EFFECTIVE PRICING STRATEGIES FOR PURCHASING OF NEW PRODUCTS (A CASE STUDY OF ROYALUZ BY HARDIS AND DROMADES LTD, IN ENUGU STATE)

EFFECTIVE PRICING STRATEGIES FOR PURCHASING OF NEW PRODUCTS (A CASE STUDY OF ROYALUZ BY HARDIS AND DROMADES LTD, IN ENUGU STATE)

Abstract

This study focussed on effective pricing strategies for purchasing of New products a case study of Royalux by Hardis and Dromades. The objectives of the study are as follows.
– To determine the methods used by Hardis and Dromades in setting prices for their new product – Royalux.
– To determine how prices of Royalux affect its demand, position and market shares.
– To find out how customers respond to different prices of different quality of products.
The scope of the study was limited to Enugu Metropolis. In sourcing for the required information, the researcher used both primary and secondary data which collected through oral interviews and administration of three sets of questionnaire one for the management and relevant staff of Hardis and Dromades, others for consumer and distributors. Bowloy’s formular was used to determine the sample size of consumers while Topmans formular was used for Distributors whist a census survey was used for the management/ relevant staff of Hardis and Dromades. Data were organized, analysed, interpreted and summaried using tables, percentages, pie chart and histogram, and chi-square statistics were used to test the three hypotheses formulated.
Based on the analysis, the following finding were made;
– That Hardis and Dromades products become a household name in Enugu.
– That the firms cost of production was given the highest consideration in setting price for Royalux.
– The high cost of transportation and handling cost contributed to increase in price of Royalux
– That the wholesales and consumer of Hardis product were encourage to a reasonable price to buy Royalux

Table Of Content

Title page
Approval page
Dedication
Acknowledgement
Abstract
Table of contentCHAPTER ONE
1.0 Introduction
1.1 Background of the study
1.2 Statement of the problem
1.3 Objective of the study
1.4 Formulation of hypothesis
1.5 Scope of the study
1.6 Definition of term

CHAPTER TWO
2.0 Literature review
2.1 Overview of pricing
2.2 Objective of pricing
2.3 Pricing strategies
2.4 Factor influencing price (Determination)
2.5 Impact of pricing on the purchasing of New product
2.6 Pricing strategies Adopted for purchasing new product.
2.7 Pricing strategies for the purchasing of Royalux.

CHAPTER THREE
3.0 Research methodology
3.1 Sources of data
3.2 Research instrument used
3.3 Population of study
3.4 Determination of sample size
3.5 Sampling techniques
3.6 Method of data analysis and treatment
3.7 Questionnaire administration
3.8 Limitations of study

CHAPTER FOUR
4.0 Data presentation, analysis and interpretation
4.1 Presentation and analysis of data
4.2 Test of hypothesis

CHAPTER FIVE
5.0 Summary of findings, recommendation & conclusion
5.1 Summary of findings
5.2 Recommendation
5.3 Conclusion
Bibliography
Appendix

Chapter One

INTRODUCTION
1.1 BACKGROUND OF THE STUDY
Purchasing operates within a dynamic environment and today’s companies are wreathing with customer values and orientations; economic stagnation, environmental decline, increased global competition, and a host of other economic political, social and pricing challenges which if Ignored will be detrimental to the company. Purchasing is concerned with getting the right product to the right customer at the right price.
Price for a product is one of the factors that determine the demand for the product, that is why economic theory states that price is determined by the interaction of demand and supply cost and price usually affect demand and these three are in continuous inter play. For economist, it is a key factor describing the level and movement of demand. The basic assumption made about demand is that all things being equal, price plays a decisive role in determination of the rate of purchase by the consumers. Price presents a thorny but interesting phenomenon under our current economic system.
Traditionally, price occupies the second position of the internal or important variables of the purchasing mix otherwise known as 4ps.
Product, price and promotion, place pricing decision aspect of a firms purchasing programme arises partly from the fact that of all the elements of the purchasing mix, price is the only one that generates income and revenue while the next represent lost to the firm (Adirika, Ebue and Nwachukwu 1996:59). Price is also one of the flexible elements of other elements of the purchasing mix unlike, product features and channel commitment, price can be changed quickly and if price is well blended with way in achieving better result. Price is a very sensitive issues facing a company of which a company cannot do without because of that, it can make or mar a company’s image. Price communicates to the market the company’s interview value/positioning of its products/services.
No company will want to incur loss through the sales of its products. Inspite of this firms want to achieve certain level of customer satisfaction translated in price terms, that is why both manufacturers and marketers use price to accomplish multiple objectives price may be use as a clue to product quality while conveying to the customers that a seller has high quality goods and services. Price wears many hats, stated by (Mark 1979) of the authors in pricing strategies and this emphasizes the crucial role of pricing in the survival of a company. At the same time price are pricing competition is the number one problem facing many purchasing executives. Yet, many companies do not handle pricing well. The most common mistake are: pricing that is too cost oriented; prices that are not revised often enough to take the rest of the purchasing mix into account; prices that are various enough for different products, market segment and purchase occasions.
Historically prices usually were set by buyers and sellers bargaining with each other sellers would asked for a higher price than they expected to get and buyers would offer less than they are expected to pay. Through the bargaining process, the would arrive at acceptable price individual buyer pay different prices for the same products, depending on their needs and bargaining skills.
Historically, price has been the major factor affecting choice. This is skill trade in poorer nations, among poorer groups, and with commodity products. However, non-price factor have become more important in buyers – choice behaviour in recent decades.
A company may decided to divert into a particular market at a specific price level as it develops a product accordingly, this is called pricing strategy. The organization aim at the most valuable price level that is ripe for exploitation or that meet its market objective at a profit, once the price level has been established necessary variation in price structure from day to day and from time to time are tactical.
But if you have a good product, do not spoil it by trying to sell it too cheaply because Nigerian Consumers associate high price with quality product even though it is a price consumed community.
From the above, “Price” constitute an important or essential area of study, because price of a product is not seen by the purchaser simply in terms of what is the cheapest price rather and element in the total bundle of satisfaction which constitute a product in the consumers eyes.
Therefore, it is a means of increasing primary demand per a product, a firm may like to fix a price that is likely to increase wider consumer acceptance and consequently increase the volume of a product. Both the manufacturers, the purchasers and likewise buyers look at price differently.
The manufacturer and the retailers view the price relating to how good his accounting method are how much profit he may be capable of making price is expressed in terms of Naira and kobo or any other monetary medium of exchange and it tells the purchaser what the cost will be to him. Although cost is not necessary regarded purely in terms of immediate ash payment in order to own a product.
Therefore, pricing function is handled different ways by different organization. In small organization, price decision is made by top management while in large organization it s handled by lower manager and purchasing department in accordance with top management pricing objective, policies, strategies and procedure,
A purchasing firm should, therefore adopt such pricing strategies that will lead to the realization of not only the pricing objective but also the normal corporate goals of the firm.
Schewe and Smith (1980: 134-137) identified two broad pricing strategies which purchasing can adopt in setting the prices of new products. These are setting an initial high price for the product (Skinghind Pricing Strategy) and/or setting an initial price (penetration pricing strategy) aimed at facilitating consumer acceptance.
Hardies and Dromades Nigeria Limited was incorporated in Nigeria as a private liability company in October 11th 1993 with its registration number as 232241. On October 10 1996, it was duly registered to be Mixing, compounding, manufacturing, preparing Dispensing and selling of drugs, poisons dispensing lotion, soaps etc at the provision of pharmacist council of Nigeria. Its functions amongst other business were to carry on manufacturing of hygiene household products.
The company is located at Emene in Enugu with branches in almost all the big cities in Nigeria. This research work centers on the company’s effective pricing strategies for purchasing of a New Product – Royallux. Pricing can determine especially at the introductory stage of a new product the success or failure of the product in the market.
Hardis and Dromades manufacturing firm adopts both low pricing strategy and high pricing strategy in purchasing its new product – Royallux. The low pricing strategy their new product – Royallux as fast as possible in order to generate substantial sales volume and a larger market share while the high pricing strategy makes it possible for the firm to recover its product cost and other expenses as quickly as possible (Stanton 1984:79). This decision is influenced by a number of factors such as customers demand schedule, the cost function, the competitors prices/reaction and the firms pricing objectives and existing government regulation regarding pricing generally. Vernon and Lamb (1986 : 60) stated the importance of these factors in determining the prices of varies from one company to another.
Because of the important of price in the purchasing of new product that the researcher takes a critical look at the effective of pricing strategies for purchasing of new product with emphasis of Royallux.1.2 STATEMENT OF THE PROBLEM
The research work is carried out to determine how Hardis and Dromades apply their pricing strategies in purchasing of the new product – Royallux. The question is, does the customers see the company’s prices as being in line with the value or quality of its offers from the discussion held with customers of Hardis and Dromades. Some complain that the price is high compared to the product quality while some customers opined that the price is in line with the quality of the product. Hardis and Dromades incurred cost in the process of providing goods for customers satisfaction, and one way of recovering some of these cost is through effective pricing strategy.
Therefore, there is need for manufacturing firms to adopt, pricing strategies that will enable them at least to recover production overhead cost and make profit. Thus, he determination of pricing strategies adopted by Hardis an Dromades in Enugu in the pricing of their new product – Royallux will form the central problem of this research.
Finally their problems include identification of the factors which determines or influence the price elastiity of demand experience – curve effects, competitors prices in similar goods, which consequently, determine the choice of pricing strategies by the firms and also in the purchasing of Royallux.

1.3 OBJECTIVES OF THE STUDY
The objective of this study is to determine effective are the methods used by Hardis and Dromades in settling prices for their new product – Royallux.
– To determine how prices of the new product affect its demand, position and market share.
– To find out how consumers respond to different prices of different quality of products.
– To Know the pricing strategies necessary to achieve the companies sales goal with regard to Royallux.
– To evaluate the pricing strategies of the company in increasing patronage for Royallux
– To determine how prices can enhance the profitability of the company’s product.

1.4 FORMULATION OF HYPOTHESES
The following hypotheses were formulated to help in carrying out this study.
H01 – The pricing strategies adopted by Hardis and Dromades for Royallux does not lead to increased sales of the product.
H1 – The pricing strategies adopted by Hardis and Dromades for Royallux had to increased sales of the product.
H02 – The pricing strategies adopted by Hardis and Dromades does not lead to repeat sales of Royallux.
H2 – The pricing strategies adopted by the company to increase repeat sales of Royallux.
H03 – The pricing strategies Hardies and Dromades for Royallux have negative impact on the profit of the company.
H3 – The pricing strategies adopted by the company for Royallux have a positive impact on the profit of the company.

1.5 SIGNIFICANCE OF THE STUDY
A product’s price is a major determinant of the market demand for it. Price affects a firm’s competitive position and its market share is imperative for purchasing firm to understand and take cognizance of the pricing practice of other competitors and effective prices for its product. Therefore, this research will be useful to other different brands product firms by enabling them to gain a useful insight into the effective pricing strategies of the purchasing firm whose operations and activities in one way or the other, effect and influence their own (different brand product firm) activities.
The consumer public will also benefit from this study since they will come to know why marketers prices are high or low, they will also be in a better position to know the best company industrial or consumer product.
The readers will benefit from the study as the information contained would widen their scope of understanding and knowledge in the area of study which will stir up further investigation.
Finally the study oil make the researcher to acquire more knowledge in the field of researching

1.6 SCOPE OF THE STUDY
This study is centered on Hardis and Dromades Nig. Ltd – Enugu which is located in Emene. The research examined the pricing strategies used by the above-mentioned firm for the purchasing of Royallux in Enugu metropolis.

1.7 DEFINITION OF TERMS
The following terms used in this study should be taken to mean the following:

Purchasing:
It is all important task of identifying, anticipating and satisfying human needs and want through exchange process as efficiently and as effectively as posible (Adirika 1990:3)

Pricing objective:
They are goals which management attempts to achieve with its pricing structure and strategies (Adrika, Ebue & Nnolim 1996:71)

Product:
It is anything or idea that can satisfy a need or a want (Adirika, Ebue & Nnolic 1997: 114)

Strategy:
It is the major pattern of major objectives, purposes or goals, essential policies and plans for achieving a company goals in such a way to define what business the company is in or is to be in (Philip Kotler 2003:118)

Effective
It is a systematic means by which purchasing manager adopt in reaching the stated objectives, goals of an organization with the maximum available resources (Philip Kotler 2003: 286).

Skimming pricing:
This is a setting an initial high price on a new product (Ani 1998: 59)

Discount
This refers to a reduction from the base price of a product: usually they are offers to buyers for buying in large quantities, and paying services for the seller (Philip Kokler 2003: 497).

Pricing
Pricing is the moved or other considerations exchanges for the ownership of the goods or services (Edoga and Ani 2000: 218 – 319).

Chapter Five

SUMMARY, RECOMMENDATIONS AND CONCLUSIONS
SUMMARY OF FINDINGSThe summary of findings of this research/project would bring together in a coherent way both the results of the various hypothesis done in chapter four as well as the findings from the interview the researcher has with staff and management of the Hardis and Dromades Ltd.At the course of this research work, some of the finding which the researcher made includes: it was found out that Hardis do complained a lot of not been paid attention to by members of Hardis. This attitude of the hospital personnel portray that of a company which is sales oriented instead of been a customer – oriented hospital.

The researcher also during the course of this project work noted that the members of the Nigerian union of journalist do not visit the Hardis in the metropolis. The reason behind this wouldn’t be reached as members of the union declined to comment as regard this.

The services of our Hardis and Dromades is generally as been poor. The reasons being that they do lack drugs, incessantly practice, god fatherism and that the environment is generally very poor (i.e. sanitation wise). The patient thinks that the general hospital hoard drugs which they divert to their private hospitals and stores.

Also, it was found out that this hospital does not have a proper public relations department in the hospital. This to me, explains why members of the Nigerian union of journalist stated that the hospital does not have public relations officer whom they can liasie with when they visit the hospital.

Lastly, high hospital charges was found out to be highly responsible for patient dissatisfaction. On the contrary, members of the Nigerian union of journalist felt that the current hospital charge are commensurate with the high cost of living prevalent in our economy these days.

RECOMMENDATIONS

Based on the above findings made, some recommendation were preferred, these includes:
1. Having taken the patient to be the “king”, the hospitals management team should see to it that patient’s attention and satisfaction is given a pivotal preference at all times.

2. Also, having noted that public-relations leads to higher patronage, profitability, satisfaction, and awareness creation, and that patients are dissatisfied with the services of the general hospitals, the management of the hospital should upgrade the quality of their services to compete favourable with services of the private hospital by making drugs readily available and affordable, maintaining a conducive medical environment and paying much attention to patients needs.

3. Efforts should be made by the hospital in the metropolis to see to it, that they do employ the service of the press. This is because the importance of the press in any organization cannot be overlook. It is a fact that the more the press known of any organization’s activity, the better the relationship between them are their patients.

To operate at optimal, the management team of these respective hospital should not embark on “Aggressive purchasing” and for highly competent managerial skills to be adopted. To this end, doctors as well as nurses and other hospital workers should be adequately trained in the area of human relations to at least enable them achieve the level of attention and relationship expected of them by their patients. Negligence of this fact has contributed immensely to poor doctor/patient relationship in hospitals most especially in our general hospitals.

CONCLUSION
Having gone through this breath taking, pain staking work, the researcher felt that the fault lies on the hospital management to make maximum use of it’s public relations to ensure a continuous patient satisfaction and patronage. To attain this, the hospital management should take a look at the researchers recommendations as a way forward. This is, because come of the problems of purchasing in the hospital business can be eradicated when the services rendered by the hospital are improved upon. The hospital should be able to met it’s special and purchasing objectives by improving the effectiveness and efficiency of it’s services and operation through public relations campaign.

To embark on purchasing-orienting campaign, is what the hospital management has to do adopt for the public relations campaign to be well utilized. The campaign should involve the employees as well as the employers, so as to enable to campaign to yield the desired result. The employees wouldn’t be force to partake on the campaign if they are not satisfied with the management. Therefore, the race to guarantee the satisfaction of the patients commence after the employees satisfaction is guaranteed otherwise, the management will find it difficult having their way.

Work Description
Chapter One of Effective Pricing Strategies For Purchasing Of New Products. Order and download complete “Effective Pricing Strategies For Purchasing Of New Products” project work if you need chapter one to chapter five of this work. Chapter One of Effective Pricing Strategies For Purchasing Of New Products contains Introduction, Background of the study, Statement of the problem, Objective of the study, Formulation of hypothesis, Scope of the study and Definition of term
Chapter Two of Effective Pricing Strategies For Purchasing Of New Products is available. Order and download complete “Effective Pricing Strategies For Purchasing Of New Products” project work if you need chapter two of this work. Chapter Two of Effective Pricing Strategies For Purchasing Of New Products contains: Literature review, Overview of pricing, Objective of pricing, Pricing strategies, Factor influencing price (Determination), Impact of pricing on the purchasing of New product, Pricing strategies Adopted for purchasing new product and Pricing strategies for the purchasing of Royalux.
Chapter Three of Effective Pricing Strategies For Purchasing Of New Products is available. Order and download complete “Effective Pricing Strategies For Purchasing Of New Products” project work if you need chapter three of this work. Chapter Three of Effective Pricing Strategies For Purchasing Of New Products contains:Research methodology, Sources of data, Research instrument used, Population of study, Determination of sample size, Sampling techniques, Method of data analysis and treatment, Questionnaire administration and Limitations of study
Chapter Four of Effective Pricing Strategies For Purchasing Of New Products is available. Order and download complete “Effective Pricing Strategies For Purchasing Of New Products” project work if you need chapter four of this work. Chapter Four of Effective Pricing Strategies For Purchasing Of New Products contains: Data presentation, analysis and interpretation, Presentation and analysis of data and Test of hypothesis
Chapter Five of Effective Pricing Strategies For Purchasing Of New Products is also included in the full work. Order and download complete “Effective Pricing Strategies For Purchasing Of New Products” project work including chapter five. Chapter Five of Effective Pricing Strategies For Purchasing Of New Products contains: Summary of findings, recommendation & conclusion, Summary of findings, Recommendation, Conclusion, Bibliography and Appendix

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