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
HO1:
There is no significant relationship between skimming pricing strategy and
corporate profitability.
HO2:
There is no significant relationship between competitive pricing strategy and
market share.
HO3:
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.
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