Final answer:
The statement is false because value pricing focuses on price setting based on perceived customer value rather than just cost reduction. While reducing costs can be a part of the strategy, it is not a requisite. The long-term goal is to provide high value at a competitive price point, considering economies of scale and other market factors.
Step-by-step explanation:
Value pricing does not necessarily require a company to reengineer its operations to become a low-cost producer, making the statement false. The concept of value pricing is grounded on setting a price point based on customer perceptions of value rather than solely on production costs. Nonetheless, a company might opt to reduce costs as a strategic measure to offer better value, which could involve reengineering operations. The goal is to provide the highest value at a reasonable price, not just to be the lowest-cost producer.
In the long run, firms indeed have the ability to select their production technology, which affects costs. As firms adjust to the optimal scale of production, they may experience economies of scale, where the cost per unit decreases as production volume increases. Companies like Walmart and Costco capitalize on this concept to deliver low prices to consumers.
However, the decision to adjust production technology and attempt economies of scale takes into consideration several factors beyond just reducing production costs. It also involves balancing labor and capital, maintaining quality, and considering market demands to ensure that the company can be competitive and profitable in the long run.