Commerce

Principle of Marketing: Price as a marketing mix

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

Topics in Commerce

Types of specialization Specialization and Exchange Historical background of commerce in Nigeria Disadvantages of barter system 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


Academic Questions in Commerce

Please click here to see all Questions and Answers

In commerce, the concept of paying in advanced is termed _____.

  • A. Advanced payment

  • B. Up payment

  • C. Forward payment

  • D. Prepayment

  • E. Uphill payment

  • F. Adpayment

In commerce, the concept of 'buy now, pay later' is termed _____.

  • A. Unadventurous payment

  • B. Buy on credit payment

  • C. Deferred payment

  • D. Postponed payment

  • E. Owed payment

  • F. Future payment

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



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

According to research, the problem isn't the amount of food produced; the actual problem is the distribution of these foods. In this regard, we actually produce enough food to feed everyone on earth, but their distribution remains an underlying problem

 

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


Notable points in Commerce

The theory of international trade is guided by the principle of comparative cost. This principle was propounded by David Richards.

The principle of comparative cost states that a country should specialize in the production of goods and services in which they have a greater comparative advantage or the least comparative disadvantage.

Below is an instance on the principle of comparative cost.

Now, let us assume we have two countries producing and exporting rice and beans respectively.

  • On a daily basis, If country A produces 100 grams of rice and 300 grams of beans daily and country B produces 50 grams of rice and 150 grams of beans, then according to this principle, country A has an advantage over country B with regards rice and beans production; but better still, country A has a greater comparative advantage in the production of beans.

 

From the above instance, it can also be said that country B is at a disadvantage with regards to the production of rice and beans. Infact, it has a bigger comparative disadvantage with regards to beans production.

The point to note here is this: A country utilizing the principle of comparative cost will always produce quality goods and services at a cheaper cost.

No single country manufactures all the goods and services in our world. This implies that every country of the world relies on certain goods and services imported (or brought in) from other countries.

Foreign trade is defined as the exchange of goods, services and capital between two or more countries.

Foreign trade is also termed as international trade.

Please read more on foreign trade here

Division of labour can be defined as the act of splitting job process into a number of different processes such that each process is done by a different person or group of persons.

Through the process of division of labour, one worker may constantly perform a specific aspect of the job and as a result, may become specialized in that area.

The result of specialization in the different department of a job will imply the production of goods with better quality.

Please read on division of labour here

Forms of division of labour relates the various ways through which division of labour may be carried out.

Take for instance, within a country, one state may choose to specialize in the production of a cars while another specializes in a different area, let's say agriculture.

Below are the forms of division of labour

  • Complex division of labour

  • Occupational division of labour

  • Geographical division of labour

 

Please read more on the forms of division of labour here.

Balance of Trade can be defined as the total value of goods imported and exported by a country during a specific period; usually yearly or annually.

Balance of trade can be either positive, negative or zero

  • A positive balance of trade implies that a country exports more goods than its imports. China as a country is likely to have a positive balance of trade since it exports a variety of goods to other countries.

  • A negative balance of trade is often considered as an unfavorable balance of trade since the country's importation exceeds its exportation. Nigeria (as at 2018) is likely to have a negative balance of trade.

  • A zero balance of trade is reached when imports equal exports.

Please read on balance of trade and balance of payments here.