Ivory Isles Resort sets a low base price of $250 for its rooms.This appears to be a great bargain for vacationers looking for resorts in the 5-star segment.However,the customers have to pay additional charges for using services such as the casino,spa,hot pool,gym,and the lounge.According to this information,which of the following pricing strategies is used by Ivory Isles?

Question

Quizplus · Accepted Answer

Ivory Isles uses captive pricing strategy, where the base product (room) is priced low but the additional services are priced higher to cover the cost and increase profitability. Customers who have already booked a room are 'captured' and are more likely to use the additional services offered by the resort at the higher prices.

Ivory Isles Resort Sets a Low Base Price of $250