Which of the Following Is True of Value-Based Pricing

question 131

Multiple Choice

Which of the following is true of value-based pricing?

• A) The targeted value and price drive decisions about what costs can be incurred and the resulting product design.
• B) Value-based pricing is mostly product driven.
• C) Value-based pricing involves setting prices based on the costs of producing, distributing, and selling the product plus a fair rate of return for its effort and risk.
• D) The marketer usually designs a product and marketing program and then sets the price.
• E) A company using value-based pricing designs what it considers to be a good product, adds up the costs of making the product, and sets a price that covers costs plus a target profit.

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Definitions:

Decision Making

The process of choosing among alternatives to achieve a goal or solve a problem.

Herfindahl-Hirschman Index

A measure used to determine the level of competition within a market, calculated based on the sum of the squares of market shares of all firms within the market.

Market

A place or system in which commercial transactions occur between buyers and sellers for goods, services, or financial assets.

Herfindahl-Hirschman Index

A measure of market concentration that is calculated by squaring the market share of each firm competing in the market and then summing the resulting numbers.