Radox, a luxury watch brand, identifies a market segment that is willing to pay premium prices for its watches, and Radox managers select an ideal selling price. Managers then determine the costs to create watches that meet the ideal selling price. The company's pricing approach is referred to as ________.
A) mass production
B) cost-plus pricing
C) target costing
D) value-added pricing
E) target return pricing

Question

Quizplus · Accepted Answer

Radox is using target costing, a pricing strategy where the selling price is set first based on customer value perceptions and market conditions, and then the company works backward to ensure the product can be produced within costs that allow for that target price to be met. This approach is focused on meeting the cost objectives to hit a desired price point, rather than setting prices based on the cost of production plus a markup (cost-plus pricing) or other methods.

Radox, a Luxury Watch Brand, Identifies a Market Segment That