Which pricing strategy involves offering a cheaper initial product while other related products are sold at a higher price?

The correct answer is complementary product pricing, which is a strategy where a company offers a base product at a lower price to attract customers, with the expectation that they will purchase additional related products at higher prices. This approach relies on the idea that once a consumer is invested in the initial cheaper product, they may feel compelled to buy complementary items that enhance their experience or usage, thereby increasing the overall sales and profitability for the company.

For example, a razor company may sell the razor handle at a low price while charging more for the razor blades needed to use it. In terms of marketing strategy, this method effectively encourages customer loyalty and stimulates ongoing sales in the long run, as customers will need the complementary items regularly.

The other choices do not accurately describe this strategy. Performance analysis refers to evaluating the effectiveness of a marketing strategy or campaign, bid pricing involves setting prices based on competitive offers, and the full-cost approach entails pricing a product by calculating its total costs plus a margin, none of which align with the concept of leveraging lower prices on one product to sell others at a premium.