The document discusses product line and product mix concepts in managerial economics, particularly focusing on product line pricing strategies used in the tourism and hospitality industry. It outlines five common pricing strategies: captive pricing, leader pricing, bait pricing, price lining, and bundled pricing, each highlighting how businesses set prices based on cost differences and consumer perceptions. Examples from various industries illustrate how these strategies maximize turnover and profits while catering to different customer needs and preferences.

1. Mohammed Asif
MBA –TH : SEM-1 , 2015-17,
NITHM
Subject:
Managerial Economics and
Marketing in Tourism & Hospitality

2. • PRODUCT LINE:
A group of products that are clearly related because they function in a similar manner are
sold to the same customer groups, are marketed through the same type of outlets or fall
within given price ranges
• PRODUCT MIX:
A Product Mix is the set of all products and items or
the total range of products offered by a company.
• PRODUCT LINE PRICING:
Product line pricing refers to the practice of reviewing and setting prices for multiple
products in coordination with one another.)

4. Milk and Nutrition products

5. Infant Products

6. Beverages

7. Product line pricing
• It is the process that retailers use to separate
goods into various cost categories creating
different quality levels in the minds of their
customers.
• Product line pricing is more effective when there
are ample price gaps between each category so
that the consumer is well informed of the quality
differentials.

8. Product line pricing
• Pricing different products within the same
product range at different price points.
• The greater the features and the benefit
obtained the greater the consumer will
pay. This form of price discrimination
assists the company in maximizing
turnover and profits.
Ex: Samsung offering different smart phones with
different features at different prices.

9. Product line pricing
In Tourism hospitality Industry
Example:
The same category of rooms having different rates
because of Amenities and facilities.
Example:
The same sightseeing place experienced by
different package rates because of optional
services or luxuries.

10. Product line pricing
• This strategy is used for setting the price for entire product line.
• In many companies now days develop product line instead of a single
product so product line pricing is setting the price on the basis of cost
difference between different products in a product line.
• Marketer also keeps in mind the customer evolution of different features
and also competitive prices.

11. Product line - pricing Strategies
There are five common product line pricing strategies
• Captive pricing
• Leader pricing,
• Bait pricing,
• Price lining, and
• Price bundling.

12. Captive Pricing
• The idea behind captive pricing is that a company
will have a basic product that they sell at a low price
or given away for free.
• However, in order to receive the full benefit of the
item they received, they have to buy additional
products. The company might lose money on the
base product, but they make a fairly good profit on
the additional products.
• Ex: Gillette victor Handle, Cartridge

13. Leader Pricing
• The idea behind leader pricing is to
generate store traffic.
• The items used to get customers into
the store are known as Loss leaders.
• When customers come into the store to
purchase the loss leaders, they usually
end up purchasing extra items at full
retail price.
• The retailer makes their profit off of the
unplanned purchases bought with the
loss leaders.

14. Bait Pricing
• This type of strategy is usually viewed as unethical and sometimes
illegal, but retailers will still use it.
• The customer will then come into the store to purchase the
advertised item then find the exact item is out of stock. They will
then be encouraged to purchase a similar, higher-priced item that is
available in store

15. Price Lining
• Price lining is a strategy retailers use when pricing different
items at one specific price point.
• The items are usually at a different level of quality or have
different features. This strategy usually makes it easier for a
retailer to buy specific products, predict what their profits
will be, and market to a certain consumer.
• EX: A good example of this would be Apple’s iPads. The basic iPad
with wifi and limited storage costs $500. The next iPad is one with
4G and the same limited storage, but it costs somewhere around
$650.

16. Bundled Pricing
• Products that have several different options or accessories available
are sold using bundled pricing.
• Instead of a consumer having to purchase each item separately, the
items are packaged together and priced as one item.
• This is usually at a discount than what it would have been priced at
when purchasing each item separately.
• Ex: Cars/ Bikes: When you are purchasing a new car/bike, you can get extra features
by bundling them with the car when you purchase it instead of purchasing them later