ABSTRACT
This study examined the relationship between price competition and market leadership position using flight aluminum as a case study. Data used for this study were collected through primary and secondary sources. Structured questionnaire instrument was used to collect data from the respondents while secondary data was collected through a review of related materials, textbooks, journals etc eighty five respondents were selected for this study. The relative simple percentage and regression analysis were used as the analytical tools. Literature of the study was broadly categories into three parts namely, conceptual, theoretical and empirical frameworks. The findings revealed that there is a significant relationship between product price competition and market leadership position of manufacturing firms. There is a significant relationship between product price competition and profitability of manufacturing firms in Nigeria. And its recommended that companies should continuously seek means in product price by either improving on its production efficiency, integrating backwardly or obtaining discount from product suppliers with a view to decreasing its product price, companies should diversify competitive strategies to include focus on product quality as product price alone cannot guarantee market leadership position etc.
TABLE OF CONTENTS
Title Page
Declaration
Certification
Dedication
Acknowledgements
Abstract
Table of Contents
CHAPTER ONE: INTRODUCTION
1.1 Overview
1.2 Statement of the Problem
1.3 Objectives of the Study
1.4 Research Questions
1.5 Statement of Hypothesis
1.6 Scope of the Study
1.7 Significance of the Study
1.8 Limitations of the Study
1.9 Definition of Terms
1.10 Organization of the Study
1.11 Summary
References 17
CHAPTER TWO: LITERATURE REVIEW 19
2.1 Introduction
2.2 Concept of Price Competition and Market Leadership
2.3 Importance and Significance of Pricing
2.4 Conditions that Support Pricing of a Product
2.5 Pricing Objectives
2.6 Competition-Oriented Pricing
2.7 Other Pricing Strategies
2.8 Concept of Break Even Analysis
2.9 Factors Influencing Pricing Decisions
2.10 Pricing Method/Strategy
2.11 Target Pricing or Rate of Return
2.12 Concept of Marginal Analysis
2.13 Theoretical Framework of Price Competition and Market Leadership
2.14 Empirical Framework of Price Competition and Market Leadership
2.15 Summary
References
CHAPTER THREE: RESEARCH METHODOLOGY
3.1 Introduction
3.2 Research Design
3.3 Population of the Study
3.4 Sample Size
3.5 Sampling Techniques
3.6 Method of Data Collection
3.7 Techniques of Data Analysis
3.8 Summary
References
CHAPTER FOUR: DATA PRESENTATION AND ANALYSIS
4.1 Introduction
4.2 Analysis of Respondents Profile
4.3 Analysis of Other Research Data
4.4 Hypothesis Testing
4.5 Summary
References
CHAPTER FIVE: SUMMARY OF FINDINGS, CONCLUSION AND RECOMMENDATIONS
5.1 Introduction
5.2 Summary of Findings
5.3 Conclusion
5.4 Recommendations
5.5 Limitation and Suggestion for Further Study
Bibliography
Appendix
CHAPTER ONE
INTRODUCTION
1.1 Overview
The market place is considered as a war zone where companies struggle to compete and remain successful against one another. With the views of Bello (2014), for a company to survive in a highly competitive environment of today, it must at least temporarily achieve a competitive advantage. Barney (2002) says that” a firm experiences competitive advantage when its action in an industry or market creates economic value and when few competing firms are engaging in smaller actions”. He went on to tie competitive advantage to performance, arguing that” a firm obtains above-normal performance when it generates greater than expected value from the resources it employs”. There are many ways for a firm to achieve this advantage and two generic ones are price leadership is simply when a company creates distinctive position in the market through product functionality, service or quality (Doveian and Kapian, 1998). If either of these two management strategies is chosen to be implemented by a company value chain analysis can help the firm focus its plan and thus achieve a competitive advantage vis-ã-vis improve its profitability level/profit.
In the views of Armstrong (2008) one of the most widely recognized determinants of business profitability is market share. Under most circumstances, enterprises that have achieved a high share of the markets they serve are considerably more profitable than their smaller share rivals. This connection between market share and profitability has been recognized by corporate executives and consultants.
Kottler and Keller (2012) argued that its three main competitive strategies accepted by firms to gain a sizeable share of the market include operational Excellency strategy attainment of cost leadership with direct effort/focus on automation on manufacturing on work procedure in order to streamline operations and reduce costs. This strategy length itself to high volume transaction oriented and standardized production that has little needs for much differentiation customer intimacy competitive strategy focuses on offering a unique range of customer service that allows for the personalization of service and the customization of products to meet differing customers needs often companies who pursue this strategy bundles services and product into a solution designed specifically for the individual customers and the product leadership competitive strategy which helps to build a culture that continuously bring superior product to the market. Here product leaders are cheap premium market prices owing to the experience curve thereby creating a consumer value. The corporate discipline needed to cultivate and maintain such competitive strategy includes: research portfolio management, team work, product management, marketing, and talent management.
Ibidunni (2009) opined that depending on motive of an organization, the sources c be determined optimally and progressively by applying effective listing of marketing strategies viz: cost leadership, differentiation, focus, defensive, offensive, vertical integration and first mover strategies. In realization of the above scenario, Hacque et al., (2009) observes that manufacturing companies in Nigeria have to develop several strategies in order to provide the much needed satisfaction which will result in brand loyalty and business growth and survival in the long run since a satisfied customer is the concern of any marketing organization, manufacturers must pay close attention to the factors that influence consumers buying behaviours is central to competition (Hacque, Khikabi & Rabman, 2009) marketers should note that consumers are always eager to go for the kind of product that will enhance their standard of living a product that is hygienic reasonably of high quality and affordable at much reduced cost, thus manufacturers must analyze the consumer buying behaviour both in terms of specific product features such as the product attributes, price, packaging style, consumer service, or a combination of other features with better understanding of customers perceptions. Manufacturing companies can determine the actions required to meet the customer needs.
A noticeable trend in recent development is the use of the pricing tool as a core competitive strategy. In the market place pricing is a criterion element and is one of the four major strategies decision variables controlled by a marketing manager. It interacts with other variables’ or elements of the marketing mix variables. The price of a company’s product arid services represents the vehicle for that company to achieve its financial objectives; it is through price and volume that revenue is generated. Price affects both the numbers of sales a firm’s makes and how much money it earns. Price equates to the financial sacrifice that the customer is willing to pay to purchase the product or service desired (Olannye, A.P., 2013) The purpose of carrying out the research is on basis of the above scholarly views, is to investigate the relationship between price competition and market leadership using Flight Aluminum Company Limited, Asaba as case study.
1.2 Statement of the Problem
Olannye (2013) discloses that a pricing method or strategy refers to the approach taken by a firm in fixing its price. Evidently, the method strategy must be appropriate for achieving the desired pricing objectives, pricing method or strategy guide and inform the pricing decision, providing a framework within which decisions can be made with consistency and with the approval of the organization as a whole strategies help to specify the role of pricing and its use in the context of the marketing mix. The need to carry out the study is in the views of Kottler and Keller (2012) enumerated below:
a) Increase in market shares of corporate entities
b) Decline in corporate profitability level vis-ã-vis turnover
c) Negative influences of competitors price action
In realization of the above challenges the researcher observes that market for consumer products is highly price elastic and as such companies that consistently lower product price would be able to compete favourably thereby gaining competitive advantage. The research is therefore carried out to ascertain the extent to which price competition determine market leadership.
1.3 Objectives of the Study
The objective of carrying out this research work is to investigate the impact of prices competition on market leadership of the Nigerian manufacturing industries. The following specific objectives are:
i) To measure the extent to which firms product price helps to determine market leadership position.
ii) To ascertain the effects of products price competition on profitability of manufacturing firms in Nigeria.
iii) To investigate the extent to which product price competition affects level of product quality.
iv) To examine whether firms products price competition affects turnover of manufacturing firms in Nigeria.
1.4 Research Questions
1. To what extent does product price determine market leadership position?
2. Would price competition directly affect profitability of manufacturing firms in Nigeria?
3. To what extent does product price competition affect level of product quality?
4. Does product price competition affect turnover of manufacturing firms in Nigeria?
1.5 Statement of Hypothesis
H01: There is no significant relationship between product price competition and market leadership position of manufacturing firms.
H02: There is no significant relationship between product price competition and profitability of manufacturing firms in Nigeria.
HO3: There is no significant relationship between product price competition and the level of product quality in manufacturing firms.
HO4: There is no significant relationship between product price and turnover of manufacturing companies in Nigeria.
1.6 Scope of the Study
The scope of study was restricted within the framework of the research topic itself. Although the research can apply to other organizations within the nation, the study focuses solely on the employees of Flight Aluminum Company Limited as case study. The scope of the inquiry was defined and limited by the conscious exclusionary and inclusionary decisions made throughout the development of the research proposal.
Among these decisions are the choice of objectives and questions, the variable of interest, study population and the geographical coverage. The reason for these choices is that alternatives are either not of interest to the researcher, not directly related or simply not feasible
1.7 Significance of the Study
The research work investigates a study of the relationship between price competition and market leadership. The research work would help the researcher to understand the extent to which product price helps to determine market leadership position and the beneficiaries of this study include the following:
1. Government: Government will use my study as a policy guide on price control.
2. Future Researcher: This study can be used for literature review.
3. Manufacturing Industries: This study would help manufacturing industries to know that product price competition have effects on their profitability.
1.8 Limitations of the Study
The research work focuses on the following challenges:
1). Negative Attitude of Correspondents: They found it very hard to disclose the information required from them. Despite the effort made by the researcher in explaining to them that the research was purely for academic purpose.
2) Data Analysis was a Constraint to the Study: This is limited to the researcher’s collection and inclusion due to inadequate information though the researcher visited academic libraries and internet in search of information.
3) Time Inadequacy: Another limitation was inadequate time. This research is purely an academic study and was carried out by a research student who had other courses to take within the limited time for study in the current academic session. So the time was not enough for the researcher to carryout an exhaustive survey on the subject matter.
4) Difficulties in Sourcing Materials: The researcher found it difficult to search for adequate materials during the research work.
1.9 Definition of Terms
a) Culture: Culture is a society’s personality. It is the sum total of learned beliefs, values and customs that serve to direct the consumers behaviour of members of a particular society.
b) Hypothesis: This is a tentative conjecture explaining an observation phenomenon or scientific problem that can be tested by further investigation or experimentation.
c) Marketing: it is the process of creating, distributing, promoting arid pricing goods, services, and ideas to facilitate satisfying exchange relationships with customers and develop and maintain favourable relationships environment with stakeholders in a dynamic environment.
d) Marketing Mix: it is defined as a set of controllable, tactical marketing tools that the response it wants in the target market.
e) Mix: Mix implies that each element of the marketing mix must blend and fit together in harmony with other elements.
f) Marketing Management: it is the analysis of planning, implementation and control of programmes designed to create, build and maintain beneficial exchanges with target buyers for the purpose of achieving organizational objectives.
g) Price: Price can be defined as the money or other consideration exchanged for the ownership or use of a good or service.
h) Price Strategy: This refers to the approach taken by a firm in fixing its price.
i) Product Policy: It is the product or service offering of a company or organization which ultimately determines the nature of the business and the market place perception of the business.
j) Product: Product is anything that is offered for the attention, acquisition or use. It is anything capable of satisfying a consumer’s wants or need.
k) Packaging: This refers to all activities of designing and producing containers or wrappers for a product.
1.10 Organization of the Study
The research work made of five distinct chapters in accordance with the university research guidelines. Chapter one represents an introduction of the research work with emphasis on research questions and hypothesis.
Chapter two of the research work, otherwise known as literature review, presents three major perspectives (conceptual, theoretical and empirical reviews / literature.
Chapter three of the research work, known as the research methodology provides and explains the various methods, processes and terminologies used to collect, present and analyze data.
Chapter four of the research work presents analyze relevant research data obtained through questionnaire administration. The chapter also tests, using chi square the four hypotheses developed in chapter one of the research work.
Chapter five of the research dwells on the presentation of the research findings, conclusion as well as recommendations. This chapter rounds off the research work.
1.11 Summary
Price and market leadership position aim is to study the relationship between product price and market leadership position and product price competition and profitability of firms.
This chapter represents an overview into the understanding of the research study. The objectives of the study, research questions and hypothesis centres on relationship between product price competition and market leadership of manufacturing firms. The significance, scope and limitations of the study also been presented in this chapter.
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