Posted in Marketing and Strategy Terms, Total Reads: 8583
Definition: Captive-Product Pricing
Captive products are those products which have to be necessarily used with an accompanying product. Captive product pricing is the pricing strategy for these kinds of products. Generally, the accompanied product is priced low because it is one time purchase. Captive products experience repetitive purchase and are hence priced higher. It is a product mix pricing strategy for a low mark-up on accompanying product and a high mark-up on the captive product. The low price of the accompanying (generally the core product) attracts the customers. This product cannot be used without its supporting captive products which result in frequent purchases prices at a higher rate. However, care must be taken not to make the captive product so expensive that it makes the purchase of the core product unattractive.