PRICING STRATEGIES AND MARKETING PERFORMANCE OF AUTOMOBILE FIRMS IN ABIA STATE

ABSTRACT

This research work focused on the pricing strategies and marketing performance of automobile Abia State. Pricing strategies is how a firm plans to get to where it want to go through strategies. An industry’s survival and profitability depends upon it pricing decision, thus the only element in the marketing mix that produces revenue and thus ensures profit ability. There are different types of pricing strategies such as penetrating pricing, skimming competitive pricing. The problem that stringated this study is the knowledge gap that look as if small scale manufacturing firms are not aware that setting their prices right xi positively on profit performance this study adopted descriptive design which involves the of questionnaire and interview which were used to generate data from the respondent. The convenient and judgmental sampling methods were used to selected and determine the automobile dealers in Abia State. Hypothesis were analyzed using correlation co-efficient statistical tool, the descriptive statistics were used to present the data. Based on findings and recommendations of this work skimming, penetrating and competitive pricing strategies should properly implemented by automobile dealers in order to record success in the industry. The impact of pricing strategies cannot be over emphasized. In conclusion it is important that automobile dealers should be conscious of their price tag over their product in order to record better profitability.

TABLE OF CONTENTS

Tit1e Page                                                                                                                                i

Certification                                                                                                                              ii
Declaration                                                                                                                               iii
Dedication                                                                                                                                iv
Acknowledgements                                                                                                                   v
Table of Contents                                                                                                                      vi

List of Tables                                                                                                                            viii

List of Figures                                                                                                                           ix
Abstract                                                                                                                                    x
CHAPTER ONE

INTRODUCTION
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                                                                                                      4

1.5       Research Hypotheses                                                                                                   4

1.6        Significance of the Study                                                                                               5

1.7        Scope of the Study                                                                                                        5

CHAPTER TWO

REVIEW OF RELATED LITERATURE

2.1        The Concept of Pricing Strategies                                                                                  6

2.2       Marketing Performance                                                                                                 8

2.2.1     Measurement of Marketing Performance market share                                                     10

2.2.2     Profitability                                                                                                                  11

2.3        Pricing Objectives                                                                                                         12

2.3        Theoretical Framework                                                                                                  12

2.3.1     Consumer Pricing Theory                                                                                              12

2.5        Conceptual Framework                                                                                                  13

CHAPTER THREE

MATERIALS AND METHODS

3.1       Research Design                                                                                                           16

3.2       Area of Study                                                                                                                16

3.3       Population of the Study                                                                                                 16

3.4       Sampling Size Determination                                                                                         17

3.5       Source of Data                                                                                                              17

3.6       Instrument of Data Collection                                                                                        17

3.7       Sampling Technique                                                                                                      18

3.8       Method of Data Analysis                                                                                               18

3.9       Model Specification                                                                                                      18

CHAPTER FOUR

DATA PRESENTATION AND ANALYSIS                                                                          

4.1       Data Generation                                                                                                            19

4.2       Data for the Analysis of Hypothesis                                                                               19

4.3       Model Specification                                                                                                      20

4.5       Model of Specification                                                                                                  22

4.6       Findings and Discussions                                                                                              27       

CHAPTER FIVE

SUMMARY OF FINDINGS, CONCLUSION AND RECOMMENDATION

5.1       Summary of Findings                                                                                                    29

5.2       Conclusion                                                                                                                   29

5.3       Recommendation                                                                                                          30

REFERENCES                                                                      

APPENDIX    

LIST OF TABLES

Table 4.1:        Questionnaire Administration and Retrieval                                                 19

Table 4.2:        Skimming Pricing Strategy and Corporate Profitability                                     21

Table 4.3:        Competitive Pricing and Corporate Market Share                                         23

Table 4.5:        Penetrating Pricing Strategy and Turnover                                                    24

LIST OF FIGURES

Fig. 2.1:           Operational framework of the relationship between pricing

strategies and marketing performance                                                           15

CHAPTER ONE

INTRODUCTION

1.1 Background of Study

One of the most crucial operating decisions management must make is establishing a setting price for its products but this is quiet unfortunately that many firms are still mismanaging pricing causing lots of money and anticipated profit to be unexplored and wasted. Egbunike (2007) opined that setting the price for an organizations product or service is one of the most difficult due to some number of variety of factors that must be considered. The primary decision arises in virtually all types of organization, just to mention but a few of them such as manufacturers set prices for their products, they manufacture, merchandising companies set prices for their goods, service firms set prices for such services as insurance policies, bank loans etc. According to Kalu (1998), a strategy stipulates or indicates how a company plans to get to where it wants to. By way of definition, pricing strategy can be defined as how a firm plans to get to where it wants to go through its pricing activities and plans. However, pricing strategy should be congruent with other objectives of the firm. Kotler (2001), is of the view that pricing strategy is paramount to every organization involved in the production of goods and services because it gives a clue about the company and its product, a company does not get a single price but rather a pricing structure that covers different items in its line. A company’s survival and profitability depends upon its pricing decisions, thus price is the only element in the marketing mix that produce s revenue and thus ensures profit ability (kotler and keller 2006) Price adopted by firms must be able to cover all cost in the long run as well as to leave a profit margin to reward management. The Price of a Product has a direct relationship with many operations of the firm’s activities. A price decision will affect demand and this in turn affects the revenue generated by the firm. Similarly, a firm which makes profit has the propensity of attracting more new capital. This shows that the public has confidence in the ability of the firm to yield return to them. So, the performance of management is usually measured by the amount of revenue it generates to satisfy the shareholders of the organization. It is evident that management has a big responsibility before them in setting and adopting the most advantageous pricing policy and the most effective profit plan for their firms, since prices are not set arbitrarily therefore management must focus on all the important factors in setting its price. Thus, it has become imperative to investigate the effectiveness of pricing policy and profit planning in Nigerian organizations.

1.2 Statement of the Problem

Hilton (1991) observed that both the market forces of demand and supply and the cost of production have a Significant bearing on determination of prices. Equally Hilton (1991) explained that there are other variables that influences pricing decisions according to him, this includes: Manufacturer’s pricing objective, economic situation, level of competition, and availability of close substitute. For pricing to be effective, firms must incorporate all these factors in selecting the most  advantageous price for it’s product.

At times, firms are not in the habit of considering these factors and this has led to the shuttingdown of many factories, downsizing of workforce and in most cases, winding up of firms (Hilton, 1991). Profit plans are made in form of budget and they help firms to forecast the level of profit, cost and revenue, they intend to generate in order to gain competitive advantage.

Unfortunately many  firms still do not prepare these plans, thus, this has led firms undertaking unplanned ventures  resulting in escalation and inability of firms to foresee shortage in resources or finance or personnel needed in the future operation of the firm. Where no plans exist, there will be no basis for firm to compare or evaluate their performance. Based on the foregoing, the problem of this study is in three (3) folds.

Firstly, the failure of some firms to incorporate factors such as economic situation, level of competition, availability of close substitute, among others in their pricing decisions, may have resulted to the minding up of several small scale manufacturing firm (SSMF) in Nigeria.

Secondly, it has been shown in accounting literatures that profit planning is a potential tool for achieving profit objectives and efficiency, which small scale manufacturing firms seems to ignore the use of profit planning (or budget) in their operations. This has led to far reaching problem such as huge unforeseen operating cost as well as shortages in good financial and human resources. Thirdly, and most importantly, the problem that stringated this study is the knowledge gap that is, it looks as if small scale manufacturing firms are not aware that pricing policy and profit planning impact positively on profit performance.

1.3       Objectives of the Study

The main objective of this study is to investigate the impact of pricing on marketing performance while the specific objectives will be to;

i.               To determine the effect of skimming pricing strategy on corporate profitability.

ii.              To assess the influence of competitive pricing strategy on market share.

iii.            To determine the effect of penetrating pricing strategy on corporate turnover.

1.4       Research Questions

The following research questions will guild this study;

i.               How does  skimming pricing strategy contribute to corporate profitability in the automobile firms?

ii.              How does competitive pricing help to gain market share in the automobile firm?

iii.            How does penetrating pricing strategy affect the turnover of the automobile firms.

1.5       Research Hypotheses

H_O1: There is no significant relationship between skimming pricing strategy and corporate profitability.

H_O2: There is no significant relationship between competitive pricing strategy and market share.

H_O3: There is no significant relationship between penetrating pricing strategy and turnover.

1.6       Scope of the Study

The study focuses primarily on small scale distribution firms in Abia State and its environs from where the distribution firms of this study are drawn to enable the researcher carryout on extensive investigation on this subject.

1.7       Significance of the Study

This research will serve as a guide to firms in setting the most advantageous pricing policy giving its individual unique situation which will enhance  profitability in the short and long run situation. It will help them to avoid choosing arbitrary prices without considering its distinctive situation and important factors.

It will serve as a guide in choosing pricing strategy which strikes a balance between what the consumers wants to pay for a product and the price in firm is willing to sell; also this research will expose them (the firm) to the need for accounting information in carrying out this decision. The research work will also be useful for the economy in the sense that if firms have substantial control over price setting, then their pricing behavior can influence national output/income and hence community welfare.

Finally, the research work will be useful for those carrying on further research on this or related topic.

1.8       Limitations of the Study

Lack of finance to aid the researcher transport to the different outlet of automobile dealers in Abia State was a problem encountered during the course of this work.

Also, poor responses from the respondents of automobile dealers during the research work was a problem encountered. Selection of suitable data and tools for analysis were also a problem encountered. 

Buyers has the right to create dispute within seven (7) days of purchase for 100% refund request when you experience issue with the file received. 

Dispute can only be created when you receive a corrupt file, a wrong file or irregularities in the table of contents and content of the file you received. 

ProjectShelve.com shall either provide the appropriate file within 48hrs or send refund excluding your bank transaction charges. Term and Conditions are applied.

Buyers are expected to confirm that the material you are paying for is available on our website ProjectShelve.com and you have selected the right material, you have also gone through the preliminary pages and it interests you before payment. DO NOT MAKE BANK PAYMENT IF YOUR TOPIC IS NOT ON THE WEBSITE.

In case of payment for a material not available on ProjectShelve.com, the management of ProjectShelve.com has the right to keep your money until you send a topic that is available on our website within 48 hours.

You cannot change topic after receiving material of the topic you ordered and paid for.