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Business Studies · 2026 · 6 marks
CBSE 2026 · Region 1 · Set 3 · Q34
Explain the following factors affecting the determination of price of aproduct :(i)Product cost(ii)The utility and demand(iii)Extent of competition in the marketExplain the following marketing management philosophies :(i)Production concept(ii)Product concept(iii)Selling concept
Explain the following factors affecting the determination of price of a
product :
(i)
Product cost
(ii)
The utility and demand
(iii)
Extent of competition in the market
Explain the following marketing management philosophies :
(i)
Production concept
(ii)
Product concept
(iii)
Selling concept
Marking-scheme solution
(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 costs, at least
in the long run. In addition, they aim at earning a margin of profit
over and above the costs.
(ii)
The utility and demand
• The utility provided by the product and the intensity of demand
of the buyer sets the upper limit of 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. 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.
• Competitor’s prices, their anticipated reactions and quality and
features of competitive product must be examined carefully
before fixing the price.
Q (b) Explain the following marketing management philosophies:
(i)
Production concept
(ii)
Product Concept
(iii)
Selling concept
(i)
Production concept
• Profits could be maximised by producing at large scale, thereby
reducing the average cost of production.
• Availability and affordability of the product is the key to the
success of a firm. Therefore greater emphasis was placed on
improving the production and distribution efficiency of the firms.
(ii)
Product concept
• With the increase in the supply of the products, customers started
looking for products which were superior in quality, performance
and features.
• The focus of business activity is in bringing continuous
improvement in quality and incorporation of new features making
product improvement the key to profit maximisation of a firm.
(iii)
Selling concept
• Firms must undertake aggressive selling and promotional efforts
to make customers buy their products by using promotional
techniques such as advertising, personal selling and sales
promotion
• The focus of business firms is on pushing the sale of products
through aggressive selling techniques with a view to persuade,
lure or coax the buyers to buy the 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.