Question

Which pricing strategies should be used that will maximize profits in each of the following situations

Consumers have significantly different preferences for different stereo components. Some are willing to pay handily for recorders but not for CD players, while others will pay handily for CD players but not for recorders.

Answer 1

Answer: Economy pricing

This is the way of an increasing market share by those companies. The people those who are not paying handily should be caught by this pricing. Demand is already there for both types of customers – paying handily, and not paying handily. In order to increase the market share both these demands should be entertained seriously.

Therefore, a pricing is required which targets the mass consumers by implementing a price that includes lower overhead cost and lower profit margin. Such pricing is the economy pricing, which suits most of the consumers’ pocket and maximizes profit by deploying the large scale of selling.