When Honda set out to design the Fit,it began with a $13,950 starting price point and an operating efficiency of 15 kilometers per liter as its goals.It then designed a stylish,peppy little car with costs that allowed it to give target customers those values.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-based pricing
E) penetration pricing

Question

Quizplus · Accepted Answer

The unorthodox order of setting a target cost and then designing the car to fit within that cost is an example of target costing. This approach involves starting with the desired selling price and subtracting the desired profit margin to arrive at the target cost. The product is then designed to meet that cost while still delivering the desired value to the customer.

When Honda Set Out to Design the Fit,it Began with a $13,950