Commerce

Principle of Marketing: Price as a Marketing Mix

len Alfred Ajibola - Mon, 24th February, 2020 @ 11:00: AM

Topics in Commerce

Elements of Promotion in Marketing Mix Principle of Marketing: Promotion as a Marketing Mix Principle of Marketing: Place as a Marketing Mix Principle of Marketing: Price as a Marketing Mix Principles of Marketing: The 7 Ps of Marketing Mix Factors necessary for Division of Labour Disadvantages of Division of Labour Advantages of Division of Labour Outbound Marketing explained Inbound Marketing explained Production - Types of Production Commerce: Definitions and Scopes of Commerce Differences between Balance of Trade and Balance of Payments Balance of Payment Deficit and Balance of Payment Surplus Disadvantages of Foreign Trade Divisions of Foreign Trade Advantages of Foreign Trade What is Foreign Trade? Types of Foreign Trade Scheme of Work for Commerce, SS1, First Term Scheme of work for Commerce, SS1, Second Term


Academic Questions in Commerce

Please check out our Test Your Knowledge page to see all Questions and Answers

The followings are advantages of division of labour EXCEPT _____.

  • A. It promotes the use of machines in production industries
  • B. There is an increase in profit
  • C. It saves time and expenses of training
  • D. It fosters the spirit of division
  • E. It increases the production of quality goods and services in the market
  • F. It increases a country's economic growth

Which of the following statement is incorrect concerning division of labour?

  • A. It is the specialization of works
  • B. It can become monotonous
  • C. It is the specialization of processes
  • D. The nature of a job is not a condition for division of labour
  • E. A person performs only a part of the job
  • F. Division of labour has some of its drawbacks

What does a bearer cheque mean?

What is an order cheque?

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Price as a Marketing Mix:

Price refers to amount of money a consumer is willing to pay for a product or service. It is one of the 7 principles of marketing mix. In addition, it is a crucial factor that will affect the demand and supply of a product. This is true because a very low price may bring about discredit to one's business reputation while an exorbitant price may kick a business out the the market.

Please read on an introduction to the Principle of Marketing Mix here.

Setting up an ideal price for a product is very important for the demand and supply of such product. The process of price setting isn't as simple as it sounds. In fact, the marketing team will need to carry out a survey on the price of similar products before setting the price for their product. To this end, the producer will need to consider various factors. Some of these will include:

  1. Cost and overall expenses during the manufacturing process of the product.
    Please read on the Concept and Types of Cost here.
  2. Level of demand for the product.
    Please read on Demand and Law of Demand here.
  3. Prices from competitors; that is, those who manufactures similar product(s).
    Please read on Supply, Supply Curve and Law of Supply here.
  4. Reputation and perception of the production company by the consumers.
    You can read on Reputation in Civic Education here.
  5. Quality of the producer's product.
  6. The level of competitiveness for the product.
  7. Profit margin of the producer.

From the information gathered, the company should be able to fix the best price for their product which may or may not be too high or too low, depending on your target customers. For instance:

Samsung have got phones that can be sold at various prices. Some of these phones may be sold at N500,000 while the prices of others may be as low as N30,000.

You can read on Promotion as a Marketing Mix here.

This above prices are justified because both suits the customers' value with regards to the phone's quality and customers' financial strength.

Please read on Scale of Preference and Opportunity Cost here.

For online businesses and websites that run adverts on their web pages, the prices charged for each advertisment will include the page and topic on which the advert is placed on the website. For instance, On Len Academy, the prices for an advert placed under the academic subject commerce will vary with another placed on our biology page and topics.

Please read on Advertising and Types of Advertising here.

Other factors that will affect prices for advertisment on websites will include the global internet ranking of the website and the number of traffic generated by the website; that is, the number of internet users that visits the website on a daily basis.

Please read more on Inbound Marketing here.

A common strategy used by small to medium sized business is the price bargain strategy. Through this method, the buyers have the advantage of pricing the product to an amount they are willing to pay for. On the flip side, the sellers may agree on the price, thus selling the product or declining it's sale at that price.

Please read on Consumer Right and Protection here.

Generally, it is of the opinion that low prices equates to lower quality while goods or products with higher prices are of higher quality. This opinion does not always hold true because nowadays, certain sellers can be quite greedy. Such sellers sell inferior quality goods/products at exorbitant prices. Below is a real-life example that took place between my friend (the buyer) and a seller.

  • A friend of mine bought a brand new LG television in a popular market called "Alaba International" located in Lagos, Nigeria. He paid N65,000 for this television. After installation in his house, he discovered that the TV's bluetooth could not pair with his phone's bluetooth (which was also a LG product). It was at this point he realized that the television wasn't an original LG product.

  • Please read on the True Meaning of Honesty explained with its Attributes here.

  • However, he took he television back to where he had purchased it. After expressing his disappointment to the seller; the seller brought out an original LG television (which had an exact physical appearance with the fake he initially bought). He was asked by the seller to pay an extra N7,000 in order to take home the original television, and that he gladly did.

You can read on Place as a Marketing Mix here.

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len

Alfred Ajibola is a Medical Biochemist, a passionate Academician with over 7 years of experience, a Versatile Writer, a Web Developer, a Cisco Certified Network Associate and a Cisco CyberOps Associate.


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Amazing facts in Commerce

Amazon is an e-commerce website launched in 1995. It did not make any profit for its first seven years.
Amazon's first profit was in 2003. Its founder "Jeff Bezos" is the richest man in the world as at 2018/2019


NOTABLE POINTS IN Commerce

Commerce can be defined as the exchange of goods and services, usually for money and on a large scale that will require the transportation of such goods and services.

Commerce is very important to the life of any Nation for the following reasons:

  1. Commerce facilitates the exchange of goods and services which everyone can enjoy, regardless their location or whether the goods is produced within or outside their country.
  2. Commerce creates an awareness of the existence of goods and services through advertising.
  3. Commerce offers employment to a very large number of people in a Nation.
  4. Commerce promotes rapid transfer of both oral and written messages through communication.
  5. Commerce determines the standard of living in a Nation. This is because the extent of commercial activities is crucial to wealth of  a nation.
  6. Commerce makes for the protection against risk in day to day business operations.
  7. Through commerce, there is a steady supply of goods in a Nation. This is because commerce ensures that goods produced are stored until needed.

A public company is not owned by an individual. Usually, it is owned by groups or a very large number of people.

The shares of a public company are traded freely on the stock exchange.

Below are some features of a public company

  1. A public company must receive it’s training certificate to commence business.
  2. The minimum membership is two while the maximum membership is limitless.
  3. A public company has a legal status. It can sue and be sued.
  4. A public company files and publishes its annual reports, including its accounts.
  5. The liability of its members is limited.
  6. The shares are easily transferrable through the stock market.
  7. A public company can issue debentures to be secured as its assets.

Please read on the types of business structure here

The four elements of the marketing mix are usually referred to as the 4 “P”. These are:

  1. Product: Anything thing that satisfies a consumer’s need is referred to as a product. Product may come in the form of manufactured goods, raw materials or services.
  2. Price: Price is defined as the exchange value of goods and services supplied. In simple terms, it serves as a mechanism of exchange.
  3. Promotion: It involves all the processes that concerns with how business organizations should inform their customers about its product. If done properly, the demand of product will be increased. Promotions can take the form of advertising, search engine optimization, social media marketing, trade fairs exhibition and so on.
  4. Place: The place as a marketing mix concerns variables such as location and transport facility where the distribution of goods and services take place.

Think of marketing mix as the set of marketing tools that an industry or company uses to drive or accomplish its marketing objectives in the target market