Business Studies Collins Revision Guide. - StudyGuide.PK

MARKETING MIX (2)Price●●There are a large number of factors that a business takes intoaccount when setting a price for its products. These include:■ how much the product costs to make■ the results of market research conducted to find out howconsumers are likely to react to a price■ what competitors are charging.In economic theory, price should be the equilibrium point wherethe quantity supplied by the business equals the quantitydemanded by the consumer. However, in real life, businesses donot have sufficiently accurate information to draw up the supply ordemand curves.SupplyPriceEquilibrium priceTypical supply and demand curve●Quantity of goodsDemandCost-plus pricing is a very simple form of pricing which does nottake into account the views of the consumer. All the costs involvedin making the product are added up and then a mark-up is addedonto the cost to give the profit. The mark-up will vary betweendifferent types of business.58