EFFECT OF PRICING STRATEGY ON SALES OF CONSUMER PRODUCT

📁 Format: MS WORD | 🗂️ Chapters: 1-5 | 📄 Pages: 65

CHAPTER ONE

INTRODUCTION

1.1        BACKGROUND OF THE STUDY

 In the face of rapid economic and technological changes, today‘s consumer is more curious, more educated and conversant with what he/she exactly wants. These changes also affect the needs of firms. According to Ehmke et al (2005), marketing your business is about how you position it to satisfy your customers‘ needs. Borden (2004) stated that marketing manager must weigh the behavioral forces and then handle marketing elements in his mix with focus on the resources with which he has to work when building a marketing program to fit the needs of a firm. For marketing to effect a change either in a new product or reinvigorate a new brand there are elements that remains constant which must be incorporated in the marketing mix and this is called the ―Four P‘s”. These four P‘s are product, price, promotion and place (Ehmke, 2005). In the context of this paper, the emphasis will be on price; hence the need to elucidate more on meaning of price to both customers and firms.

Price is the amount a customer pays for a product or the sum of the values that consumers exchange for the benefits of having or using a product or service (Bearden et al 2004). Price means different things to different people; it is interest to lenders, COT or service charged by the banker (lenders), premium to the insurer, fare to the transporter, honorarium to the guest lecturer etc, (Kotler et al 2008). According to Rosa et al (2011), the importance of price as a purchase stimulus has a key role in price management since not only does it determine the way prices are perceived and valued, but it also influences consumer purchase decisions (Rosa, 2001; Simon, 1989; Vanhuele and Dreze, 2002). Studies have shown price as an important factor in purchase decision, especially for frequently purchased products, affecting choices for store, product and brand (Rondan, 2004).

Lancioni and Gattorna (2013) in their study affirmed that pricing strategy has a positive relationship with the initiation and implementation of an advertisement and sales strategies that is expected to improve performance whenever there is a synergy between marketing and sales duty and moreso, the organization benefits. But when chaos occurs between these two functional areas, it posts inverse influence on the organization and as a result hampered their overall performance (Crepedes& Piercy,1996; Strahle, Spiro & Acito,1996; Dewsnap& Jobber 2000). Therefore, pricing strategy is concluded to be a marketing strategy (Varadarajan 2010). Similarly, Ramaswamy, Gatignon and Reibstein (1994); Palazon and Delgado-Ballester (2009) and Gu, Kim, Tse and Wang (2010) said that competitive market response to a pricing communication or signal may lead to unpleasant behavior involving a price war, or cooperative behavior in which the competitor raises prices to the new established considerable level.

The greater the importance of price in purchases decisions, the greater the intensity of information and the greater the amount of comparisons between competing brands (Mazumdar and Monroe, 1990). Considering the nature of the consumer products (frequently purchased and consumed products, implying medium-low level of consumer-supplier interaction), the basic is, the customers who usually purchase are more frequently in contact with prices. Pricing strategy is paramount to every organization involved in the production of consumer goods and services because it gives a cue about the company and its products, a company does not set a single price but rather a pricing structure that covers different items in its line (Kotler et al, 2001). According to Hinterhuber (2008) pricing strategies vary considerably across industries, countries and customers and can be categorized into three groups: cost-based pricing, competition-based pricing, and customer value-based pricing.

1.2        STATEMENT OF PROBLEM  

 Post purchase satisfaction has always been a major indicator as a level of satisfaction of customer who used the product in the market.  Defective pricing strategies have contributed towards the achievement of these set of objectives.  Well established and implemented pricing strategies have played a major role in the success of marketing of consumer product. The pricing strategy has however for some time now experiencing some unfavorable external business environment.

Such as

1. Poor pricing strategy reduce the sale of consumer product
2. Lack of effective pricing strategy can be implemented in other to increase the sale and profitability of product.
3. Poor sales of the product
4. Ineffective pricing strategy adopted by Cadbury Nig PLc

1.3    OBJECTIVES OF THE STUDY

The main purpose of the study is on effect of pricing strategy on sales of consumer product. Other specifics objectives of the study are:

1. To establish the relationship between pricing  strategy and sales of consumer product.
2. To identify pricing strategy that can be implemented in other to increase the sale and profitability of product.
3. To investigate on the cause of poor sales of the product in the market
4. To investigate into the pricing strategy adopted by Cadbury Nig PLc

1.4        RESEARCH QUESTION

1. Is there any relationship between pricing  strategy and sales of consumer product?
2. What are the pricing strategy that can be implemented in other to increase the sale and profitability of product?
3. What is the cause of poor sales of the product in the market?
4. is pricing strategy adopted by Cadbury Nig PLc effective?

1.5        STATEMENT OF HYPOTHESIS

H0:There is no significant relationship between pricing strategy and sales of consumer product

H1: There is significant relationship between pricing strategy and sales of consumer product

H0:  pricing strategy adopted by Cadbury Nig PLc does not lead to increased sale of product

H2:  pricing strategies adopted by Cadbury Nig PLc lead to increased sale of product

H0: pricing strategy cannot influence the sale of consumer goods.

H3:  pricing strategy can influence the sale of consumer goods

1.6        SIGNIFICANCE OF THE STUDY

This research work a part from being an essential requirement for the partial fulfillment of National Diploma, it will be an added value and benefit to the researcher, other individual and groups. The project will beneficial to Unilever Nigeria plc, as the findings and recommendations will help to improve their marketing activities. The project benefits my fellow student and student of other institutions in related course.

The information in this project work will enable marketing firms re-appraise the pricing strategy applied in their business and make better use of marketing resources and efforts in their marketing activities. The study will also widen the knowledge base on the researcher in the curse of conducting the research. 

1.7        SCOPE AND LIMITATION OF THE STUDY

The researchers will limit their study to only one organisation, which Cadbury Lagos,Nigeria plc. The scope of pricing strategy will be restricted to Factors affecting price determination; Pricing policies and strategies; sale of consumer product and marketing mix.

A problem in gathering facts and figures for a project of this nature is inevitable. The researcher encountered some problems in administering the questionnaire. It look a lot of time and patient to get the appropriate people to fill and return the questionnaires, and getting access to the necessary documents was even more difficult.

Finally, time constraint is another limitation in the conduction of this research work. Although, despite the researcher work-load in preparing for the final examination during this research work, serious efforts were made to keep appointments with respondents and collection of other data that are objective factual and adequate for this research work.

1.8        DEFINITION OF TERMS

Consumer Product: Anything is offered to the market for acquisition sale, attention use or consumption that satisfied a want or need

PRICE: price as a cost of producing, delivering and promoting the product charged by the organization. Price can be stated as the actual or rated value of a valuable product which is up for exchange; some define it as amount of money paid for product

SALE A sale is the exchange of a commodity for money or service in return for money or the action of selling something. The seller or the provider of the goods or services completes a sale in response to an acquisition, an appropriation or a request.

PRICING STRATEGY: This is firm’s decision on the price of the product and the pricing

1.9             HISTORICAL BACKGROUND OF THE CASE STUDY

Cadbury Nigeria is a member of the Cadbury Schweppes Group, a major player in the global confectionary and beverages markets with over 40, 000 employees and business operations in 200 countries. Cadbury Nigeria has a portfolio of brands that are market leaders in the Confectionery, Food Drinks and Foods categories. 

Cadbury’s initial objectives in the 1950s to source cocoa and prospect for a market in Nigeria led to the establishment of a manufacturing facility in Ikeja, north of Lagos, in 1965. The company has since grown organically to become one of the leading manufacturers in Nigeria, with a rising profile in the Europe, Middle East Africa (EMEA). Listed on the Nigerian Stock Exchange since 1976, Cadbury is in the top 10 of the 258 quoted equities by market capitalisation at the end of 2002. Cadbury Schweppes currently owns 46.3% of the equity, with the balance stock held by about 40,000 individual and institutional shareholders.

Cadbury Nigeria is one of the few signatories to date to the Convention on Business Integrity. Its lead brands include Tom Tom, Bournvita and Bubba bubble gum.

This research material should be used as a GUIDE only…Kindly read our Terms of Use