EFFECTS OF PRICE ON THE PATRONAGE OF SELECTED CONSUMER GOODS AMONG UNIVERSITY STUDENTS IN ABIA STATE, NIGERIA

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ABSTRACT

This study focused on the effect of price on the patronage of selected consumer goods among university students in Abia State, with reference to students in Michael Okpara University Umudike and Abia State University Uturu. The specific objectives were to: ascertain cost-oriented pricing and its effect on patronage of milk and instant noodles, determine the relationship between prices of milk and instant noodles and perception of their quality, ascertain the relationship between price and consumer brand loyalty of milk and instant noodles, determine the between price information and patronage of milk and instant noodles among university students in Abia State. The researcher adopted survey research design, primary data were used. The population of the study consists of all the students in Michael Okpara University Umudike and Abia State University Uturu. Logistic Regression and Pearson Product Moment Correlation analysis were used to analyses the objectives and test hypotheses posited. The major findings revealed that; income, price, durability and availability are the major factors influencing the patronage of milk and instant noodles, there is a strong and positive correlation between the prices of milk and instant noodles and the perception of their quality, and there is a strong and positive correlation between price and consumer brand loyalty of milk and instant noodles among university students in Abia State. The researcher concluded that; price have a strong effect on the patronage of consumer goods (milk and instant noodles) among university students in Abia State and recommends that; manufacturing organization in the production of milk and instant noodles should always strive to improve the quality, durability and appeal of their products while using effective marketing segmentation to increase the availability and affordability of their products in university communities. The need for organizations in the production of milk and instant noodles to maintain a stable price that depicts the quality of their products was also accentuated.

  


 


 


 

TABLE OF CONTENTS

Title page                                                                                                                   i                                                                                                                                                                          

Declaration                                                                                                                ii

Certification                                                                                                              iii

Dedication                                                                                                                 iv

Acknowledgement                                                                                                     v

Table of Contents                                                                                                      vi

List of Table                                                                                                              ix

Abstract                                                                                                                      x

CHAPTER 1

INTROUCTION

1.1      Background Of The study                                                                                 1                         

1.2         Statement Of The Problem                                                                            3                     

1.3         Objectives Of The Study                                                                                4                      

1.4         Research Questions                                                                                      5                                          

1.5         Research Hypotheses                                                            5                            

1.6         Significance Of The Study                                                                                       6                             

1.7         Scope Of Study                                                                                7                              

1.8         Limitations Of The study                                               7                          

1.9         Operational Definition Of The Terms                                 8                                                                                                                                     

CHAPTER 2                                                                                                                        

REVIEW OF RELATED LITERATURE                                                                      

2.1      Conceptual Framework                                                                                  9

2.1.1   Concept of Price                                                                                             9

2.1.2   Dimensions of pricing Strategies                                                                  12

2.1.3   Patronage                                                                                                       22

2.1.4   Relationship between price and perception of quality                                  25

2.1.5   Relationship between price and brand loyalty                                              27

2.1.6   Relationship between price information and product patronage                  30

2.1.7   Consumer perception of price                                                                       31

2.1.8   Concept of Product Quality in Marketing                                                     33

2.1.9   Consumer perception of Quality                                                                   36

2.1.10 Dimensions of product Quality                                                                     37

2.1.11 Consumer Decision Making                                                                          38

2.1.12 Price Management                                                                                         39

2.1.13 Pricing Policies                                                                                              40

2.1.14 Pricing Objectives                                                                                         41

2.2      Theoretical Framework                                                                                 43

2.2.1   Price Theory                                                                                                  43

2.2.2   Naive Pricing Theory                                                                                    44

2.2.3   Game Pricing Theory                                                                                    44

2.2.4   Arbitrage Pricing Theory                                                                               45

2.2.5   Consumer Theory                                                                                          46

2.3       Empirical Studies                                                                                          46

2.4       Summary of Reviewed Literature                                                                48

2.5       Gap in Literature Reviewed                                                                         49

CHAPTER 3

RESEARCH METHODOLOGY

3.0     INTRODUCTION                                                                                         51

3.1     Research Design                                                                                             51

3.2     Study Area                                                                                                      51

3.3     Population of the Study                                                                                  53

3.4     Sampling Procedure                                                                                        53

3.5     Scoring of Instrument or Measurement of Variables                                      54

3.6     Research Instrument                                                                                       54

3.7     Validity of the Sampling Instruments                                                             55

3.8     Reliability of the Sampling Instruments                                                         55

3.9     Administration of the Instrument                                                                    56

3.10   Sources of Data Collection                                                                             56

3.11   Model Specification                                                                                        57

3.12   Method of Data Analysis                                                                                59

3.13   Hypothesis Testing                                                                                          59

 

CHAPTER 4

DATA PRESENTATION, ANALYSIS AND INTERPRETATION

4.1     Questionnaire Administration                                                                        60

4.2     Cost-Oriented pricing and its effect on patronage of Milk and Instant Noodles among University Students in Abia State                                                                 61

4.3     The Relationship between Price of Milk and Instant Noodles and perception of their Quality among University Students in Abia                                               62 State.                                                                     

4.4     The Relationship between Price and Consumer Brand Loyalty of Milk and Instant Noodles among University Students in Abia State                                      63.

                                                              

4.5     The Relationship between Price Information and the Patronage of Milk and Instant Noodles by University Students in Abia State.                                            64               

4.6     Discussion of Result                                                                                      65


CHAPTER 5

CONCLUSION AND RECOMMENDATIONS

5.1     Summary of Findings                                                                                     68

5.2     Conclusion                                                                                               69       

5.3     Recommendations                                                                                          69

          References                                                                                                      71

 

 

 


 

 

 

CHAPTER 1

INTRODUCTION

1.1              BACKGROUND OF THE STUDY

Price is unquestionably one of the most important marketing elements (Bauer, Klieger and Koper, 2004). Much researched have demonstrated the significant of price in buying decisions (Monroe 2003). A more new-grained analysis recommends that consumers’ buying decisions are driven by price perceptions rather than by actual prices. These perceptions are very subjective and susceptible to contextual influences (Alba et al. 1999; Krishna et al. 2002). Thus, appropriate pricing is imperative for organizations offering intension and consumers buying decision.

According to Rosa et al., (2011), the significant of price as a buying stimulus has a vital function in price management, not only does it determine the way prices are perceived and valued, but it also affect consumer purchasing decisions (Rosa, 2001;Vanhuele and Dreze, 2002).The more the significant of price in purchasing decisions, the more the power of information and the greater the amount of comparisons between competing brands (Monroe and Mazumdar, 1990).

Considering the fact that, consumer products are regularly purchased and consumed products, the basic thing is that, the customer who usually purchases is often or usually  in contact with the prices, and allows their knowledge of price offering by competing brands to influence their purchasing decision. Therefore, product prices are not only of interest to consumers but are of great interest to organizations in order for them to compete favourably within the industry and to maximize profit. Thus, pricing tactics is very significant to every firm who engaged in the production of consumer goods and services because it signals a reminder about the company’s and its products. A company does not implement a single price but they do rather organize pricing structure that allows different product line (Kotler et al, 2001). Selecting a pricing goal and its tactics or strategy has plays a significant role for business owner and this is fundamental in the business planning and process. It is further than merely estimating the cost of production and additionally a markup (Roth 2007). Therefore, designating product prices is a deliberate activity and the price allocated to a product or prices allocated to a product or categories of products will have influence on the add-on to which consumers perceive the firm’s products and intent later buying of company product.

Additionally, one of the secrets to business success is pricing a product properly. If the price of a particular product is suitable for the product, it will enhance how much such product is sold, and contribute in creating the base for a business that will prosper. However, companies should get pricing right, so that they can succeed any problem that may occur in the market. Inappropriate product pricing is an invitation to business failure, following its inability to gain  profit to cover its expenses, (Moen, 2001).

Consequently, companies today offer their products to the market when they believe that such product has covered all costs with some level of margin of profit (Nworah, 2006). Therefore they will fix a suitable price to the product that is going to benefit them and the proposed consumers, and prices are not expected to be static for a very long time because of dynamics in economic conditions such as; inflation, rising prices of other cost inputs and increasing general standard of living. Therefore, a situation where a company’s factor input costs have been rising, company will adequately adjust its prices to reflect these changes, but in a subtle way just to maintain their share in the market.

Furthermore, change particularly in the uncontrollable or advance technological environment has also constituted its own impediments within the area of pricing strategies. The web has come into existence and businesses have gone online and pricing of tangible (products) and intangible (services) have also taken another form. The era of new technologically advancement and dispensation route allows people to get the most update on multimedia information on the best connections, and at the best prices (Keller 1996). Consumers are more knowledgeable now than ever, especially university students who regularly surf the internet to get price information on every facet of their needs, including consumer goods.

From the foregoing it is obvious that role of price on the purchasing decision of consumers cannot be succinctly stated. Thus, this research work deems it imperative to ascertain the; “Effects of price on the patronage of selected consumer goods among university students in Abia State, Nigeria” with particular reference to Michael Okpara University of Agriculture Umudike and Abia State University Uturu. The selected consumer goods of interest to the researcher are Milk and Instant Noodles as a result of its wide appeal to students.

1.2              STATEMENT OF THE PROBLEM

In today’s marketing environment, price and consumer perception of quality are among the central issues determining purchase. The greater the importance of price in purchasing decisions, the greater the intensity of information and the greater the amount of comparisons between competing brands (Mazumdar and Monroe, 1990).

However, in university environment majority of the populations are students who depend on their parents or guardians for sustenance, and as such, they adopt various approaches to reduce their cost of living while satisfying their immediate needs. It is ironic however to state that within this environment where majority of the population are not working class, the cost of living seems to be very high due to population explosion. Thus, due to their economic standard, students are interested in the price of different goods available within the community especially those of competing brands so as to guide their decision despite that various variables or cost effect of pricing on patronage which have not come to limelight. Again, whether relationship exists between price of goods and quality of those goods available within the university community remain a mirage, which is why this research work will find out the effect of cost-oriented pricing on the patronage of milk and instant noodles among university students of Michael Okpara and Abia state universities, both in Abia State.

Additionally, as students scramble for information from their fellow students and retailers on the cheapest brand of products required to satisfy their needs, whether this information  guides their patronage of selected consumer goods decision is unknown. Moreover little is known on the effects of price on their brand loyalty. Thus, in view of the following it is pivotal to ascertain the; “Effects of Price on the Patronage of Selected Consumer Goods among University Students in Michael Okpara University of Agriculture Umudike and Abia State University with interest in Milk and Instant Noodles as the selected consumer goods.

1.3              OBJECTIVES OF THE STUDY

The broad objective of this study is to examine the effect of price on the patronage of selected consumer goods among university students in Abia State, Nigeria. The specific objectives are to:

        i.                        ascertain cost-oriented pricing and its effect on patronage of milk and instant noodles among university students in Abia State.

      ii.                        determine the relationship between prices of milk and instant noodles and perception of their quality among university students in Abia State.

    iii.                        ascertain the relationship between price and consumer brand loyalty of milk and instant noodles among university students in Abia State.

    iv.                        determine the between price information and patronage of  milk and instant noodles by university students in Abia State.

1.4              RESEARCH QUESTIONS

The research provided answers to the following questions.

        i.                        What is the cost-oriented pricing and its effect on patronage of milk and instant noodles among university students in Abia State?

      ii.                        What is the relationship between prices of milk and instant noodles and perception of their quality among university students in Abia State?

    iii.                        What is the relationship between price and consumer brand loyalty of milk and instant noodles among university students in Abia State?

    iv.                        What is the relationship between price information and the patronage of milk and instant noodles by university students in Abia State?

1.5              RESEARCH HYPOTHESES

The following hypotheses were tested in null form:

HO1: Cost-oriented pricing do not have any significant influence on the patronage of milk and instant noodles by university students in Abia State.

HO2: There is no significant relationship between prices of milk and instant noodles and perception of their quality among university students in Abia State.

HO3: There is no significant relationship between price and consumer brand loyalty to milk and instant noodles among university students in Abia State.

HO4: There is no significant relationship price information and the patronage of milk and instant noodles by university students in Abia State.

1.6              SIGNIFICANCE OF THE STUDY

It is obvious that appropriate price is imperative for organizations offering intension and consumers buying decision, but of interest to this research work are consumers buying decision. This research work will serve as a frontier of knowledge to organizations especially the organizations that their product falls within the scope of this research work; it will enable them to know the effects of pricing on the purchasing behaviour of university students in Abia State. The study will also serve as an eye opener to these organizations on the activities of middle men who represent them within the university environment in marketing their products. The result of the research work will enable the organizations to decide whether to float a retail outlet in the university environment that will have direct contact with the students at the company approved price, so as to reduce some unethical practices indulged in by middle men in the process of selling their products.

To the retailers, the study will enable them to see the effects of some unethical practices they indulge in on the purchasing decision of students in the university environment which creates dissonance to some of the products offered by these organizations. It will also enhance their knowledge on the marketing practice that will enhance their sales, enabling them to retain a higher market share within the university environment.

On the part of the students, this research work will enable them to know their views and perspective on how price affects their purchasing behaviour, and how the activities of middle men within the university environment influence their purchasing decision. To prospective researchers, this research work will serve as an instrument for further research by adding to the scholarly material available for research purposes.

 

1.7              SCOPE OF STUDY

This research focused on the effect of price on the patronage of selected consumer goods among university students in Abia State,Nigeria. The geographical scope was limited to Michael Okpara University of Agriculture Umudike and Abia State University Uturu respectively. The researcher selected two consumer goods that have wide appeal among university students which includes: Milk and Instant noodles.

1.8              LIMITATIONS OF THE STUDY

The researcher encountered some difficulties in the process of carrying the research. Chiefly among is the biased and uncooperative attitude of the students that served as the respondents of the research. Ensuring that the questionnaire was well completed and returned was a big challenge for the researcher especially among students of Abia State University Uturu. This situation compelled the researcher to visit the school on many occasions in order to share and retrieve the filled in copies of the questionnaire.  The risk and cost of transportation to both universities was also overwhelming because of poor road network in Abia State. Financing the research from the beginning to the end posed some challenge to the researcher because of the economic condition of Nigeria.

 

1.9              OPERATIONAL DEFINITION OF TERMS

Price: Adding value to a product for the purpose of exchange. It also means to determine the monetary value its equivalent for an item, to put a price on.

Patronage: The act of buying something or the process of seeking and obtaining something. The acquisition of property for a price; which is determines using money or its equivalent.

Consumer Goods: Goods that people buy for their own use, rather than goods bought by business and organizations.

University Students: Someone who is studying in educational institution at the highest level for a degree. A person enrolled at a university 



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