THE IMPACTS OF PRICING IN MARKETING
ABSTRACT
The “Impacts of Price in Marketing of Coke Drinks in Enugu State” are the subject of this project’s investigation. Every everyone is interested in prices, therefore price changes influence everyone, whether they are consumers or producers. The goal of this study project is to highlight the significance of pricing in order to accomplish the organization’s desired return on investment in capital. It also aims to produce sales and gross profit forecasts while taking into account all relevant internal and external elements. The literature has been examined
both primary and secondary data, which were gathered through questionnaires, in-person interviews, written materials or the work of other journals, textbooks, and handouts, were used by the researcher. Moreover, surveys were given out and tested hypotheses. Eventually, based on the study’s findings, it is advised that:
a. The business should prioritize its products over all other corporate goals and profit maximization over selling prices.
b. Careful consideration of personnel and the reduction of production costs when choosing a pricing strategy results in a lower selling price per product, which frequently leads to an increase in turnover and net profit.
CHAPTER ONE
1.0 INTRODUCTION
1.1 BACKGROUND OF THE STUDY
Establishing the selling price for a company’s goods and services is one of the most crucial operational decisions management must make. Manufacturing organizations are also constantly faced with a variety of choices. The management must choose what to produce, how to produce it, how much of it to create, and at what price. The management must also decide what procedures and policies to follow. Management must establish policies on discount allowance, payment duration, freight payment, credit terms, and many other price-related situations that eventually effect the market price of the goods it is supplying to the market list cost.
IMPACT OF PRICING IN MARKETING OF COCA-COLA
Business-related marketing activities include planning for demand, assisting with product development, and making products and services available to satisfy customers and users while also generating profit for the company. When a product is made by a company, the consumer typically pays for it rather than receiving it for free. The value of the product is a factor in this decision. All businesses, whether for profit or nonprofit, must determine how much to charge for their goods and services. (Kotler, Philip, 1987).
In the past, sellers and buyers have negotiated prices; the seller will offer more than he expects to receive, and the buyer will offer less than he expects to pay, until an agreeable price is found.
Pricing in marketing is the key activity within the capitalistic system of free market enterprises, in other words it is the most critical element of marketing mix that determines a company’s marketing shares and profitability. Price is the only marketing mix that yield revenue, while the other 3ps generate cost. Most companies do not only find it difficult but also mishandle their pricing strategies.
Price is one of the major variables that a marketing manager controls. Originally price is considered vital among the factors which influence buyer’s choice and behavior. In 1950’s and 1960’s non-price factors grew relatively more important and it had reached a point where over half of a sample of company managers did not select pricing as one of the five most important policy areas in their firm and marketing success.
Recently, because of the world wide inflation price has again attracted considerable attention and is now viewed by many marketers as one of the most important element in the marketing mix following the product.
Bush and Houston (1985,558) defined price as the value assigned to the utility one receives from goods and services, usually price is the amount of money that is given up to acquire a given quantity of goods and services. It is the regulator of the economic system because of its influence on the reward for all factors of production and the allocation of these factors. However in the marketing of a new product price policy should take cognizance of its importance on other element of the marketing mix. In recent time the question is how do you much do you think we can get this item, how much do you think we ought to sell it for, have been asked by managements who are in charge with the responsibility of pricing the products or services. Therefore considers the reaction of its competitors in deciding the pricing strategy to go for. That is, how will the dealers and distributors react to this when they see ours? And will the government intervene and prevent this price? In all, market need to know the laws, and regulations affecting and to comply with it. guided by the company’s objective, the marketing management must develop a set of pricing objective and policies. They must anticipate what the pricing policy of the firm will face and how it is going to overcome it. Some of this pricing policies should be seen as how flexible price will be, at what level i9t will be set, how pricing will be handled during the cost of the product life cycle.
Pricing is handled in various ways. in small business organization pricing is handled by the top management rather than the marketers. While in large scale organization, pricing is typically handled by divisional and product line managers, then the general pricing is done by the top management as it is with the case study.
Business these days is becoming competitive and sophisticated. This demand has made companies to adopt various price policy decision and other strategies to attract customer. Price is one of the 4ps under the control of the marketing practitioners. It’s importance within the marketing mix cannot be overlooked. The pricing policy which a firm adopts in setting their product price normally goes to affect the organization and profit. Although it is not out of place to recognize the important place of the other aspect of the marketing mix (product, place or distribution, promotion) in working in harmony with price towards the attainment of marketing objective. Pricing should reflect the worth of the product or service in the eyes of the consumer, not just cover costs. The task of translating the manager’s pricing objectives and policies into pricing decisions that will contribute to the achievement of the overall marketing target must be completed. Since pricing is a crucial decision factor, all departments and functional areas are invested in it. Pricing management is a team effort. Decisions on pricing are made in accordance with organizational guidelines that control the firm’s future operations. A company must make a lot of pricing policy decisions in order to improve the performance of the firm. It includes the following.
1. Skimming or penetration pricing policy
2. Resale agreement policy
3. Product line pricing policy
4. Discount pricing policy
5. Psychological pricing policy etc.
1.2 STATEMENT OF PROBLEMS
Because of the high rate of inflation that is influencing the business environment in an unpredictable economy like ours, estimating the price of goods or services is challenging. When production overhead costs rise, the anticipated price will change and cause problems and perhaps even product failure. There is also a negative impact on pricing policy decisions when businesses are faced with a complex of false future forecasts, such as when a budget is improperly appropriated and implemented, which will have a negative impact on the organization. Hence, the study project discusses “The effect of pricing on marketing of Coca-Cola products in Enugu State.
1.3 OBJECTIVE OF THE STUDY
This study’s goal is to understand how businesses set their new product prices, with a focus on Coca-Cola. Pricing is a key factor in achieving all goals since it affects customers just as much as it influences how people perceive a company. The goal of the study project is to determine how much the Coca-Cola Company adheres to its pricing strategy in the context of a cutthroat marketing climate.
1.4 RESEARCH QUESTIONS
1. What kind of pricing strategy is coca-cola using?
2. Do you consider pricing to be of importance more than coca-cola product?
3. Is there any significant relationship between pricing of coca-cola and companies image?
4. Do you meet your target on investment at the price you sell coca-cola product?
5. Do you think that the pricing strategy coca-cola are using is competitive?
6. Do pricing assist coca-c0la in increase sales volume ?
1.5 HYPOTHESIS
Ho1: Coca-cost cola’s is more crucial than Coke’s.
H1: Coca-Cola pricing is not more significant than Coca-Cola
Ho2: Coke pricing and company reputation have a substantial relationship.
H2: There is no discernible connection between Coca-Cola pricing and the company’s reputation.
H03: Do you reach your investing goals with the price at which you sell coke?
H3: With the price you charged for Coca-Cola, you fell short of your investment goal.
H04: The price approach employed is aggressive.
H4: The chosen pricing approach lacks competition.
1.6 SIGNIFICANCE OF THE STUDY
The reader will be able to comprehend the significance of price and pricing in the marketing of coke thanks to this research project, which is being conducted under a case study of Coca-Cola in the state of Enugu. It will also emphasize the value of selling as a normal pricing strategy for both new and existing products. It will make clear to the organization’s management the detrimental effects of a poor price policy on the expansion and growth of its firm.
Yet, the knowledge contained in this project work will be useful to any future researchers who wish to do study investigations in this area.
1.7 SCOPE OF THE STUDY
Coca-Cola has numerous locations across the nation and is the research topic of choice. They have offices in Lagos, Benin, Enugu, Onitsha, Owerri, Jos, and other cities, however the researcher chose to conduct this study in Enugu state because she was unable to travel to other offices due to her logistical and economic limitations.
1.8 DEFINITION OF TERMS
For easy and fast comprehension of this project work, there are some certain key terms which ought to be defined. they are as follows;
1. Price: price can be defined as sacrifice made to acquire a given product, which may be monetary or non monitory.
2. Pricing: Onunla .J. Kelechi (2004,p.77) defined pricing as the activities involved in setting the price for which a product will be sold.
3. Pricing policy: it is referring to as guideline philosophy or course of action designed to influence and determine pricing policy decision.
4. Product: Kotler and Amstrong (2001 p7) a product is anything that can be offered to a market for an attention acquisition, use or consumption that might that satisfy a want or need. It includes physical object, services, objects, places, organizations and ideas.
5. Strategy: a plan of action intended to accomplish a specific goal.(source : internet)
6. Quality: the ability of a product to consistently meet or exceed customers requirement (source : internet)
7. Market: these are the potential buyers of your product.
8. Value: a customer perception relative price (the cost to own and use) and performance (quality). (source : internet)
9. Management: is defined as the process by which operative groups directs action towards common goals.
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