Match the List-I with List-II Choose the correct answer from the options given below:LIST I
Pricing situationLIST II
DescriptionA. Product line Pricing I. Pricing optional or accessory products sold with the main product B. Optional product pricing II. Setting prices across an entire product line C. Captive product Pricing III. Pricing low value by product to get rid of or make money on them. D. By-Product Pricing IV. Pricing products that must be used with the main product.
A-II, B-I, C-IV, D-III
A-II, B-I, C-IV, D-III — option 3. Each pairing is essentially the definition of the term.
| Situation | Description | Illustration |
|---|---|---|
| A. Product line pricing | II — setting prices across an entire product line | Price steps between models in a range, reflecting cost differences, customer evaluations of features, and competitors’ prices — a car sold in base, mid and top variants |
| B. Optional product pricing | I — pricing optional or accessory products sold with the main product | Extras the buyer may choose — a sunroof, an extended warranty, a larger battery. The base price is often kept low and the options carry the margin |
| C. Captive product pricing | IV — pricing products that must be used with the main product | Printers and cartridges, razors and blades, consoles and games. The main product is priced low and the captive item high, since the buyer has no choice once committed |
| D. By-product pricing | III — pricing low-value by-products to dispose of them or make money on them | Residues of the main process — molasses from sugar, bran from flour. Any price above the cost of storing and delivering them lets the producer reduce the main product’s price and compete harder |
The distinction that decides the question is B against C, and it turns on a single word: optional means the buyer may take it or leave it; captive means he cannot use the main product without it. That is why captive pricing supports so aggressive a margin — and why regulators and consumers watch it.
The full set of product-mix pricing situations, of which these four are part :
| Situation | Content |
|---|---|
| Product line pricing | Price steps across a range |
| Optional-product pricing | Accessories and extras |
| Captive-product pricing | Necessary companions; in services, two-part pricing — a fixed fee plus a variable usage charge |
| By-product pricing | Residues of the process |
| Product bundle pricing | Several products sold together at a reduced combined price |
The common thread is that the firm sets prices to maximise the profit of the whole mix, not of each item separately — which is why a printer may be sold at or below cost.
Hence, the answer is A-II, B-I, C-IV, D-III.
Similar Questions
Find the most appropriate sequence of life-cycle of price for a product, from the initial stage to the mature stage.
After determining its pricing objectives, what is the next logical step a company should take in setting its pricing policy ?
The practice of selling below cost, with an intention to destroying the competitor is referred to as :
Cost - Plus pricing is not suitable for :
Match the items of List - I with that of List - II and suggest the correct code :
List - I (Pricing Strategies) List - II (Explanations) (a) Customary pricing (i) Ending a price with 99 paise (b) Skimming (ii) pricing a product based on perceived expectations of customers (c) Penetration pricing (iii) Setting a high price which gradually reduces as competitors enter the market (d) Psychological pricing (iv) Offering at a low price for a new product during its initial offering Code :
Find the most appropriate sequence of life-cycle of price for a product, from the initial stage to the mature stage.
The practice of selling below cost, with an intention to destroying the competitor is referred to as:
After determining its pricing objectives, what is the next logical step a company should take in setting its pricing policy?
When the Companies pay less attention to its own costs or demands and bases its price largely on competitors’ prices, then it is known as :
Match the items of the List-I with those of the List-II and suggest the correct code from the following:
List-I List-II i. Loss Leader a. Locational price differentials ii. Unchanged Pricing b. Products with high initial demands iii. Basing Point Pricing c. Product line pricing iv. Skimming Pricing d. Oligopoly pricing Codes:
Important Questions from Pricing decisions
- Which of the following are the informal pricing methods ?
I. Cost plus
II. Competitive
III. Rate of return
IV. Trial and error
Codes : Which among the following is not an internal factor in pricing decisions?
Find the most appropriate sequence of life-cycle of price for a product, from the initial stage to the mature stage.
After determining its pricing objectives, what is the next logical step a company should take in setting its pricing policy ?
The practice of selling below cost, with an intention to destroying the competitor is referred to as :
