IMPACT OF PRICING STRATEGIES ON CONSUMER PURCHASE BEHAVIOR (A CASE STUDY OF AIRTEL AND ETISALAT)

ABSTRACT

This study is on the impact of pricing strategies on consumer behavior. Primary data was employed in this study using a sample size of 100 despondence drawn from 50 Etisalat subscribers and 50. Airtel subscribers, respectively in Umuahia so as to elicit useful information on the thrust of the study. A descriptive research design was used in this study. However, three research questions and hypotheses were formulated for the study and were tested using Chi-square test and spearman rank correlation at 5% level of significance. Based on the empirical findings of the study, it was organizations and consumer's perception. Furthermore, the study also revealed that respondents considered the pricing strategies of both telecommunications companies (Airtel and Etisalat) to be similar enough to be considered as same. Apparently, both adopt similar pricing strategies to create and cultivate their own share of the market. This most likely, since both are new entrants in the Nigerian telecommunications market (Airtel has been in the market since 2001 why changing ownership from Econet, Vmobile, Celtel, Zain and the most recent Airtel). The study equally revealed that purchasing strategies positively and significantly impact on organization profitability. This conclusion was based on the empirical evidence emanating from this study where the respondents to this study strongly agreed that a Firm's turnover depends on pricing strategy and [hat low call tariff increased firms profit base on high patronage. Hence, any telecommunications firm that does not improve in quality service delivery at affordable price will soon find itself wept into the gutters with most of its loyal subscribers "decamping" to a better option or alternative. It is therefore recommended that telecommunication companies, Airtel and Etisalat in particular should maintain consistent quality services, since the Nigerian market will switch loyalty within a short time if their services focus more expectation in terms of satisfaction is not met. Airtel and Etisalat Should on quality services delivery (widen their coverage, ensure uninterrupted communication, etc), also, they shouldput into consideration their pricing strategy as a sine qua nonfor high profitability. Their pricing strategy should cater for both the rich and poor.

TABLE OF CONTENTS

Cover page ﾿ i

Title page ﾿ ii

Declaration ﾿ iii

Certification ﾿ iv

Dedication ﾿ v

Acknowledgement ﾿ vi

Tableof content ﾿ vii

Abstract ﾿           ix ﾿

CHAPTER ONE INTRODUCTION ﾿ 1

1.1        Background of the Study ﾿ 1

1.2       Statement of the Problem ﾿ 2

1.3       Research Objectives ﾿ 3

1.4       Research Questions ﾿ 3

1.5       Research Hypotheses ﾿ 4

1.6Research Hypotheses ﾿ 4

1.7Scope of the Study ﾿ 4

CHAPTER TWO ﾿ 5

REVIEW OF RELATED LITERATURE ﾿ 5

2.1       Marketing Concept ﾿ 5

2.1.1     Marketing Orientations ﾿ 5

2.1.2    Marketing Environment ﾿ 7

2.1.3    Marketing Mix ﾿ 8

2.2       Pricing ﾿ 11

2.2.1Approaches Companies use to set Price ﾿ 12

2.3       Setting the Price ﾿ 14

2.3.1     Selecting the pricing objectives ﾿ 14

2.3.2    Determining demand ﾿ 15

2.3.3     Estimating costs ﾿ 16

2.3.4    Analyzing competitors' cost price and offers ﾿ 17

2.3.5     Selecting a pricing method ﾿ 17

2.3.6    Selecting the final price ﾿ 20

2.4       Adapting the price ﾿ 21

2.4.1     Geographical pricing (cash, countertrade, barter) ﾿ 21

2.4.2    Price discounts and allowances ﾿ 21

2.4.3    Promotional pricing ﾿ 22

CHAPTER THREE ﾿ 23

RESEARCH METHODOLGY ﾿ 23

3.1  ﾿ Research design ﾿ 23

3.2  ﾿ Sample procedure ﾿ 23

3.3  ﾿ Data collection method ﾿ 23

3.4 ﾿ Method of data analysis ﾿ 24

CHAPTER FOUR ﾿ 26

DATA ANALYSIS AND DISCUSSION OF FINDINGS ﾿ 26

4.1 Questionnaire distribution and analysis ﾿ 26

4.2       Demographics of sample ﾿ 26

4.3       Test of Hypotheses ﾿ 36

4.3.1     Testing hypothesis one ﾿ 36

4.3.1.1  Test Statistics ﾿ 37

4.3.1.2 Computation of test statistic ﾿ 38

4.3.2 Testing hypothesis two ﾿ 41

4.3.2.1 Computation of test statistic ﾿ 41

4.4    Discussion of findings ﾿ 45

4.4.1  Relationship between pricing strategy and consumer perception ﾿ 45

4.4.2 Impact of pricing strategies of both organizations on the behaviour ﾿ 46

4.4.3 Impact of pricing strategies on organizational profitability ﾿ 46

CHAPTER FIVE ﾿ 47

SUMMARY, CONCLUSION AND RECOMMENDATIONS ﾿ 47

5.1  Summary of findings ﾿ 47

5.2 Conclusion ﾿ 48

5.3 Recommendations ﾿ 49

5.4 Limitations ﾿ 49

REFERENCES ﾿ 51

APPENDIX 2 ﾿ 53