when the 2001 toyota pirus was introduced in the United States, it was the first
ID: 1209614 • Letter: W
Question
when the 2001 toyota pirus was introduced in the United States, it was the first mass produced hybrid gas electric can in the u.s market. At the time of the introduction,almost 2000 cars had been pre-sold at the manufacturer's suggested retail price (msrp) of 19,995 three years later, the 2004 pirus was larger than the original model and featured an upgraded power train, yet the msrp was still $19995 and due to growing demand customers were put on waiting lists to be able to purchasc the car. Explain some of the ways you think Toyota may have arrived at the MISRP of $19,995 for the (then) unique 2001 Prius. Why might Toyota have kept the same MSRP for the more advanced and larger 2004 Prius that had for original 2002 model, given that demand had singificantly increased to the point where customers were put on waiting lists at dealerships?
Explanation / Answer
Answer. When Toyota introduced its hybrid gas/electric car in the US model in 2001, then it was the only producer at that time, so it was a kind of monopoly at that time. So, it charged a higher price. Now when it introduced an advance version of its previous car in 2004, then the company charged the same price. It could be because now there could be other more than 1 producers, another reason could be low production cost (the technology becomes advanced over the period of time and reduces cost of production). Toyota knows that the demand for its cars highly elastic, which means a small reduction in price level will increase the demand for the car by a higher amount. So, this could be another startegy to set price level at a low level to attract buyers thereby increasing the overall profit level and sales. Other competitors may find it difficult to sell the product at that much low price level. This could be the strategy of Toyota to capture larger market share.
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