CHAPTER ONE
INTRODUCTION
1.1 BACKGROUND TO THE STUDY
Toilet
soaps are very important to the health of the human being. It is used
for cleanliness. This important product has to be appropriately pricing
in order to attract customer patronage and increase profitability.
According
to Kotler (1996:46) price is the amount of money customers pay for the
product or service and the time a place of exchange.
Mumer (1994:10)
in the quality renew of purchasing stated that price is the exchange
value of goods/services and the value of an item is what it can be
exchange in the market place, every product and service has its price.
It is through price and payment that firms recover their cost of
production and active their margin of profit.
Pricing is the monetary
expression of value, is created on utility, utility is an expression of
usefulness, whole usefulness is based on the potential for need and
want, satisfaction value and utility are culturally based while needs
and want – cultural, psychological, sociological and physiological
based, therefore price as an ultimate expression of needs and want
satisfying potential of an item of product or services which has
cultural psychological economic implication on market.
Edoga and Ani
(2000:319) noted that price is often used to indicate value when it is
pained with the perceived quality of product or service specifically,
value can be defined as the ratio of perceived quality to price (value
perceived quality/price).
This relationship shows that for a given
price as perceived quality increase, value increases. Also, for a given
price, value decreases when perceived quality decrease. For some
products, price itself influences the perception of quality and
ultimately value, to consumers. This include toilet soaps.
Pricing is an important and complete element of the purchasing mix and generate the highest level of external interference.
It
is a major determinant with volume of goods and services available for
the consumer in any economy. Therefore, forms especially those on profit
business has to choose with the contain of the environmental variables,
both external and internal pricing policies and techniques which are
available to achieve its organizational objectives.
The importance of
price in the purchasing of toilet soaps cannot be over emphasized. If
an organization wants to maximize its net profit, the right price must
be selected for its products price in goods may either be too high or
too low to be good. When the price and changed are two high the size of
the market for that particular product may be unnecessarily restricted
and if the right price where used. The size of net profit is directly
related to the effectiveness of price because price usually causes
change in market demand for a given product and in turn its revenue and
net profit.
Monrce (1994:210) noted that the consumer perception of
product quality vary directly with the price, the higher the price, the
better the quality is preferred to be.
In the word by Ichie (1993:25)
without price there can be no purchasing, product may be marched with
market/but only when buyers or sellers agree on price, buyer or a seller
may propose a price but it is not effective until price is accepted by
the owner.
In the view of the complex nature of price and important
to customers patronage decision, the researcher in the study critically
examine the effect of pricing strategies on purchasing of toilet soap in
Enugu State.
1.2 STATEMENT OF THE PROBLEM
The high mortality
rate of manufacturing business especially those firms in the beverages
industries in our country Nigeria is a source of concern to the
management of business organization and the society in general. It seems
that these forms do not adopt appropriate pricing strategies in the
pricing of their products.
Today, one can see small manufacturing
firms spring up in the city in the guise of manufacturing toilet soaps,
some of these firms after a few months/years of operation start to
experience low sales, low profit, as a result of poor customer patronage
caused partly by failure to adopt appropriate pricing strategies.
A
situation where manufactures of consumer products and services continue
to experience low sales volume or an eventual close up of business as a
result of low profit margin arising from the adoption of wrong pricing
strategies calls for investigation. The study seeks to find out what
pricing strategies are used by as well as those manufacturing firms in
the Toilet Soap Industry and how far they have helped in goal
accomplishment.
A delegated economy like one in an attempt to make
quick money or an excess profit. Toiletaria Industry especially soap
manufacture usually increase a price of their products indiscriminately.
This
is no doubt affect the patronage of customers. It has also been
discovered that the price of some toilet soaps are not commensurate with
the quality of the product. The pricing for the product calls for
serious questioning.
1.3 OBJECTIVES OF THE STUDY
1. To determine whether the pricing system of Toilet Soaps company attract customers.
2. To find out the problems associated with the pricing system of toilet soaps.
3. To determine the effect of pricing system on the profitability of toilet soaps.
4. To find out the problems associated with the pricing system of Toilet soaps.
5. To see if repeat patronage of the customers of toilet soaps as a rest of the pricing system.
6. To find out how toilet soap companies fix their charge.
7. To make appropriate recommendation on how to improve on the pricing system of the toilet soaps.
1.4 FORMULATION OF HYPOTHESIS
HYPOTHESIS 1
HO: Pricing system adopted for toilet soap does not attract customers.
HI: Pricing system adopted for toilet soap companies attract customers.
HYPOTHESIS 2
HO: Pricing system of toilet soap companies does not lead to increased profitability of the companies.
HI: Pricing system of toilet soap companies leads to increased profitability of the companies.
HYPOTHESIS 3
HO: Pricing system adopted for toilet soap does not lead to customer repeat patronage.
HI: Pricing system adopted for toilet soap leads to customer repeat patronage.
HYPOTHESIS 4
HO: Pricing system as adopted for toilet soap is not commensurate with quality of product.
HI: Pricing system as adopted for toilet soap is commensurate with quality of product.
1.5 SIGNIFICANCE OF THE STUDY
The study is not
only an academic exercise, it will have a substances benefit to the
researcher. It will lightened the researcher knowledge in research
writing on pricing strategies adopted by toilet soaps industries.
It will be of immense benefit to the researcher or readers who will find the study as a source of literature review.
Toilet
soaps manufacture and other related firms will find the write up very
useful. It will help them to know how to fix prices in their
service/product.
The government also will equally benefit from the study since they equally involve in purchasing of Toilet Soaps.
1.6 SCOPE OF THE STUDY
This research was
undertaken to examine the effect pricing strategies of purchasing of
toilet soap in Enugu State. A case study of selected of toilet soaps.
However
in the view of limited resources, time and other constraints emphasis
was placed or as selected toilet soaps like lux, premier, eve, etc.
1.7 DEFINITION OF TERMS
i. Price – Is the monetary expression of value.
ii. Purchasing – The process of identifying, anticipating and satisfying customers needs and wants. Through exchanged needs.