Question

Charter Corporation manufactures a single product that has a cost of $350. The company uses a 70% markup on the cost to arrive at a selling price of $595, which results in a price that virtually always exceeds that of the market leaders.
If Charter changes to the approach known as target costing, the company will first:

A) reduce its 70% markup rate.
B) trim its $350 cost.
C) attempt to re-engineer its product.
D) undertake a thorough study of competitors' prices.
E) change the markup so that it is based on sales rather than based on cost.

Answer 1

Answer:

(D) Undertake a thorough study of Competitor's prices.

Explanation:

Pricing is one of the most important components when it comes to creating marketing strategies. The price is one of the first things that a consumer notices about a product and is one the deciding factors when it comes to their decision to buy it or not.

When  product is priced in accordance with what the competition is charging, this process is known as competitive pricing. When it comes to competition based on pricing strategy, the purchasing behaviour of customers is an important criteria. Some of the factors that companies take into account in order to ensure profitable sustenance of the business.