Analysis of a Tied-Products Pricing Strategy
Consider a business strategy where a durable 'base' product (like a video game console or a water filter pitcher) is sold at a very low price, sometimes even at a loss. The company's profit is primarily generated from the repeated sale of necessary, proprietary 'consumable' products (like video games or replacement filters) that are priced with high-profit margins. Critically evaluate this business model. In your response, discuss the potential advantages and disadvantages from the perspective of both the business and the consumer, and form a judgment on its overall fairness.
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CORE Econ
Economics
Social Science
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Economy
Introduction to Microeconomics Course
The Economy 2.0 Microeconomics @ CORE Econ
Ch.9 Lenders and borrowers and differences in wealth - The Economy 2.0 Microeconomics @ CORE Econ
Evaluation in Bloom's Taxonomy
Cognitive Psychology
Psychology
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Pricing Strategy Analysis
Analysis of a Tied-Products Pricing Strategy
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Match each business pricing scenario with the economic principle it best illustrates. Your task is to distinguish the model that relies on a low initial purchase price to generate profits from subsequent, more expensive required purchases.
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A business strategy that involves selling a primary product at a very low price, often near or below its production cost, relies on generating the majority of its profit from the mandatory and repeated purchase of high-priced ________.