The Impact Of Pricing In Marketing Of Coke

Project and Seminar Material for Marketing

The Impact Of Pricing In Marketing Of Coke


This project investigates “The Impacts of Pricing in Marketing of Coke Drinks in Enugu State” Every individual is interested in the prices, so everyone whether a consumer or a producer is affected by rise or fall in price. The purpose of this research work is to lay emphasis on the important of pricing in other to achieve a target return on capital invested by the organization, to develop forecast for sales and gross profit considering all the various internal and external factors that are relevant to the forecast. The literatures were reviewed. The researcher made use of both primary and secondary data, which were collected using questionnaire, personal interview, written materials or work of other journals, textbooks, handouts. And questionnaire were distributed, hypothesis formulated were tested. Finally, the findings of the study, it is recommended that:

  1. The company should put into consideration the company’s products over all corporate objectives profit maximization before their selling prices.|
  2. In deciding pricing strategy, concerned personnel and minimization of production cost so that selling price per product is reduced which many head to increase in turnover and net profit.

Chapter One

1.1 Introduction

1.1 Background 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 objective of this research work is to know how companies price their new products, especially coca-cola in particular. For all objectives, pricing is as important to the customers, as it is one of the parameter to evaluating the firm’s image. Thus the research work seeks to find out the extent to which coca-cola company carryout It’s pricing policy in their within the competitive marketing environment.

1.4 Research Questions

  1. What kind of pricing strategy is coca-cola using?
  2. Do you consider pricing to be of importance more than coca-cola product?
  3. Is there any significant relationship between pricing of coca-cola and companies image?
  4. Do you meet your target on investment at the price you sell coca-cola product?
  5. Do you think that the pricing strategy coca-cola are using is competitive?
  6. Do pricing assist coca-c0la in increase sales volume ?

1.5 Hypothesis

  1. Ho1: Pricing of coca-cola is more important than coke
    H1: Pricing of coke is not more important than coke
  2. 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.
  3. 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.
  4. 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.

5. Strategy:

A plan of action intended to accomplish a specific goal.(source : internet)

6. Quality:

The ability of a product to consistently meet or exceed customers requirement (source : internet)

7. Market:

These are the potential buyers of your product.

8. Value:

A customer perception relative price (the cost to own and use) and performance (quality). (source : internet)

9. Management:

Is defined as the process by which operative groups directs action towards common goals.

Chapter Five

5.0 Summery of Findings, Conclusion and Recommendation

5.1 Summary of the Findings

Like many managerial decision, pricing decision, are fundamental to the success or otherwise of all profit seeking organization, pricing decision have direct impact o the inflow of founds and profitability of the company. Once pricing policy has been established, it is often difficult and costly to change. The degree of attainment of the profit maximization, objective of the business also depend on a very extent, on the effectiveness and efficient of pricing or decision.

Pricing decision are all options to be weighted so as to place some monetary exchange value for the goods and services been produced and or rendered play important role to the entrepreneurs especially the profit oriented organizations. In view of the above statement, this research work has critically dealt with the issue of the impact of pricing in marketing of coke in Enugu State. The profit making organization with a special reference to coca-cola.

Findings of the study are summarized as follows:

  1. Pricing are used by coca-cola to maximize profit
  2. It was discovered that pricing are used by coca-cola to achieve the target rate of return.
  3. Also it was observed that coca-cola uses pricing to increase their market share.

5.2 Conclusion

The issue of pricing is a general phenomenon in organization especially profit making organization/firms. Since thus will enhance their continuous existence survival and growth mainly in the long run.

The research work can conveniently be concluded by saying that organization ie if profit making organization that wants to remain in the market, survive and grow, they should give this issue required attention, since it one of the primary determinants of achieving cooperate goals, administrative efficiency and overall survival and growth of a business with the aim of making profit. And since the business external environment is turbulent on nature.
Therefore this issue required paramount attention for making business especially coca-cola.

5.3 Recommendation

The researcher highly gone through the process of research into the impact of pricing in marketing as it related to coca-cola plc therefore makes the following recommendations:

i. The company should put into consideration the company’s product overall cooperate objectives, profit maximization before fixing their selling price.

  1. In deciding pricing strategy, concerned personnel should put into consideration a relative reduction and maximization of production cost so that selling price per product is reduced and eventually led to increase in turnover and net profit.
  2. Competent/qualified personnel as regard this issue should be accorded to the work to be done, so that goods result will emancipate from this.
  3. In making pricing decision for the company’s product, management /concerned personnel should be tactful by carefully watching their competitors.
  4. Finally further promotional activities should be embarked on, so that in the long run will increase the sale volume and the overall bringing/generate more profit to the organization /firm.

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