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Take one element of cost that is included in the final price of a product to...

Take one element of cost that is included in the final price of a product to its customers. Explain how a company must use the cost as part of the total price of a product. What ways can a company decrease certain costs to keep their customers happy?

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Answer #1

Marketing and distribution cost is one major cost parameter which affects companies. Generally 10% of the cost is devoted towards marketing for example per unit price of Coca Cola Bottle starts at 2 dollars out of which the distributiin and marketing cost comes around 0.3 dollars.

Thus companies use 10 % as threshold level for marketing, higher the price of product the marketing cost gets lower due to economies of scale.

Companies can keep customers happy by lowering prices and to do that they must lower cost first. Cost reduction strategies include simpler packaging, low cost digital marketing, online distribution, production in single bottling anf assembling plant, etc.

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