Assignment on The Pricing Out in the Markets

Introduction of The Pricing Out in the Markets

            There are so many strategies for companies to handle the essence of pricing for their products and services, and each strategy comes with its own pros and cons. Moreover, there are a variety of concepts and aspects, which are associated with the pricing in the market. One such concept is pricing out in the market. It is important to understand the relevant aspects of this concept to know how it actually works (WAKSMAN, 2019). The price out in the market means when a group or an individual is not able to buy a certain product due to its high price, or when they are no able to make any kind of investment. It happens because market value is increased to a significant level, or the product becomes too expensive for users to buy. If anyone has been priced out of the market, then it means that things are not looking good for him/her in that particular market. For example, if a real estate market has increased its market value in significant numbers, and an average income earner is not able to purchase any property in the area, which means he/she has been priced out of the market. In this situation, the solution is to look for other markets, where the real estate business is at a stable level having a moderate kind of market value. A range of reasons can be behind the increase in market value or an increase in the price of a product. It is up to the companies and markets to determine, what kind of pricing is suitable for them (HALTON, 2019)

The Captive Product Pricing of The Pricing Out in the Markets

            Before knowing the pricing strategy of captive products, it is vital to understand what captive product is. Captive products are the ones, which are developed or made so that it can be used with other relevant products. To understand the essence of captive products, one good example is printers. A company, which is making printers to sell, they will have to make ink cartridges as well so that certain models of printers can be made useable. A printer without an ink cartridge is not usable, and it has no operational benefit. It is true that there could be other brands offering a variety of ink cartridges, but there can be some special model of printers, which may need special kinds of ink cartridges for effective use, so the manufacture of the printer will also have to manufacture ink cartridges. It is important to know that pricing for captive products is never an easy thing to handle because this process is very complex because it is hard to deal with customers. There can be situations, where the price for the relevant item is too high like ink cartridge, which can also affect the sales of the original product such as a printer. The companies will have to look for different market factors before pricing the captive products. For example, some companies set a lower price for their actual product, but the captive product is priced a bit higher. This strategy is adopted to ensure that customers are attracted to the core product due to low pricing, and once they have purchased a core product, then they will be forced to purchase the captive product, and this is how a company will earn better profits (CAMPBELL, 2020)

The Product Line Pricing of The Pricing Out in the Markets

            This product pricing strategy is very much similar to the captive product pricing, rather it can be said that product line pricing is a primary concept, and captive product pricing is one of the secondary concepts. Still, it is important to understand the broader concept of product line pricing. In this strategy, a company is able to use a range of similar or relevant products, and they price it with product line pricing. One good example of product line pricing is product mix pricing. In this strategy, the company uses its whole product line as a whole, and all parts are considered a part of the bigger product category. But when it comes to pricing, they price each product with different kinds of prices. For example, if a company is involved in selling razors, then their relevant captive product is a replacement cartridge. The company can do it smartly by pricing low for the razor itself, even they may offer it free in some promotions, but they will tag a higher price for the replacement cartridge. How does it fulfill the objective of a company to earn more profits? The answer is that they first attract customers to buy a razor because it’s cheap in price, but once they start using it, and look for a replacement cartridge, they have to purchase an expensive cartridge, and this is how profit is increased (Bailey, 2018)

A List of Products with Captive Product Pricing

1.      The first product in this regard is a razor. A base product is a razor, which may cost $3, and its captive product is the replacement cartridge, which may be priced at $5.

2.      A printer may be priced at $50, but the price of its ink cartridge can be $5.

3.      A video game console is a base product, priced at $10, but its relevant captive products such as extra controllers, wires, and batteries may charge $50.

4.      A person may enter a theme park after buying a ticket, but when he purchases a burger of worth $10, which is normally priced at $5 in the local market

5.      A mobile phone can be a base product priced bit lower, but then its internet packages and airtime packages may be charged higher by the telecom operator, who has a joint venture with the mobile phone company.

6.      A personal computer is a base product, but it cannot be used without installing Windows software, so Windows software is a captive product.

7.      The glue gun is another base product, which needs glue sticks to be used, so glue stick is the captive product, which may be priced lower than the gun, but it is a must to use the glue gun

8.      The hair shampoo is a core product, which may be priced lower in various cases, but its captive product is hair conditioner, which may be priced higher to add value to the hair care of a customer

9.      The whitening cream can be considered a core product, which is used to whitening the skin, but there can be its captive product such as night cream to be used along with the core whitening cream to get better results

10.  If a customer visits a swimming pool to swim, then it will be considered a core product/service, and then the customer sees that they are selling an affordable swimsuit at the spot, which will be considered a captive product

 References of The Pricing Out in the Markets

Bailey, V. (2018). What Is a Product Line Pricing Strategy? Retrieved March 18, 2020, from https://bizfluent.com/facts-6003881-product-line-pricing-strategy-.html

CAMPBELL, P. (2020). COMPLETE GUIDE TO CAPTIVE PRODUCT PRICING. Retrieved March 18, 2020, from https://www.profitwell.com/blog/captive-product-pricing

HALTON, C. (2019). Priced Out. Retrieved March 18, 2020, from https://www.investopedia.com/terms/p/priced-out.asp

WAKSMAN, K. (2019). How to Determine Your Wholesale Product Pricing. Retrieved March 18, 2020, from https://www.thebalancesmb.com/determing-your-wholesale-product-pricing-3502224