Comparative study of pricing strategies of selected retailing stores in Nigeria

ABSTRACT

The study is on “Comparative study of pricing strategies of selected retailing stores in Nigeria”. The study has three objectives and four research questions. The quasi – experimental survey design is considered and adopted against the experimental design. The population was 20,000 and the sample size was 400 staff of the supermarket and others is allocated to customers of the supermarket in Owerri, Imo State. This research work made use of random sampling techniques. Questionnaire were allocated or distributed to various retail outlets in Owerri Imo State. Analysis of variance statistical techniques was used to analyze the data and the test of hypotheses. The findings show that advertising really had a strong influence on retail stores to make use of print media, television, radio, magazines, and posters, etc in creating awareness of their products. It was also discovered that the return on investments of television advertising is proportionate to its expenditure.The study therefore recommended among others that, Pricing strategies and policies should be changed as the situation in the market place change. Majority of retailers should adopt more penetration pricing strategies or skimming pricing strategy.     In the supermarket industry, price discount and putting or giving out bonus to customers should be practiced in order to encourage more customers.

CHAPTER ONE

INTRODUCTION

 1.1 BACKGROUND OF THE STUDY

Pricing is the marketing function which seeks to reconcile in monetary terms buyers wants from product with seller objectives [Anyanwu 2013; 182] pricing is the process of reaching at the cover, but to capture the value of product or services in the mind of the customers. According to Schewe (1981: 315) one of the most challenging tasks of any retailer is that the establishing an effective pricing strategy for this merchandise and evaluating the probable effect of his shop used widely. Price manipulation becomes a powerful tool for ensuring the success of any marketing activities or programme. Pricing as it applies to manufacturers and whole-sellers does not apply to retailer. This has given the fact that retailers offer a wide selection of goods and services and that consumers often make a purchase decision in respect of basket of goods rather than single product or services. The consequence has to decide what policy is likely to encourage consumers to patronage his shop rather than that of his competitor. It is difficult to differentiate in terms of performers.

Product now has shorter lives. Therefore companies, retail organization alike took non-product competitive advantage (pricing strategy). The dicey nature of pricing is what Fenton (1981:82) expressed that if rush for maximum volume above a certain point, out profit will automatically be reducing our sales turnover by value and our production value unit. Pricing is a problem when circumstance leads a firm, to become to doubt the rightness of its price in relation to current demand and cost, pricing is a problem where competitors initiate a change in price and if so by how much.

Pricing as a strategy is a means to end. Strategy gives the guideline on how to achieve the objectives (Anyanwu 2000:132). Retail shops especially, drug stores, super market, retailers on shoe product, service firms like restaurants, hair salon which is focus on the study as a going concerns seeks to achieve those marketing objectives necessary for their existence and survival such objectives include;

1. a) Maximum profit contribution
2. b) Maximum volume of sales
3. c) Maximum volume of product/service sold by the unit of product/service.

Pricing strategy is a means to achieve these objectives. There are a number of fundamental considerations in pricing those related cost, profit, competition and demand. There is a lot of pricing strategy that are available for most retailers to adopt. For the scope of this study we shall examine the following strategies;

1. a) Price leading
2. b) Unit pricing
3. d) Price discount and allowances.
4. e) Penetration pricing
5. f) Skimming pricing
6. g) Odd pricing/ even pricing
7. h) Prestige pricing
8. i) Guarantee pricing
9. j) Diversionary pricing

1.2 STATEMENT OF THE PROBLEM

     Pricing has become one of the most important decision variables in any organization. Considering the high mortality rate of business in our country is a source of concern to the management of retail stores in general. It seems that these retailers do not adopt appropriate pricing strategy in pricing their merchandise

Nowadays it is common to see retail business establish everywhere. Almost every corner of the cities like drug/chemist stores, show stores, restaurant etc. Some of the retail stores after few months of operation starts to experience low profits as a result of poor customer patronage caused by strategies.

In a situation whereby most retailers of both customer products and services, continue to experience low sales or eventual close up, the business as a result of an absence of pricing strategies lying behind their price decision that took account of dynamic elements in the situation call for this study.

 1.3 OBJECTIVE OF THE STUDY

The objectives of the study include the following, to;

Determine various pricing strategies of retail shops that make them have influence of product/service patronage.

Find out, the appropriate pricing strategies that would enhance efficiency and effectiveness among retail shops.

Make recommendation where necessary to retailers on pricing strategies

1.4 RESEARCH QUESTION

The following are research questions

• Does pricing strategies of retail stores have influence on product/service patronage?
• What are the determinant factors of pricing by retailers?
• Is there generated adequate information on which to base pricing decisions?
• Does the pricing strategy adopted by these retailers affect the nature of the product?

1.5 HYPOTHESIS FORMULATIONS

The following are the hypothesis formulated and developed to seek or find solution to the research questions.

Ho: Pricing strategies of retail stores do not have influence on the product/services.

Hi:  There is no relationship between retail stores products and their pricing strategies.

1.6 SIGNIFICANCE OF THE STUDY

The result of this finding will be value to the following people or groups.

• To the retailers: It will enable the retailers to develop effective pricing strategies that will create maximum returns.
• To business organization, it will of immerse benefit to business organization by giving them insight on hoe productivity in their pricing strategy could enhance productivity in their operations.
• The government. The government would also have use of this research work by enabling the government have insight into the various pricing strategies of retailers to enhance that fair prices are adopted by retailers in the selling of their goods and services.
• The academics: The benefit of this research to academics cannot be over emphasized first, it extends the frontier of knowledge in the aspect of pricing strategies.
• The researchers: This researcher will provide more information on pricing strategies; it will also give additional confidence to the researchers to discuss on this area when the need arises.

1.7 DELIMITATION/SCOPE OF THE STUDY

For the purpose of achieving excellence and the best possible result, this research is limited to only retail stores in Owerri Imo state on a comparative study of pricing strategies of selected retailing stores in Nigeria. For better specification of boundary for this work, effort would be made to cover only supermarkets in Owerri, Imo state; although the information obtained can be generally applied to other retailing institutions on pricing strategy. Due to the financial involvement, time limitations and some other factors this study have been limited to the pricing strategies of the following supermarkets in Owerri, Imo state : Destiny supermarkets in plot 124 Ikenegbu layout, Owerri, Imo state, Nigeria , Maris supermarket No 171 Ikenegbu layout Mbari Road, Owerri, Imo state Nigeria , Glorisco supermarket No14 Mbaise Road Owerri, Imo state Nigeria. The different pricing strategies adopted in the research looked into are; cost base pricing, market oriented pricing and competition oriented pricing.

1.8 DEFINITION OF TERMS

Price; this is the monetary value attached to a product. Anyanwu (2003:3)

Retailer; A retailer is a merchant middleman who sells primarily to the ultimate consumer. Anyanwu (2000)

Strategy; this is an outcome of planning and decision process. Alugbuo (2004:40)

Policy; This can be defined as a general guideline that guides managerial action. Alugbuo (2002:126)

Marketing Mix; this is the combination of controllable variables (I.e.) product, distribution, price and promotion which spells out the marketing strategies used to achieve marketing objective Anyanwu (2004:4)

Pages:  84

Category: Project

Format:  Word & PDF         

Chapters: 1-5                                 

Material contains Table of Content, Abstract and References.