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Topic:Pricing and Advertising
Content:(a) Definition of pricing
(b) Price determinants
Sub-Topic 1: Definition of pricing
Price means the amount of money that is offered or asked for when something is bought or sold.
Pricing. It is the placing of price on a particular farm produce that will suit the customers and fetch higher income to the farmer. Farmers also promote their products and services through such techniques as advertising and personalized sales, which serve to inform potential customers and motivate them to purchase.
Advertising is also a means by which a farmer tells the would-be consumers about the existence of a product, the quality, the uses and the price of such produce.
Four elements are normally distinguished: getting the right product to the market; selling the product at the right price; ensuring that the promotion is right—that is, advertising and marketing for the product; and ensuring that the product is distributed to the most convenient place for customers to buy it.
Pricing strategy
It is defined as the method adopted by the business to set its selling price
The step implemented by a firm to determine the optimum price of a product, and the strategy includes:
- Cost-plus pricing: this is the cost of manufacturing the products plus the profit mark up
- Competitive pricing:this involves setting price in line with or just below the competitors price to try capture the more of the market
- Penetration pricing: this when the price is set lower than the competitors price in order to be able to enter a new market.
Sub-Topic 2: Price Determinants
In a market, there are buyers and sellers. The buyers bring their money to the market to buy goods while the sellers bring the goods to the market for sale. The factors that determine the price at which both the seller (farmer) and buyer (consumer) are satisfied are:
(i)Cost of production
(ii) Quality of produce
(iii) Quantity of produce
Cost of production: to determine the price for your product, it is important to use your cost of production as your base. Therefore, you must know your cost of production so that a break-even point can be established.
Government policies: government subsidies reduce the input cost for farmers, and support prices fixed by the government that ensures that prices do not fall below such levels. Policies that curb export of agricultural products may prevent shortages or causes a glut in the market, leading to stable prices or a
