PRICING STRATEGY IN A COMPETITIVE BUSINESS ENVIRONMENT (A CASE STUDY OF S.P.D.C. DELTA STATE WARRI)

CHAPTER ONE

INTRODUCTION

1.1                      GENERAL BACKGROUND OF THE SUBJECT MATTER.

One element that is very important in any organization is price. Pricing is an important strategic issue because it is related to the product positioning. It also affects other marketing mix elements, such as product feature channel, decision and promotion.

In any organization after a product has been made, the next task for the executive is how to place on price n the products so as to get revenue from the capital invested in product and at the same time stand neck to make with competition. Price does not apply to goods only but also to the different service and commodities differ either because a product quality or the satisfaction enjoyed by the consumer. Specifically price can take any of these forms like rent paid to landlord, wages paid to workers, salary paid to executives, money paid on goods bought, commission on bonus, services etc. In essence, price according to Olukoye 1997 is the amount of money needed to acquire a given quantity of goods or services. Price can also be defined in another way as the market value of a product or services.

From the foregoing, it could therefore be said that price is the actual money as exchange fro the satisfaction enjoyed from a given product or services. The Economists may not fully accepts such definition of price simply because they believe that price can only be determined by the forces of demand and supply which is made totally agreed by the marketing executives. Through demand and supply are some of the major factors that determine price, the market still believes that there are some other factors that can influence price determination of a product, such as product, quality, company’s relation to product satisfaction, competition legal constraints and so on. Such factors should be taken into consideration before the price is set for a new product or existing ones.

Understanding the executives must take extra care in deciding with the task because any mistake in setting price for a commodity may lead to total rejection of that product in the market by the consumers, especially if the consumers are very sensitive to the price