Swatch surveyed the market and identified an unserved segment of watch buyers. Using these results, Swatch created a watch at a price that consumers were willing to pay. The unorthodox order of this marketing mix decision is an example of ________.

Question

Quizplus · Accepted Answer

This scenario describes the use of target costing, in which a company starts with the target price that consumers are willing to pay and then works backward to determine the cost of producing the product. This is the opposite of cost-plus pricing, where the company starts with the cost of production and adds a markup to determine the price. It is also not competition-based pricing, which looks at what similar products are priced at, or value pricing, which focuses on creating a perception of high value for the price. Finally, penetration pricing involves setting a low price initially to penetrate the market, which is not the approach described here.

Swatch Surveyed the Market and Identified an Unserved Segment of Watch