Question

The BASF Chemical Company in Germany has developed a new rubberized coating. The product has an application for cell phones and other hand-held electronic devices that gives them protection from falls and scratches. BASF plans to market the product directly to businesses that manufacture the casings for these types of products. BASF currently uses a system of salespeople headquartered in Germany, while its primary business customers are in China.

Refer to Scenario 19.2. If BASF were to employ pricing that includes the price at the factory plus freight charges from a chosen point nearest the buyer, this would be an example of ____ pricing.

Answer 1

Answer: Base point pricing

Explanation: In simple words, Base point pricing is the method of companies fixing their products prices on the basis of a base cost plus production costs to a particular market.

While some find this a form of collaboration between the selling companies (it reduces the ability of purchasing firms to eliminate competition through position or private transport), it is standard practice in the steel and automotive sectors.

Hence from the above we can conclude that the given case depicts base point pricing.