Page 19 - Bisiness Studies_Form_3

Business Studies for Secondary Schools

more interest it evokes and the higher the Exercise 1.3
quantity that will be purchased.
1. Assume you have imported a large
Price is a determinant of sales revenue: quantity of goods from country Y
Sales revenue equals price multiplied
by unit sales volume. Hence, the sales to sell to your customers. By giving
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revenue depends on the quantities sold reasons, describe the criteria you
and their prices. will use in setting their prices.
2. Imagine you are starting a new
Price is also a competitive tool: When mobile phone brand in Tanzania.
a business sets a lower price than its How would you set a price that
competitors, it increases the chances of makes your phone affordable for
attracting more customers and gaining a middle-income customers while
larger share of the market. A lower price also helping your business compete
can appeal especially to price-sensitive with other existing brands in the
buyers comparing similar products. For market?
example, if two food vendors are selling
chapati in the same area, one at TShs Place
1,000 and the other at TShs 700, many Place refers to the distribution channels
customers might choose the cheaper and locations where the good or service is
option, assuming the quality is similar. In made available to customers. It is one of
this way, pricing becomes a strategy not the marketing mix elements that ensures
just to sell, but to outshine competitors the availability of goods and services
and influence customer choice. to consumers. The goods and services

may move from producers to consumers
through the channel of distribution, which
Activity 1.6
comprises a set of people or institutions
that perform all of the activities (functions)
Visit a nearby market in your utilized to move goods and services from
community and engage with business production to consumption. They include
owners to: merchant middlemen, agent middlemen,
(a) Inquire about the methods they suppliers, and facilitators. These channels
use to set prices for their products. ensure that consumers get goods and
(b) Explore the challenges they face services timely.
in pricing their products and the Promotion
strategies they use to overcome The term “promotion” is defined as
these challenges. the element of a business’s marketing
mix used to inform, persuade, and

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