AN ANALYSIS OF THE EFFECT OF PRICING STRATEGY FOR EFFECTIVE MARKETING OF A PRODUCT
Chapiter 1
1.0 Overview
The study on the analysis of the impact of pricing strategy for successful product marketing is introduced in this chapter. The general introduction, study goals and objectives, problem description, hypothesis testing, research question, rationale, and study scope will all be included in this chapter.
1.1 Introduction in general
Due to the quick changes in economic and technical conditions, today’s consumer is more inquisitive, knowledgeable, and aware of what he or she wants. The demands of businesses are likewise impacted by these changes. Ehmke et al. (2005) assert that positioning your company for customer satisfaction is an important aspect of marketing it. According to Borden (1984), when developing a marketing program to meet a company’s needs, a marketing manager must consider the behavioral dynamics at play before handling the marketing components in his mix while keeping in mind the available resources. The “Four P’s” are the factors that must be included in the marketing mix in order for marketing to affect change, whether in a new product or revitalize a new brand. Product, pricing, promotion, and place are the four Ps (Ehmke et al. 2005). The focus of this study will be on price, thus it is important to clarify what price means to both customers and businesses.
According to Bearden et al. (2004), price is the sum of the values that customers exchange for the advantages of owning or utilizing a product or service. Price can also be the amount that a client pays for a product. Price might signify different things to different people. For lenders, it may represent interest, COT or service fees, premiums for insurers, transportation costs, honoraria for guest lecturers, etc. (Kotler et al 2008). Rosa et al. (2011) assert that the value of price as a marketing stimulant is crucial to pricing management because it not only affects how prices are viewed and evaluated but also how effectively they are marketed (Rosa, 2001; Simon, 1989; Vanhuele and Dreze, 2002). Price is a crucial element in efficient marketing, especially for regularly purchased goods, influencing decisions about the brand, product, and shop (Rondan, 2004).
The intensity of information and the volume of brand comparisons increase in direct proportion to how important pricing is to effective marketing (Mazumdar and Monroe, 1990). Given the nature of consumer goods—frequently eaten and acquired goods—and the implication of a medium-low level of consumer-supplier interaction, the basic truth is that customers who regularly make purchases come into closer touch with prices. Every firm involved in the production of consumer goods and services must have a pricing strategy since it provides information about the company and its products (Kotler et al., 2001). Companies do not set a single price but rather a pricing structure that encompasses many things in their line. Pricing strategies can be divided into three categories, according to Hinterhuber (2008): cost-based pricing, competition-based pricing, and customer value-based pricing. Pricing methods differ significantly between industries, nations, and customers.
A key responsibility of the business owner and a crucial step in the planning process is selecting a pricing strategy. It involves more than just figuring out the production cost and adding a markup (Roth 2007). As a result, setting product prices is a strategic action, and the price or prices allocated to a product or range of items will affect how consumers perceive the firm’s products and how they ultimately decide whether to buy them.
Marketing generally aids businesses in defining, promoting, and disseminating their products as well as maintaining relationships with their customers. Due to increased competition (Myers 1997), gray market activities (Assmus and Wiese, 1995), counter-trade requirements (Cavusgil and Sikora, 1988), regional trading blocks (Weekly, 1992), the need for intra-market segments (Dana 1998), and volatile exchange rates (Knetter, 1994), pricing has always been one of the most difficult marketing decisions. Depending on the price, consumers’ perceptions of the products vary. Pricing things for consumers is therefore a challenging undertaking, mostly because a high price may result in unfavorable opinions about products and a low price may be deceptive regarding other qualities, such as quality.
Businesses must devise and use the appropriate approach in a variety of settings because there are numerous pricing objectives that give rise to varied tactics. Premium and penetration pricing, price skimming, economy and psychological pricing, product and optional product pricing, captive and product bundle pricing, promotional, geographical, and value pricing are a few methods of setting a product’s price. However, when it comes to pricing for worldwide and foreign markets, the situation is even more challenging.
1.2 Purpose And Goals Of The Study
The following are the precise aims of this study, which includes analyzing the impact of price strategy for successful product marketing:
1. To investigate the impact of price strategy for successful product marketing.
2. To investigate elements that impact a product’s pricing and promotion.
3. To investigate the connection between a pricing strategy and successful product marketing.
1.3 State of the problem:
It is less evident how the effective marketing notion may direct pricing operations. Customers would undoubtedly like to pay less, in some cases even nothing, but it is just not possible to provide goods for free. A company that does that will go out of business, run dry, and be unable to provide value to its clients. However, these are issues that have given this study’s goal.
The main goal of this study is to comprehend how customers see businesses’ pricing methods. It is risky to presume that customers find a given pricing strategy to be fair; in addition, it is inappropriate to claim that customers think the price that is established reflects the cost of manufacturing a good. More importantly, various pricing tactics employed by rivals also obstruct and influence the products. Another issue stems from the fact that few businesses implement the concept of value in their pricing strategy since consumers do not grasp it (Hinterhuber, 2008). If a company believes that its prices are communicating value to clients, but the customers do not see value as connected to the set prices, then the pricing purpose of the company is defeated due to zero marketability.
Since the advent of the internet, businesses have moved their operations online, and pricing for goods and services has also changed. Customers’ exposure to online and offline costs currently has a big impact on how well a product is marketed. Anyone can get access to the most recent multimedia material via the most efficient connections and at the most affordable prices thanks to the new, technologically advanced distribution channels.
1.4 Theories
One HO: There is no discernible difference in the mean rating of consumer responses about the impact of pricing strategy for successful product marketing.
HA: The mean evaluation of consumer responses on the impact of price strategy for successful product marketing shows a substantial difference.
The second hypothesis (HO) states that there is no correlation between the mean rating of consumers’ opinions on the variables influencing a product’s pricing and marketing.
HA: There is a strong correlation between the mean rating of consumer responses to elements impacting a product’s pricing and marketing.
The third hypothesis (HO) states that there is no connection between a successful product’s pricing strategy and marketing.
HA: A product’s pricing plan and successful marketing have a considerable relationship.
1.5 Questions For Research
1. How does pricing affect the successful marketing of a product?
2. What variables affect a product’s pricing and marketing?
3. How can pricing strategy and successful product marketing work together?
1.6 Justification For Study
The result of the global economic slump, of which Nigeria as a nation has experienced its fair share, has been an upsurge in the emergence of new enterprises everywhere. The pricing strategy used by the management of these rival companies for their individual goods and services has been key to their ability to remain in business. Consumers perceive businesses that demand more money for less value as being pricey, which results in a decline in business and the eventual extinction of the items. This study is justified because it will give managers of businesses and other company administrators a framework for education that they can use to regulate their price structure for efficient product marketing.
1.7 Aim Of The Study
This study will discuss a product’s pricing structure and how it affects how well the product is marketed.
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