Influence of Pricing Strategy on the Sales of a New Product; A Case Study of Gumalti Super Store Maiduguri Borno State
Chapter One
Research Objectives
The study was guided by the following objectives:
- To determine the influence of sales oriented pricing on consumption of new fast food products at fast food restaurants , borno.
- To identify the influence of competition on pricing at fast food restaurants , borno.
- To establish the influence of sales promotion on consumption of new fast food products at fast food restaurants , borno.
- To assess how the quality of the products affects on consumption of new fast food products at fast food restaurants .
CHAPTER TWO
LITERATURE REVIEW
Introduction
The main purpose of this literature review is to identify and examine what has been done by other scholars and researchers in relation to effects of price change on consumption of new consumer products. This review also assisted the researcher to limit the problem to define it better. A detailed knowledge of what has been done helps the researcher to avoid unnecessary and unintentional duplication of other projects, demonstrates familiarity with the existing body of knowledge from a framework within which the research findings are to be interrupted and finally to overcome limitations of previous studies. This chapter covers previous studies undertaken on the subject of the study by various researchers and scholars across the globe. The main sources of literature were textbooks, publications. Newsletters, thesis and the Internet search engines.
Literature Related to influence of sales oriented pricing on consumption According to Kibera (2002), price is the value placed on a good or service by a customer at some point in time. Pricing is a problem when a firm has a set of prices for the first time. This happens when the firm develops or requires a new service. It introduces its regular product into a new geographical area and when it enters bids on new contract work. The firm must decide where to position its quality and price.
Kotler et al (1991) says that, deciding the price of a product is not just a matter of recording production costs, adding the experiences of operating the business and providing a seasonal profit. The following factors are important to consider when setting a price: the products fashion and seasonal appeal, competition and supply and demand
Costs and experiences: the manufacturers and distributors of a product involve many costs and experiences; these include expenditure for product materials, employees’ wages, shipping charges, advertising, selling and business taxes.
Individual food choices are influenced by a wide variety of environmental and individual variables. Three main dimensions related to food choices are taste, perceived value (which includes price and portion size) and perceived nutrition. Foods vary along each of these evaluative dimensions. Individuals also vary in terms of the importance placed on each dimension. For example, individuals of lower socioeconomic status may place greater importance on perceived value, whereas those who are mainly concerned about health and nutrition may place greater importance on the nutritional quality of foods. In general, people may possess knowledge about healthful food choices, but when considered in tandem with the choice dimensions of price and taste, they may choose the tastier and cheaper, but less nutritious, food. An important question for public health promotion efforts in the area of healthful food choices is, “Can people be influenced to purchase and consume more healthful foods if the foods are increased in attractiveness through lowering prices?” (Kibera, 2002).
CHAPTER THREE
RESEARCH METHODOLOGY
Introduction
The chapter outlined the methodology and procedures and modalities in data collection. It also covers research design, determination and identification of the population sample size, sampling design, sampling procedure, the instruments of data collection, validity and reliability of data collected.
Research Design
Research design is an arrangement of conditions for collection and analysis of data in a manner that aims to combine relevance to research purpose with economy. The study employed descriptive survey research design. According to Koul (1986) the design is efficient in collecting a large amount of information within a short time. It was felt that descriptive survey is the only means through which views, opinions, attitudes and suggestions for improvements regarding to the effects of price change on consumption of new consumer products at fast food restaurants . This enabled the researcher to understand how one variable under study affected (in this case price changes) or was responsible for changes in another variable (Consumption of new food products). Descriptive research design was chosen because in business research, the cause-effect relationship is less explicit. Cooper and Pamela [2006] pointed out that, the use of descriptive research design enabled the understanding, explanation, prediction and control of any relationship between variables under study.
Target Population
The study targeted 86 employees as well as 160 past and present customers of fast food restaurants , uyo. Oso and Onen (2005), alludes that a description of the target population is important and should stipulate its features. The study targeted: managers, supervisors and employees of Prime Chic Inn, Chicken Grill, Chicken Zone and Queen chic fast food restaurants , uyo. This is because they provided information on price and consumption of new food products. Both management and employees provided information on how the price has affected consumption of new food products. The data is shown in the table below:
CHAPTER FOUR
DATA ANALYSIS AND PRESENTATION
Introduction
This chapter presents a quantitative and qualitative analysis of study findings and discusses the influence of price change on consumption of new consumer products at fast food restaurants , uyo, akwa ibom. It is divided into sections that address data preparation and screening, demographic composition of the study sample, descriptive analysis of the data and discussion of findings.
CHAPTER FIVE
SUMMARY, CONCLUSION AND RECOMMENDATIONS
Introduction
In this chapter, a summary of the findings of the study is presented as it related to the specific objectives of the study. Conclusions in relation to the purpose of the study were then made based on these findings. The chapter ends with recommendations to stakeholders on the influence of price change on consumption of new consumer products a survey of fast food restaurants , uyo
Summary of the study findings
This study sought to establish the influence of price change on consumption of new consumer products. In order to achieve this endeavor, the study came up with four specific objectives to be pursued as well.
The objectives tackled identified price change namely: sales oriented pricing; competition on pricing; communicate price changes to its customers, customers’ reaction toward price changes and how they affected consumption of new consumer products. A summary of the major findings of this study is presented in the sections that follow.
To determine the influence of sales oriented pricing on consumption of new fast food products
Based on the findings it’s clear that price do affect organization uses this approach they will be certain about the price than demand and they do not have to make frequent adjustments sales that are high price mean low sales while low prices mean high sales.
This is because the marketer to communicate price changes. When an as demand changes. Also prices tend to be similar and competition is minimized.
To identify the influence of competition on pricing
Based on the findings on the effect of competition on pricing it showed that organizations set their prices in relation to those of competitors. Historically, sellers will ask for the highest price on their products and customers would bargain to an acceptable price but today most organizations set one price for all buyers. Moreso, it is evident that the firm should look for current economic situation. To endure a price strategy, it is high, it gives the firm a greater degree of advantage but not so when is low. Thus, customer’s characteristics play an important role in stocking price strategies.
Influence of sales promotion on consumption of new fast food products at fast food restaurants
Based on the findings it showed that sales promotion enhances two-way communication. The ability to interact with the receiver allows the sender to determine the impact of the message. Problems in comprehension or objections can be resolved and in- depth discussions of certain selling points can be provided immediately. Some of the qualities that sales promotion must value most include empathy good listening, honesty, dependability, and thoroughness and follow through.
More so sales promotion represents the customer main link of the firm. Moreover, through the efforts of the successful salesperson, a company can build relationship with customers that continue long beyond the initials sale. It is the salespersons who serve as the conduct through which information regarding products flaws improvement applications, or new uses can pass form the customer to the marketing department. Personal selling provides the push needed to get intermediaries to carry new products, increase their amount of goods purchased and devote more effort in merchandising a product or brand.
To assess the influence of quality of the products on consumption at fast food restaurants
It is clear from the finding that complains always accompany price changes, this because customers identify complaining as their solution to price changes. Purchase decision one based on how customers perceive prices and what they consider to be the current actual price-not the marketer’s stated prices. They may have a lower price threshold below which prices may signal inferior or unacceptable quality as well as an upper price threshold above which prices is prohibitive and seen as not worth the money. Also, Consumers’ evaluation of the fairness of a price-changing firm depends on their information. As their information changes, their resistance to price increases should change as well. A firm that knows its customers would obviously time its price increases so they occur when resistance is relatively low
Conclusions
Based on the findings of this study of determining the influence of price change on consumption of new consumer products, the researcher made the following conclusions:
- Price does affect sales: a high price means low sales, while low prices mean high sales
- The firm sets prices to break even on the cost of making and marketing a product or set prices to make a target profit. The organization determines the price at which it will break-even or make the target profit it is seeking.
- The organization uses a number of techniques o communicate price changes to its
- From the data collected, it was evident sales promotion does affect product marketing. This implied that sales promotion indeed does increase the sale of a In addition, it implies that sales promotion enhances open and honest communication, which is a key organization building block for developing successful relationships.
- From the data collected, it was evident that sales promotion represents the customer main link of the firm. Moreover, through the efforts of the successful salesperson, a company can build relationship with customers that continue long beyond the initials sale.
- Quality of products can be viewed as a strategic means to gain competitive advantage in the market place for example most organizations include service representatives as part of their sales team to ensure that customer concerns with present products are addressed and remedied at the same time new business is being solicited. Some of the strategies adopted Purchase decisions are based on how customers perceive prices and what they consider to be the current actual price-not the marketer’s stated prices. They may have a lower price threshold below which prices may signal inferior or unacceptable quality as well as an upper price threshold above which prices is prohibitive and seen as not worth the money
Recommendations
Based on the findings and conclusions of the study the researcher felt that the following recommendations are necessary to improve the influence of price change on consumption of new consumer products:
- The restaurant management should apply or use more than one pricing strategy to increase sales volume in the company. The hotel should continuously improve their consumer goods consumption for using fair prices.
- On the influence of competition on pricing the study recommends that the fast food restaurants management should monitor its competitors’ price changes to enable it come up with more effective and appropriate pricing. Also, management should look for current economic situation. To endure a price strategy, it is high, it gives the firm a greater degree of advantage but not so when is low. Thus, customer’s characteristics play an important role in stocking price strategies. In the search for competitive advantage, one of the most important steps to carry out is a customer value analysis. This determines the benefits that customers in a market segment want and how they perceive the relative value of competing offers, including yours.
- On the influence of sales promotion on consumption of new fast food products at fast food restaurants the organization needs to benchmark on the best competitors practices to retain its competitive status and in order to win other markets. Again, communicating this through customer newsletters, letters from the chief executive, and publicity activities, can generate important benefits to the overall marketing and sales campaign.
- Based on the findings on the influence of quality of the products on consumption at fast food restaurants . the study recommends to the management that Prices should not be changed regularly as this will affect consumption of products (food). This is because Consumers’ evaluation of the fairness of a price-changing firm depends on their information. As their information changes, their resistance to price increases should change as well. A firm that knows its customers would obviously time its price increases so they occur when resistance is relatively low
- From the findings, the researcher recommends that: there is need for the organizational employees to talk about any issues that arises among them. In the past it has been a habit in many management situations to not talk to the Management has relied upon others at lower management levels to get the message across. This gives the impression that you do not care about for you or the business. In this situation, they may just come to the workplace, do as little as is required, collect their pay and go home. There will be no interest. It is necessary to talk to employees, about themselves, their lives and what is going on in work from their point of view
Suggestion for further research
A study of this magnitude cannot be exhaustive in covering the area of investigation. More research can be undertaken in related areas. The following suggestions for further research are made.
- Further study should be carried out on factors determining pricing strategies in organization
- Further study should be carried out to establish the impact of pricing strategy on organizational profitability
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