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two strategies: marketshimming pricing and marketperation pricing. (1) MarketSkimming Pricing Many panies that invent new products initially set high prices to 39。skim39。s price often has to he changed when the product is part of a product mix. In this case, the firm looks for a set of prices that maximizes the profits on the total product mix. Pricing is difficult because the various products have related demand and costs, and face different degrees of petition. (1) Product Line Pricing Companies usually develop product lines rather than single products. For example, Merloni39。 prices. If the price difference between two successive products is small, buyers will usually buy the more advanced product. This will increase pany profits if the cost difference is smaller than the price difference. If the price difference is large, however, customers will generally buy the less advanced products. (2) OptionalProduct Pricing Many panies use optionalpro duet pricing offering to sell optional or accessory products along with their main product. For example, a ear buyer may choose to order power windows, cruise control and a radio with a CD player. Pricing these options is a sticky problem. Car panies have to decide which items to include in the base price and which to offer as options. BMWs basic cars e famously under equipped. Typically the 318i is about DM40, 000, but the customer then has to pay extra for a radio (prices vary), electric windows (DM700), sun roof (DM! , 800) and security system (DM1, 100). The basic model is stripped of so many forts and conveniences that most buyers reject it. The pay for extras or buy a betterequipped version. More recently, however, American and European car makers have been forced to follow the example of the Japanese car makers and include in the basic price many useful items previously sold only as options. The advertised price now often represents a wellequipped car. (3) Cap LivePro duct Pricing Companies that make products that must be used along with a main product are using captiveproduct pricing. Examples of captive products are razors, camera film and puter software. Producers of the main products (razors, cameras and puters) often price them low and set high markups on the supplies. Thus Polaroid prices its cameras low because it makes its money on the film it sells. And Gillette sells lowpriced razors, but makes money on the replacement blades. Camera makers that do not sell film have to price their main products higher inorder to make the same overall profit. (4) ByProduct Pricing In producing proeessed meats, petroleum products, chemicals and other products, there are often byproducts. If the byproducts have no value and if getting rid of them is costly, this 5 will affect the pricing of the main product. Using byproduct pricing, the manufacturer will seek a market for these byproducts and should accept any price that covers more than the cost of storing and delivering; them. This practice allows the seller to reduce the main product39。t realize how valuable their byproducts are. For example, most Zoos don39。 manure can be an excellent source of additional revenue. But the ZooDoo Compost Company has helped many zoos understand the costs and opportunities involved with these byproducts. ZooDolicenses its name to zoos and receives royalties on manure sales. 39。t even know how much manure they are producing or the cost of disposing of it, 39。t think to move into active byproduct sales. However, sales of the fragrant byproduct can be substantial. So far novelty sales have been the largest, with tiny containers of Zoo Doo (and even 39。valentines) available in 160 zoo stores and 700 additional retail outlets. For the longterm market, ZooDoo looks to organic gardeners who buy15 to 70 pounds of manure at a time. Zoo Doo is already planning a 39。 club to reach these lucrative byproduct markets. (5) ProductBundle Pricing Using, productbundle pricing, sellers often bine several of their products and offer the bundle at a reduced price. Thus theatres and sports teams sell seas on tickets at less than the cost of single tickets; hotels sell specially priced packages that include room, meals and entertainment; puter makers in elude attractives of ware packages with their personal puters. Price bundling can promote the sales of products that consumers might not otherwise buy, but the bined price must be low enough to get them to buy the bundle. In other cases, productbundle pricing is used to sell more than the customer really wants. Obtaining a ticket to an exclusive sports event is difficult, but World Cup football finals tickets are available to people willing to buy them b