Question

When the management team noted the increased interest in bikes as a mode of commuting, bicycle manufacturer Sensta introduced utility bikes aimed at the urban commuter. In which of the following cases is the company following a multiple-segment pricing strategy?

A) Sensta manufactures a basic model priced at $500, a bike with more features, priced at $1,500 and a deluxe model priced at $3,000.

B) Sensta entered the market with a bike priced at $2,500, and later, as more competitors entered the market, reduced the price to $1,000.

C) When Sensta entered the market, there were already competitors in the $1,000-$2,000 price range. Sensta introduced three bike models in the $500-$700 price range in order to capture market share, and later raised the prices of its products.

D) With several competitors with similar product features in the utility bike market, Sensta concentrated on the sturdiness of its bikes, and raised the price of the basic model from $500 to $1,000.

E) As the market for bikes in a particular city became saturated, Sensta raised the prices of its bikes hoping to gain maximum profit before exiting the market.

Answer 1

The scenario in which Sensta manufactures a basic bike model at $500, an intermediate at $1,500, and a deluxe model at $3,000 is an example of a multiple-segment pricing strategy, targeting different customer segments.

Step-by-step explanation:

When a company such as bicycle manufacturer Sensta introduces utility bikes aimed at the urban commuter with different price points, they may be employing a multiple-segment pricing strategy if they offer different versions of their product at varying prices to cater to different customer segments. Analyzing the given options, the case that represents multiple-segment pricing strategy is:

A) Sensta manufactures a basic model priced at $500, a bike with more features, priced at $1,500 and a deluxe model priced at $3,000.

This scenario illustrates a classical approach to multiple-segment pricing, where products are offered at various price points, with each version targeting a different consumer segment based on their willingness to pay and feature preferences. Sensta's strategy involves producing a basic model, a mid-range bike, and a deluxe model, with the goal of catering to different customer needs and maximizing their market coverage.