Home » Project Material » Effects Of Uniform Pricing Policy On The Marketing Of Petroleum Products

Effects Of Uniform Pricing Policy On The Marketing Of Petroleum Products

4 Chapters
|
68 Pages
|
7,836 Words

A uniform pricing policy in the marketing of petroleum products can have significant effects on various stakeholders in the industry. On the consumer side, it can promote transparency and fairness, ensuring that prices are consistent across different locations, thereby reducing confusion and enhancing trust. However, it may also limit competition and innovation among retailers, potentially leading to decreased efficiency and fewer choices for consumers. From the perspective of petroleum companies, uniform pricing can simplify pricing strategies and reduce administrative costs associated with managing different price structures. Nevertheless, it may also reduce their ability to respond to local market conditions and differentiate their offerings. Overall, the effects of a uniform pricing policy depend on the specific market dynamics and regulatory environment in which it is implemented.

PROPOSAL

The Nigerian National petroleum Corporation (NNPC) was formed in 1977 to put government into the front seat in the oil industry. Since then, the government cased to a mere regulatory agency. Through the NNPC the government went into exploration, drilling and marketing of petroleum product in Nigeria, which brought unwholesome activities.
My aim of carrying out this research is to identify the impacts of uniform pricing of petroleum products by examining:
– The trend of petroleum product pricing in Nigeria.
– The factors influencing petroleum products
– The effects of uniform prices for petroleum, products.
– Suggesting ways of ensuring efficient pricing of petroleum products prices, and also the responsibilities of the NNPC this issue.
My studying of this also will focus on uniform pricing of petroleum products, and its implications in Nigerian economy. This stall be done by considering constraints that will be encountered as I study.

ABSTRACT

The aim of this study is to examine and determine the effects of uniform pricing policy on the marketing of petroleum products in Nigeria. Data were collected form primary and secondary data. The major data collection instrument is the questionnaire.
The data were presented in table as frequency distribution and analyzed with frequencies and percentage. Having analyzed the data, the two funding are:
1. The existing pricing policy has resulted in uniform prices by the “Big 8” and different prices by independent marketers.
2. The effects of the uniform pricing include: shortage of supplies relative to demand, diversion, bunkering and hoarding of petroleum products.
The conclusion is guided that deregulation of the down stream sector will improve the pricing system.

TABLE OF CONTENT

Title page
Approval page
Dedication
Acknowledge
Table of content
List of table
Proposal
Abstract

CHAPTER ONE:
INTRODUCTION
1.1 Background of the study
1.2 Statement of problem
1.3 Objectives of the study
1.4 Research questions
1.5 Significance of the study
1.6 Scope of limitations of the study
1.7 Definition of terms.

CHAPTER TWO:
LITERATURE REVIEW
2.1 The meaning and concept of price
2.2 Determinants of price
2.3 Pricing goals and objectives
2.4 Flexibility in pricing
2.5 Pricing models
2.6 Pricing situation in Nigeria
2.7 Uniform pricing and marketing of petroleum product in Nigeria

CHAPTER THREE:
RESEARCH METHODOLOGY
3.1 Research design
3.2 Sources of data
3.3 Population
3.4 Sample size used
3.5 Validation of instrument
3.6 Data collection procedure
3.7 Method of data analysis

CHAPTER FOUR:
DATE PRESENTATION AND ANALYSIS
5.1 Summary of findings
5.2 Conclusion
5.3 Recommendations
Bibliography
Appendix

CHAPTER ONE

INTRODUCTION
1.1 BACKGROUND OF THE STUDY
Frequent charges in the prices of petroleum products, have a regular feature of the oil sector in Nigeria the price of petroleum products have been reviewed upward trice in Nigeria between 1999 and 2003 (Eze, 2003:7). Pricing of petroleum products had been the responsibility of the petroleum product pricing regulatory Agency (PPPRA) and, Nigerian National Petroleum deregulation of petroleum products prices.
The NNPC was established in 1977 to put the government in front seat in the oil industry. Form them the government ceased to be a mere regulatory agency. Through the NNPC, the government delved into exploration, drilling and marketing of petroleum products in Nigeria (Ugbaja 2001: 8). To facilitate this, the pipeline and product marketing company (PPMC) and petroleum product pricing Regulatory Agency (PPPRA) were established to regulate the pricing, distributing and marketing of petroleum products in Nigeria.
Prior to the deregulation of petroleum product pricing in the PPPRA and the NNPC ensured uniform pricing for all petroleum products through out in Nigeria. For instance in 1989 the Babangida administration through these agencies raised the pump price of fuel, one of the petroleum products to N6.00 per liter. This was also further raised to N13.00 per liter by the Abacha regime in 1996.
In 2001, the Obasanjo administration increased it to N19.00 and further to N26.00 in 2002. In 2003, it was again raised form N26.00 to N34.00, and in 2004 currently was increased to N40.00 per liter and is still will be raised again (Ojo, 2003:18).
Uniformity in the pricing of petroleum products throughout the country had been ensured and sustained because of the control and the regulation of the industry by the government agencies the current proposals of the deregulation of the oil sector will not only bring about heterogeneity in the prices of these product but will also bring about wholesome activities in the marketing of these products (Nwala, 2003:9).
Before the deregulation of petroleum product pricing, the marketing of the petroleum products were undertaken by eight (8) companies: Agip, Texaco, Elf, Total, Unipetrol, Mobil, National African petroleum and National. These companies maintained uniform prices of the various emergence of the numerous petroleum products markets in recent time have changed the situation it is against this background that this study is set to examine the impact of uniform pricing of petroleum products in Nigeria.

1.2 STATEMENT OF PROBLEM
The deregulation of petroleum products prices recently was necessitated by the problems of uniform pricing of the products. Among these problems are:
– Inadequate supply of the products to marketers by the refineries.
– Hoarding of the products by the marketers in the down stream sector.
– Product diversion by marketers to undesignated destinations.
– Increase demand of the products in the country.

1.3 OBJECTIVES OF THE STUDY
The purpose of this study is to determine the impact of uniform pricing of petroleum product in Nigeria. Thus, the objectives of the study are:
1. To examine, the trend in petroleum products pricing in Nigeria
2. To examine factors influencing petroleum products prices.
3. To determine the effects of uniform prices for petroleum products.
4. To identify the problems of uniform prices petroleum products
5. To suggest ways of ensuring efficient pricing of petroleum products prices.

1.4 HYPOTHESIS
The following questions are formulated for the purpose of this study.
HYPOTHESIS
Ho: Uniform prices for petroleum products does not ensure efficient marketing of the products.
Hi: Uniform prices for petroleum products ensures efficient marketing of the products.
HYPOTHESIS 2
Ho: Deregulation of petroleum products prices will not improve the marketing of the products
Hi: Deregulation of petroleum products prices will improbe the marketing of the products.

1.5 SIGNIFICANCE OF THE STUDY
The usefulness of the findings and recommendations to the government, its petroleum product marketing agencies and students.
Firstly, the government will through the findings of this study understand the biting effects of the current pricing policy for petroleum products on the consumers. The recommendations will help in formulating pricing policies that will make the marketing efficient.
Secondly, the petroleum product pricing agency (PPPA) will through this study see the need to be more efficient I the fixing of petroleum product prices in spite of the proposed deregulation of the prices, influencing the prices will reduce the exploitative tendency of the markets.
Again, the Nigerian national petroleum corporation (NNPC) and all independent petroleum product marketers will see the need to cooperate with the government and NNPC will ensure efficient pricing policy and marketing of the products.
Finally, the study will be useful for academic purpose, it will serves as a data back to all students and researchers earring out a related study in future. The study will also provide the basis for further studies through the findings.

1.6 SCOPE OF THE STUDY
The study focuses on uniform pricing of petroleum products and its implications in the Nigerian economy. However, in the course of the study, the following constraints were encountered:
1. Uncooperative attitude of some individuals: Some of the Nigerian National petroleum corporation (NNPC) and pipeline products marketing company (PPMC) staff and independent petroleum marketers refused to complete the questionnaires or to be interviewed, this affected the volume of primary information available for the study.
2. Inadequate finance: The study could have been more extensive of the researchers included other independent marketers outside Enugu metropolis in the study. But the researcher did not have enough funds for such an extensive study.
3. Time constraint: Because of the demand placed on the researcher by other academic activities, the researcher did not have ample time for the study. Thus, the study could not accomplish within a recorded time.

1.7 DEFINITION OF TERMS AND ACRONYMS
Upstream sector: This refers to the drilling and refining section of petroleum processing activities.
1. Down Stream Sector: This refers to the distributive and marketing section of petroleum products.
2. Uniform Pricing: This refers to the phenomenon of fixing the same price for each of the petroleum products I the marketers.
3. Deregulation: This refers to the system of allowing the supply and demand for product prices to determine their relative prices.
4. NNPC: This is an acronym for Nigerian National Petroleum Corporation.
5. PPPA: This is an acronym for petroleum products pricing Agency.
6. PPMC: This is an acronym for pipeline products marketing company.

SIMILAR PROJECT TOPICS:
Save/Share This On Social Media:
MORE DESCRIPTION:

Effects Of Uniform Pricing Policy On The Marketing Of Petroleum Products:

A uniform pricing policy in the marketing of petroleum products refers to the practice of setting the same price for these products across different locations or outlets, regardless of variations in factors such as transportation costs, local taxes, and competitive conditions. This policy can have various effects on the marketing of petroleum products, both positive and negative. Here are some potential effects:

Positive Effects:

  1. Simplicity and Transparency: Uniform pricing simplifies the pricing structure, making it easier for consumers to understand and compare prices. This transparency can build trust and loyalty among consumers.
  2. Reduced Price Wars: Uniform pricing can help mitigate price wars among competitors since all outlets are selling at the same price. This can lead to more stable profit margins for retailers and reduce the potential for price-driven competition.
  3. Stable Profit Margins: Retailers can enjoy more stable profit margins since they don’t have to constantly adjust their prices based on local factors. This stability can contribute to better financial planning.
  4. Brand Image: Uniform pricing can enhance a company’s brand image by conveying a sense of fairness and consistency in pricing.

Negative Effects:

  1. Market Disparities: Different markets have different cost structures due to factors like transportation costs, taxes, and local economic conditions. Uniform pricing might lead to disparities in profitability among outlets in different regions, potentially disadvantaging those in higher-cost areas.
  2. Competition Reduction: Since there is less incentive for price-based competition, companies might not be as motivated to improve customer service, product quality, or innovate in other areas. This could lead to a stagnation in the industry’s overall competitiveness.
  3. Consumer Behavior Change: In areas where prices were previously lower due to lower costs, consumers might react negatively to sudden price increases. This could lead to decreased demand and customer dissatisfaction.
  4. Regulatory Challenges: Implementing uniform pricing across different regions could face regulatory challenges, especially if local governments have control over taxes and pricing regulations.
  5. Market Flexibility: Uniform pricing might hinder a company’s ability to respond quickly to market fluctuations. For instance, during periods of high demand, a company might want to implement surge pricing in certain areas to manage demand.
  6. Loss of Local Competitiveness: Local retailers that were previously able to offer lower prices due to their specific cost advantages might struggle to compete under uniform pricing, potentially leading to closures and loss of jobs in those areas.

Ultimately, the effects of a uniform pricing policy on the marketing of petroleum products depend on various factors such as the market structure, consumer behavior, regulatory environment, and the company’s strategic goals. A careful analysis of these factors is essential before implementing such a policy.