Question

A 16-ounce bottle of prairie herb vinegar sells for $4.95, and a 16-ounce bottle of heinz vinegar costs $1.05. prairie herb vinegar is new to the market, is perceived to be of higher quality, and provides a unique flavour to foods even though it is used in the same way as heinz vinegar. which type of policy is prairie herb vinegar most likely using?

a. status quo skimming
b. price skimming
c. bundling cost pricing
d. penetration pricing

Answer 1

Prairie Herb Vinegar is most likely employing a price skimming strategy by setting a higher initial price due to its unique value proposition and perceived higher quality.

Step-by-step explanation:

The pricing strategy that Prairie Herb Vinegar is most likely using is price skimming. This is a strategy where a company sets a relatively high price for a new or innovative product at the beginning to maximize revenues layer by layer from segments willing to pay the high price. Over time, they may lower the price to attract additional layers of consumers. This approach is typically used for products that have a unique value proposition, like the unique flavour mentioned for Prairie Herb Vinegar, and are perceived to be of higher quality compared to standard options like the Heinz vinegar.