ABSTRACT
Generally, price is the amount of money charged for a product or service. Price is one of the controllable variables which refers to the sum of all the values that customers give up in order to gain benefit. The main objective of the study is to evaluate the pricing strategy for effective marketing of pharmaceutical products, which emphasizes on Juhel Pharmaceutical Limited. The study adopted primary data method of data collection and the variables examined are Penetration Pricing, Effective Marketing. The researcher administered a research questionnaire to each member of the target population since it was the most appropriate tool to gather the information. Descriptive statistics such as percentages and tables were used in the analysis of data and the researcher employed Chi-Square to estimate the relationship of the variables. Data presentation was done by the use of tables for easy understanding and interpretation. The study found that Penetration Pricing Strategy is significant to Pharmaceutical Products at 5% level of significance. In view of the above, the public is recommended by the study to accommodate Penetration Pricing Strategy as tool for effective marketing of Pharmaceutical Products.
TABLE OF CONTENTS
Title page I
Declaration II
Certification III
Dedication IV
Acknowledgement V
Abstract XII
CHAPTER ONE: INTRODUTION
1.1 Background to the
Study 1
1.2 Statement of the Problem 3
1.3 Objectives of the Study 4
1.4 Research Questions 4
1.5 Research Hypotheses 5
1.6 Significance of the Study 6
1.7 Scope of the Study 6
1.8 Limitations of the Study 6
1.9 Definition of Terms 7
CHAPTER TWO: REVIEW OF RELATED LITERATURE
2.1 Overview of
Marketing 9
2.2 Pricing 11
2.2.1 Objectives of
Pricing 12
2.2.2 Technologies in
Pricing 13
2.2.3 Nine Laws of
Pricing Sensitivity and Consumer
Psychology
17
2.2.4 Approaches 18
2.2.5 Pricing Tactics 19
2.2.6 Pricing Mistakes
19
2.3 Pricing Strategies 20
2.3.1 Models of
Pricing 21
2.3.2 Variable Pricing
Strategies 35
2.3.3 Yield Management
Strategies 36
2.4 Role of Pricing
Marketing 37
2.5 Penetration
Pricing 39
2.5.1 Research 42
2.6 Pharmaceutical
Marketing 43
2.6.1 New PHRMA Code 45
2.6.2 Free Sample 46
2.6.3 Continuing
Medical Education 47
2.6.4 Pharmaceutical
Representatives 47
2.6.5 Key Opinion
Leaders 50
2.6.6 Colleagues 52
2.6.7 Private and
Public Insurers 52
2.6.8 Drug Coupons 54
2.6.9 Economics 55
CHAPTER THREE: RESEARCH METHODOLOGY
3.0 Research Design 57
3.1 Area of the Study 57
3.2 Sources of Data 57
3.3 Population of the
Study 58
3.4 Sample and
Sampling Technique 58
3.5 Sample
Determination 59
3.6 Instrument for
Data Analysis 59
3.7 Validity of
Research Instruments 60
3.8 Reliability of
Research Instruments 60
CHAPTER FOUR: PRESENTATION AND ANALYSIS OF
DATA
4.1 Data Presentation
and Analysis 61
4.2 Test of Hypotheses 75
CHAPTER FIVE: SUMMARY, CONCLUSION AND
RECOMMENDATIONS
5.1 Summary of
Findings 86
5.2 Conclusion 86
5.3 Recommendations 87
References
Appendixes
LIST OF TABLES
4.1.1 Questionnaire Administration 59
4.1.2 Sex Population of Respondents 60
4.1.3 Age Distribution of Respondents 60
4.1.4 Marital Status 61
4.1.5 Respondents Occupation 61
4.1.6 Educational Qualification of Respondents 62
4.1.7 Whether Respondents have Consumed Juhel
Pharmaceutical products 62
4.1.8 If “yes”, which type of Juhel Pharmaceutical
Product have you consumed? 63
4.1.9 Whether the Juhel Pharmaceutical Products were
very effective 63
4.1.10Whether
penetration pricing strategy encourage patronage of
Juhel Pharmaceutical Products 64
4.1.11Whether
Penetration Pricing Strategy serves as tool for Competitiveness 65
4.1.12Whether
Penetration Pricing Strategy has effect on the
Increase
in Sales Volume 65
4.1.13Whether
Penetration Pricing Strategy enhances Market
Share 66
4.1.14Whether
Penetration Pricing Strategy enhances Juhel Nig. Ltd. Performance 67
4.1.15Whether
Penetration Pricing Strategy has effect on Consumer
Retention/Loyalty. 67
4.2.1 Whether Penetration Pricing Strategy serves as
tool for Competitiveness. 70
4.2.2 Whether Penetration Pricing Strategy have
effect on the increase in sales
volume 71
4.2.3 Whether Penetration Pricing Strategy have
effect on Consumer Retention/Loyalty. 73
CHAPTER
ONE
INTRODUCTION
1.1 BACKGROUND OF STUDY
Generally price is the amount of money charged for a
product or service. More broadly, price is one of the controllable variables
which refers to the sum of all the value that customers gives up in order to
gain benefit or having or using a product or services (Kotler,2010) according
Agbonifoh et all (1998) refers to what the buyers gives and what the sellers
get in return for a product or services and more so a product can be defined as
anything that can be offered and accepted in exchange for satisfaction (Onyike,
2002) anything offered to the market for attention, acquisition, use or
consumption that satisfy a want or need (Armstrong, 2010). The focus of this
research is on the pricing strategy for effective marketing of pharmaceutical
products. In the course of marketing of pharmaceutical products, pricing has
placed a significant role for instance, the manufacturer or marketer is able to
push the product to the market through the application of any pricing strategy
or any other strategy assuming the product has been able to meet the basic
requirements for the particular strategy Pharmaceutical Company. Long term strategy
might include maximizing its market shares to achieve this, it might include
introduction of price point that gaining less profit but increases sales volume,
according to Xia at al, (2004) price farmers refers to consumer’s assessment of
whether a seller’s price is reasonable, acceptable, or justifiable. And also
backed up by another study from Herrman et al, (2009) which include that
consumer satisfaction is directly influenced by price perceptions, albeit
indirectly, the fairness itself and way it is fixed and offered have a great
impact on satisfaction. And of which every current and potential buyer’s
primary aim is to gain satisfaction. Research shows that some pharmaceutical
companies fails because of wrong placement of price. All this reasons brings us
to pricing strategy for effectiveness of pharmaceutical products. Pricing
strategy for pharmaceuticals usually change as the product passes through its
life cycle. The introductory stage is especially challenging for firms bringing
out products that face the challenge of setting prices for the first time they
can choose between two broad strategies which are market skimming pricing and
market penetration pricing (Kotler, 2010).
A service is the application of
specialized competence (knowledge and skill) through deeds, process and
performance for the benefits of another entity or the entity itself. Services
are economic activities, rather than tangible products offered by one party to
another. Service marketing strategy focuses on delivery processes, experiences
and intangibles to customers rather than physical products/ goods and
transactions. Services which can be defined as deed processes and performances,
it falls into several categories.
1.2 STATEMENT OF PROBLEMS
Many pharmaceutical companies failed because of wrong
placement of pricing of their products. Since we all know that pricing is
fundamental to company’s success. It is also difficult to establish in a way
that guarantees profitability, some pharmaceutical companies adopt underpricing
while some adopt overpricing. There are so many factors companies need to
consider before they can win the heart of their consumers. Before the
implementation of the pricing strategy, pharmaceutical companies have to
determine which strategy to be used in order to convince their consumers. So
whatever way one may wish to look at it, marketing of pharmaceutical products
must involve several strategy and pricing strategy tend to be one important as
the pricing roles may be. Many pharmaceutical companies has failed to
understand these hence their products often fails, while some fail at the point
of introduction due to wrong pricing, some fail to introduce the product with
right price while some fail to adjust the price rightly thereby failing to
penetrate the market. In some cases, most of the pharmaceutical companies
adjust their pricing policy wrongly while trying to penetrate the market. This
act of pushing products into the market wrongly by pharmaceutical companies
actually differ from one company to another. Based on the above stated
challenges confronting the pharmaceutical companies, the possible solution to
any of these problems as identified will be researched into and how pricing
strategy can be determined and sustain pharmaceutical products for effective
organizational growth and competitiveness.
1.3 OBJECTIVE OF STUDY
The main objective of this
study is to evaluate the pricing strategy for effective marketing of
pharmaceutical products, which emphasizes on Juhel Pharmaceutical ltd, Enugu.
Other specific objectives are to:
i.
Examine
how pharmaceutical firms have used penetration pricing strategy as a tool for
competitiveness in the volatile Nigeria marketing environment.
ii.
Examine
relevance of penetration pricing strategy as a tool to increase sales volume.
iii.
Determine
the impact of penetration pricing strategy on customer relation/ loyalty of
Juhel Nig. ltd product
1.4
RESREARCH QUESTIONS
1)
To
what extent is penetration pricing strategy of pharmaceutical company?
i.
What
is the impact of penetration pricing strategy on the competitiveness of Juhel?
ii.
How
does penetration pricing strategy impact on increase in sales volume of Juhel
Nig. ltd products?
iii.
What
is the impact of penetration pricing strategy on consumer retention/ loyalty on
Juhel Nig. ltd products?
1.5
RESEARCH HYPOTHESES
The
following hypotheses will guide the researcher in this study towards finding a
solution to the identified problems.
Hypotheses
1
Ho: Penetration pricing strategy does not serve as a
tool for competitiveness in the
marketing environment
Hypotheses
2
Ho: Penetration pricing strategy does not impact on
the increase in sales volume of Juhel products.
Hypotheses
3
Ho: Penetration pricing strategy does not have any
impact on consumer retention/ loyalty of Juhel products.
1.6
SIGNIFICANCE OF THE STUDY
This research work is very
significant to pharmaceutical company. It will alsi be vital to other sectors
of the economy and the society at large.
This research tends to reveal the essentiality of effective penetration pricing
strategy of pharmaceutical companies.
Finally, it will also indicate the benefits of
effective penetration pricing strategy and how it could be equally for further
research work as a reference, considering those who may be writing on similar
topic.
1.7
SCOPE OF THE STUDY
The
scope of this research work is the penetration strategy for effective pricing
of pharmaceutical companies with special considerations on Juhel Nig. Ltd,
Enugu.
1.8
LIMITATIONS OF THE STUDY
The
following challenges is envisaged by the researcher in the course of this
study;
a.
Financial
Challenges: Due to the harsh economic situation in the country, the researcher
encountered insufficient financial resources. This to some extent, made distribution
and collection of the questionnaire difficult for the researcher.
b.
Limited
Time: The time allotted to this project / research work was insufficient due to
the fact that the researcher also has some lecturers to take, and other
academic assignments were there equally begging for attention.
c.
Un
co-operative Attitude of Respondents: Some respondents were so difficult in
reaching as they tried all they could to frustrate the effort of the researcher
but for the doggedness/ resilient of the researcher.
1.9
DEFINITION OF TERMS
Pricing: This can be defined
as the act of setting a price.
Strategy: A planned series of
actions for achieving something.
Services: Is something that
the public needs especially something that everyone in the country needs.
Intangible: Is hard to define,
describe and measure.
Inseparability: The service
and the service provider is the same.
Perishability: Service is
highly perishable. It does not last for a long time.
Standardization: It can be
measured and classified.
Variability: It is when
something changes.
Posited: When you suggest or
assume something as bases for argument.
Doggedness: You determine to
continue with something even if it becomes difficult or dangerous.
Penetration: Is the degree to
which a product is available or sold in an area.
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