This study focussed on effective pricing strategies for marketing
of New products a case study of Royalux by Hardis and Dromades. The objectives
of the study are as follows.
- To determine the methods used by Hardis and
Dromades in setting prices for their new product – Royalux.
- To determine how prices of Royalux affect its
demand, position and market shares.
- To find out how customers respond to different
prices of different quality of products.
The scope of the study was limited to Enugu Metropolis. In
sourcing for the required informtion, the researcher used both primary and
secondary data which collected through oral interviews and administration of
three sets of questionnaire one for the management and relevant staff of Hardis
and Dromades, others for consumer and distributors. Bowloy’s formular was used
to determine the sample size of consumers while Topmans formular was used for Distributors
whist a census survey was used for the management/ relevant staff of Hardis and
Dromades. Data were organized, analysed, interpreted and summaried using
tables, percentages, pie chart and histogram, and chi-square statistics were
used to test the three hypotheses formulated.
Based on the analysis, the following finding were made;
- That Hardis and Dromades products become a
household name in Enugu.
- That the firms cost of production was given the
highest consideration in setting price for Royalux.
- The high cost of transportation and handling
cost contributed to increase in price of Royalux
- That the wholesales and consumer of Hardis
product were encourage to a reasonable price to buy Royalux.
1.0 Introduction
1.1 Background of the study
1.2 Statement of the problem
1.3 Objective of the study
1.4 Formulation of hypothesis
1.5 Scope of the study
1.6 Definition of term
2.0 Literature review
2.1 Overview of pricing
2.2 Objective of pricing
2.3 Pricing strategies
2.4 Factor influencing price (Determination)
2.5 Impact of pricing on the marketing of New product
2.6 Pricing strategies Adopted for marketing new
product.
2.7 Pricing strategies for the marketing of Royalux.
3.0 Research methodology
3.1 Sources of data
3.2 Research instrument used
3.3 Population of study
3.4 Determination of sample size
3.5 Sampling techniques
3.6 Method of data analysis and treatment
3.7 Questionnaire administration
3.8 Limitations of study
4.0 Data presentation, analysis and
interpretation
4.1 Presentation and analysis of data
4.2 Test of hypothesis
5.0 Summary of findings, recommendation
& conclusion
5.1 Summary of findings
5.2 Recommendation
5.3 Conclusion
Bibliography
Appendix
CHAPTER ONE
INTRODUCTION
1.1 BACKGROUND OF THE STUDY
Marketing operates within a dynamic environment and today’s
companies are wreathing with customer values and orientations; economic stagnation,
environmental decline, increased global competition, and a host of other
economic political, social and pricing challenges which if Ignored will
be detrimental to the company. Marketing is concerned with getting the right
product to the right customer at the right price.
Price for a product is one of the factors that determine the
demand for the product, that is why economic theory states that price is
determined by the interaction of demand and supply cost and price usually
affect demand and these three are in continuous inter play. For economist, it
is a key factor describing the level and movement of demand. The basic
assumption made about demand is that all things being equal, price plays a
decisive role in determination of the rate of purchase by the consumers. Price
presents a thorny but interesting phenomenon under our current economic system.
Traditionally, price occupies the second position of the internal
or important variables of the marketing mix otherwise known as 4ps.
Product, price and promotion, place pricing decision aspect of a
firms marketing programme arises partly from the fact that of all the
elements of the marketing mix, price is the only one that generates income and
revenue while the next represent lost to the firm (Adirika, Ebue and Nwachukwu
1996:59). Price is also one of the flexible elements of other elements of the
marketing mix unlike, product features and channel commitment, price can be
changed quickly and if price is well blended with way in achieving better
result. Price is a very sensitive issues facing a company of which a company
cannot do without because of that, it can make or mar a company’s image. Price
communicates to the market the company’s interview value/positioning of its
products/services.
No company will want to incur loss through the sales of its
products. Inspite of this firms want to achieve certain level of customer
satisfaction translated in price terms, that is why both manufacturers and
marketers use price to accomplish multiple objectives price may be use as a
clue to product quality while conveying to the customers that a seller has high
quality goods and services. Price wears many hats, stated by (Mark 1979) of the
authors in pricing strategies and this emphasizes the crucial role of pricing
in the survival of a company. At the same time price are pricing competition is
the number one problem facing many marketing executives. Yet, many companies do
not handle pricing well. The most common mistake are: pricing that is too cost
oriented; prices that are not revised often enough to take the rest of the
marketing mix into account; prices that are various enough for different
products, market segment and purchase occasions.
Historically prices usually were set by buyers and sellers
bargaining with each other sellers would asked for a higher price than they
expected to get and buyers would offer less than they are expected to pay.
Through the bargaining process, the would arrive at acceptable price individual
buyer pay different prices for the same products, depending on their needs and
bargaining skills.
Historically, price has been the major factor affecting choice.
This is skill trade in poorer nations, among poorer groups, and with commodity
products. However, non-price factor have become more important in buyers –
choice behaviour in recent decades.
A company may decided to divert into a particular market at a
specific price level as it develops a product accordingly, this is called
pricing strategy. The organization aim at the most valuable price level that is
ripe for exploitation or that meet its market objective at a profit, once
the price level has been established necessary variation in price structure
from day to day and from time to time are tactical.
But if you have a good product, do not spoil it by trying to sell
it too cheaply because Nigerian Consumers associate high price with quality
product even though it is a price consumed community.
From the above, “Price” constitute an important or essential area
of study, because price of a product is not seen by the purchaser simply in
terms of what is the cheapest price rather and element in the total bundle of
satisfaction which constitute a product in the consumers eyes.
Therefore, it is a means of increasing primary demand per a
product, a firm may like to fix a price that is likely to increase wider
consumer acceptance and consequently increase the volume of a product. Both the
manufacturers, the purchasers and likewise buyers look at price differently.
The manufacturer and the retailers view the price relating to how
good his accounting method are how much profit he may be capable of making
price is expressed in terms of Naira and kobo or any other monetary medium of
exchange and it tells the purchaser what the cost will be to him. Although cost
is not necessary regarded purely in terms of immediate ash payment in order to
own a product.
Therefore, pricing function is handled different ways by different
organization. In small organization, price decision is made by top management
while in large organization it s handled by lower manager and marketing
department in accordance with top management pricing objective, policies,
strategies and procedure,
A marketing firm should, therefore adopt such pricing strategies
that will lead to the realization of not only the pricing objective but also
the normal corporate goals of the firm.
Schewe and Smith (1980: 134-137) identified two broad pricing
strategies which marketing can adopt in setting the prices of new products.
These are setting an initial high price for the product (Skinghind Pricing
Strategy) and/or setting an initial price (penetration pricing strategy) aimed
at facilitating consumer acceptance.
Hardies and Dromades Nigeria Limited was incorporated in Nigeria
as a private liability company in October 11th 1993
with its registration number as 232241. On October 10 1996, it was duly
registered to be Mixing, compounding, manufacturing, preparing Dispensing
and selling of drugs, poisons dispensing lotion, soaps etc at the provision of
pharmacist council of Nigeria. Its functions amongst other business were to
carry on manufacturing of hygiene household products.
The company is located at Emene in Enugu with branches in almost
all the big cities in Nigeria. This research work centers on the company’s
effective pricing strategies for marketing of a New Product – Royallux. Pricing
can determine especially at the introductory stage of a new product the success
or failure of the product in the market.
Hardis and Dromades manufacturing firm adopts both low pricing
strategy and high pricing strategy in marketing its new product – Royallux. The
low pricing strategy their new product – Royallux as fast as possible in order
to generate substantial sales volume and a larger market share while the high
pricing strategy makes it possible for the firm to recover its product cost and
other expenses as quickly as possible (Stanton 1984:79). This decision is
influenced by a number of factors such as customers demand schedule, the cost
function, the competitors prices/reaction and the firms pricing objectives and
existing government regulation regarding pricing generally. Vernon and Lamb
(1986 : 60) stated the importance of these factors in determining the prices of
varies from one company to another.
Because of the important of price in the marketing of new product
that the researcher takes a critical look at the effective of pricing
strategies for marketing of new product with emphasis of Royallux.
1.2 STATEMENT OF THE PROBLEM
The research work is carried out to determine how Hardis and
Dromades apply their pricing strategies in marketing of the new product –
Royallux. The question is, does the customers see the company’s prices as being
in line with the value or quality of its offers from the discussion held with
customers of Hardis and Dromades. Some complain that the price is high compared
to the product quality while some customers opined that the price is in line
with the quality of the product. Hardis and Dromades incurred cost in the
process of providing goods for customers satisfaction, and one way of
recovering some of these cost is through effective pricing strategy.
Therefore, there is need for manufacturing firms to adopt, pricing
strategies that will enable them at least to recover production overhead cost
and make profit. Thus, he determination of pricing strategies adopted by Hardis
an Dromades in Enugu in the pricing of their new product – Royallux will form
the central problem of this research.
Finally their problems include identification of the factors which
determines or influence the price elastiity of demand experience – curve
effects, competitors prices in similar goods, which consequently, determine the
choice of pricing strategies by the firms and also in the marketing of Royallux.
1.3 OBJECTIVES OF THE STUDY
The objective of this study is to determine effective are the
methods used by Hardis and Dromades in settling prices for their new product –
Royallux.
- To determine how prices of the new product
affect its demand, position and market share.
- To find out how consumers respond to different
prices of different quality of products.
- To Know the pricing strategies necessary to
achieve the companies sales goal with regard to Royallux.
- To evaluate the pricing strategies of the
company in increasing patronage for Royallux
- To determine how prices can enhance the
profitability of the company’s product.
1.4 FORMULATION OF HYPOTHESES
The following hypotheses were formulated to help in carrying out
this study.
H01 –
The pricing strategies adopted by Hardis and Dromades for Royallux does not
lead to increased sales of the product.
H1 – The pricing strategies adopted by Hardis and Dromades for
Royallux had to increased sales of the product.
H02 –
The pricing strategies adopted by Hardis and Dromades does not lead to repeat
sales of Royallux.
H2 – The pricing strategies adopted by the company to increase
repeat sales of Royallux.
H03 –
The pricing strategies Hardies and Dromades for Royallux have negative
impact on the profit of the company.
H3 –
The pricing strategies adopted by the company for Royallux have a positive
impact on the profit of the company.
1.5 SIGNIFICANCE OF THE STUDY
A product’s price is a major determinant of the market demand for
it. Price affects a firm’s competitive position and its market share is
imperative for marketing firm to understand and take cognizance of the
pricing practice of other competitors and effective prices for its product.
Therefore, this research will be useful to other different brands product firms
by enabling them to gain a useful insight into the effective pricing strategies
of the marketing firm whose operations and activities in one way or the other,
effect and influence their own (different brand product firm) activities.
The consumer public will also benefit from this study since they
will come to know why marketers prices are high or low, they will also be in a
better position to know the best company industrial or consumer product.
The readers will benefit from the study as the information
contained would widen their scope of understanding and knowledge in the area of
study which will stir up further investigation.
Finally the study oil make the researcher to acquire more
knowledge in the field of researching
1.6 SCOPE OF THE STUDY
This study is centered on Hardis and Dromades Nig. Ltd – Enugu
which is located in Emene. The research examined the pricing strategies used by
the above-mentioned firm for the marketing of Royallux in Enugu metropolis.
1.7 DEFINITION OF TERMS
The following terms used in this study should be taken to mean the
following:
Marketing:
It is all important task of identifying, anticipating and
satisfying human needs and want through exchange process as efficiently and as
effectively as posible (Adirika 1990:3)
Pricing objective:
They are goals which management attempts to achieve with its
pricing structure and strategies (Adrika, Ebue & Nnolim 1996:71)
Product:
It is anything or idea that can satisfy a need or a want (Adirika,
Ebue & Nnolic 1997: 114)
Strategy:
It is the major pattern of major objectives, purposes or goals,
essential policies and plans for achieving a company goals in such a way to
define what business the company is in or is to be in (Philip Kotler 2003:118)
Effective
It is a systematic means by which marketing manager adopt in
reaching the stated objectives, goals of an organization with the maximum
available resources (Philip Kotler 2003: 286).
Skimming pricing:
This is a setting an initial high price on a new product (Ani
1998: 59)
Discount
This refers to a reduction from the base price of a product:
usually they are offers to buyers for buying in large quantities, and paying
services for the seller (Philip Kokler 2003: 497).
Pricing
Pricing is the moved or other considerations exchanges for the
ownership of the goods or services (Edoga and Ani 2000: 218 – 319).
| Department | Marketing |
| Project ID Code | MKT0088 |
| Chapters | 5 Chapters |
| No of Pages | 99 pages |
| Reference | YES |
| Format | Microsoft Word |
| Price | ₦4000, $15 |
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| Contact Us On | +2347043069458 |