Chapter 3: Price and Value Communication
Electric Car Company
Your company is planning to launch a new electric car, differentiated by various proprietary
energy-saving features that enable it to travel much further on a single overnight charge than any
all-electric competitor. The car can travel an estimated 90 miles in all-electric mode. The basic
car is expected to be cheaper than any other new car alternative for people who want only cheap,
local transportation, since it will qualify for the same tax credit incentives as other fuel-efficient
cars. Your company can also offer a variety of options, which it could choose to bundle or offer
separately. They include:
• 5hp gasoline engine and 3-gal. tank, which extends range between charges to 250 miles
(150 between refills without recharging). Variable cost to make is low relative to price
difference between this all-electric car and cheapest hybrids.
Without any of the options above, the car will sell for much less than any of the leading hybrids.
What prices structures (à la carte, bundled, or included with car) and levels would you choose to
maximize your profitability from sales of the “options”? Assume that there are easily observable