Which of the following is the best example of a captive pricing strategy?

• A. A clothing store offers buy-one-get-one-free promotions.
• B. A printer manufacturer sells printers at a low price but charges high prices for replacement ink cartridges.
• C. A restaurant charges different prices for dine-in and takeout orders.
• D. A movie theater offers discounted tickets for students.

Answer: (B)

Verified step by step guidance

1. Understand the concept of captive pricing strategy: it involves selling a primary product at a low price (sometimes even at a loss) and then charging a higher price for the complementary or necessary secondary product that customers must buy to use the primary product effectively.
2. Analyze each option to see if it fits this definition:
3. Option 1: Buy-one-get-one-free promotion is a discount strategy to increase sales volume, not captive pricing.
4. Option 2: Selling printers at a low price but charging high prices for replacement ink cartridges fits captive pricing because the printer is the primary product and ink cartridges are the necessary complementary product.
5. Option 3 and 4 involve price discrimination or discounts but do not involve a primary product and a complementary product with different pricing, so they are not examples of captive pricing.