THE EFFECT OF PRICING POLICY ON SALES IN THE BEVERAGE INDUSTRY OF NIGERIA
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The subject under study is the effect of pricing policy on sales in beverage industry, the principle, of pricing entails that companies be cautious and efficient in setting up price for their product. Price as one of the four Ps of marketing, demand good attention, because it plays a major role in the successful marketing ofÂ a companyâ€™s product, customers or consumers decide either to buy or not to buy a particular product judging the nature and characteristics of the product and their purchasing power through its price.
Therefore, price of product is the major determinant, of the market demand for such product, price is one of the most powerful weapons that are available for or to a market to beat down competitors. Customers are likely to patronize companyâ€™s product whose prices is satisfying and psychologically fair to them. Effective strategy and policy must be adopted in order for the companyâ€™s to succeed in its marketing programme so that it will result to an effective implementation of pricing.
Pricing is an area of primary importance in marketing and it is central to the profitable operation of a business, its marketing activities without critically monitoring and controlling itâ€™s pricing system profit can only be made if consumer buy what the company produce, on the other hand consumer will only buy at the price that satisfies them. In the past many firms did not under stand the theory and concept of pricing. This is very peculiar to developing economy especially Nigerian. They merely set prices that suit their purpose and interest without viewing it from customer point to view.
This is because there were no or not enough competitive firms. Many firm have to realize the importance of pricing as one of the most important element that helps to determine the success of any business enterprise.
In managing the pricing of product which is part of companyâ€™s marketing mix, management must first of all decide on its pricing goal, policy and strategy about a given product to satisfy consumers, efficient pricing of goods and services which is often a critical factor in successful operation of any business enterprise. Pricing has many definitions as there are many definitions given by some price authors;
- price, is defined by Stanton (1985) as the â€œâ€amount of money charged for a product or services.
- Brown and Jalques (1995) sees it as the amount of money which will be accepted in return for legal transfer of a product and services.
- A.D Umar, M. Tanko Y.A. Hashim (2005) described price as the â€œValues of a product (good and services) expressed in a monetary termâ€. The above definitions do not consider price or pricing in relation to the physical product alone, this is due to the fact a seller usually price or is pricing the constituent of the physical product severed services as well as it satisfying benefits for instance one model of an automobile may at a stated price included ratio power steering, tinted glass, are condition, metallic door are services of same for another model of the same make these six listed items may be priced separately.
To this end Kotler (2000) defined price as â€œthe amount of money needed to acquire some or a combination of a product and its accompanying or separate services.
Pricing is there fore the parallel of the total product offered to a buyer for a price and receives not only the product of offering but may include installation. Maintenance services and repair of a brand / new which may be helpful in future for promotion. This question here is how are price arrived at: historically in a competition environment (market) through bargaining with each other sellers would offer more than they expect to set from buyer who will in turn offer less than they expect to pay.
They would arrive at a mutually acceptable price through bargaining.
- STATEMENT OF THE PROBLEM
Many companies do not handle pricing as it should be. The most common mistake is that pricing is too cost oriented, it is not revised often enough to capitalize on market changes, it is also set independent of the rest of the marketing mix other then as an interior element of market positioning strategy and price is not varied enough to different product item. Therefore, many companies find it difficult to break even due to largely the impact of competition, hence the need to adopt appropriate pricing policy. The current decline in business activities due to the worlds economic depression is drawing many industries to the extend that profit is far beyond reach for many companies. TheÂ inflation trend makes it so difficult for consumers to actually buy or even afford most of their needs. The value of naira that keep plunging day after day makes it so difficult for companies to services their metered product from overseas, the high import duties and other cost doing business that increase the cost of the end product to the detriment of the consumers. The adoption of price over time and space to meet varying circumstances and opportunities when price change should be initiated and now should it respond to competitors price changer.