Libra Electronics has invented a new technology to make laptops that are extremely lightweight and unbreakable. The company is advertising aggressively and wishes to create demand for its new range of laptops. To attract customers, the company has priced the laptops attractively. However, to earn a profit, the company has priced the batteries required for the laptops extremely high. Which of the following is illustrated in this scenario?
A) Downsizing strategy
B) Harvest strategy
C) Razor and blade strategy
D) Divestment strategy
E) Switching costs

Question

Quizplus · Accepted Answer

The scenario illustrates the razor and blade strategy, where the company sells a product at a low price (laptop) and prices the complementary product (battery) high to earn a profit. This strategy is aptly named after the business model of selling razors at a low price and charging high prices for the blades.

Libra Electronics Has Invented a New Technology to Make Laptops