Price Analysis Of Orange Juice Enterprises In Makurdi Local Government Area Of Benue State, Nigeria
The study focused on price analysis of orange juice enterprises in Makurdi local government area of Benue state. The study involved the random selection of orange juice sellers within, Makurdi town. A total of 99 questionnaires were administered and collected, data collected were subjected to descriptive analysis, gross margin analysis and the hypothesis was tested using a t-test. The result of the study indicated that 37.4% and 62.6% were male and female respectively, it was also discovered that the majority (50.5%) of the respondents were within the age of 26-37 year old and majority (73.7%) were single. Cost and return analysis showed that orange juice production is a profitable enterprise with a total cost of N 1,297.9798, enterprise earning of N 7,459.60 and gross margin of N 6,161.6162. The result also indicated price of orange juice is affected by the cost of materialS, quality of the juice, geographical area, season, and cost of production and packaging of the juice. the enterprise F-statistics (2.197) was statistically significant (p0.05). Hence, the null hypothesis was rejected and the alternative hypothesis accepted. The coefficient of determination (R2) was 0.145, implying that the independent variable in the model accounted for 58.6% variation in the gross margin. The hypothesis testing result further showed that enterprise experience (962.35) significantly (p0.05) affects the gross margin of the orange enterprise. It was concluded that orange juice production is a profitable enterprise in Makurdi.
Table of Contents
- Title Page
- List of Table
- 1.1 Background to the Study
- 1.2 Statement of the Problem
- 1.3 Research Questions
- 1.4 Objectives of the Study
- 1.5 Statement of Hypothesis
- 1.6 Significance of the Study
- 1.7 Scope and Limitation of the Study
- 1.8 Definition of Terms
2.0 Literature Review
- 2.1 Conceptual Framework
- 2.1.1Concept of pricing and pricing strategy
- 2.1.2 Fruit and vegetable juices
- 2.1.3 Composition of fruit juice
- 2.1.4 Benefits of consumption of fruits juice
- 2.1.5 Processing of orange into juices
- 2.1.6 Physicochemical properties of orange juice
- 2.1.7 Major challenges of orange juice enterprise
- 2.1.8 Processing of Fruits into Juice
- 2.2 Theoretical Framework
- 2.2.1 Theory of price
- 2.2.2 Game pricing theory
- 2.2.3 Consumer theory
- 2.3 Review of Related Empirical Studies
- 3.1 Research Design
- 3.2 The Study Area
- 3.3 Population of the Study
- 3.4 Sample and Sampling Technique
- 3.5 Instrument of Data Collection
- 3.6 Validation of the Instrument
- 3.7 Reliability of Research instrument
- 3.8 Method of Data Collection
- 3.9 Variables/Model Specification
- 3.10 Data Analysis Techniques
4.0 Results and Discussion
- 4.1 Socio economic characteristics of orange juice entrepreneurs
- 4.2 The Cost and return analysis of orange juice enterprise
- 4.3 Determinants of Orange Juice Price
- 4.4 Constraints to Orange Juice Enterprise
- 4.5 Effect of Socio-economic Characteristics on the Gross Margin
5.0 Summary, Conclusion and Recommendations
- 5.1 Summary
- 5.2 Conclusion
- 5.3 Recommendations
- 5.4 Suggestion for Further Studies
- Appendix I
List of Tables
- Socio-economic Characteristics of Respondents (n = 99)
- Cost and return on orange enterprise
- Determinants of Orange Juice Price
- Constraints to Orange Juice Production
- Effect of Socio-economic Characteristics on the Gross Margin
1.1 Background to the Study
Fruit and vegetables are eaten or cooked or preserved by drying, canning or processed into other products such as juices. Carbohydrates including starch and sugar constitute the principal nutritional material. Citrus fruit are primary source of vitamin C and most fruit and vegetables contain quantities of vitamin A and B. These vitamin contents are sharply reduced during storage of processed fruits (Shils et al., 2006).
Juices are the pressed liquid from fruit and vegetable and are sources of nutrients including vitamins, minerals, natural sugars and phytochemicals. Juices from fruits and vegetables in any diet contribute to physical and mental functioning of the body. Vegetable juices are lower in calories than fruit juices and the most common ones are carrots, tomatoes and mixed vegetable juices. Fruit juices include temperate fruit juice (such as apple, pear, peach, apricot, prune and cherry), berry juice (including strawberry), grape juice, melon juice, citrus juice and tropical juices (Emebu and Anyika, 2011).
Sweet orange (Citrus sinensis) is one of the commercial citrus varieties growing in many parts of Nigeria (Ofosu-Budu et al., 2007). The development and production of orange juice products have undergone limited progress in Nigeria. The few orange processing enterprises in Nigeria encounter problems with quality of the juice with respect to browning, loss of ascorbic acid as well as spoilage during storage. In addition to these, competition from foreign market is growing rapidly.
Commercial production of juice has been mainly limited to oranges, pineapple, apple and grapes. Small scale productions of juice from several vegetable such as carrots, tomatoes and some berries have commenced. It is the intention of the processor to preserve as possible much flavours, colour and nutritive values of the original product from which juice is made to provide a balanced diet and not as a replacement or substitute for any beverages (Ayed and Al-Tamimi, 2007).
The Codex Alimentarius Commission (a joint FAO/WHO for food Standard programme) define fruit juice intended for consumption as unfermented but fermentable non-alcoholic drink intended for consumptions obtained by mechanical process from sound ripe fruit and vegetable preserved extensively by physical means or preservatives (Codex alimentarius commission, 2004).
The quality of orange juice is determined by factors such as processing condition and storage conditions. Studies have shown that at elevated temperature, there is ascorbic acid loss in single strength orange juice (Abrams, 2002). Geographical locations of fruit have an effect of juice properties and for that matter the storage characteristics. Adhikari in 2006, reported that juice during the late Valencia season were noticeably lower in fungal than those obtained during other processing seasons.
Fruit juices are becoming important part of modern diet in many communities. Their consumption is popular in Nigeria because of their health and invigorating benefits (Ndife et al. 2013). They act as nutritious beverages and play significant roles in healthy diets because they offer good taste and varieties of nutrients found naturally in fruits.
In Nigeria, different kinds of seasonal fruits are available including apple, orange, pineapple, and grape which provide an abundance of vitamins, minerals, antioxidants and fibers, all of which are essential for human health. Fruit juice intake is a convenient way by which people receive the benefits of various fruits when whole fruit is not readily available or desired (Nitu et al. 2010). Properly extracted juices are very similar to the fruit; they contain most substances which are found in the original ripe and sound fruit from which the juice is made. Fruit juices are always 100% fruit products and should not be confused with soft drinks or other refreshing drinks (Landon, 2007). They are available either in their freshly prepared form or industrially processed form. In either case, it is expected to be free from contaminants and contain most substances which are found in the original ripe and sound fruit from which the juice is extracted, without added sugar or preservative (Hassan et al. 2014).
Price is the amount a customer pays for a product or the sum of the values that consumers exchange for the benefits of having or using a product or service (Bearden et al 2004). Price means different things to different people; it is interest to lenders, service charged by the banker (lenders), premium to the insurer, fare to the transporter, honorarium to the guest lecturer etc,. According to Rosa et al (2011), the importance of price as a purchase stimulus has a key role in price management since not only does it determine the way prices are perceived and valued, but it also influences consumer purchase decisions (Rosa, et al. 2011). Price is as an important factor in purchase decision, especially for frequently purchased products, affecting choices for store, product and brand.
The greater the importance of price in purchases decisions, the greater the intensity of information and the greater the amount of comparisons between competing brands. Considering the nature of the consumer products (frequently purchased and consumed products, implying medium-low level of consumer-supplier interaction), the basic is, the customers who usually purchase are more frequently in contact with prices.
Pricing strategy is paramount to every organization involved in the production of consumer goods and services because it gives a clue about the company and its products, a company does not set a single price but rather a pricing structure that covers different items in its line (Kotler et al. 2001). According to Hinterhuber (2008) pricing strategies vary considerably across industries, countries and customers and can be categorized into three groups: cost-based pricing, competition-based pricing, and customer value-based pricing.
Choosing a pricing objective and associated strategy is an important function of the business owner and an integral part of the business plan or planning process. It is more than simply calculating the cost of production and adding a mark-up. Therefore, assigning product prices is a strategic activity and the price or prices assigned to a product or range of products will have an impact on the extent to which consumers view the firm‘s products and determine its subsequent purchase. However, it is less clear how pricing activities can be guided by the marketing concept.
Certainly, customers would prefer paying less, in fact, they would even prefer to pay nothing but it is simply not feasible to give products without price. An organization that does that will run dry and out of business and would not be able to create value for the customers. Subsequently these constitute problems that have provided a purpose for this research. This present work is therefore carried out to determine the price determinant and pricing strategies in the orange juice enterprise in Makurdi Benue state
1.2 Statement of the Problem
Fruit juice enterprise in Benue state and Nigeria as a whole is a growing market which is mostly face with many challenges of, lack of processing skills and technology, storage facility and many other socio economic factors which affects the viability of the enterprise causing economic loss in the venture.
According to a research conducted by Amoah et al. (2006), about 18%-45.7% loss of fruit yearly. Orange ranked first in post-harvest loss in 2008 and the percentage of 30.6%. Alzamora et al. (2000) has reported that about 30-50% of fruits and vegetables harvested in developing countries are never consumed due to spoilage during transportation, storage and processing. Post-harvest loss fruit and vegetable has also reached 20-40 percent because harvesting, processing or storage techniques are inefficient and therefore resulted in unstable supply (Mrema and Rolle, 2002), this has necessitated the processing, value addition and storage of this products in other forms that can improve their usability and shelf life.
The direct consumption of the orange fruit do not much up for its production due to the large in-flow of orange into the market hence there is the need to exploit other possible uses of the fruit which could arrest the alarming post-harvest loss.
More attention have been given to the production of the orange juice than it sale. Different producers of the orange juice sells at different price depending on the location, quality, flavour and most importantly the level of customer’s demand of the product. The selling price of the orange juice have over the years affected the level of production of the fruit juice, it is on this background that this research work was carried out to determine the effect of pricing on the production, sale, and proficiency of the orange fruit juice in Benue State.
1.3 Research Questions
The study provided answers to the following research questions;
- What are the socio-economic characteristics of orange juice entrepreneurs in Benue state?
- What are the orange juice price determination strategies in Benue state?
- What is the estimate costs and returns of orange juice enterprise in Benue state study area
- What are the problems associated with orange juice enterprise in Benue state
1.4 Objectives of the Study
The main objective of this study was to carry out price analysis of orange juice enterprise in Makurdi Local Government Area of Benue State.
The specific objectives were to:
- Describe the socio-economic characteristics of orange juice entrepreneurs in the Benue state.
- Assess orange juice price determination strategies;
- Estimate the costs and returns of orange juice enterprise;
- Identify problems associated with orange juice enterprise in the study area.
1.5 Statement of Hypotheses
Based on the specific objectives of this research work as stated above, the following null hypothesis was stated.
H0: socio- economic characteristics of orange juice entrepreneurs have no significant effect on their gross margin
1.6 Significance of the Study
It is hoped that the finding from this research would be of benefit to the orange juice enterprise in Benue State. The result of this work would also provide awareness to those in the business of producing orange juice in the area on the best price to sell the product that will not reduce the demand and at the same time favourable to the buyers. This work will also bring to light the various effect of pricing on the profitability of the orange juice enterprise.
Recommendations will also be made on the pricing of orange juice among producers in the study area and the state as a whole. This research will also help to bring to awareness of the proficiency of the orange juice enterprise thereby encouraging more investors to venture into the business of producing orange juice and help to reduce the incidences of spoilage and wastage of the orange fruit in the study area.
1.7 Scope and Limitation of the Study
This studies covers the orange juice enterprises in Benue State Nigeria, the study specifically focuses on the various aspects of pricing in the enterprise including the price determination strategies and the effect of pricing on the cost and return and overall profit maximization in the orange juice enterprise. The work covers a survey of the orange juice production, sale/marketing, pricing and consumption in Benue State using the Makurdi Local Government Area of the state as a case study.
The study is limited in terms of coverage and depth since the study area covered was the Makurdi Local government only out of the twenty three local governments of the state. Thus, the results from the study may not reflect the overall situation in the orange juice enterprise in Benue State as whole. It is limited to the objectives mentioned in the study. Another limitation was the demanding schedule of respondents at work in some of the orange juice market which made it very difficult getting the respondents to participate in the survey. As a result, retrieving copies of questionnaire in timely fashion was very challenging. Also, the researcher is an undergraduate (student) and therefore has limited time as well as resources in covering extensive literature available in conducting this research. Information provided by the researcher may not hold true for all businesses or organizations but is restricted to the selected organization used as a study in this research especially in Makurdi, the locality where this study is being conducted.
1.8 Definition of Terms
Pricing is the method of determining the value a producer will get in the exchange of goods and services. Simply, pricing method is used to set the price of producer’s offerings relevant to both the producer and the customer
A pricing strategy takes into account segments, ability to pay, market conditions, competitor actions, trade margins and input costs, amongst others. It is targeted at the defined customers and against competitors.
This is a juice produced from pressed from orange fruit, it is a liquid extract of the orange tree fruit produced by squeezing oranges
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