Marshmallow Systems is a start-up equipment manufacturer, and its main product is a smartphone. The firm sells the smartphone at cost, that is, the price is exactly the actual cost of production. The firm's intention behind pricing the phone this way is to build its customer base. In the context of pricing models, the strategy used by Marshmallow Systems is the:

Loss leader strategy

Explanation:

 A loss leader is one of the type of pricing based strategy in which the various types of products and the services are offering at low price in the market for the purpose of attracting the new consumers or users.  

 The main objective of the loss leader strategy is that the brands and products are offers at below its actual market cost due to the competition level in the market and to attract the consumers towards their business.  

 According to the given question, the Marshmallow system is one of the start up manufacturing company and the main product business of this company is smartphone. So, on the basis of the given context of the pricing model the Marshmallow company is using the loss leader strategy for attract the users.    

 Therefore, Loss leader strategy is the correct answer.

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