Project Materials

EFFECT OF PRICING STRATEGIES ON THE PURCHASING OF TOILET SOAPS

Chapter one

INTRODUCTION

1.1 Background of the Study

Toilet soaps are extremely vital for human health. It’s utilised for cleanliness. This crucial product must be priced appropriately in order to attract customers and increase profitability.

According to Kotler (1996:46), price is the quantity of money clients pay for a product or service, as well as the moment at which it is exchanged.

Mumer (1994:10) noted in the quality renewal of purchasing that price is the exchange value of goods/services, and the worth of an item is what it can be exchanged for in the market; each product and service has a price. Price and payment are how corporations recover their manufacturing costs and maintain their profit margins.

Pricing is the monetary expression of value, is created on utility, utility is an expression of usefulness, the whole usefulness is based on the potential for need and want, satisfaction value and utility are culturally based, while needs and wants are cultural, psychological, sociological, and physiologically based

therefore price as an ultimate expression of needs and want satisfying potential of an item of product or service which has cultural psychological economic implication Edoga and Ani (2000:319) observed that price is frequently used to signify value when it comes to the perceived quality of a product or service. Specifically, value can be defined as the ratio of perceived quality to price.

This relationship demonstrates that, for a given price, as perceived quality improves, value increases. Furthermore, at a given price, value drops when perceived quality declines. For some products, the price determines buyers’ perceptions of quality and, ultimately, value.

This includes toilet soaps. Pricing is an essential and comprehensive component of the purchasing mix that generates the greatest amount of external interference. It is a major factor influencing the volume of goods and services available to consumers in every economy.

As a result, forms, particularly profit-driven businesses, must select pricing strategies and techniques that include environmental variables, both external and internal, in order to fulfil their organisational goals.

The importance of price in selecting toilet soaps cannot be overstated. If a company wants to maximise its net profit, it must choose the proper price for its items.

Prices in goods can be either too high or too cheap to be good. When the price and change are too high, the size of the market for that particular product may be unnecessarily limited, even if the correct price is applied.

The size of net profit is directly proportional to the effectiveness of price because price usually causes a change in market demand for a specific product, affecting revenue and net profit.

According to Monrce (1994:210), consumer perceptions of product quality are directly proportional to price, with higher prices indicating higher quality.

According to Ichie (1993:25), there can be no purchase without a price; a product can be marched with the market/but only when buyers or sellers agree on a price; a buyer or seller can suggest a price, but it is not effective unless the owner accepts it.

Given the complexities of pricing and its importance in customer patronage decisions, the researcher in the study critically examines the effect of pricing methods on toilet soap purchases in Enugu State.

1.2 Statement of the Problem

The high mortality rate of manufacturing businesses in Nigeria, particularly those in the drinks industry, is a subject of concern for business management and society as a whole. It appears that these forms do not use acceptable pricing techniques for their items.

Today, small manufacturing firms spring up in the city under the guise of producing toilet soaps; however, after a few months/years of operation, some of these firms begin to experience low sales and profits as a result of poor customer patronage, which is caused in part by a failure to implement appropriate pricing strategies.

A situation in which consumer product and service manufacturers continue to endure poor sales volume or eventually close their doors as a result of low profit margins caused by the use of incorrect pricing strategies warrants further consideration.

The study aims to determine what pricing techniques are employed by manufacturing enterprises in the Toilet Soap Industry, as well as how far they have assisted in achieving goals.

A delegated economy is one that aims to make rapid money or an excess profit. The toiletry industry, particularly soap manufacturers, frequently raises the prices of their products without regard for the consequences.

This will undoubtedly have an impact on customer behaviour. It has also been observed that the prices of some toilet soaps do not reflect the quality of the product. The product’s pricing raises severe concerns.

1.3 GOALS OF THE STUDY

1. Determine whether the toilet soap company’s pricing approach attracts customers.

2. To investigate the issues with the pricing system for toilet soap.

3. Determine the impact of the pricing system on the profitability of toilet soaps.

4. To identify issues with the pricing system for toilet soaps.

5. To determine whether customers’ repeat purchases of toilet soaps correlate with the rest of the pricing system.

6. Find out how toilet soap companies set their prices.

7. Make relevant recommendations on how to enhance the price system for toilet soap.

1.4 Formulation of Hypothesis

Hypothesis 1.

HO: The pricing system used for toilet soap does not attract customers.

Hello: The pricing scheme used by toilet soap producers attracts customers.

Hypothesis 2.

HO: The pricing mechanism used by toilet soap producers does not boost their profitability.

Hi: The pricing mechanism of toilet soap firms increases their profitability.

Hypothesis 3

HO: The pricing strategy used for toilet soap does not result in customer repeat purchases.

HI: The pricing scheme used for toilet soap encourages repeat purchases.

Hypothesis 4

HO: The toilet soap pricing system is not proportionate with the product’s quality.

HI: Pricing strategy as established for toilet soap is commensurate with quality of product.

1.5 Significance of the Study

The study is more than just an academic exercise; it will also provide substance benefits to the researcher. It will broaden the researcher’s understanding in research writing on price tactics used by toilet soap industries.

It will be extremely beneficial to the researcher or readers who will use the study as a source of literature reviews. The write-up will be extremely valuable to manufacturers of toilet soap and other relevant companies.

It will assist them determine how to set prices for their service/product. The government will also gain from the study because they are involved in the purchase of toilet soaps.

1.6 SCOPE OF THE STUDY

This study was conducted to investigate the impact of pricing strategies on the purchase of toilet soap in Enugu state. A case study of a variety of toilet soaps. However, due to limited resources, time, and other constraints, attention was placed on specific toilet soaps such as Lux, Premier, Eve, and so on.

1.7 Definition of Terms

i. Price is the monetary expression of value.

ii. Purchasing – The process of recognising, predicting, and fulfilling customer needs and desires. Through the exchange of needs.