Question

Compare and contrast captive pricing and product bundle pricing.

Answer 1

CAPTIVE PRICING:

Captive Pricing of commodity is used where the value of the main product becomes very small, but the value of the supporting product becomes high, which is important for the main product to function.The Captive Pricing of commodity is most always greater than the main product. In order to retain the buyers, businesses prefer to have a cheaper price for the main commodity. Around the same time, they offer a better price of captive goods to increase their revenues.When deciding the quality of captive goods a variety of considerations.Firstly,the term expected by the consumer who will potentially utilize the central commodity and secondly the amount of units of captive goods that will be marketed during this time span.You need a strong brand loyalty by utilizing the captive commodity pricing scheme.Examples for captive products are shaving blades for razor,machine parts for a machine etc.

PRODUCT BUNDLE PRICING:

In product bundle pricing industries market a kit or collection of products or services on a subscription basis at a cheaper price than will be paid if the buyer bought any of them individually.Every consumer has a price he's prepared to pay for a particular product or service. When the price you offer is equivalent to or cheaper than what the buyer is able to spend, the consumer may buy as he finds the product to be a discount. Through economics the disparity is regarded as the market surplus between what the buyer paid versus what the buyer was able to pay.Bundle pricing is an effort to raise some of the demand surplus of the consumers.Some of the advantages of bundle pricing are; offering goods in packs provides incentives that go beyond just receiving additional money from each customer, it simplifies processing and reduces glitches, it introduces dynamic prices to a client segment and to outselling competitors, it boosts sales; it improve cost efficiency,it drives revenue; it checks alternative communication platforms.Examples for bundle pricing are combo dishes at a new restuarant,TV channel plans,packages on buying a new computer etc.