PRICING STRATEGIES AND MARKETING PERFORMANCE OF SELECTED MOBILE PHONE OPERATORS (A STUDY OF GLO NIGERIAN LIMITED)

ABSTRACT

This Research work focused on effect of pricing strategies and marketing performance of GLO in Umuahia, Abia State. Pricing strategies is how a firm plans to get to where it want to go through pricing strategies. An industry’s survival and profitability depends upon it pricing decision, thus price is 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 pricing, competitive pricing. The problem that stringated this study is the knowledge gap that is, it look as if small scale manufacturing firms are not aware that setting their prices right impact positively on profit performance this study adopted descriptive design which involves the use of questionnaire and interview which were used to generate data from the respondent. The convenient and judgmental sampling methods were used to determine the sample size of GLO management and staff in Umuahia, 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 be 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

Cover Page

Tittle Page i

Declaration ii

Certification iii

Dedication iv

Acknowledgement v

Table of Contents                                                                                vi-viii

List of Tables ix

Abstract x

CHAPTER ONE

INTRODUCTION

1.1 Background to the study  1

1.2 Statement of the problem 2

1.3 Objectives of the study 3

1.4   Research questions  ` 3

1.5 Research hypotheses  4

1.6 Scope of study 4

1.7 Significance of the Study 4

1.8 Limitations of the Study 5

1.8 Definition of Terms 5

CHAPTER TWO

REVIEW OF RELATED LITERATURE

1.8 Definition of Terms 6

2.1.1 The concept of pricing strategies 6

2.1.2 Marketing Performance 8

2.2.1 Measures of marketing performance market share 10

2.2.2 Profitability 10

2.2 Pricing Objectives 11

2.3 Theoretical Framework 18

2.3.1 Consumer Pricing Theory 18

2.3 Empirical Framework 19

CHAPTER THREE

RESEARCH METHODOLOGY

3.1 Research design 21

3.2 Area of the Study         21        

3.3 Population of Study 21

3.4 Source of Data 22

3.5 Instrument of Data Collection 22

3.6 Sampling Technique 22

3.7 Method of Data Analysis 22

3.8 Model specification 22

CHAPTER FOUR

DATA PRESENTATION AND ANALYSIS

4.1 Data Generation 24

4.2 Data for the Analysis of Hypothesis 1 26

4.3 Model Specification 27

4.4 Findings and Discussions 32

CHAPTER FIVE

SUMMARY OF FINDINGS, CONCLUSION AND RECOMMENDATIONS

5.1 Summary of findings 34

5.2 Conclusion 34

5.3 Recommendations 34

References 36

Appendixes 39

LIST OF TABLES

Table 4.1 Questionnaire Administration and Retrieval 24

Table 4.2; Skimming Pricing Strategy and Corporate Profitability 26

Table 4.3: Competitive Pricing and Corporate Market Share 28

Table 4.4 Components of r_s 29

Table 4.5 Penetrating Pricing Turnover 31

CHAPTER ONE

INTRODUCTION

1.1 Background to the Study

Telecommunication industry in Nigeria from inception has been the absolute monopoly of the federal government. At the initial stage of its development, it was meant to provide effective means of communication for the colonial administration. However after independence it became so obvious that telecommunication services be developed just after the colonial masters and the foreign trading companies thereafter however, it stated to be viewed as a social service necessary to augment government development effort by providing faster and efficient means of communication to areas far away from the centre of administration, commerce and industry.

Nowadays, communication does not only enhance mutual understanding and social integration of disperse communities but also foster harmonious relationship which contributed immensely to the overall socio-economic, political as well as cultural development of human society. GLO industry in Nigeria is currently undergoing transformation due to the deregulation of policy that has been implemented by the Nigerian communication commission. At the moment, there are numerous telephone service providers in Nigeria that are competitor with “NITEL” this consists of Globacom, MTN Nigeria, Visafone, Etisalat etc. they provide effective mobile phone service for local and international calls. GLO has been regarded as the most known network in the market today after consulting some consumers of other network.

Consequently this new trend give rise to service commitment of huge financial resources into the marketing activities of service provider generated in Nigeria. A good marketing programme will enable the company to achieve its operating objective faster.

0n this study the researcher makes an attempt to evaluate the marketing strategies in the company’s marketing activities in the area covered by this study.

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 influence 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 its product.

At times, firms are not in the habit of considering these factors and this has led to the shutting down 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 winding 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 marketing  performance.

1.3 Objectives of the Study

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

i. determine the relationship that exist between skimming pricing strategy on corporate profitability.

ii. assess the relationship that exist between competitive pricing strategy on market share.

iii. determine the relationship that exist between 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 mobile communication firms?

ii. How does competitive pricing help to gain market share?

iii. How does penetrating pricing strategy affect the corporate turnover?

1.5 Research Hypotheses

H0₁: There is no significant relationship between skimming pricing strategy and corporate profitability.

H0₂: There is no significant relationship between competitive pricing strategy and market share.

H0₃: There is no significant relationship between penetrating pricing strategy and corporate turnover.

1.6 Scope of the Study

The study focuses primarily on small scale distribution firms in Abia State and its environments 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 a 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.

1.8 Definition of Terms

1.8.1 Pricing  Strategy:  It refers to a method companies use to price their products or services. 

1.8.2 Performance: performance  is the accomplishment of a given task measured against preset known standards of accuracy, completeness, cost and speed.

1.8.3 Marketing Performance: Marketing performance is the systematic management of marketing resources and processes to achieve measurable gain in return on investment and efficiency, while maintaining quality in customer experience.

1.8.4 Mobile Phone operators: A mobile phone operator, wireless provider, or carrier is a mobile telecommunications company that provides wireless internet GSM services for mobile device users.