Effective Pricing Strategies For Introducing A New Product In The Market
(A Case Study Of Globacom Gms Enugu Metropolie)
Introducing a new product to the market demands meticulous planning and execution, especially in devising effective pricing strategies that resonate with consumers and ensure profitability. A successful approach entails a blend of various methodologies, including value-based pricing, penetration pricing, and competitive pricing. Value-based pricing hinges on understanding the perceived value of the product to the target audience, allowing for setting prices commensurate with the benefits offered. Penetration pricing involves initially offering the product at a lower price point to gain market share swiftly, gradually adjusting prices as the product gains traction. Concurrently, competitive pricing entails analyzing rival offerings and positioning the new product competitively in terms of both features and pricing. Moreover, dynamic pricing strategies can be employed, leveraging market demand fluctuations and consumer behavior insights to adjust prices accordingly. Coupled with effective marketing campaigns highlighting the product’s unique selling propositions, these pricing strategies can establish a strong foothold for the new product in the competitive market landscape.
This study focused on the effective of pricing strategies for introducing a new product in the market (A case study of Globalcom GSM Enugu metropolis).
To carry out the research work the some of the following objective were set out.
To find out the problem associated with the pricing system of communication comparing.
To make appropriate recommendation on how to improve on the pricing system of the communication industries.
Four hypothesis were formulated Data were sources using questionnaire, Extensive Literature review on past work, test books, journals on the area of study were carried out. Bourley if formular was used to determine the sample size of the customers while a census of the staff was carried out.
The data collected were presented on stated tables, analyzed and interpreted while the researcher hypothesis was tested using chi-square.
Based on the analysis the following findings were made that the pricing system adopted by communication instructor in Enugu metropolis is not commensurate with the quantity of service rendered.
That the pricing system adopted by communication industries does not attract customer.
In the view of above findings the researcher recommends among others.
That the pricing of communication service should be customer oriented.
That communication industries should improve on their service quality so that it will be in line with price charged.
It is the researcher opinion that if these recommendation are judiciously carried out communication industries will not only serve their customer better but also improve their profit margin.
Title Page
Approval Page
Dedication
Acknowledgement
Abstract
Table Of Content
Chapter One
1.1 Background Of The Study
1.2 Statement Of Problems
1.3 Objectives Of The Study
1.4 Formulation Of The Study
1.5 Significant Of The Study
1.6 Scope Of The Study
Chapter Two
2.0 Literature Review
2.1 An Overview Of Service
2.2 Characteristic Of Service
2.3 Overview Of Price
2.4 Types Of Pricing Strategy
2.5 Pricing Of Communication Services
2.6 Pricing Objective
2.7 Impact Of Pricing On Customers Patronage Of Gsm Services
2.8 Selling An Appropriate Price For Gsm Communication Service.
Chapter Three
3.0 Research Methodology
3.1 Source 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 The Findings, Recommendation And Conclusion
5.1 Summary Of Findings
5.2 Recommendations
5.3 Conclusion
Bibliography
Appendix
1.1 INTRODUCTION
Communication has become one of the greatest tools in marketing of goods. This important services has to be appropriating proceed in order to attract customer patronage and increase protiability.
According to Kotles (1996 P: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 review of marketing stated that price is the exchange value of a good 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.
Price is the monetary expression of values. Value is created on utility, utility is an expression of usefulness, while 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 paired with the perceived quality of product or service specifically, value can be defined as the ration o 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 product, price itself influences that perception of quality ultimately value, to consumers, this include transport service.
Pricing is an important and complete elastic of the marketing mix and generate the highest level of external interference.
It is a major determinant with volume of goods and service available for the consumer in any economy. Therefor, forms especially those on profit business has to chose with the control. The environmental variable, both external and internal pricing policies and techniques which are available to achieve its organizational objective.
The importance of price in communications industry cannot be one emphasized. If communication organization wants to maximize its net profit the right price must be selected for its services price in a services may either be to higher too how to be good. When the price changed are two high the size of the market for that particular product may be unnecessary restricted and if the right price where used. The size of net profit is directed to the effectiveness of price because price usually cause change in market demand for a given product and in turn its revenue and net profit.
Monree (1992: 210) noted that the consumer perception of product quality vary directly with the price, the higher the price, the better the quantity is perceived to be.
In the world of Ichie (1993: 25) without price there can be no marketing, product may be marched with market but only when buyers and sellers agree on price, ownership transfer actually occur. Either a buyers or a seller may propose a price but it is not effective until price is accepted by the owner.
In the view of the compose nature of price and important to customers patronage decision the researcher in the study critically examine the effective pricing strategies for introducing a new product in the market with particular interest on Global Communication GSM operation in Enugu.
1.2 STATEMENT OF PROBLEM
Price is an important marketing mix that makes or mar a company especially in a delegated economy like in an attempt to make quick money or an excess profit. Communication industry especially GSM operators usually increase a price of their services and product in discruminately.
This is no double affect the patronage of customers. It has also been discovered that the price of GSM service are not commensurate with the quality of services offered. This money charged for voice mail cause for service questioning.
Although Global com GSM is yet to make an impact in Enugu metropolis but one does not expect must difference in the quality and price of their product as in areas where they have stated operation. It is because of important enterprise in the marketing of goods and services that the research examine.
1.3 OBJECTIVES OF THE STUDY
1. To determine whether the pricing system of communication companies attract customers.
2. To find out the problems associated with the pricing system of communication companies
3. To determine the effect of pricing system on the profitability of communication companies.
4. To find out the problems associated with the pricing system of communication companies
5. To see if repeat patronage of the customers of communication companies as a rest of the pricing system.
6. To find out how communication companies fix their charges.
7. To make appropriate recommendation on how to improve on the changing system of the communication companies.
1.4 FORMATION OF HYPOTHESIS
HYPOTHESIS 1
Ho: Pricing system adopted by communication companies not attract customers.
Hi: Pricing system adopted by communication companies attract customers.
HYPOTHESIS 2
Ho: Pricing system of communication companies does not lead to increase profitability of the company
Hi: Pricing system of communication companies lead to increased profitability of the companies.
HYPOTHESIS 3
Ho: Pricing system adopted by communication companies does not lead to customers repeat patronage.
Hi: Pricing system adopted by communication companies lead to customers repeat patronage.
HYPOTHESIS 4
Ho: Pricing system as adopted by communication companies is not commensurate with quality of service rendered.
Hi: Pricing system as adopted by communication companies is commensurate with quality of service rendered.
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 wider the researcher knowledge in research writer or pricing strategic adopted by communication industries.
It will be of immerse benefit to researcher’s or reader’s who will find the study as a source of literature review.
Global com and other related firms will find the write up very useful it will help them to know how to fix prices their service/product.
The government also will equally benefit from the study since they equally involve in marketing of communication service.
1.6 SCOPE OF THE STUDY
This research was under taken to examine the effective pricing strategic for introducing a new product in the marketing, a case study of Global com GSM in Enugu.
However in the view of limited resources, time and other constraints emphasis was placed on Global com operations within Enugu metropolis.
1.7 DEFINITION OF TERMS
(1) Price – Is the monetary expression of valve
(2) Marketing – The process of identify, anticipating and want through exchange made.
Effective Pricing Strategies For Introducing A New Product In The Market:
Introducing a new product to the market requires careful consideration of pricing strategies to maximize profitability and gain a competitive edge. Here are some effective pricing strategies for launching a new product:
- Market Research: Start by conducting thorough market research to understand your target audience, their preferences, and their willingness to pay for your product. This will help you determine a pricing range that aligns with market expectations.
- Cost-Plus Pricing: Calculate the cost of production, including manufacturing, overhead, and distribution costs, and then add a desired profit margin. This is a straightforward method but may not consider market dynamics.
- Competitive Pricing: Analyze the prices of similar products in the market and set your price at a similar level. This strategy can help you enter the market quickly but may limit your profitability.
- Value-Based Pricing: Focus on the perceived value your product offers to customers. Price your product based on the benefits and unique features it provides compared to competitors. Customers are often willing to pay more for products that solve specific problems or offer exceptional value.
- Skimming Pricing: Launch your product at a high price initially and gradually reduce it over time. This strategy is effective for capturing early adopters and maximizing initial revenue. However, it may limit your market reach.
- Penetration Pricing: Offer your product at a lower price initially to quickly gain market share and attract price-sensitive customers. As you establish your brand and market presence, you can gradually increase the price.
- Dynamic Pricing: Adjust your prices based on real-time market conditions, demand fluctuations, or customer behavior. Dynamic pricing can help optimize revenue and adapt to changing market dynamics.
- Bundle Pricing: Package your new product with complementary products or services at a slightly discounted price. This can encourage customers to purchase more and increase the overall value of their purchase.
- Psychological Pricing: Use pricing techniques like setting prices just below a round number (e.g., $9.99 instead of $10) or emphasizing the value of your product (e.g., “Great value at just $29”). These tactics can influence consumer perception.
- Subscription or Membership Pricing: Offer subscription-based pricing models to create recurring revenue streams. This approach can be effective for products with ongoing value or services.
- Freemium Pricing: Offer a basic version of your product for free (or at a very low cost) and charge for premium features or an upgraded version. This can help attract a large user base and convert some into paying customers.
- Price Testing and Optimization: Continuously monitor the performance of your pricing strategy and be open to making adjustments based on customer feedback and market changes. A/B testing different pricing models can provide valuable insights.
- Limited-Time Promotions: Create a sense of urgency by offering introductory discounts or limited-time promotions to encourage early adoption.
- Geographic Pricing: Adjust prices based on geographic location or market conditions. This can help optimize pricing for different regions.
- Segmented Pricing: Tailor your pricing strategy to different customer segments based on factors like demographics, purchasing behavior, or loyalty.
Remember that the right pricing strategy may evolve over time as your product matures and market conditions change. Regularly evaluate and adjust your pricing strategy to remain competitive and maximize profitability. Additionally, consider the long-term implications of your pricing decisions on your brand image and customer loyalty.