Background of the study.
is a form of communication between you and your customers with the goal of
selling your product or service to them. Communicating the value of your
product or service is a key aspect of marketing. A Start up or a company's
strategy combines all of its marketing goals into one comprehensive plan. A
good marketing strategy should be drawn from market research and focus on the
product mix in order to achieve the maximum profit and sustain the business.
The marketing strategy is the foundation of a marketing plan.
the face of rapid economic and technological changes, today‘s consumer is more
curious, more educated and conversant with what he/she exactly wants. These
changes also affect the needs of firms. According to Ehmke et al (2005),
marketing your business is about satisfying your customers‘ needs. Borden
(1984) stated that marketing manager must weigh the behavioral forces and then
handle marketing elements in his mix with focus on the resources with which he
has to work when building a marketing program to fit the needs of a firm. For
marketing to be effective, a change either in a new product or rebranding a new
product, there are elements that remains
constant which must be incorporated in the marketing mix and this is called the
"Four P‘s". These four P‘s are product, price, promotion and place
(Ehmke et al 2005).
is the amount a customer pay for a product or the sum of the values that
consumers exchange for the benefits of having or using a product or service
(Bearden et al 2004). Price means different things to different people; it is
interest to lenders, COT or service charged by the banker (lenders), premium to
the insurer, fare to the transporter, honorarium to the guest lecturer etc,
(Kotler et al 2008). According to Rosa et al (2011), the importance of price as
a purchasing tool has a key role in price management since it not only
determine the way prices are perceived and valued, but it also influence
consumer purchase decisions (Rosa, 2001; Simon, 1989; Vanhuele and Dreze, 2002).
have shown price as an important factor in purchase decision, especially
organizations that purchased products, affecting choices for store, product and
brand (Rondan, 2004). The greater the importance of price in purchases
decisions, the greater the intensity of information and the greater the amount
of comparisons between competing brands (Mazumdar and Monroe, 1990).
Considering the nature of the consumer products (frequently purchased and
consumed products, implying medium-low level of consumer-supplier interaction),
the basic is that the customers who usually purchase are more frequently in
contact with prices. Pricing strategy is essential to every organization
involved in the production of consumer goods and services because it gives a cue
about the company and its products, a company does not set a single price but
rather a pricing structure that covers different items in its line (Kotler et
al, 2001). According to Hinterhuber (2008) pricing strategies vary considerably
across industries, countries and customers. It can be categorized into three
groups: cost-based pricing, competition-based pricing, and customer value-based
Choosing a pricing strategy is an important
function of the business owner and an integral part of the business plan or
planning process. It is more than simply calculating the cost of production and
adding a markup (Roth 2007). Therefore, assigning product prices is a strategic
activity and the price or prices assigned to a product or range of products
will have an impact on the extent to which consumers view the firm‘s products
and determine its subsequent purchase. However, it is less clear how pricing
activities can be guided by the marketing concept. Certainly, customers would
prefer paying less, in fact, they would even prefer to pay nothing but it is
simply not feasible to give products without price (Sagepub.com 2009). An
organization that does that will run dry and out of business and would not be
able to create value for the customers.
to Agwu and Carter (2014), ‘among the four Ps, price is the only income
generator and it is the value attached to a product. Price is the amount of
money charged for a product or service. It is the sum of all the values that
customers give up in order to gain the benefits of having or using a product
(Kotler et al 2010). Baker (1996) noted that price is the mechanism which
ensures that the two forces (demand and supply) are in equilibrium. According
to Santon (1981) price is simply an offer or an experiment to task the pulse of
the market. It is the monetary value for which the seller is willing to
exchange for an item (Agbonifoh et al, 1998). Ezeudu (2004) argues that price
is the exchange value of goods and services. Schewe (1987) defines price as
what one gives up in exchange for a product or service.
is one of the most important elements of the marketing mix as it is the only
one that generates revenue for the firm unlike the others that consume funds
(Agwu and Carter 2014). Lovelock (1996) suggested that pricing is the only
element of the marketing mix that produces revenues for the firm, while all the
others are related to expenses. Diamantopoulos (1991) also argued that, price
is the most dynamic element in marketing strategy in that pricing decisions can
be implemented relatively quickly in comparison with the other elements of
marketing strategy. It is capable of determining a firm‘s market share and
profitability. Kellogg et al., (1997 p.210) point out that If effective product
development, promotion and distribution sow the seeds of business success,
effective pricing is the harvest. Although effective pricing can never
compensate for poor execution of the first three elements, ineffective pricing
can surely prevent those efforts from resulting in financial success.
Statement of the problem.
to attain effective product marketing, effective pricing strategy is important.
Therefore the need arise to examine the effect of pricing strategy on effective
marketing of a product. Also to research the best pricing strategy for
marketing a product.
Objective of the study.
main objective of the study is to examine the effect of pricing strategy on
effective marketing of a product.
is pricing strategy?
is the effect of pricing strategy on effective product marketing?
Significance of the study.
study will examine pricing strategies, find the most effective and research it
effect on marketing a product.
Scope of the study.
study focus on the analysis of the effect of effective pricing strategy on
effective marketing of product.
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