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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