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After acquiring the necessary knowledge and skills on starting an Aloevera Farm, Ashok wanted to be the leading manufacturer of Aloevera products worldwide. He observed that the products were expensive as the demand of the products was more than the supply. He was also keen to promote methods and practices that were economically viable, environmentally sound and at the same time protecting public health.

Ashok’s main consideration was about the amount of money paid by the consumers in consideration of the purchase of Aloevera products. He also thought that competitors prices and their anticipated reactions must also be considered for this.

After gathering and analysing information and doing correct marketing planning, he came to know that the consumers compare the value of a product to the value of money which they are required to pay. The consumers will be ready to buy a product when they perceived that the value of the product is at least equal to the value of money which they would pay.

Since he was entering into a new market, he felt that he may not be able to cover all costs. He knew that in the long run, the business will not be able to survive unless all costs are covered in addition to a minimum profit. He examined the quality and features of the products of the competitors and the anticipated reactions of the consumers. Considering the same, he decided to add some unique features to the packaging and also decided to provide free home delivery of the products.

The above case relates to a concept which is considered to be an effective competitive marketing weapon. In conditions of perfect competition, most of the firms compete with each other on this concept in the marketing of goods and services.

(a) Identify the concept.

(b) Explain briefly any four factors discussed in the above case related to the concept so identified.

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(a) The concept of Marketing used above is 'PRICE MIX'.

(b) Four factors affecting price determination are:

(i) Production cost: The price should recover all costs viz. fixed costs, variable costs and semi variable costs apart from obviously including a fair return for undertaking the marketing effort and risk.

(ii) Utility and demand: While determining the price of any product, the utility provided by it and the intensity of demand should not be ignored. If buyer is a\satisfied that the given product meets his/her requirement, he would also be ready to pay the cost and reasonable margin to the producer.

(iii)Extent of competition in the market: In case of monopoly, a firm can enjoy complete freedom in fixing prices. However if it is facing competition, it should consider the prices charged by the competitors also.

(iv)Marketing methods used: Pricing of products also gets affects by the elements of marketing such as amount spent on advertisement, type of packaging, discounting policies, credit or finance facilities, etc.

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