CHAPTER ONE

1.0 INTRODUCTION 1.1 THE BACKGROUND OF THE STUDYDecision about prices of a company’s product and services are among the most important activities the business organization undertaken infact few decision that these organization make arouse as much interest as those concerning prices. The company should be tactful and dynamics with the pricing strategy of the business. Whereas cost can be analyzed using information from within the firm prices cannot just be determined by only cost plus marketing for profit. External factors come into play including prices. Practiced by the competition secretary of the product in question timing supply difficulties substitute product taste fashion and so forth. Even over time the price can swing many times in both directions.In as much as the price factors remains the strongest argument in selling its manipulation calls fro that information gathering flair instinct and even patience however in this guessing game the marketer should know the break even point which is the minimum price he ought to sell a given volume or quantity to be able to cover costs. Below the price the bad news if there are sales is that capital is drying up. As the spectrum widens and the firm may lease to trade.The manufacturing companies must analyze the cost of production or of goods sold in determining the price. This applies not only to prices fixed by an organization but also to those if they are dictated to it by force in the external environment which include rent interest rate of any fund borrowed taxes and other charges and a marketing for net profit.Business organization mainly the manufacturing industries do not put any pricing strategy for their goods and services into consideration before they do. It the company may not have much of a choice if the product on arriving the market place meets competitions products which are will known household names. In this circumstances the price will stay at or below the competitors unless there is effective product differentiation that succeed to pull and retain demand at a higher price. Fixing the selling price is a tactful exercise involving a lot of vigilance. On one side the price should not be so high as to kill demand negative affect it one the other a low price cause the organization to loose valuable income. The best price is the one that produces the best or optimum revenue from sales such prices is seldom static or constant. Rather it fluctuates like mercury depending on market forces. At a static price competitor can undercut market share by offering the same goods or substitutes at a lower price.Pricing policy is very important it influence sales turnover and profitability. The company should be very careful when fixing the price of a product is of low or shoddy quality even through sales may increase especially in a market with low or medium income earner. Invasively high price ought to indicate high quality.Unfortunately this is not the case the time consumers cannot possibly be experts in all items. They rely four judgments on some aspects and price is among. Unscrupulous manager whose sale objective is profit use deceitful high pricing as their stock-in-trade likewise high pricing can literally scare the public into the waiting hands of the competitors. Tack and wisdom must prevails especially that the temptation to practice high prices is permanent.However a high or a low price strategy must take into account the break even point of the product. It means that the entrepreneur must detail cost fixed and variable before determining the price below which there is capital erosion conversely above this break even point there is profit that grows depending on how high the price can be accepted by buyers and the quantity actually sold.In short pricing is the strongest weapon in business strategy as well as deadly poison if poorly manipulated. In some cases sales and cash flow increase due to low price strategy. In other the effect can be a boomerang, the market might perceive or conclude form the low price that the product is not of good quality. Many people use price as an indication of quality.

1.2 STATEMENT OF THE PROBLEM Price is a very important tool that is used in every marketing organization. By its nature pricing have created a lot of impact on the marketing of beverages mostly in a developing economy.Effectively planned pricing policies are basically one of the prerequisites for proper co-ordination and realization of the ultimate pricing goals which will eventually need to the achievement of the organization goal. If revert is being the case that the pricing policy is unplanned arthritically the achievement of the organization’s goals fails.“All things being equal” problems that tends to exists include.1. Inability to audit an appropriate and efficient pricing policy: In view of this problem there is need to enhance and critically examine the pricing policy applied in the food drinks industries and other manufacturing organizations in improving their marketing performance. Since pricing can be a routine activity, the marketer or the company should be creative in pricing for new product complementary product or substitute product line and product in joint cost which are the pricing objective and a guide post for effectiveness in pricing.2. Lack of information on the impact of price on the effectiveness of the product sales: This had been the major concern of the manufacturing firms. The best price is the can that produces the best or optimum revenue form sales. Relay high price ought to indicate high quality.

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