Process: (1.. Specify product,2. consider selling price,3. Calculate required profit, 4.Determine target
cost, 5. Close cost gap,6. Negotiate with customers).
AREAS OF COST REDUCTION (1. Materials- eliminate unnesesery materials, find cheaper alternative
materials, quality should not be compromised) LABOURS(Reduce labour costs,use ower skilled
labour,increase productivity by improving staff morale) OTHER AREAS( Increase automation,reduce
incidence cost driver,comsider alternate product designs). TC in Service Industries (spntanity service
consumed at same tome its produced,Perishibilty, as cumsumed immediately can not be stored,
Intangable, cang be see or touched,Unique, no services can be homogenous, No transfer of
ownership.