Chenyi bought a new car that came with free oil changes and service until the loan was paid off. This is an example of promotional pricing. A. True B. False
The correct answer and explanation is:
Correct Answer: A. True
Explanation:
Promotional pricing refers to a short-term strategy businesses use to stimulate interest in a product or service, often by offering discounts, incentives, or added value. In this case, Chenyi’s new car came with free oil changes and service until the loan was paid off, which adds extra value to the purchase without increasing the price. This is a classic example of promotional pricing, as it’s intended to attract buyers by making the offer more appealing compared to competitors.
Let’s break it down:
- Promotional pricing doesn’t only mean lowering the sticker price. It can also mean bundling products or services, offering rebates, or including maintenance for free—just like in Chenyi’s case.
- By including free oil changes and servicing, the car dealer is adding benefits that reduce the buyer’s long-term costs. These benefits serve as incentives to make the purchase now, increasing the perceived value.
- The promotion is also time-bound—it lasts until the loan is paid off. This limited duration makes it a promotional strategy rather than a permanent feature.
Why Companies Use Promotional Pricing:
- To boost short-term sales
- To compete with rival brands
- To clear inventory or launch a new product
- To create customer loyalty early on
In Chenyi’s case, the dealer likely used this strategy to close the sale more effectively, making the deal more attractive and convincing Chenyi to commit to the purchase.
Conclusion:
Because this oil change and servicing offer is a temporary incentive designed to enhance the value of the car purchase, it clearly falls under promotional pricing. Therefore, the statement is True.