EFFECT OF PRICING POLICY ON MARKETING PERFORMANCE IN THE BEVERAGE INDUSTRY (A STUDY OF UNILEVER NIGERIA PLC)

ABSTRACT

The study investigated on the effect of pricing policy on marketing performance in beverage industry. The objectives of the study are; to examine the effects of penetration pricing policy on sales volume, to examine the effects of skimming pricing policy on market shares and to examine the effects of competitive pricing policy on profitability. To achieve the objectives of the study, correlational research design was adopted. The researcher adopted primary data in getting the required information. Out of 80 questionnaires issued to the respondents, 60 representing 75% were carefully filled and returned. In testing the hypothesis, correlation coefficient was used. The major findings reviewed that penetration pricing policy has a significant effect on sales volume in the beverage industry. The findings also reviewed that skimming pricing policy has a significant effect on market share in the beverage industry. The findings further reviewed that competitive pricing policy does not have any significant effect on profitability in the beverage industry. The researcher recommends that Organizations in Nigeria should take time to conduct market research, because this is a toll that can be used for effective pricing. The researcher also recommends that the organizational objective should be visited when making pricing policy, Management of small and medium enterprises should always have adequate information about the cost of production before changing price.

TABLE OF CONTENTS

Title Page-   -         -         -         --        -         -         -         -          -         i

Declaration  -         -         -         --        -         -         -         -          -         ii

Certification -         -         -         --        -         -         -         -                   - iii

Dedication-                                 -        -         --        -         -                                                    -        iv

Acknowledgement -         -         -         --        -         -         -          -         v

List of Tables         --        -         -         -                   -         -          -         vi

Table of Contents  -         -         -         --        -         -         -          -         vii

Abstract       -         -         -         --        -         -         -         -          -         x

CHAPTER ONE

INTRODUCTION

1.1     Background to the Study  -        -         -         --        -          -         1 

1.2   Statement of the Problem- -         -         --        -         -          -         3

1.3     Objectives of the Study-  -         -         --        -         -          -         3

1.4     Research Questions-        -         -         --        -         -          -         3

1.5     Research Hypotheses -     -         -         --        -         -          -         4

1.6     Significance of the Study -         -         -         --        -          -         4

1.7     Scope of the Study -         -         -         --        -         -          -         5

1.8     Limitation of the Study    -         -         -         --        -          -         5

CHAPTER TWO

REVIEW OF RELATED LITERATURE

2.1     Conceptual Frame Work  -         -         -         --        -          -         7

2.2     The Effect of Pricing Policy on Sales Volume         -          -         8

2.3     Impacts of Market Shares on Performance     -         -          -         9

2.4     Impacts of Pricing Policy on the Profitability                                        

Level of an Organization -         -         -         --        -          -         11

2.5     Internal Factors Affecting Pricing        -         -         -          -         12

2.6     External Factors Affecting Formation of Pricing     -          -         14

2.7          Economic Factors Affecting Pricing    -         -         -          -         15

2.8     Price Determination in a Competitive Market          -          -         15

2.9     Summary of Literature -  -         -         --        -         -          -         16

CHAPTER THREE

RESEARCH METHODOLOGY

3.1     Research Design    -         -         -         --        -         -          -         17

3.2     Area of Study-       -         -         --        -         -         -          -         17

3.3     Sources of Data and Method of Collection    -         -          -         18

3.4     Population of the Study-  -         -         --        -         -          -         18

3.5     Sample Procedure and Sample Size -   -         -         --          -         18

3.6     Validity of the Research Instrument-   -         -         --          -         19

3.7     Reliability of the Research Instrument           -         -          -         19

3.8     Method of Data Analysis --        -         -         -         -          -         20

3.9     Model Specification -      -         -         --        -         -          -         20

CHAPTER FOUR

DATA PRESENTATION, ANALYSIS AND INTERPRETATION

4.1     Data Presentation -          -         -         --        -         -          -         21

4.2     Test of Hypotheses -        -         -         --        -         -          -         30     

4.3     Discussion of Findings -  -         -         --        -         -          -         36

CHAPTER FIVE

SUMMARY OF FINDINGS, CONCLUSION AND RECOMMENDATIONS

5.1 Summary of Findings   -        -         -         --        -         -          -         38

5.2 Conclusion -     -         -         --        -         -         -         -          -         39

5.3 Recommendations     -         -         -         --        -         -          -         40

REFERENCES

APPENDIX

LIST OF TABLES

Table 4.1:  Distribution of Questionnaire and Response Rate                               21

Table 4.2:    Distribution of Respondents According to Age                              21

Table 4.3:     Distribution of Respondents According to

Educational Qualification                                                              22

Table 4.4:    Distribution of Respondents According to Years of Services       23

Table 4.5:    Religion                                                                                         23

CHAPTER ONE

INTRODUCTION

1.1     Background to the Study  

A product is incomplete if it does not attract any price, the principle of pricing entails that companies must be cautious and efficient in setting up price for their products. price as one of the four ps of marketing, demand good attention, because it plays a major role in the successful marketing of a company’s product, customers or consumer’s decide either to buy or not to buy a particular product based on their ability to pay the market prices.

According to ode (2011) the term price simply means the amount of money that you actually pay in order to buy a particular goods or services so that the relationship between the buyer and the seller is confined to the transaction itself. However in explaining the importance of pricing, Egbunike (2007) sustained that setting up the price for an organizations products or services is one of the most difficult, due to some number of factors that must be considered. While Kotler (2002) sees pricing as “the amount of money needed to acquire some or a combination of product and its accompanying or separate services.

Therefore, price of product is the major determinant of market demand for such product; price is one of the most powerful weapons used in the business for effectively high competition. Customers are likely to patronize company’s product whose price is satisfying and psychologically fair to them. Effective strategy and policy must be adopted in order for the company’s to succeed in its marketing   program so that it will result to an effective implementation of policy. The main purpose of this study is to examine the activities of pricing policy on performance of beverage industry using unilever Nigeria plc as a case study. unilever Nigeria plc was incorporated as lever brothers (west African) limited on 11^th April, 1923 by lord levelhulne, but company’s antecedent have to be traced back to his existing trading interest in Nigeria and west Africa generally and to the fact that he had since the 19^th century been involve with the soap business in Britain .unilever Nigeria plc started at soap manufacturing organization in Nigeria.

After series of acquisition, the company diversified into manufacturing and marketing of food, non soapy detergent and personal care product. These acquisitions brought in Lipton Nigeria limited   in 1985, cheese ponds limited in 1988. The company changed its name to Unilever Nigeria limited in 2001.

Unilever Nigeria plc is a public liability company quoted on the Nigeria stock exchange since 1973 with Nigeria currently having 49% of equity holdings.  

1.2   Statement of the Problem

Pricing policy entails that companies must cautious and efficient in setting up price for their product. Whenever price goes up, it will affect the sales volumes negatively thereby reducing the market share and profitability. Profitability and market share will reduce because so many customers will not come back, due to high price. But whenever there is a decrease in price, sales volume tends to be high, thereby increasing market share and profitability.

1.3     Objectives of the Study

The general objective of this study will be to examine the effect of pricing policies on marketing performance of selected firm in beverage industry. The specific objective of the study will include, to:

i)              examine the effects of  penetration pricing  policy on sales volume;                                                               

ii)            examine the effects of skimming pricing policy on market shares;

iii)          examine the effects of competitive pricing policy on profitability;

1.4     Research Questions

     Key research questions for this study will include;

i)              How does penetration pricing policy affect sales volume in the beverage industry?

ii)             How does skimming pricing policy affect market shares in the beverage industry?

iii)           How does competitive pricing policy affect profitability in the beverage industry?

1.5     Research Hypotheses

Hypotheses to be tested in the course of this study are stated as follows:

H_o1:   Penetration pricing policy does not have any significant effect on sales volume in the beverage industry

H_o2:   Skimming pricing policy does not have any significant effect on market share in the beverage industry.

H_o3:   Competitive pricing policy does not have any significant effect on profitability in the beverage industry.

1.6     Significance of the Study

This study will be quite significant in terms of those it will benefit and how it will benefit them. The people that will benefit from this study includes manufacturers, distributors and consumers. It will also be useful to researchers for academic purpose. It will help manufacturers to know the quality of product that they are producing, so that they will be able to cover the cost of production and make profit. While distributors will report consumers reaction to it products or services to manufacturers for adjustment in order to satisfy consumers. Consumers tend to buy more products when price is low.

1.7     Scope of the Study

This study focused on effect of pricing policies on marketing performance in the beverage industry. The study were been carried out in Aba, with data generated from employees of Unilever plc, as respondents.

1.8     Limitation of the Study

This study by nature will be limited by such constraint as:

1.       Resources:-

·      Finance: A major determinant of the sound research is availability of fund research is a money oriented venture. Liquid cash is needed for travelling, consulting and gathering materials. As such, the researcher could not carry out the research on a bigger scale due to inadequate capital.

·      Time:  The limited time – target for the completion of this research could not give me (the researcher) adequate time to carry out the study as I would have wanted it (the researcher).

·      Academic Materials: Accruing from inadequate capital the research was unable to access some material mostly external due to lack of fund and other problems encountered in the quest for information.

·      Co-operation: In a  developing country like Nigeria, a research is always posed with the unco-operative attitude  of respondents, which probably because of some sort reasons, were unable to release relevant information when approach.

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