Effect Of Pricing Strategies On The Purchasing Of Toilet Soaps
(A Case Study Of Selected Toilet Soaps)
The impact of pricing strategies on consumer purchasing behavior regarding toilet soaps is substantial and encompasses various dimensions. Pricing plays a crucial role in influencing consumer perceptions, preferences, and ultimately, purchase decisions within the competitive soap market landscape. Dynamic pricing, penetration pricing, and price skimming are among the strategies employed by soap manufacturers to address diverse consumer segments and market conditions. Dynamic pricing, leveraging real-time data and demand fluctuations, caters to price-sensitive consumers by offering discounts or promotions, thereby stimulating immediate purchases. Penetration pricing, characterized by setting initially low prices to gain market share, attracts price-conscious consumers and fosters brand loyalty over time. Conversely, price skimming involves setting high prices initially to capitalize on early adopters’ willingness to pay premium prices, gradually lowering prices to capture broader market segments. Additionally, psychological pricing tactics, such as charm pricing or bundling, influence consumer perceptions of value and affordability. Furthermore, the perception of soap quality and brand image intertwines with pricing strategies, as consumers often equate higher prices with superior product attributes or prestige. However, excessive price fluctuations or perceived price gouging may erode consumer trust and brand equity, highlighting the delicate balance between pricing strategies and consumer satisfaction. Therefore, a strategic approach to pricing that aligns with consumer preferences, market dynamics, and brand positioning is essential for maximizing sales and fostering long-term consumer relationships in the competitive toilet soap market landscape.
The main purpose of this study is to analyze the effect pricing strategies on the purchasing of toilet soaps in Enugu State. With special emphasis on toilet soaps made by Unilever Nigeria Plc.
The objectives of the study among others is:
To determine whether the pricing system of toilet soaps organization attract customers.
To find out the problems associated with the pricing system of Unilever Plc Organization. The researcher formulated four hypothesis and tested them using chi-square method of testing hypothesis. The researcher reviewed the relevant literature to the effect pricing strategies for toilet soaps product and Topman’s formula was used in determining the sample size for this study.
The population of the study were made up of relevant staff/management, distributions and customers of the toilet soaps.
The data analysed and interpreted shows the following:
That the strategies for toiler soaps after sales of their products.
That the pricing strategies used by toilet soaps industry lead to increase in profitability of companies.
Based on these findings, the researcher recommends the following:-
That the pricing strategies and policies should be changed as the situation in the market place changes that is pricing policies and strategies should be flexible to care for the various changes that takes in the environment. If these recommendations are followed toilets soaps manufacture will serve their customers better with improved profit.
Contents
Title page i
Approval page ii
Dedication iii
Acknowledgment iv
Abstract vi
Proposal vii
Table of contents xii
CHAPTER ONE
1.1 Background of the Study
1.2 Statement of the Problems
1.3 Objectives of the Study
1.4 Formulation of the Hypothesis
1.5 Significant of the Study
1.6 Scope of the Study
CHAPTER TWO
2.0 LITERATURE REVIEW
2.1 An Overview of Purchasing
2.2 Overview of Price
2.3 Types of Pricing Strategy
2.4 Pricing Decision
2.5 Pricing Objectives
2.6 Importance of Price in Purchasing
2.7 Factors Affecting the Price of Products.
CHAPTER THREE
3.0 Research Methodology
3.1 Sources of Data
3.2 Population of the Study
3.3 Sampling Techniques
3.4 Sample Size Determination
3.5 Research Instrument Used
3.6 Method of Data Treatment and Analysis
3.7 Limitation of the Study
CHAPTER FOUR
4.0 PRESENTATION, ANALYSIS AND INTERPRETATION
OF DATA
4.1 Presentation and Analysis of Data
4.2 Test of Hypothesis
CHAPTER FIVE
5.0 SUMMARY OF FINDINGS, RECOMMENDATION AND CONCLUSION
5.1 Summary of Findings
5.2 Recommendations
5.3 Conclusion
BIBLIOGRAPHY
APPENDIXES
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.
Effect Of Pricing Strategies On The Purchasing Of Toilet Soaps:
Pricing strategies have a significant impact on the purchasing of toilet soaps, as they directly influence consumer behavior and their decision-making process. Here are some key effects of pricing strategies on the purchasing of toilet soaps:
Perceived Value: The price of a toilet soap can shape consumers’ perception of its value. Higher-priced soaps may be perceived as higher quality or luxurious, while lower-priced soaps may be seen as more affordable but potentially lower in quality. Pricing strategies that align with the perceived value can attract specific target markets.
Price Sensitivity: Consumers vary in their sensitivity to price changes. Some are price-sensitive, meaning they are more influenced by discounts, promotions, or lower prices, while others are less sensitive and may prioritize brand loyalty or product features. Pricing strategies need to consider these different segments of consumers.
Brand Loyalty: Pricing can impact brand loyalty. If a consumer has a strong attachment to a particular soap brand, they may be willing to pay a premium for it. Pricing strategies should balance brand equity with competitive pricing to retain loyal customers while attracting new ones.
Competitive Positioning: Pricing plays a crucial role in how a soap brand positions itself in the market. Premium pricing positions a soap as a high-end or luxury product, while lower pricing can position it as a budget-friendly option. The choice of pricing strategy should align with the brand’s positioning and target market.
Promotions and Discounts: Temporary price reductions, buy-one-get-one-free offers, and other promotions can influence consumer purchasing decisions. These strategies can attract price-sensitive consumers and encourage bulk buying.
Psychological Pricing: Using psychological pricing techniques, such as setting prices just below a round number (e.g., $4.99 instead of $5.00), can create the perception of a better deal, even if the actual difference is small. Such pricing strategies can influence impulse purchases.
Price-Quality Relationship: Consumers often associate higher prices with better quality. Premium pricing can signal superior ingredients, fragrance, or other features, which can attract consumers looking for a high-quality soap.
Elasticity of Demand: The elasticity of demand for toilet soaps can vary based on the market segment and product differentiation. Understanding demand elasticity helps businesses set optimal prices to maximize revenue or market share.
Price Wars: Aggressive pricing strategies by competitors can lead to price wars in the market. While this can benefit consumers in the short term with lower prices, it can erode profit margins and harm brand image over time.
Subscription Models: Some soap brands offer subscription-based pricing models, where customers receive regular soap deliveries at a fixed monthly cost. This strategy can enhance customer retention and predictability of revenue.
In conclusion, pricing strategies have a multifaceted impact on the purchasing of toilet soaps. Businesses must carefully analyze their target market, competitive landscape, and brand positioning to choose the most effective pricing strategy that aligns with their overall business objectives and customer preferences.