---
title: "Marketing strategies, pricing and credit policy"
subject: "Entrepreneurship Development"
chapter: 5
key: "semester_7/entrepreneurship_development:marketing-strategy-price-credit"
source: https://www.bctengineer.com/q/semester_7/entrepreneurship_development/marketing-strategy-price-credit
site: BCT Engineering
---

# Marketing strategies, pricing and credit policy

Entrepreneurship Development · Chapter 5: Development of Business Plan and Execution

- Asked in: year not given, 6 marks
- Answer checked by Claude Opus 5.5 (high effort) on 2026-10-14
- Page: https://www.bctengineer.com/q/semester_7/entrepreneurship_development/marketing-strategy-price-credit
- Whole chapter: https://www.bctengineer.com/md/semester_7/entrepreneurship_development/chapter-5

## Question

Explain the marketing mix a startup should plan. A firm has monthly sales of Rs 24,00,000, of which 30% is sold on credit with 45 days of credit period. Find the average receivables the firm must finance, and suggest two ways to control credit risk.

## Short answer

Plan marketing mix (product, price, place, promotion). Credit sales = Rs 7,20,000/month, average receivables = 7,20,000 x 1.5 = Rs 10,80,000. Control risk by checking customer credit, setting limits, and offering early-payment discounts.

## Answer

#### Marketing mix (4 Ps; services add People, Process, Physical evidence)
| P | Startup decisions |
|---|---|
| Product | Features, quality, brand, packaging, warranty |
| Price | Cost-plus, competitive or value-based; discounts; penetration or skimming |
| Place | Direct sales, retailers, online; stock and delivery |
| Promotion | Social media, content, sampling, events, referrals, public relations |

Startups with small budgets use low-cost methods: social media, word of mouth, partnerships, early-adopter offers and content marketing. The cost of each customer must stay below the value earned from that customer.

#### Credit sales numerical
Credit sales per month:

$$
24{,}00{,}000 \times 0.30 = \text{Rs } 7{,}20{,}000
$$

With a 45-day credit period, money is tied up for 1.5 months:

$$
\text{Receivables} = 7{,}20{,}000 \times \frac{45}{30} = \text{Rs } 10{,}80{,}000
$$

The firm must finance Rs 10.8 lakh of working capital, from its own cash or a loan, until customers pay.

#### Controlling credit risk
1. Check the customer's credit history and set a credit limit.
2. Offer a cash discount (for example 2% for payment within 10 days).
3. Take advance or part payment; follow up due invoices systematically.
4. Reduce the credit period for new customers.

**Answer:** Plan product, price, place and promotion together; receivables = Rs 10,80,000, controlled by credit limits and early-payment discounts.

## Check yourself

The answer's key points as multiple-choice questions, with the correct option and why.

1. The four Ps are:
   A. Product, price, place, promotion
   B. People, process, profit, policy
   C. Plan, price, produce, profit
   D. Product, people, premises, payment
   Answer: A. Services add People, Process and Physical evidence. (Key point: Marketing mix)

2. Monthly credit sales are:
   A. Rs 24,00,000
   B. Rs 7,20,000
   C. Rs 16,80,000
   D. Rs 10,80,000
   Answer: B. 30% of 24,00,000. (Key point: Credit sales)

3. Average receivables financed:
   A. Rs 7,20,000
   B. Rs 3,60,000
   C. Rs 10,80,000
   D. Rs 21,60,000
   Answer: C. 7,20,000 x 45/30 = 10,80,000. (Key point: Receivables)

4. Which controls credit risk?
   A. Longer credit periods for all
   B. No follow-up
   C. Selling to anyone
   D. Credit limits and early-payment discounts
   Answer: D. Checking history, limits and discounts reduce risk. (Key point: Credit risk control)

## Related in Entrepreneurship Development

- [Government support and startup policy in Nepal](https://www.bctengineer.com/question.md?key=semester_7%2Fentrepreneurship_development%3Astartup-policy-government-support-nepal) — Entrepreneurship Development, chapter 8
- [Break-even analysis for a startup](https://www.bctengineer.com/question.md?key=semester_7%2Fentrepreneurship_development%3Abreak-even-analysis-numerical) — Entrepreneurship Development, chapter 5
- [Cost-plus pricing numerical](https://www.bctengineer.com/question.md?key=semester_7%2Fentrepreneurship_development%3Apricing-cost-plus-numerical) — Entrepreneurship Development, chapter 3
- [NPV and payback of a startup project](https://www.bctengineer.com/question.md?key=semester_7%2Fentrepreneurship_development%3Anpv-payback-startup-project) — Entrepreneurship Development, chapter 5
- [Customer lifetime value and CAC numerical](https://www.bctengineer.com/question.md?key=semester_7%2Fentrepreneurship_development%3Altv-cac-unit-economics) — Entrepreneurship Development, chapter 4
- [Key financial indicators: burn rate and runway](https://www.bctengineer.com/question.md?key=semester_7%2Fentrepreneurship_development%3Aburn-rate-runway-indicators) — Entrepreneurship Development, chapter 6

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