Target pricing refers to
A) a method of selecting specific prices wholesalers and retailers are willing to pay based upon the elasticity of each given item.
B) a method of charging different prices to maximize revenue for a set amount of capacity at any given time.
C) the practice of simultaneously increasing product and service benefits while maintaining or decreasing price.
D) a method of estimating the price that ultimate consumers would be willing to pay for a product, then working backward through markups taken by retailers and wholesalers to determine what price to charge wholesalers..
E) a method of estimating the price that ultimate consumers would be willing to pay for a product, then determining how much wholesalers wish to charge its customers, deliberately adjusting the composition and features of the product to achieve the target price to consumers.

Question

Quizplus · Accepted Answer

Target pricing involves estimating the price consumers are willing to pay, and then working back through markups taken by intermediaries to determine what price to charge them. This helps ensure that the product is priced competitively and profitably at each level of the supply chain. Option A is incorrect because wholesalers and retailers are not involved in setting the prices in target pricing. Option B is incorrect because it refers to yield management, a pricing strategy used by industries such as airlines and hotels. Option C is incorrect because it describes value-based pricing. Option E is incorrect because it involves adjusting the product features and composition to achieve the target price, which is not a defining characteristic of target pricing.

Target Pricing Refers to