Jameson noticed that the vending machine soda bottles had changed shape. Upon further investigation, he saw that each bottle contained 2 ounces less than the previous bottles. But the price remained the same! The pricing objective of the beverage company is to
A) increase profits by reducing the amount provided in each bottle.
B) build traffic at the vending machines by changing the shape of the bottle.
C) undercut the competition by changing the shape of the bottle.
D) increase market share by reducing the amount provided in each bottle.

Question

Quizplus · Accepted Answer

Target costing is a demand-based pricing strategy where the marketer first determines what the customer is willing to pay. He/she then subtracts a reasonable profit desired by the company. The remaining amount is the target cost, or the amount that costs for the product or service cannot exceed.

Jameson Noticed That the Vending Machine Soda Bottles Had Changed