Question

When Panasonic considers how to price a new product, they determine what price they think their customers will pay, and then identify what profit the company needs. From there they determine the features they can offer on this product. This method of determining price is known as:
a) cost-based pricing.
b) target costing.
c) value pricing.
d) demand-oriented pricing.

Answer 1

Answer:

b) target costing.

Explanation:

According to my research on different pricing methods, I can say that based on the information provided within the question the method being described is known as target costing. Like mentioned in the question this is the process of analyzing a product's life-cycle costs (how much customers may pay throughout the products life on the market) and then design the functions and features of the product around that data. This is done in order to all but guarantee that the products profit margin will be reached, and is what Panasonic is considering doing.

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