Swatch surveyed the market and identified an unserved segment of watch buyers. Using these results, Swatch created a watch at a price consumers were willing to pay. The unorthodox order of this marketing mix decision is an example of ________.
A) competition-based pricing
B) cost-plus pricing
C) target costing
D) value pricing
E) penetration pricing

Question

Quizplus · Accepted Answer

This scenario describes the use of target costing, which involves analyzing the market and determining the price consumers are willing to pay, and then designing a product to meet that target cost. This is in contrast to cost-plus pricing, where the price is determined by adding a markup to the cost of production, or competition-based pricing, where the price is set based on the prices of competitors. Value pricing is focused on offering a high-quality product at a fair price, and penetration pricing involves setting a low price to enter a new market.

Swatch Surveyed the Market and Identified an Unserved Segment of Watch