EFFECT OF PRICING STRATEGIES ON THE PURCHASING OF TOILET SOAPS
CHAPTER ONE
INTRODUCTION
1.1 BACKGROUND TO THE STUDY
Toilet soaps are very important to the health of the human being. It is used for cleanliness. This important product has to be appropriately pricing in order to attract customer patronage and increase profitability.
According to Kotler (1996:46) price is the amount of money customers pay for the product or service and the time a place of exchange.
Mumer (1994:10) in the quality renew of purchasing stated that price is the exchange value of goods/services and the value of an item is what it can be exchange in the market place, every product and service has its price. It is through price and payment that firms recover their cost of production and active their margin of profit.
Pricing is the monetary expression of value, is created on utility, utility is an expression of usefulness, whole usefulness is based on the potential for need and want, satisfaction value and utility are culturally based while needs and want – cultural, psychological, sociological and physiological based, therefore price as an ultimate expression of needs and want satisfying potential of an item of product or services which has cultural psychological economic implication on market.
Edoga and Ani (2000:319) noted that price is often used to indicate value when it is pained with the perceived quality of product or service specifically, value can be defined as the ratio of perceived quality to price (value perceived quality/price).
This relationship shows that for a given price as perceived quality increase, value increases. Also, for a given price, value decreases when perceived quality decrease. For some products, price itself influences the perception of quality and ultimately value, to consumers. This include toilet soaps.
Pricing is an important and complete element of the purchasing mix and generate the highest level of external interference.
It is a major determinant with volume of goods and services available for the consumer in any economy. Therefore, forms especially those on profit business has to choose with the contain of the environmental variables, both external and internal pricing policies and techniques which are available to achieve its organizational objectives.
The importance of price in the purchasing of toilet soaps cannot be over emphasized. If an organization wants to maximize its net profit, the right price must be selected for its products price in goods may either be too high or too low to be good. When the price and changed are two high the size of the market for that particular product may be unnecessarily restricted and if the right price where used. The size of net profit is directly related to the effectiveness of price because price usually causes change in market demand for a given product and in turn its revenue and net profit.
Monrce (1994:210) noted that the consumer perception of product quality vary directly with the price, the higher the price, the better the quality is preferred to be.
