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Business Studies · 2026 · 4 marks
CBSE 2026 · Region 2 · Set 1 · Q28
Aditya owned a skincare company named ‘Nat-Ayur’. In July, $\displaystyle 2025$, he
decided to launch a new herbal face cream in the market using traditional
herbs like turmeric, sandalwood, neem, aloe vera, saffron etc.
The total cost of producing, packaging, distributing and selling the
cream came to $\displaystyle 60$ per tube. ‘Nat-Ayur’ decided that this would be the
`
minimum price to cover the cost. They wanted to earn a fair margin of
profit too. For this ‘Nat-Ayur’ conducted a survey and found that the
expected demand would be high. Customers were ready to pay more for
herbal and chemical free products. They also found that many face creams
with similar features are available in the market priced between $\displaystyle 80$ to
`
0. To compete effectively, ‘Nat-Ayur’ decided to price the cream at
` `
to attract the customers while offering better benefits.
To add value to the product ‘Nat-Ayur’ invested in eco-friendly
packaging, free home delivery and on-line advertisements. This
uniqueness gives ‘Nat-Ayur’ a competitive freedom in fixing price of its
cream.
Identify and explain any two factors that were taken into consideration by
‘Nat-Ayur’ for determining the price of their herbal face cream.
Marking-scheme solution
Factors that were taken into consideration by 'Nat-Ayur' for determining the
price of their herbal face cream:
(i)
Product Cost
§ Product cost includes the cost of producing, distributing and selling the product. It
determines the minimum level or the floor price at which the product may be sold.
§ Generally, all marketing firms strive to cover all their cost at least in the long run.
In addition, they aim at earning a margin of profit over and above the cost.
(ii)
The Utility and Demand
§ The utility provided by the product and the intensity of demand of the buyer set the
upper limit of the price. The buyer may be ready to pay up to the point where the
utility from the product is at least equal to the sacrifice made in terms of the price
paid. However, the seller would, however, try to at least cover the costs.
§ Consumer usually purchase more units at a low price than at a high price.
(iii)
Extent of Competition in the Market
§ The price will tend to reach the upper limit in case there is lesser degree of
competition while under conditions of free competition; the price will tend to be set
at the lowest level.
§ Competitors prices and their anticipated reactions must be considered before fixing
the price of a product. Not only the price but the quality and the features of the
competitive products must be examined carefully before fixing the price.
(iv)
Marketing Methods Used
§ Price fixation process is affected by other elements of marketing such as
distribution system, quality of salesmen employed, quality and amount of
advertising, sales promotion efforts, the type of packaging, etc.
§ Uniqueness of any of the above elements gives the company a competitive freedom
in fixing prices of its products.
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CBSE Class 12 Business Studies past-paper question from the 2026board exam, with the answer as CBSE’s own marking scheme gives it. Where our answers come from.