THE IMPACTS OF PRICING IN MARKETING OF COKE DRINKS

Abstract

This study was on the impacts of pricing in marketing of coke drinks. Four objectives were raised which included; to ascertain whether the pricing of coca-cola is more important than coke, to ascertain the relationship between pricing of coke and companies image, to find out whether you meet your target investment with the price you sell coke and to find out the pricing strategy used is competitive.. A total of 77 responses were received and validated from the enrolled participants where all respondents were drawn from coca cola company, Enugu state. Hypothesis was tested using Chi-Square statistical tool (SPSS).

Chapter one

Introduction

1.1Background of the study

One of the most important operating decisions management must take is establishing the selling price for its product and services, moreover manufacturing companies are always faced with numerous decisions. The management has to decide on what to produce, how to produce at what quality and quantity to produce and at what price, the management also have to consider what policies and method to be adopted. Management must decide on the right price of the product, it is offering to the market and then set up policies and then set up policies on discount allowance, payment period, freight payment, credit terms and many other price related situation which ultimately affects the

list price.

IMPACT OF PRICING IN MARKETING OF COCA-COLA

Marketing consist business related activities that see to anticipate demand, help in developing and making the goods and services available to the satisfaction of consumers and users and as a profit to the organization. When a product is produced by an organization, the consumer usually do not collect the product free of charge but for a price.

This consideration depends on the perceived worth of the product. All profit and nonprofit organization face the task of selling price on their product and services. (Philip Kotler 1987).

Through history, sellers and buyers in the process of negotiation set prices, it is than he is expected to receive, and the buyer will offer less than he is expected to acceptable price is reached.

Pricing in marketing is the key activity within the capitalistic system of free market enterprises, in other words it is the most critical element of marketing mix that determines a company’s marketing shares and profitability. Price is the only marketing mix that yield revenue, while the other 3ps generate cost. Most companies do not only find it difficult but also mishandle their pricing strategies.

Price is one of the major variables that a marketing manager controls. Originally price is considered vital among the factors which influence buyer’s choice and behavior. In 1950’s and 1960’s non-price factors grew relatively more important and it had reached a point where over half of a sample of company managers did not select pricing as one of the five most important policy areas in their firm and marketing success.

Recently, because of the world wide inflation price has again attracted considerable attention and is now viewed by many marketers as one of the most important element in the marketing mix following the product.

Bush and Houston (1985,558) defined price as the value assigned to the utility one receives from goods and services, usually price is the amount of money that is given up to acquire a given quantity of goods and services. It is the regulator of the economic system because of its influence on the reward for all factors of production and the allocation of these factors. However in the marketing of a new product price policy should take cognizance of its importance on other element of the marketing mix. In recent time the question is how do you much do you think we can get this item, how much do you think we ought to sell it for, have been asked by managements who are in charge with the responsibility of pricing the products or services. Therefore considers the reaction of its competitors in deciding the pricing strategy to go for. That is, how will the dealers and distributors react to this when they see ours? And will the government intervene and prevent this price? In all, market need to know the laws, and regulations affecting and to comply with it. guided by the company’s objective, the marketing management must develop a set of pricing objective and policies. They must anticipate what the pricing policy of the firm will face and how it is going to overcome it. Some of this pricing policies should be seen as how flexible price will be, at what level i9t will be set, how pricing will be handled during the cost of the product life cycle.

Pricing is handled in various ways. in small business organization pricing is handled by the top management rather than the marketers. While in large scale organization, pricing is typically handled by divisional and product line managers, then the general pricing is done by the top management as it is with the case study.

Business these days is becoming competitive and sophisticated. This demand has made companies to adopt various price policy decision and other strategies to attract customer. Price is one of the 4ps under the control of the marketing practitioners. It’s importance within the marketing mix cannot be overlooked. The pricing policy which a firm adopts in setting their product price normally goes to affect the organization and profit. Although it is not out of place to recognize the important place of the other aspect of the marketing mix (product, place or distribution, promotion) in working in harmony with price towards the attainment of marketing objective. The purpose of pricing is not to cover cost, but to capture the value of the product or services in the mind of the customers. Manager have to develop a set of pricing objective and policies decision that will work towards the achievement of the overall marketing objective must be translated into pricing decisions but, who is to accomplish the task? Pricing decision is a major decision area and as such every department or functional areas are committed into it. No single department takes care of pricing. Pricing policy decision is expressed with the guideline set by the organization, which regulates future activity of the firm. There are so many pricing policy decisions which a firm has to adopt order to increase the performance of the firm. It includes the following.

1. Skimming or penetration pricing policy
2. Resale agreement policy
3. Product line pricing policy
4. Discount pricing policy
5. Psychological pricing policy etc.

1.2      STATEMENT OF PROBLEMS

In an unstable economy like ours, determining the price of items or product is difficult because of high inflation rate affecting the business environment. When there is increase in the overhead expenses of production then, the anticipation price will change and will bring about difficulties and possible failure of the product, also there is an adverse effect on pricing policy decision when firms are faced with the complex of false future forecast, for instance when a budget is wrongly appropriated and implemented, this is going to affect the organization adversely. The research work, therefore talks on “Impact of pricing on marketing of coca-cola drinks in Enugu State.

1.3      OBJECTIVE OF THE STUDY

The objectives of the study are;

1. to ascertain whether the pricing of coca-cola is more important than coke
2. to ascertain the relationship between pricing of coke and companies image
3. to find out whether you meet your target investment with the price you sell coke
4. to find out the pricing strategy used is competitive.

1.5      HYPOTHESIS

Ho1: pricing of coca-cola is more important than coke

H1: pricing of coke is not more important than coke

Ho2: there significant relationship between pricing of coke and    companies image

H2: There is no significant relationship between pricing of coke and  company’s image.

H03: do you meet your target investment with the price you sell coke?

H3: you did not meet your target investment with the price you sale coke.

H04 : The pricing strategy used is competitive.

H4 : the pricing strategy used is not competitive.

1.6      SIGNIFICANCE OF THE STUDY

This research project being done under a case study of coca-cola in Enugu state, will enable the reader to understand the relevance of price and pricing in marketing of coke. It will also highlight the importance of selling as a standard pricing policy for new product as well as that of the existing products. It will reveal to the management of the organization the adverse effect of wrong price policy to its business growth and development.

However this project work will serve as a source of information to the future researcher who would like to conduct studies related to this work.

1.7      SCOPE OF THE STUDY   

Coca-cola as the researcher base of study has many branches in some part of the country. They have branches in Lagos, Benin, Enugu, Onitsha, Owerri, Jos and Aba etc, but the researcher decides to carry out this research in Enugu state due to the researcher’s inability to reach out other branches as a result of researcher’s economic handicap time and logistic reasons.

1.8      DEFINITION OF TERMS 

For easy and fast comprehension of this project work, there are some certain key terms which ought to be defined. they are as follows;

1. Price: price can be defined as sacrifice made to acquire a given product, which may be monetary or non monitory.
2. Pricing:Onunla .J. Kelechi (2004,p.77) defined pricing as the activities involved in setting the price for which a product will be sold.
3. Pricing policy:it is referring to as guideline philosophy or course of action designed to influence and determine pricing policy decision.

4.  Product: Kotler and Amstrong (2001 p7) a product is anything that can be offered to a market for an attention acquisition, use or consumption that might that satisfy a want or need. It includes physical object, services, objects, places, organizations and ideas.

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