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In a competitive market, a supplier will use which type of pricing approach? Cost plus. Target...

In a competitive market, a supplier will use which type of pricing approach?

Cost plus.

Target pricing.

Target costing.

Market price.

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Expert Solution

Cost plus pricing - In many businesses, the most common method of price determination is estimating the cost of product and fix to it a margin of profit. Here the term cost includes all types of costs i.e production, manufacturing and distribution costs.

Target Pricing - It helps to identify that what price is best suited to compete in this competitive market. The firm then applies its standard profit margin to it and arrives at the price which it would get in the market.

Target costing - In target costing, we first determine what price we think that consumer will pay for our product. We then determine how much of a profit margin we expect and substract them from the final price. The remaining amount left is what is available as a budget to be used to create the product.

Market Price - It implies when prices of products are set according to current market prices of same or similar products. Then depending on the features, the prices are set high or low.

MARKET PRICING STRATEGY IS ALSO KNOWN AS COMPETITION BASED STRATEGY. HENCE A SUPPLIER SHOULD FOLLOW MARKET PRICING STRATEGY IN A COMPETITIVE MARKET

ekkarill92 answered 2 years ago
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