Title Page - - - - - - - - - i
Approval Page - - - - - - - - ii
Declaration - - - - - - - - iii
Dedication - - - - - - - - - iv
Acknowledgement - - - - - - - v
Abstract - - - - - - - - - vi
Table of Contents - - - - - - - vii
ONE – INTRODUCTION
1.1 Background of the Study - - - - -
1.2 Statement of General Problem - - - -
1.3 Objective of the Study - - - - - -
1.4 Research Questions - - - - - -
1.5 Significance of the Study - - - - -
1.6 Scope of the Study - - - - - -
1.7 Definition of Terms - - - - - -
TWO – REVIEW OF RELATED LITERATURE
2.1 pricing and pricing decision -- - - - -
2.2 The importance of pricing - - - -
2.3 objectives of pricing - - - -
2.4 factors affecting pricing - - - - -
2.5 theoretical background to pricing - -
- - - - -
2.6 pricing approaches - - - -
2.7 pricing policies - - -
2.8 pricing strategies - - - - - -
2.9 profit planning - - -
- - -
– RESEARCH METHODOLOGY
3.1 Introduction - - - - - - -
3.2 Research Design - - - - - -
3.3 Area of the Study - - - - - -
3.4 Population of Study - - - - - -
3.5 Sample size and Sampling Techniques - - -
3.6 Instrument for Data Collection - - - -
3.7 Validity of the Instrument - - - - -
3.8 Reliability of the Instrument - - - -
3.9 Method of Data Collection - - - - -
3.10 Method of Data Analysis - - - - -
– DATA PRESENTATION AND ANALYSIS
4.0 Introduction - - - - - - -
4.1 Data Presentation and Analysis - - - -
4.2 Characteristics of the Respondents - - -
4.3 Data Analysis - - - - - - -
4.4 Testing Hypothesis - - - - - -
4.5 Summary of Findings - - - - - -
4.6 Discussion of Findings - - - - -
– SUMMARY, CONCLUSION AND RECOMMENDATION
5.0 Introduction - - - - - - -
5.1 Summary - - - - - - - -
5.2 Conclusion - - - - - - - -
5.3 Recommendations - - - - - -
References - - - - - - - -
Appendix - - - - - - - -
study was intended to evaluate the impact of pricing on profitability level of
an organization. This study was guided by the following objectives; to
establish the efficiency and effectiveness of pricing policy in selected firms.
To find out the various factors that influence pricing decisions in selected
firms. To determine if pricing decision (s) can make an impact on a firm’s
profit and efficiency. To investigate if profit planning (or budgeting) can
result in cost reduction and increased profit performance. To make
recommendation based on the findings of this study to the management of firms.
study employed the descriptive and explanatory design; questionnaires in
addition to library research were applied in order to collect data. Primary and
secondary data sources were used and data was analyzed using the correlation
statistical tool at 5% level of significance which was presented in frequency
tables and percentage. The respondents under the study were 42 employees of the
cresent spring water and winco foam ltd Awka.
study findings revealed that pricing policy of a firm has an influence on the
degree to which firm can achieve optimum profitability; based on the findings
from the study, efforts should be made by entrepreneurs in ensuring a profitable
and competitive pricing policy.
IMPACT OF PRICING POLICY ON
PROFITABILITY LEVEL OF AN ORGANIZATION
1.1 BACK GROUND OF STUDY
of the most crucial operating decisions management must make is establishing a
setting price for its products but this is quiet unfortunately that many firms
are still mismanaging pricing causing
lots of money and anticipated profit to be unexplored and wasted.
However in explaining the importance of
pricing, Egbunike (2007:83) sustained that setting the price for an
organizations product or service is one of the most difficult, due to some
number of variety of factors that must be considered. The primary decision
arises in virtually all types of organization, just to mention but a few of them
such as manufacturers set prices for their products, they manufacture,
merchandising companies set prices for their goods, service firms set prices
for such services as insurance policies, bank loans etc.
A company’s survival and profitability
depends upon its pricing decisions, thus price is the only element in the
marketing mix that produce s revenue and thus ensures profit ability (kotler
and keller 2006:475) Price adopted by firms must be able to cover all cost in
the long run as well as to leave a profit margin to reward management.
The Price of a Product has a direct
relationship with many operations of the firm’s activities. A price decision
will affect demand and this in turn affects the revenue generated by the firm.
Similarly, a firm which makes profit has the propensity of attracting more new
capital. This shows that the public has confidence in the ability of the firm
to yield return to them. So, the performance of management is usually measured
by the amount of revenue it generates to satisfy the share holders of the
It is evident that management has a big
responsibility before them in setting and adopting the most advantageous
pricing policy and the most effective profit plan for their firms, since prices
are not set arbitrarily therefore management must focus on all the important
factors in setting its price. Thus, it has become imperative to investigate the
effectiveness of pricing policy and profit planning in Nigerian
1.2 STATEMENT OF THE PROBLEM
(1991:201) observed that both the market forces of demand and supply and the
cost of production have a Significant bearing on determining prices. Equally he
explained that there are other variables that influences pricing decisions
according to him, this includes: Manufacturer’s pricing objective, economic
situation, level of competition, and availability of close substitute.
For pricing to be effective, firms must
incorporate all these factors in selecting the most advantageous price for it’s
product. At times, firms are not in the habit of considering these factors and
this has led to the shutting down of many factories, downsizing of workforce
and in most cases, winding up of firm’s
Profit plan are made in form of budget
and they help firms to forecast the level of profit, cost and revenue, they
intend to generate in order to gain competitive advantage. Unfortunately many
firms still do not prepare these plans, thus, this has led firms undertaking
unplanned ventures resulting in escalation and inability of firms to foresee
shortage in resources or finance or personnel needed in the future operation of
the firm. Where no plans exist, there will be no basis for firm to compare or
evaluate their performance.
Based on the foregoing, the problem of
this study is in three (3) folds.
Firstly, the failure of some firms to
incorporate factors such as economic situation, level of competition,
availability of close substitute, among others in their pricing decisions, may
have resulted to the minding up of several small scale manufacturing firm
(SSMF) in Nigeria.
Secondly, it has been shown in
accounting literatures that profit planning is a potential tool for achieving
profit objectives and efficiency. which small scale manufacturing firms seems
to ignore the use of profit planning ( or budget) in their operations. This has
led to far reaching problem such as huge unforeseen operating cost as well as
shortages in good financial and human resources.
Thirdly, and most importantly, the problem
that stringated this study is the knowledge gap, that is, it looks as if small
scale manufacturing firms are not aware that pricing policy and profit planning
impact positively on profit performance.
OF THE STUDY:
research is aimed at achieving the following objectives.
(i) To establish the efficiency and
effectiveness of pricing policy in selected firms.
(ii) To find out the various factors that
influence pricing decisions in selected firms.
(iii) To determine if pricing decision (s) can make
an impact on a firm’s profit and efficiency.
(iv) To investigate if profit planning (or
budgeting) can result in cost reduction and increased profit performance.
To make recommendation based on the
findings of this study to the management of firms.
achieve the objective of the study, the following hypotheses are formulated.
Ho – Pricing Policy of a firm has no
influence on the degree to which a firm can achieve optimum profitability.
Hi – Pricing Policy of a firm has
influence on the degree to which a firm can achieve optimum Profitability.
Ho – Effective profit
planning has no effect on the profit performance of a firm.
Hi- Effective profit planning has a major effect
on the profit performance of a firm.
1.5 SCOPE AND LIMITATION OF THE STUDY
no single research can validly cover all areas of the topic the researcher
tends that thrust of this project will be limited within the scope of how
management’s performance of small scale manufacturing firms are influenced by
the choice of its pricing policy and its profit planning. The study will focus
primarily on small scale manufacturing firms
in Anambra state Awka to be precise and its environs from where the
manufacturing firms of this study are drawn to enable the researcher carryout
on extensive investigation on this subject. The companies to be studied are:
Crescent spring waters Awka and winco foam limited Agu Awka.
OF THE STUDY
researcher is limited by time constraints. Since the semester is very short and
has a bulk of academic exercise.
researcher is also constrained by unavailability of funds required for an
extensive research of this magnitude.
and importantly, most small scale manufacturing firms that were studied lack
adequate and organized accounting and decision making system, poor
organizational chart and structure also their general unwillingness to
corporate or give out information, all, these married the effectiveness of this
1.6 SIGNIFICANCE OF THE STUDY
research will serve as a guide to firms in setting the most advantageous
pricing policy giving its individual unique situation which will enhance
profitability in the short and long run situation. It will help them to avoid
choosing arbitrary prices without considering its distinctive situation and
will serve as a guide in choosing pricing strategy which strikes a balance
between what the consumers wants to pay for a product and the price the firm is
willing to sell; also this research will expose them (the firm) to the need for
accounting information in carrying out this decision.
research work will also be useful for the economy in the sense that if firms
have substantial control over price setting, then their pricing behaviour can
influence national output/income and hence community welfare.
the research work will be useful for those carrying on further research on this
or related topic.
1.7 DEFINITION OF TERMS.
POLICY: It is a guiding
philosophy or course of action designed to influence and determine pricing
decisions. Pricing policies set guidelines for achieving objectives.
PROFIT PLAN: The profit plan is the operating plan detailing
revenue expenses and resulting to net income for specific period of time. It is
the firm’s optimal plan in the light of management expectation in future.
COST: Expenses incurred to procure something which may
be labour, material, facilities or resources
EFFICIENCY: Ability to work or produce well, without wasting
time or resources.
Producing the intended result.
FIXED COST: Cost that remains constant within a level of
production. It does not vary with production.
MARKETING MIX: The combination of the far primary element that
comprises a company’s marketing programme which are price, product, place and
VARIABLE COST: They are cost that varies with level of
production. They are constant per unit but vary with total production.
STRATEGY: Strategy is a general statement of the vary in
which an organization plans to achieve its objectives. The strategy contains
the basic approach but not the details of how a firm plans to attain its