ABSTRAT
Product pricing has attracted the interest of scholars and managers in recent times. It is based on this that the research investigated the effect of pricing strategies on the performances of manufacturing firm in Abia state. The objective of the study were to examine the effect of pricing policy on the firm sales volume; find out the most appropriate pricing strategies for the scoping; study the effect of cost, competition and demand on the pricing strategies. The study adopted a sample size of 80 from a population of 100 using Yaro Yamen method. A well structured questionnaire was used for data collections which were later analyzed using multiple regression models. The result showed that pricing strategies has a significant impact on the sales performance and the profitability of Pz, Nigeria Plc. Thus, the researcher recommended the adoption of pricing strategies on the benefit manufacturing firms in Abia state.
TABLE OF CONTENTS
Title page - - - - - - - - - - i
Declaration - - - - - - - - - - ii
Certification - - - - - - - - - -iii
Dedication - - - - - - - - - - iv
Acknowledgement - - - - - - - - - v
Table of content - - - - - - - - - vi
List of tables - - - - - - - - - ix
Abstract- - - - - - - - - - - x
CHAPTER ONE
1.0 INTRODUCTION
1.1 Background of the study - - - - - - -1
1.2 Statement of problem - - - - - - - -3
1.3 Objective of the study - - - - - - -4
1.4 Research questions - - - - - - - -5
1.5 Research Hypotheses - - - - - - - -5
1.6 Significant of the study - - - - - - -6
1.7 Scope of the study - - - - - - - - 6
1.8 Definitions of terms - - - - - - -6
1.9 Limitations of the study - - - - - - -7
CHAPTER TWO
2.0 Review of Related Literature
2.1 Pricing Strategy Defined - - - - - - -8
2.2 Price Defined - - - - - - - - -8
2.3 Concept Pricing - - - - - - - -11 2.4 Pricing Objectives - - - - - - - -11 2.5 Pricing Methodology - - - - - - - -14
2.6 Factors That Affects Product Pricing - - - - -17 2.7 Pz Plc Pricing Policies - - - - - - -18 2.8 Pz Plc Promotional Pricing - - - - - -23 2.9 Customer/Buyer Behavior Defined - - - - -25 2.10 Reasons for the Study for Consumer Behavior - - - -26
CHAPTER THREE
3.0 Research Methodology
3.1 Research design - - - - - - - -30
3.2 Area of study - - - - - - - - -30
3.3 Study Population - - - - - - - -31
3.4 Sample Size - - - - - - - - -31
3.5 Sampling Size - - - - - - - -31
3.6 Data Collection - - - - - - - -32
3.6. Data Sources - - - - - - - -32
3.6. Validity and reliability - - - - - - -33
3.7 Data Analysis - - - - - - - -33
CHAPTER FOUR
4.0: Data Analysis, Presentation and Discussion of Findings - -34
4.1: Questionnaire Administration - - - - - -34
4.2: Personal Data Analysis - - - - - - -34
4.3: General Data - - - - - - - - -39
4.4: Testing of Hypothesis - - - - - - -49
4.5: Summary of Findings - - - - - - -50
CHAPTER FIVE
5.0: SUMMARY, CONCLUSION, AND RECOMMENDATION
5.1 Summary - - - - - - - - -52
5.2 Conclusion - - - - - - - - -53 5.3 Recommendation - - - - - - -54
List of Tables
Table 4.2: Sex of Respondents - - - - - - -34
Table 4.2.2: Marital Status of respondents - - - -35
Table 4.2.3: Age of Respondents - - - - - -36
Table 4.2.4: Household Size of Respondents - - - -37
Table 4.2.5: Years of Service of Respondents - - - -38
Table 4.3.1: Adoption of Pricing and Pricing Strategy by the Company -39
Table 4.3.2: Pricing Strategies and the Extent of the Firms Success -40
Table 4.3.3: pricing strategies objectives - - - - - -41
Table 4.3.4:Factors Affecting Pricing Strategies and Objective
of the Firm - - - - - - - -42
Table 4.3.5: The Extent these Factors Affect the Pricing Strategies
And Objectives of the Company - - - -43
Table 4.3.6: The Effect of Policies on the Company’s Pricing
Objectives and Strategies - - - - -44
Table 4.3.7: The Extent of Customer Reaction to Company’s pricing
Objectives and Strategies - - - - -45
Table 4.3.8: Estimate of Monthly Sales (#) - - - - -46
Table 4.3.9: Estimated Monthly Cost of Marketing - - -47
Table 4.3.10: The Implementation of Pricing Strategies and
Company’s - - - - - - -48
Table 4 .4: Analysis of the Factors Affecting Pricing Strategies and
Objectives - - - - - - - -49
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 et al, 2007).
According to Agbonifoh et al (1998), 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 rise 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. They include:
i) Cost of production of the product.
ii) Competition.
iii) Ability and willingness of buyer to pay for the product.
iv) 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: 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.
For pricing to be useful as a strategy, PZ established 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.
Achieving set objectives are the major aims or purposes of all business organization's especially the profit oriented ones. These objectives include:
i. Marketing profits.
ii. Remaining in business.
iii. 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.
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.
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:
i. To know how pricing strategies of firms affect households consumption pattern.
ii. To know how pricing methods of firms affect buying behavior of households.
iii. To know the extent of which pricing tactics of firms affect buying process.
iv. To know who buys and what factors affect buying behaviours relative to decision making in households consumption pattern.
1.3 Objectives of Study
The major objective of this study is to examine the effect of price on the performance of manufacturing firms with close reference to PZ Nigeria Plc. The study will also seek to:
i. Examine the effect of pricing strategies on the firm sales volume.
ii. Examine the most appropriate pricing strategies for the company in its competitive market environment.
iii. Examine the company's various pricing strategies.
iv. Study the effect of cost, competition and demand or pricing
strategies in use.
v. Ascertain if government legislations affect pricing of products.
1.4 Research Questions
i) What is the effect of price strategy on the firm’s sales volume?
ii) What are the most appropriate pricing strategies for the company in its competitive market environment?
iii) What are the company's various pricing strategies?
iv) What are the effects of cost, competition and demand or pricing strategies in use?
v) Do government legislations affect pricing of products?
1.5 Research Hypotheses
The following null hypotheses will be tested:
Ho1: There is no relationship between effective pricing strategy and sales volume.
Ho2: cost, consumer reaction, competition and government policies do not affect the pricing strategies of the firm.
1.6 Significant Of Study
The benefits of this study are enormous but in specific term, the study will be of important to the following groups:
i. Business organizations: the result of this study will be significant to business organizations because they will be 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.
ii. 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.
iii. 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 Study
This work was limited to pricing strategy and PZ was chosen as a case study.
The study covers some PZ locations i.e Aba, Enugu, Umuahia and the corporate headquarters which were reached mostly by calls and the questionnaire.
1.8 Definition of Terms
Brand: - This is the name given by a manufacturer to its products and services.
Brand Loyalty: - This is the continuous purchase of a particular brand of a product by an individual with no intention of switching over to another brand.
Buyers: - Those who buy or purchase beer.
Consumer: - One who satisfies his/her needs or desire through consumption of a beer brand.
Attitude: - A consumer’s feeling or thinking towards an object or idea.
Motivation:- A driving force which influences an individual thought towards a particular course of action.
Perception: - The process by which people select, organize and interpret information to form a meaningful picture of the world.
Cognitive Dissonance: - Buyers discomfort caused by post purchase conflict
1.9 Limitations of the Study
In carrying out this project work, research encountered certain limitations, which adversely affected the findings for this work. They include:
i. High cost of transportation and materials
ii. Delay in material retrieval.
iii. Scarcity of sufficient data for this work’s effectiveness.
iv. Lack of trust to disclose some vital information and documents for fear of disclosing it to competitors.
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