Abstract
The study focused on the effect of price on consumer patronage of soft drinks (A study of 7up bottling company Aba Abia State). The specific objectives are to ascertain the effect of price on consumer repeat purchase of soft drinks in Aba, to examine the effect of price on consumer frequency of purchase of soft drink in Aba, to determine the effect of price on volume purchase of soft drink in Aba, to evaluate the effect of price on brand switching of soft drinks in Aba, and to determine the relationship between price and consumer patronage of soft drinks in Aba. The research design adopted was descriptive research design and it shows in detailed the plan how the researcher intend to carry out the study according to the research question and hypotheses stated in chapter one in other to achieve the research objectives. The population of the study comprised of staff and customers of soft drink seven up bottling company in Aba Abia State. The population therefore involves entire population which is 220660 according to (NPC, 2006). The study adopted a well-recognized and acceptable formular called Taro Yamane to determine the sample size which is one hundred and thirty three (399). The study made used of primary source of data which involve distribution of questionnaire to the respondents to enable them express their feelings as regards the products offer by the firm. The study adopted correlation coefficient and ANOVA analyses of varience to analyze the stated hypotheses. empirical results the study revealed that there is positive and significant relationship between Price (0.031) consumer’s repeat purchase of soft drinks in Aba, there is positive and significant relationship between Price (0.011) and consumer frequency of purchase of soft drinks in Aba, there is a significant different between price (0.017) and the volume of purchase of soft drink in Aba Abia State, there is a significant different between price (0.001) and brand switching of soft drink consumers in Aba Abia State while there is positive and significant relationship between price (0.004) and consumer patronage of soft drinks in Aba. It was recommended that management of the selected soft drink firm to take into cognizance the prices of it product because consumer react to the prices of goods irrespective of the quality and also there is need for sellers to set the prices according to the forces of demand and supply in other to induces consumer repeat purchase for soft drinks.
Keywords: Price and consumer patronage for soft drinks
TABLE OF
CONTENT
CHAPTER ONE
INTRODUCTION
1.1 Background of
the Study 1
1.2 Statement of the Problem 3
1.3 Objective of the
Study 4
1.4 Research
Questions 4
1.5 Research Hypotheses 4
1.7 Scope of the Study 5
1.8
Limitations of the Study 6
CHAPTER TWO
REVIEW OF RELATED LITERATURE
2.1 Conceptual Framework 7
2.1.1 Pricing Strategy Defined 8
2.1.2 Price Defined 8
2.1.3 Concept
of Pricing 10
2.1.4
Pricing Objectives 10
2.1.5 Pricing
Methodology 12
2.1.6
Factors That Affects Product Pricing 14
2.1.7
Pricing Policies and it Effect on Consumer Patronage 15
2.1.8
Promotional Pricing of Some Firms in Nigeria 19
2.1.9 Consumer/Buyer Behaviour Defined 20
2.1.10
Reasons for the Study of Consumer Behaviour 21
2.1.11 Cost-Based
Pricing 23
2.1.12 Value-Based Pricing 25
2.1.13 Demand-Based Pricing 26
2.1.14 Competition-Based Pricing 27
2.1.15 Strategies
for New and Established Products 27
2.1.16 New
Product Pricing Strategy 28
2.2 Theoretical
Framework 28
2.2.1 Information Processing Theory 28
2.2.2
Social Learning Theory 29
2.3 Empirical Review 30
2.4 Summary of Related Literature 32
CHAPTER THREE
METHODOLOGY
3.1 Research Design 34
3.2.
Study Area 34
3.3 Population of the Study 35
3.4 Sample Size Determination 35
3.5
Method of data collection 36
3.6 Sampling Procedure and technique 36
3.7
Validity of Research Instrument 36
3.8
Reliability of the Instrument 37
3.8.1
Method of Data Analysis 37
3.9.
Model Specification 37
CHAPTER
FOUR
RESULT
AND DISCUSSION
4.1 Data presentation, interpretation and analysis 40
4.1.3. Rate the effect
of price on consumer repeat purchase of soft drinks in Aba? 43
4.1.4. Rate the effect
of price on consumer frequency of purchase of soft drink in Aba? 44
4.1.5. Rate the effect
of price on volume purchase of soft drink in Aba? 45
4.1.6. Rate the effect
of price on brand switching of soft drinks in Aba? 46
4.1.7. Rate the relationship
between price and consumer patronage of soft drinks in Aba? 47
4.3.1 Test of Hypothesis
1 47
4.3.2 Test of Hypothesis
2 48
4.3.4 Test of Hypothesis
3 49
4.3.4 Test of Hypothesis
4 50
4.3.5Test of Hypothesis 5 51
CHAPTER FIVE
SUMMARY, CONCLUSION AND
RECOMMENDATION
5.1 Summary 53
5.2 Conclusion 54
5. 3
Recommendations 54
LIST OF TABLES
4.1.:
Data Presentation/ Results and Discussion 40
4.1.2: Distribution of the respondents according to
their socio economic characteristics 41
4.1.3 Effect of price on
consumer repeat purchase of soft drinks in Aba? 43
4.1.4 Effect of price on
consumer frequency of purchase of soft drink in Aba? 44
4.1.5 Effect of price on
volume purchase of soft drink in Aba? 45
4.1.6 Effect of price on
brand switching of soft drinks in Aba? 46
4.1.7: Relationship
between price and consumer patronage of soft drinks in Aba?
47
4.1.8: Price has no significant effect
on consumer repeat purchase of soft drinks in Aba 47
4.1.10: Price has no significant effect
on volume of soft drinks purchase in Aba 49
4.1.10: Price does not significant
influence brand switching behavior of
soft
drink consumers in Aba 50
CHAPTER ONE
INTRODUCTION
1.1 Background
of the Study
Price
is one of the elements of marketing mix which produces revenue. It is very
crucial as the prime mover of trade in any market economy where goods and services are
traded. One can conclude that price is one variable that is very important to both the buyer
and the seller. (Boniface, Agbonifoh, Anyanwu and Offiongdon, 2007). According to Agbonifoh, et al. ,(2008), price is the monetary value for which the seller is
willing to exchange the
item, or what a buyer gives in return for it. Price since history has remained a major determinant of
buyer choice. Price is one of the most flexible elements that can be changed quickly and still remains
one of the most important element in determining market share and profitability (Anuforo and Boniface, 2013). Pricing is the process of determining
price of a product. Companies handle pricing in a variety of ways. For small
companies, prices are often assessed by company’s boss. This is different for
large companies where pricing is handled by a division and product-line
managers. Here the top management sets the general pricing objects, policies
and often approves proposed prices from the lower level management. Companies
often establish a pricing department. The aim is to assist management in price
setting and implementing appropriate price. (Agbanifoh et al., 1998).
Different
people have different names for their price. The local utility will give its
price as rate, the insurer will give its price as premium, and the employer will give his price
as salary or wages. Price for education is tuition, while price for telephone service
is bill. From the above, one may wonder what determines the price of a product
or service. Such factors may include; cost
of production of the product, competition, ability
and willingness of buyer to pay for the product, government
legislation.
Many
companies do not handle pricing well as price competition is the number one
problem facing them. The most common mistake or misconceptions made by
companies are that price is too cost-oriented, price
is not revised often enough to capitalize on market changes; price
is set independent of the rest of marketing mix rather than as an intrinsic
element of market positioning strategy, price
is not varied enough for different product items, market segments and purchase
occasions (Kotler and Keller, 2009).
For
pricing to be useful as a strategy, a firm establishes its pricing policies
within the content of a carefully structured set of pricing objectives. This is
because failure to coordinate pricing policies with the over-all objectives of pricing often lead to
a reduction in profitability (Kotler and Keller, 2009).
Achieving set objectives are
the major aims or purposes of all business organization's especially the profit
oriented ones. These objectives include marketing profits, remaining in business, competing favorably with other firms that are in
the same line of business. For an organization to achieve these objectives, it
must embark on the development of a structure and design a programme which would facilitate
effective and efficient accomplishment of the set objectives. The above can only be achieved by having a good
pricing strategy (Best, 2006). An organization with a good pricing strategy, objectives
policies and methods stand a better chance of making a lot of profit and its product will live longer
in the market so long as its strategies does not negatively affect it (Rogers, 2010).
1.2 Statement of the Problem
Product
pricing is vital to the growth and sustenance of any marketing system. Product pricing, no doubt is important in
influencing pattern of households in Aba, Abia State. Every research is
necessitated by the existence of the problems upon which the study is intended
to probe into in the light of the study, various problems have been identified
to be shading the success of pricing in influencing the consumption pattern of
households. However, in most households, decision making regarding purchase is
solely considered to be the responsibility of the husband, wife children or
extended family members. Basically, the
research as such has identified some problems which the study will examine and
proffer solutions to. They are to: examine how pricing policies of firms affect
households consumption pattern; analyze how pricing methods of firms affect
buying behavior of households, determine
the extent of which pricing tactics of firms affect buying process; know who
buys and what factors affect buying behaviours relative to decision making in
households consumption pattern.
However,
neglecting these problems has led to gross marketing
failure of many manufacturing organizations. Despite the fact that the consumer
is a personality whose behavior is governed by different and varied influences
such as: his society beliefs, attitude, his past learning, experience,
perception and his expectations. These form his taste choice and product
preference. But when there is a problem of determining the value of the product
in relation to the product, the price goes a long way to help. There is
therefore, need to examine how price affect consumer preference with a view to
uncovering reasons behind Nigerian consumers‟ seeming preference for
manufactured goods. The study attempts to examine the effect of price on
consumer preference selected consumer products in Abia State.
1.3 Objective
of the Study
The major objective of this study is to evaluate the effect of
price on consumer patronage of soft drinks (A study of 7up bottling company Aba,
Abia State). The specific objectives are to:
i.
ascertain the effect of price
on consumer repeat purchase of soft drinks in Aba Abia
State
ii.
examine the effect of
price on consumer frequency of purchase of soft drink in Aba Abia State
iii.
determine the effect of
price on volume purchase of soft drink in Aba Abia
State
iv.
Evaluate the effect of
price on brand switching of soft drinks in Aba Abia
State
v.
Determine the
relationship between price and consumer patronage of soft drinks in Aba Abia State
1.4 Research Questions
1. To what extent does
price affects consumer repeat purchase of soft drinks in Aba Abia State?
2. To what extent does price
affects consumer frequency of purchase of soft drink in Aba Abia State?
3. To what extent does effect of price on
volume purchase of soft drink in Aba Abia State?
4.
What is the effect of price on brand switching of soft drinks in Aba Abia State?
5.
What is the relationship between price and consumer patronage of soft drinks in
Aba Abia State?
1.5 Research Hypotheses
H01: Price has no
significant effect on consumer repeat purchase
of soft drinks in Aba Abia State
H02: Price has no significant effect on consumer
frequency of soft drinks in Aba Abia State
H03: Price has
no significant difference on the volume of purchase of soft drink in Aba Abia State
H04: Price has
no significant difference on brand switching of soft drink consumers in
Aba Abia State
H05: There is no significant relationship between price
and consumer patronage of soft drinks in Aba Abia
State.
1.5 Significance of the Study
This study focused on effect
of price on consumer patronage of soft drinks (A study of 7up bottling company
Aba, Abia State). This study is enormous but in
specific term, the study will be of benefit or import of the following groups: The benefits of Business
organizations: the result of this study will be significant to business
organizations because they will become more aware of the factors that affect
and influence pricing, and adopt those factors to get more market share for
itself which means higher profits from sales.
The Investors:
if
it is noted that a particular beverage company has a high level of sales
resulting from good pricing strategies, the investors may decide to invest in
the beverage company as its profits will be high as well as dividend.
Academic:
the result of this study will be significant to the academic as it will form
the basis for research work in pricing strategies.
1.7 Scope of the Study
This study focused on effect of price on consumer
patronage of soft drinks (A study of 7up bottling company Aba, Abia State). The
state was selected because industries and factors are located and it has a
larger population then the state capital and its inhabitant business oriented
and industrious.
1.8 Limitations of the
Study
In
the course of the study, the following factors posed challenges for the
researcher;
Respondent’s behavior:
Some
of the respondents were not friendly but the researcher applied diplomacy in
relation with them to achieve the desired result.
Weather:
The
work was carried out only during the rainy season. This was a serious problem.
The researcher was however able to cope by planning her movement carefully and
using research assistance to achieve the desired results within the period of
the study.
Materials Availability:
Getting
the required current materials to aid the study an assiduous task. The
researcher was able to address these problems by using the MOUAU library and
visiting libraries of nearby Universities, like ABSU, UniZik, etc. for relevant
materials.
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