Final answer:
Value-based pricing relies on the value or benefits that a product provides to a customer. A strong brand name can influence consumers to pay a higher price due to perceived value. Overall, in a market with competitive pricing, both businesses and consumers can benefit. The correct answer is option: b) associating product and benefits.
Step-by-step explanation:
Value-based pricing depends on associating product and benefits. This approach to pricing focuses on the value that a product or service provides to a customer rather than simply undercutting the price of competitor products, maintaining loyalty, or aligning with the cash flow needs of the business. For instance, a well-respected brand name that has been carefully built up over many years can justify a higher price because the perceived value to the consumer is greater.
Furthermore, businesses in a competitive market where products are continuously improved upon and offered at decreased costs can benefit greatly. When a company can deliver its services more cheaply, as seen in the example of a messenger company whose main cost is gasoline, it can often enhance both the supply and profitability. Consumers, in turn, enjoy better or less expensive products, leading to a situation where the nation as a whole experiences more gains than losses.