of them apply target costing as comprehensively and intensively as top Japanese companies such as Nissan, Toyota, Nippondenso. Target costing emerged from Japan from 1960s to early 1970s with the particular effort of Japanese automobile industry, including Toyota and Nissan. It did not receive global attention until late 1980s to 1990s when some authors such as Monden (1992), Sakurai (1989), Tanaka (1993), and Cooper (1992) described the way that Japanese companies applied target costing to thrive in their business (IMA 1994). With superior implementation systems, Japanese manufacturers are more successful than the American companies in developing target costing. Traditional cost-plus pricing strategy has been impeding the productivity and profitability for a long time. As a new strategy, target costing is replacing traditional cost-plus pricing strategy by maximizing customer satisfaction by accepted level of quality and functionality while minimizing costs. Process of target costing The process of target costing can be divided into three sections: the first section involves in market-driven target costing, which focuses on studying market conditions to identify a product's allowable cost in order to meet the company's long-term profit at expected selling price; the second section involves performing cost reduction strategies with the product designer's effort and creativity to identify the product-level target cost; the third section is component-level target cost which decomposes the production cost to functional and component levels to transmit cost responsibility to suppliers. Market-driven target costing Market driven target costing is the first section in the target costing process which focuses on studying market conditions and determining the company's profit margin in order to identify the allowable cost of a product. Market driven costing can go through 5 steps including: establish company's long-term sales and profit objective; develop the mix of products; identify target selling price for each product; identify profit margin for each product; and calculate allowable cost of each product. Company's long-term sales and profit objectives are developed from an extensive analysis of relevant information relating to customers, market and products. Only realistic plans are accepted to proceed to the next step. Product mix is designed carefully to ensure that it satisfies many customers, but also does not contain too many products to confuse customers. Company may use simulation to explore the impact of overall profit objective to different product mixes and determine the most feasible product mix. Target selling price, target profit margin and allowable cost are identified for each