THE IMPACT OF PRICING STRATEGY ON NEW PRODUCT SALES
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ABSTRACT
A survey of fast food restaurants in Uyo, Akwa Ibom, Nigeria, this study evaluated the effect of price adjustment on the consumption of new consumer products. This is because price is one of the four aspects of the marketing mix with the most flexibility. A common issue is that firms are overly eager to decrease prices in order to make a sale, as opposed to persuading customers that their items are worth a higher price. Another frequent error is setting pricing that is too focused on costs rather than consumer value. Among others, these are the primary focus of this investigation. The specific objectives of the study were to determine the influence of sales-oriented pricing on consumption of new fast food products at fast food restaurants in Uyo, to identify the influence of competition on pricing at fast food restaurants in Uyo, to establish the influence of sales promotion on consumption of new fast food products at fast food restaurants in Uyo, and to evaluate how product quality affects consumption of new fast food products at fast food restaurants in Uyo. The researcher utilized a descriptive study methodology. This research was conducted in fast food outlets in Uyo, Akwa Ibom. The demographic sample included 86 employees and 160 current and former consumers. The data gathering methods included a questionnaire, an observation schedule, and an interview schedule. Using descriptive data analysis methodologies, the data were organized, presented, analyzed, and interpreted. According to the findings of the study, it is evident that a company sets prices to cover the cost of manufacturing and marketing a product or to achieve a predetermined profit margin. The organization establishes the prices at which it will achieve break-even or the desired profit level. According to the study’s findings, in order to enhance the company’s sales volume, many pricing strategies should be applied or utilized. The report also recommends that the hotel consistently improve the quality of its consumer goods in order to achieve reasonable costs. There are also suggestions for future research on the elements that determine pricing strategies in enterprises.
FIRST CHAPTER
INTRODUCTION
Background of the study
In recent years, the costs of essential goods, such as electricity and agricultural supplies, have risen dramatically. Between 2006 and 2008, the average price of oil increased by 110 percent, the price of rice by 217 percent, the price of wheat by 136 percent, the price of maize by 125 percent, and the price of soybeans by 107 percent. The ensuing economic impact on businesses, people, and entire economies has refocused attention on the scarcity of natural resources and the most effective means of managing them in the twenty-first century.
According to Kotler (2004), pricing is the amount of money charged for a product or service or the sum of the values people exchange for the benefits of possessing or utilizing the thing. The optimal price should satisfy both the buyer’s and seller’s objectives. The notion indicates that if you determine the optimal pricing, your consumers will be satisfied, your profit will increase, and your bottom line will be healthier. Pricing is far from straightforward in reality. Setting the optimal pricing is one of the most challenging decisions ever made by managers. The majority of businesses are so poor at it that they leave money on the table. Pricing involves more than just establishing prices. Pricing is a plan to grow sales volume at a profit, while including and delivering essential messages about the offering’s value to the customer. In general, most firms do not employ such rigorous pricing (Monroe 2003).
When a company’s costs are lower than those of its competitors, a low price can be leveraged to win customers, which highlights the significance of price decision for marketing managers. Moreover, price reduction as a means of gaining or retaining market share is a well-established technique.
used by companies When making purchase decisions with limited information, consumers rely significantly on price as an indicator of a product’s quality. Price is a crucial factor in influencing the consumption of new fast food products in any hotel in Uyo, Nigeria, and its environs, since it determines the success of the product.
Description of the problem
According to Kotler (2004), price is the only aspect of the marketing mix that generates income. All remaining items indicate expenses. Additionally, price is one of the most adaptable components of the marketing mix. In contrast to product characteristics and channel commitments, price can be modified rapidly. Concurrently, pricing and price competition is a major concern for many marketing professionals. Another frequent error is pricing that is too focused on costs rather than consumer value.
There has been a decline in new fast food restaurant patronage as a result of increased rivalry from hotels in the same area, such as Cicada Hotel and Hotel Comfy, that offer the same services and new fast food goods at comparable prices.
Low pricing comparable to those charged by new fast food restaurants, so making them more desirable due to their different or cheaper rates. In order to attract more consumers, there have been price discrepancies among hotels and eateries. As a result of the industry’s homogeneity, measuring quality is difficult, making pricing exceedingly tough. Most fast food restaurants have had pricing difficulties, since they must sometimes decrease their prices to attract and keep customers, and sometimes increase their prices to reflect costs. This has resulted in people staying or leaving based on the amount charged. As a result, restaurants can no longer guarantee certain clients. This study used the case of fast food restaurants in Uyo to investigate the impact of pricing adjustments on the consumption of new consumer goods.
Object of the study
This study’s primary objective was to assess the impact of price variation on the consumption of new consumer products at fast food restaurants in Uyo, Akwa Ibom.
Objectives of Study
The study was motivated by the following aims:
To investigate the impact of sales-oriented pricing on the consumption of new fast food items at fast food establishments in Uyo.
To determine the effect of competition on the pricing of fast food businesses, uyo was used.
To determine the effect of sales promotion on the consumption of new fast food products in Uyo fast food establishments.
Determine how product quality influences the consumption of new fast food goods in fast food establishments.
Research Concerns
The following questions are addressed by the research:
What effect does sales-driven pricing have on the consumption of new fast food items in fast food establishments in Uyo?
What effect does competition have on the pricing of fast food businesses, uyo?
What effect does sales promotion have on the consumption of new fast food items in fast food establishments in Uyo?
How does product quality influence the consumption of new fast food products in fast food restaurants?
Importance of the research
Several stakeholders, including the researcher, the University of Uyo and other institutions of higher education, as well as managers and business owners in the fast-moving consumer products market, can benefit from the study.
The findings and recommendations of this study are beneficial to the management of fast food restaurants and other enterprises, as it can lead to the development of adequate processes for determining the prices of items in order to implement a price increase that does not negatively effect sales.
As an academic institution, the University of Uyo contains a library where completed studies are archived for student and teacher reference. The study will benefit students by allowing them to learn more about the effects of price on the consumption of new food products; it will also contribute to the existing body of information, which will be valuable to all other institutions of higher education.
Constraints of the study
The focus of the study was on the impact of pricing adjustments on the consumption of a firm’s new consumer items, which may not be the only determinant of the firm’s success or failure, as production, technology, financing, level of skilled labor, and sources of suppliers also contribute to growth. Some of the employees’ information sources were primarily memory-based and consequently susceptible to suppression of other significant data. Low response from responders owing to apprehension that valuable information could be leaked to rivals.
Limitations of the Research
The aim of the study was the impact of pricing changes on the consumption of new consumer goods at fast food restaurants in Uyo. Principal responders included managers, supervisors, employees, and customers. The study was conducted in Uyo town between May and July of 2013.
Definitions of key terminology employed in the study
New fast food products: meals that can be produced and supplied in a short amount of time.
While any quick-to-prepare meal might be regarded,
Price The amount of money an object is offered or sold for.
Pricing strategy is a process used by marketers to determine a price that is commensurate with the service provided.
Strategy Criteria or operational base
Market skimming entails fixing the price of a new product so as to extract the highest revenue possible from sectors ready to pay a premium price. As a result, the business generates fewer but more profitable sales.
Market penetration — establishing a low initial price in order to swiftly infiltrate the market and maintain a substantial market share.
The structure of the study
The first chapter served as the basis for this investigation. It specifically addressed the study’s historical context, problem statement, aims, research questions, purpose, importance, and limitations. The second chapter offered the literature review in order to locate and analyze the work of other academics and researchers, as well as to assist the researcher in defining the topic more narrowly. Methodology and processes and modalities in data collecting include research design, determination and identification of population sample size, sampling design, sampling procedure, instruments of data collection, and validity and reliability of gathered data. The data analysis, presentation, and discussion of the results may be found in the fourth chapter. The conclusion and recommendations will comprise the fifth chapter of this document.
THE IMPACT OF PRICING STRATEGY ON NEW PRODUCT SALES
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