MINI CASE - Alden Manufacturing

Alden Manufacturing produces small kitchen appliancesblenders, hand mixers, and electric

skilletsunder the brand name First Generation. Alden attempts to target newlyweds and first-

time home buyers with this brand.

Considering that most of these young households have limited financial resources, Alden

attempts to engage in target costing. "In doing this," says Milton Alden, the co-founder of the

company, "we have better control over keeping the price right in line with customers."

Alden manufactures a three-speed blender, its top seller, along with a five-speed blender. The

hand mixers are manufactured in two variantsa small handheld mixer with two rotating beaters

and another that comes with an optional stand and an attached mixing bowl. Alden's

temperature-controlled skillets are manufactured in a single style with three color options.

"We only offer a few types of products," Milt Alden added, "but we make large quantities of

each item. This allows us to produce superior products while holding our prices low."

Question 2 [20 marks]

a. Milt Alden says that his company makes "large quantities of each item," and that this

helps the company keep its prices low. Identify the concept that Mr. Alden is referring to

and explain how it helps the company to keep their prices low. How has the company

implemented this strategy? Apply the relevant theory to the facts of the case. Do

not simply list the material from the book. [10 marks]

b. Discuss the importance of the target costing as outlined in the mini-case in Alden's

marketing mix as the company seeks to serve the target markets it has defined. Apply

the relevant theory to the facts of the case. Do not simply list the material from

the book. [10 marks]