Read the following case study and answer question.

Sumit and Rachit are running a company processing coffee powder with a unique name 'Mad over Coffee'. It has a widely established market because of its excellent quality and distinct flavours. They don't have too many competitors in the market. As a result, they are in a position to keep the price of their products high. But the company is not providing after sales service. It doesn't take feedback from its customers. They soon realised this and bounced back. They appointed Raghav, a young energetic, as marketing manager. Raghav suggested diversification and expansion of staff. They added new flavours to their existing product range. They also ventured into tea processing, cocoa powder, and protein mix.

For this, he estimated the additional manpower requirement and finally after completing the staffing process, he managed to get a good team of sales personnel. He modified their packaging, making it more attractive and reusable. They started providing more details about their products on their labels. To promote their sales they started offering extra quantity (20% extra) in each pack.

A variety of programmes were designed by him to promote or protect the company's image and its individual products in the eyes of public.

They started advertising their products on TV and Social media.

"They were in a position to keep the price of their products very high". Which factor affecting price determination make it possible ?

Extent of competition in the market

The correct answer is option (4) : Extent of competition in the market

The factor affecting price determination that made it possible for Sumit and Rachit to keep the price of their products very high, as mentioned in the case, is:

(4) Extent of competition in the market

• The case indicates that they didn't have too many competitors in the market, which allowed them to maintain high prices. The extent of competition in the market can significantly impact a company's pricing strategy. When there is limited competition, a company may have more flexibility to set higher prices.

Utility and demand (1) :

• Pricing is influenced by the utility of a product and the level of demand in the market. If a product offers high utility and is in high demand, a company may be able to charge higher prices. Conversely, if demand is low, prices may need to be lower to attract buyers.

Marketing methods used (2):

• The marketing methods a company employs, such as advertising, promotion, and branding, can impact the perception of value and, consequently, the price customers are willing to pay. Effective marketing can justify higher prices if customers perceive additional value.

Pricing objectives (3) :

• The company is pricing objectives, such as maximizing profit, gaining market share, or achieving a certain level of revenue, will influence the pricing strategy. Different pricing objectives may result in higher or lower prices based on the company's goals.