Abstract
Pricing strategy is considered to be one of the more
critical components of the marketing mix (Product, Place, Price and Promotion)
and is focused on generating revenue and ultimately profit for the company. The
current research study aims to analyze the effect of pricing strategies on
marketing of agricultural products in Udi LGA In Enugu State.
These study on the effect of pricing strategies on
the marketing of agricultural products in Enugu State, with particular
attention to Udi L. G. A Council was carried out. To evaluate the best possible
means or best strategy to be used in making the product available in the Urban
town and cities thereby eliminating the problem of price variations.
As the study focuses on exporting companies, not
only setting one or more pricing strategy is important, but also how do these
companies adapt their strategies to different industries and different
geographical markets. The applied methodology sustains, that the results are
rooted on a case study within the preferred pricing strategies of the analysed
companies. This can lead to measure the data for export performance and what
influence did it had on a company’s turnover.
CHAPTER
ONE
INTRODUCTION
1.1 Background of The
Study
Today,
the mentioning of the word marketing has a lot of things and meanings to send
to a lay man. The word marketing has to be understood and interpreted by
any lay man as meaning the same things as trading. But to a professional,
marketing is starts before production and ends after consumption. We also
talk about societal marketing concept which puts the entire society into consideration
when doing anything unlike trading which emphasizes on selling. In an
attempt to define the term marketing, it is good to look at some definition
given by some authorities and professionals in the field. It should
also be noted that there is no generally accepted definition of marketing
rather each person tries to look at marketing to reflect the functions
performed by him therefore we would not make mistakes if we say that
there are as many definitions of marketing as there are many
marketers.
According to Philip Kotler (1980), marketing is “Human activity directed at
satisfying needs and wants through exchange process.” This
definition has some key words as the operative words, such as needs, wants and
exchange, Needs, this defined as a state felt deprivation in person.
Wants are the expression of human needs as they are shaped by a person, culture
and individual development. And want must be backed with money for it to
be meaningful to the marketer Exchange is obtaining a desired object from
someone offering in return something of value.
Nwokoye (1981) defined marketing a s the “set of activities that
facilitate exchange transaction involving economic goods and services for
the ultimate purpose of satisfying human needs. The activities here
include product development, production, packaging, branding, transportation,
storage, promotion, distribution, pricing and so on. Ifezue (1990) define
marketing as’n a process which identifies, anticipates and satisfies
consumes needs and wants through conception, promotion mutual exchange and
physical distribution of economic goods and services.
Yet, Institute of marketing, london (1945) defined marketing as “a management
process which identifies, anticipates and supply consumer’s requirements
efficiently and profitably. From the above definition, one can understand that
market is said to encompass a lot of activities and emphasizes a lot on
consumer satisfaction and puts the marketer at a profit. From the above
definitions, marketing of agricultural produce (Rice) can be looked at as the
application of marketing knowledge to the marketing of rice.
One may be correct to say that market starts when farmers plan their output in
respect to expected market demand to pricing of the produce in relation to the
existing market price till the product gets to the ultimate consumer. ‘Because
of the above, we picked up to find out in this study the pricing and strategies
used in holding the produce. (Rice) and make some recommendation or how best to
improve the marketing of the produce. By the time we finish this work, we will
be able to find out the strategies used in the pricing of rice and find
out if the shortfall in the strategies (If any) are responsible for the
inadequate supply of rice to the consumers who need the product (Rice).
In
the face of rapid economic and technological changes, today’s consumer is more
curious, more educated and conversant with what he/she exactly wants. These
changes also affect the need of firms. According to Ehmke, Fulton and Lusk
(2005), marketing your business is about how to position it to satisfy your
customers’ needs. Borden (1984) stated that marketing manager must weigh the
behavioural forces and then handle marketing elements in his mix with focus on
the resources with which he has to work when building a marketing program to
fit the needs of a firm. For marketing to effect a change either in a new
product or reinvigorate a new brand there are elements that remains constant
which must be incorporated in the marketing mix and this is called the “four
P’s” these four P’s arte product, price, promotion and place (Ehmke et al,
2005). In the context of this study, the emphasis will be on price, hence the
need to elucidate more no meaning of price to both customers and firms.
Price
is amount a customer pays for a product or the sum of the values that consumers
exchange for the benefits of having or using a product or service (Bearden,
Ingram and Larfforge, 2004). According to Rosa, and Rodan (2011), the importance
of price as a purchase stimulus has a key role in price management since not
only does it determine the way prices are perceived and valued, but it also
influences consumer purchase decisions (Rosa and Rodan, 2011; Simon, 1989;
Vanhuele and Dreze, 2002). Studies have shown price as an important factor in
purchase decision, especially for frequently purchased products, affecting
choices for store, product and brand (Rondan, 2004). The greater the importance
of price in purchases decisions; the greater the intensity of information and
the greater the amount of comparison between competing brands (Mazumdar and
Monroe, 1990).
Considering
the nature of the consumer products (frequently purchased and consumed
products, Implying medium-low level of consumer – supplier interaction), the
basic is, the customers who usually purchase are more frequently in contact
with prices. Pricing strategy is paramount to every organization involved in
the production of consumer goods and services because t gives it cue about the
company and its products, a company does not set a single price but rather a
pricing structure that covers different items in its line (Kotter and
Armstrong, 2001). According to Hinterhuber (2008) pricing strategies vary
considerably across industries, countries and customers and can be categorized
into three groups. Cost-based pricing, competition based pricing, and customer
value-based pricing.
Closing
a pricing objective and associated strategy is an important function of the
business owner and an integral part of the business plan or planning process.
It is more than simply calculating plan or planning process. It is more than
simply calculating the cost of production and adding a markup (Ruth, 2007).
Therefore, assigning product prices is a strategy activity and the price or
prices assigned to a product or range of products will have an impact on the
extent to which consumers view the firm’s products and determine its subsequent
purchase.
However,
it is less clear how pricing activities can be guided by the marketing concept.
Certainly, customers would prefer paying less, in fact, they would even prefer
to pay nothing but it is simply not feasible to give products without price
(Sagepub.com 2009). An organization that does that will run dry and out of
business and would not be able to create value for the customers. Subsequently
these constitute problems that have provided a purpose for this research.
Researchers have identified a number of pricing strategies used by firms to
achieve customer’s patronage. In the present study, three of these pricing
strategies, namely, price bundling strategy, product line pricing strategies,
will be used to anchor the study.
The
focus of the study is on the pricing strategies, though pricing strategies and
patronage have been widely studied across the world. But most of these studies
have been in the developed economics. Unfortunately, studies in the food
manufacturing sectors of the under-developed countries like Nigeria have been scarce.
The motivation for the study therefore was to empirically evaluate the effects
of the pricing strategy of agricultural products.
1.2 STATEMENT
OF THE PROBLEM
Before
now, the production of rice used to be at the very low level and
because this, rice was left for the rich man who can afford the cost. The
reason for this being that because the production was left unmechanized through
some attempts were made towards increasing the put but one much have been
achieved. It is based on above reason that we have chosen to find out the
problems inherent in the rice marketing in Enugu State. The problems which are
identified fall in the following: –
1.3 OBJECTIVES
OF THE STUDY
The
main objective of the study was to examine the effects of the pricing strategy on
food manufacturing firms in the Enugu Nigeria on. However, the specific
objectives are as follows;
i.
To determine the pricing strategy of agricultural firms in the Enugu Nigeria.
ii.
To evaluate the best strategy to be used in making the product (rice) available
in the Urban town and cities thereby eliminating the problem of price
variations.
iii.
To find out the extent customer pricing affect the pricing strategy of agricultural
products firm.
1.4 Research Questions
To
help guide the study, the following research question were asked:
i.
what is the pricing strategy of agricultural firms in the Enugu Nigeria?
ii.
what is the best strategy to be used in making the product (rice) available in
the Urban town and cities thereby eliminating the problem of price variations.?
iii.
How does customer pricing affect the pricing strategy of agricultural products
firm?
1.5 SIGNIFICANCE
OF THE STUDY
The
role of agricultural products and rice in particular in the nation’s economy
and its importance cannot be over emphasized. The deadline in the rice
production and fluctuation in price and price and its effects on the citizen as
well as the economy were not taken seriously, hence the study.
This
study will of great importance to the government and other interested group (s)
especially the farmers, processors, distributors and even consumers to know how
to solve the problem inherent in marketing of it, say by way of revamping and
revitalizing the industry so as to meet the needs of the society. In the like
manner, this study will recommend the best production and adequate strategy to
make the product available to the consumers at the right time, place and at a
lasers price. Also, it will aim at pointing out other areas in rice marketing
that need greater and urgent attention.
Finally,
this study will help the researcher in that it will expose him to the practical
aspect of marketing research and widen his knowledge about rice production.
Also, it will serve as a help to others who may want t carry out research in
any related areas. In this work, we studied Enugu State as whole. The reason
behind our studying the entire state is to collect a broad information that
will cover the variations involved in the pricing and strategies in the
different areas of our study.
The
areas covered in Enugu state zones are Abakaliki, Enugu and Nsukka zone. This
spread was considered necessary because through some of the zones are more of
production concentration than others, the reverse is the cause when considering
marketing and consumption of rice. Example of this is the fact that Abakaliki
and Ugboaka in Enugu Zone and Adani in Nsukka Zone have higher production,
concentration for rice, Enugu and Nsukka happen to have higher consumption
concentration. It is based on the above that we have in this work chosen to
study the entire state to find out the variation (s) in pricing and strategies.
1.6 Definition of Terms
Pricing:
Pricing was the setting up of a value to a product or service and was the
result of a complex set of calculations, research and understanding and risk
taking ability (Danish et al., 2015).
Pricing
strategy: Pricing strategy was paramount to every organization involved in the
production of consumer goods and services because it gives a cue about the
company and its products because a company does not set a single price but
rather a pricing structure that covers different items in its line (Kotler et
al., 2001).
Consumer
behaviour: This was the decision process and physical activity individuals
engage in when evaluating, acquiring, and using economic goods and services
(Chen, 2009).