An automobile manufacturer charges a higher price for its "hybrid" car that runs on both electricity and gasoline than it charges for a car that runs on only gasoline. The manufacturer contends that the consumer will save money with the hybrid car in the long run because the money saved on gasoline will more than cover the price differential between the hybrid car and a regular car. This manufacturer is using:
A) Price leadership.
B) Price lining.
C) Value in use pricing.
D) Psychological pricing.
E) Reference pricing.

Question

Quizplus · Accepted Answer

The manufacturer is using value in use pricing, which is a pricing strategy where the price is based on the value that the product provides to the customer, rather than just the cost of producing it. In this case, the manufacturer is arguing that the hybrid car will save the customer money in the long run due to lower gasoline costs, which increases the overall value of the car.

An Automobile Manufacturer Charges a Higher Price for Its "Hybrid