Principle of Marketing: Price as a marketing mix

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

Topics in Commerce

Contract of Employment: Terms of employment contract Principle of Marketing: People as a marketing mix and their importance Principle of Marketing: Positioning as a marketing mix Principle of Marketing: Packaging as a marketing mix 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 seven principles of marketing mix Factors necessary for division of labour Disadvantages of division of labour Advantages of division of labour Concept of Outbound Marketing Inbound Marketing explained Types of production in commerce 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

Academic Questions in Commerce

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In commerce, which of the following is false with regards to a commodity?

  • A. A commodity must always have a market value

  • B. Rendered services are also instances of commodities

  • C. Products applicable to commodities can be bought or sold with money

  • D. A commodity must be standardized

  • E. A commodity must be usable upon delivery

  • F. Commodities can be traded in the futures market

Whatever is being marketed must always provide value to its potential consumers.

  • A. True

  • B. False

Which of the following is not a branch of marketing?

  • A. Merchandising

  • B. Promotions

  • C. Forex

  • D. Search Media Optimization

  • E. Social Media Optimization

  • F. Copywriting

Which of the following is not a characteristics of commerce?

  • A. The only aim of commerce is to make profit

  • B. It is a discontinuous process after profit had been made

  • C. It is accompanied with challenges and uncertainties

  • D. It is 100% business and economic activity

  • E. Transaction processes are always involved in commerce

  • F. It connects the process of production and marketing

Which of the following is not a function of commerce?

  • A. Unnecessary in times of emergencies like earthquakes and wars

  • B. Facilitates mass production of goods

  • C. Influences transportation network within and outside a state

  • D. Attempts to satisfy human needs and wants

  • E. Improves the standard of living

  • F. Acts as an online business link between buyers and sellers

One of the following is a form of division of labour.

  • A. Agonistic division of labour
  • B. Antagonistic division of labour
  • C. Mutualistic division of Labour
  • D. Advanced division of labour
  • E. Solitary division of labour
  • F. Occupational division of labour

A place where people buy homogenous goods in large quantities is called _____.

  • A. Wholesaler's Market

  • B. Goods Market

  • C. Products Market

  • D. General Market

  • E. Commodity Market

  • F. Forex Market

Any activity aimed at getting people interested in a company's product or service is termed _____.

  • A. Commerce

  • B. Economics

  • C. Financial Accounting

  • D. Marketing

  • E. Production

  • F. Distribution

Price as a Marketing Mix:

Price refers to an amount of money a consumer is willing to pay for a product or service. It is one of the seven 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 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 that 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 nor too low, depending on their 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.

The above prices are justified because both appeals to 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 more on 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 to the price, thus selling the product. However, the seller may also decline its 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 the 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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Amazing facts in Commerce

With Amazon Smile, you can donate 0.5 percent of your purchases to a charity of your choosing

Check it out here

The brewery, Sankt Gallen in Japan, produces a beer called Un Kono Kuro from elephant's dung

North Korea and Cuba are the only countries in the world where you can't buy Coca-Cola

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


prepayment is somewhat an opposition to deferred payment. This is true because the concept of prepayment oversees that the buyer makes payment beforehand and must wait to enjoy whatever had been paid for after some significant time had elapse.

In short, you can think of a prepayment as 'paying in advance'. An example is when a tenant pays in advance to a landlord for an apartment yet to be used. Another example is an online payment for items yet to be received.

Deferred payment is defined as a future payment eventually made after a buyer receives goods and services without an initial payment. Think of it as the: 'buy now, pay later' type of transaction.

From the perspective of the seller, the money yet to be received after the supply of goods or services is called an accrued revenue, unrealized revenue or accrued assets.

According to the buyer, the money yet to be paid after the delivery of goods or services is called an accrued expense. For instance, a company that owes employees salary can be said to have an accrued expense.

Please read more on deferred payment here

For an item to be considered a commodity, it must satisfy three conditions. These are:

  1. It must be standardized. In the case of agricultural commodities, they must be in their unprocessed state.

  2. It must be usable upon delivery

  3. The price of a commodity item must vary.

A commodity market can therefore be defined a place where people buy and sell homogenous goods in large quantities.

Homogeneous goods are products that essentially have the same physical characteristics (or qualities) as similar products from other brands.

It is noteworthy to state that foreign currencies, data and bandwidth have all been included as part of today's commodity markets. In this regard, a commodity market will always have it's own set of rules and regulations.

Please read more n commodity market here

Marketing is a broad field of study. Below are branches or divisions of marketing:

  • Advertising

  • Search Engine Optimization (SEO)

  • Merchandising

  • Branding

  • Promotions

  • Copywriting

  • Social Media Optimization (SMO)

  • Event planning

  • Customer Relationship Management (CRM)

  • Graphic Design

  • Internet Marketing

Marketing is defined as any activity or process aimed at getting people interested in a company’s product or service.

The processes utilized in marketing can take place via posters, public relations campaigns, handbills, social media, radio and television, buses, walls along the streets, the internet or just anywhere.

Below are some of the branches of marketing:

  • Advertising

  • Search Engine Optimization (SEO)

  • Merchandising

  • Branding

  • Promotions

  • Copywriting

  • Social Media Optimization (SMO)

  • Event planning

  • Customer Relationship Management (CRM)

  • Graphic Design

  • Internet Marketing

Please read more on marketing here