PRICE VARIATIONS AND ITS EFFECTS ON SALES PERFORMANCE OF AN

ORGANIZATION: A CASE STUDY OF NEW KENYA CO-OPERATIVES

CREAMERIES NAKURU TOWN
Kevin M Namukali cp12/60550/09
1ohn Wambugu cp12/60512/09
Sophia Gatwiri cp12/60477/09
Davis Chesimbili cp122/60354/07






Research Project Submitted in Partial Fulfillment of the Requirements for the Award
of bachelor of Commerce






1uly 2011










ACKNOWLEDGEMENT
We Ieel greatly indebted to all those who made the preparation oI this research successIul.
Much gratitude goes to our supervisor Mrs. Sirma Ior her endless eIIorts to guide in
streamlining the project. This was not withstanding her tight schedule oI activities. We also
thank Iriends, lecturers and mentors. They all gave us the motivation that was key to our
achievements in writing this project.
ABSTRACT
The main problem oI the study was price varies among products especially when they are
raised and customers seem to shiIt to other related products which are lower in prices. This
aIIects customers who are loyal to the brand and the sales turnover oI the Iirm will
decrease. To establish the relationship that exists between price variation and product
branding with regard to sales perIormance oI the Iirm and to establish the challenges Iaced
by price variations on product branding. The study was conIined between the month oI
May 2009 and September 2009. This study was limited in that it only Iocused on the one
organization. A case study research design was used and the organization provided the
target population oI 125 employees. A sample oI 38 respondents was derived using
stratiIied sampling method because it is suitable to include the elements Irom each oI the
segments and it will enable to divide the population into subpopulation or strata. The
questionnaires were personal administered and the validity oI the study was ensured
through critical review by the research supervisor.. From the Iindings, it was cited that the
Iirm should look Ior customers who are brand loyalty. Consumer can be categorized under
Iour groups starting with brand switchers. Lastly, a suggestion Ior Iurther study was
provided which was the Impact oI product branding on company`s market growth rate oI
an organization









TABLE OF CONTENTS
ACkNCWLLDGLMLN1 II
A8S1kAC1 II
I LIS1 CI 1A8LLS V
1 LIS1 CI IIGUkLS VI
A88kLVIA1ICNS VI
CLkA1ICNAL DLIINI1ICN CI 1LkMS VI
CnA1Lk CNL 1
10 IN1kCDUC1ICN 1
11 8ACkGkCUND CI 1nL S1UD 1
12 S1A1LMLN1 CI 1nL kC8LLM 3
13 C8ILC1IVL CI 1nL S1UD 3
14 kLSLAkCn ULS1ICN 3
1S SIGNIIICANCL CI 1nL S1UD 4
16 LIMI1A1ICN CI 1nL S1UD S
17 SCCL CI 1nL S1UD S
18 1nLCkL1ICAL IkAMLWCkk S
CnA1Lk 1WC 7
20 LI1LkA1UkL kLVILW 7
21 IN1kCDUC1ICNS 7
22 kLVILW CI AS1 S1UDILS 7
221 UNDLkS1ANDING kICING 7
222 SL11ING kICLS 7
223 IN1LkNAL IAC1CkS 1C CCNSIDLk WnLN SL11ING kICLS 8
224 Lk1LkNAL IAC1CkS 1C CCNSIDLk WnLN SL11ING kICLS 10
22S GLC8AL LkSLC1IVL CN kICING 12
226 LVALUA1ING 1nL CUS1CMLkS' kICL SLNSI1IVI1 13
227 DL1LkMINA1ICN CI kICL 13

228 CCNSUMLk SCnCLCG AND kICING 1S
2281 CCNSUMLk LkCL1ICN CI kICLS AND VALUL 16
229 IAC1CkS 1C CCNSIDLk WnLN kICING 17
2291 1LS CI kICING S1kA1LGILS 18
2292 SLLLC1ING 1nL kICING C8ILC1IVL 20
2293 SLLLC1ING A kICL ML1nCD 20
2210 LkLkILNCL AS A VALUL 23
23 CkI1ICAL kLVILW 2S
24 SUMMAk 2S
CnA1Lk 1nkLL 2S
30 kLSLAkCn DLSIGN AND ML1nCDCLCG 2S
31 IN1kCDUC1ICN 26
32 kLSLAkCn DLSIGN 26
33 1AkGL1 CULA1ICN 26
34 SAMLING DLSIGN AND SAMLL SI2L 26
3S DA1A CCLLLC1ICN INS1kUMLN1 27
36 DA1A CCLLLC1ICN kCCLDUkLS 27
37 kLLIA8ILI1 AND VALIDI1 27
38 DA1A ANALSIS AND kLSLN1A1ICN 27
40 DA1A ANALSIS kLSLN1A1ICN AND IN1LkkL1A1ICN 28
41 IN1kCDUC1ICN 28
42 DLMCGkAnIC INICkMA1ICN CI 1nL kLSCNDLN1S 28
421 GLNDLk CI 1nL kLSCNDLN1S 28
422 AGL DIS1kI8U1ICN CI kLSCNDLN1S 29
423 MAkI1AL S1A1US 30
424 ACADLMIC UALIIICA1ICN 30
42S CSI1ICN IN 1nL CkGANI2A1ICN 31
426 WCkkING LkLkILNCL 31

432 CkI1LkIA USLD 8 1nL IIkM 1C DL1LkMINL kICLS CI kCDUC1S 33
433 kICL VAkIA1ICN AIILC1S 1nL SALLS LkICkMANCL CI 1nL IIkM 33
43S CUS1CMLkS kLAC1ICN WnLN kICLS CI kCDUC1S CnANGL 3S
436 nCW kICL AIILC1 CVLkALL SALLS 3S
437 CnALLLNGLS IACLD 8 kICL VAkIA1ICN CN kCDUC1 8kANDING 36
CnA1Lk IIVL 36
S0SUMMAk CI 1nL IINDINGS CCNCLUSICN AND kLCCMMLNDA1ICNS 36
S1 IN1kCDUC1ICN 37
S2 SUMMAk CI 1nL IINDINGS 37
S21 GLNLkAL INICkMA1ICN 37
S23 AGL CI 1nL kLSCNDLN1 37
S24 MAkI1AL S1A1US 38
S2S ACADLMIC UALIIICA1ICN 38
S26 CSI1ICN CI 1nL kLSCNDLN1 38
S27 WCkkING LkLkILNCL 38
S3 SLCIIIC C8ILC1IVL 38
S4 CCNCLUSICN 39
SS kLCCMMLNDA1ICN 39
ALNDIkLS
Questionnaires
i. LIST OF TABLES
8 1A8LL 31 1AkGL1 CULA1ICN 26
C 1A8LL 32 SAMLL SI2L 27
D 1A8LL 41 GLNDLk CI 1nL kLSCNDLN1S 29
L 1A8LL 42 AGL CI 1nL kLSCNDLN1S 29
I 1A8LL 43 MAkI1AL S1A1US 30
G 1A8LL 44 ACADLMIC UALIIICA1ICN 30

n 1A8LL 4S CSI1ICN IN 1nL CkGANI2A1ICN 31
I 1A8LL 46 WCkkING LkLkILNCL 31
I 1A8LL 47 IAC1CkS AIILC1 kICLS CI CUk kCDUC1S 32
k 1A8LL 48 CkI1LkIA USLD 8 1nL IIkM 1C DL1LkMINL kICLS CI kCDUC1S 33
L 1A8LL 49 kICL VAkIA1ICN AIILC1S 1nL SALLS LkICkMANCL CI 1nL IIkM 34
M 1A8LL 410 CCMMUNICA1ICN WI1n CUS1CMLkS WnLN 1nLkL AkL kICL CnANGLS CI 1nL
kCDUC1S 34
N 1A8LL 411 CUS1CMLkS kLAC1ICN WnLN kICLS CI kCDUC1S CnANGL 3S
C 1A8LL 412 nCW kICL AIILC1 CVLkALL SALLS 3S
1A8LL 413 CnALLLNGLS IACLD 8 kICL VAkIA1ICN CN kCDUC1 8kANDING 36

1. LIST OF FIGURES
IIG 21 DLMAND LLVLL 11
k IIG 22 kLLA1ICNSnI 8L1WLLN DLMAND AND SUL (LUILI8kIUM) 14
S IIG 23 8kLAkLVLN CnAk1S 22
1 IIG 24 LkLkILNCL AS A VALUL 24

ABBREVIATIONS
K.C.C enya Co-Operatives Creameries
D.D Demand
S.S Supply
G.O.K Government oI enya



OPERATIONAL DEFINITION OF TERMS

Price is the value placed on a good or service by the Iirm at some point in
time
Break even analysis A point where total costs oI the products and total revenue are
equal.
Demand Quantity which the customers stand ready to buy at varying
Prices, where all other conditions are constant
Pricing Strategy is a method applied to marketers in order to come up with a price
that is equal to service

CHAPTER ONE
1.0 Introduction
The purpose oI this chapter is to examine the background oI the study, statement oI the
problem, objectives oI the study, research questions, the purpose oI the study, the
signiIicance oI the study the scope oI the study, limitations oI the study and theoretical
Iramework oI the study.
1.1 Background of the Study
Saxena (2004), price is a value oI a commodity or a service measured in terms oI the
standard monetary unit. In comparing two quotations, price enables us to appraise the
relative value oIIered by each supplier; thereIore Marketers should thereIore nurture it to
avoid any disasters. There has been a growing interest in the area oI pricing more so
because price represents the goodwill oI the Iirm. In corporate take- over or merges oIten
the value oIIered to buy out a Iirm is much more than the book value oI its land, plant and
machinery, inventory oI Iinished and semi Iinished goods/ products and the market value
oI its shares
The Iirms price equity is relatively new one and research is still underway. The interest in
studying pricing equity is reIlected by the Iast growing number oI research seminars and
papers in leading international journals. This chapter is devoted to understand price
variation and its contribution to creating a competitive advantage Ior the Iirm.
Cooper and leinschmidt (1971) Iound that products solely designed Ior the domestic
market tend to show a high Iailure rate as opposed to the products designed Ior the world
market. The Implication is that companies should adopt an international Iocus in designing
and developing new products. New products are the centre oI attention in most companies
because oI their obvious contribution to the survival and the prosperity oI the enterprise.
These new products when matched to the consumer needs oIIer opportunities Ior a Iirm to
strengthen its position in the existing product markets and moved to new ones. In the
traditional channel system, members make little or no eIIort to co-operate with each other.
They buy and sell Irom each other and that is all.

Forbers (1996) said that a Iirm might decide to go to direct distribution iI there are no
suitable intermediaries available. Economists oIten assure that the customers have 'perIect
inIormation about all producers and that the producers knows which needs what products,
where, when and at what price. BeIore launching the product, the company can come up
with advertisement billboards so as to prepare what would be customers Ior the launch.
Stokes (1997) says that the demand Ior one product as a percentage oI the total demand oI
the market is an expression oI that products market share. He went Iurther and says that
competitor seeks to become the market leader by enjoying the largest share oI percentage
oI a market. A large market share oI a product indicates a high level oI customer
acceptance which in turn can give the suppliers several advantages.
A company`s closest competitors are those pursuing the same target markets with the
marketing mix strategy. SuccessIul companies design and operates system Ior gathering
continuous intelligence about their competitors and must be alert to changes in what and
how competitors are revising their strategy to meet those emerging desires and competitive
intelligence system about which competitor to attack and which to avoid and how to
balance customer and competitor orientations. The need to market overseas goes beyond
marketing considerations Ior instance, presence in leading markets is necessary to keep
track oI new technology development Ior tomorrow`s products and services. The global
manuIacturing involves coordinating manuIacturing activities across the globe. The term
imply the technology transIer that leads to some uniIormity in manuIacturing means
specializing plants in diIIerent countries to play diIIerent routes in the global network. A
common result oI globally has rationalized number oI components and parts among its
various plants.
Customers perceive a consistent diIIerence in an important attributes he Iirms oIIering vis-
vis that oI its competitors. That is the diIIerences must be reIlected in some product/
delivery attributes which are key buying criteria. Product/ delivery even attribute such as
availability customer awareness visibility and aIter sales services. Core competencies are
the collective learning in an organization. It involves pooling oI diverse streams oI
resources be it in the area o production marketing skills and technology areas. In an
organization the technologist engineers and marketers etc. have a shared understanding oI

customer needs and technological possibilities. Care and competencies are the inner Iorce
that binds existing businesses
1.2 Statement of the problem
otler (2004), states that, price is the only element in the marketing mix that produces
revenue, all other elements represents costs. Price is also one oI the most Ilexible elements
oI the marketing mix. Unlike product Ieatures and channel commitments, price can be
changed quickly. At the same time, pricing and price competition is a number one
problem Iacing many marketing executives. Yet many companies do not handle pricing
well. One Irequent problem is that companies are too quick to reduce prices in order to get
a sale rather than convincing buyers that their products are worth a higher price other
common mistakes including pricing that is too cost oriented rather than customer-value
oriented.
According to otler (2006), in any Iirm customers are the most important clients Ior the
Iirm hence to main duty oI the management is to guarantee a long-term customer
satisIaction. enya cooperative creameries keep on improving on the Iield oI advertising,
technology and other outdoor sectors. However when price varies among products
especially when they are raised customers seems to shiIt to other related products Irom
other companies i.e. Tuzo, Brookside which are lower in prices. This aIIects customers
who are loyal to the brand and the sales turnover oI the Iirm will decrease.
1.3 Objective of the study
The main objective oI the study was to establish the eIIect oI price variation and its eIIects
on sales oI private branding.
i. To examine the Iactors that aIIect the use oI price variation on Iirms product
ii. To establish the criteria the Iirm uses in determining the price oI its product.
iii. To establish the relationship that exist between price variation and product
branding with regard to sales perIormance oI the Iirm
iv. To establish the challenges Iaced by price variations on product branding.
1.4 Research Question

To answer the above research objectives, the Iollowing research questions were
Iormulated.
i. What Iactors aIIect the use price variation on Iirm`s products?
ii. What criteria do the Iirm uses in determining prices oI its product?
iii. What is the relationship existing between price variation and product branding
with regard to sales perIormance oI the Iirm?
iv. What are the challenges Iaced by price variation on product branding?
1.5 Significance of the study
The study will beneIit the Iollowing people:
Top Management
The top management will beneIit by use oI price variation media to promote their good and
the company to be in a position to understand the best ways to reach their customer more
eIIectively.
Image building oI the organization is achieved through massive awareness oI both its
products and services. Constant Ilow oI sales revenue is due to customer`s aIIordable
prices oI present variety products in the market.

Organization
The study will beneIit the organization in determining ways oI attaining customer
satisIaction through eIIective and competitive price variations. It also beneIits to know and
improve on how it can eIIectively satisIy and handle their customer by ensuring that
customer care programmed is in place to highlight the Iailure and weaknesses oI
management in provision oI good customer service and suggestion on the way Iorward.
Managers
The Iindings and recommendations oI this study will be useIul to the managers oI
Company Ior developing suitable mechanisms oI determining prices oI products so as not
increase sales.

1.6 Limitation of the Study
In the wake oI increased demand to perIorm, the researcher experienced some reluctance
Irom the management and employees to delay oI inIormation due to sensitivity oI the
matter and a Ieeling that it was a Iault Iinding mission. To overcome this problem the
researcher used an introductory letter Irom enya Institute oI Management.
1.7 Scope of the Study
The study investigated the price variations and its eIIect on sales oI product branding, at
New enya Cooperative Creameries. The study was undertaken between May 2009 and
September 2009 using a case study was New enya Cooperative Creameries. The
geographical location oI the place oI study was Nakuru and it targeted 125 Respondent and
a sample size oI 38 respondents. The researcher sought to evaluate the two variables in the
study that is price variation and sales perIormance. Questionnaires were used to collect the
data.
1.8 Theoretical framework
The researcher adopted the Microeconomic Theory by Marx which he said Adherents oI
neoclassical economics, the currently predominant school, employ the theory oI
marginalize, which holds that the value oI any good or service is determined by its
marginal utility, the utility oI the "last" bought consumption good measured by its price, in
satisIying a speciIic consumer's wants. While Marx emphasizes proIit maximization,
neoclassical economists view the maximization oI utility at the individual or societal level
as the driving Iorce oI the economy. Proponents oI the LTV would reply that as capitalism
only recognizes demand backed by money then the price oI a good is not simply measured
by its useIulness but by the amount oI money, consumers own - it depends on a pre-
existing set oI relations oI distribution. These relations oI distribution in turn rest on a set
oI relations oI production, which determine how consumers "earn" their money, capitalists
"earn" proIits, workers` wages, landlords rent and so on. Consequently, the price oI an
object depends not only on its useIulness but on the amount oI money diIIerent consumers
have - their diIIerent eIIective demands. As marginal utility theory does not take account
oI the eIIect oI these inIluences on price, it remains an abstract theory.

In microeconomics, this utility maximization takes place under certain constraints, these
are the available amounts oI Iactors oI production, Ior instance, labor (as with Marx proIit
maximization takes place under the constraint oI available production techniques and the
wage rate). In Iact, the ultimate restriction is time. Households divide their time (24 hours
a day) into leisure time and time Ior work. The household chooses that amount oI leisure
time and (via working time) that amount oI consumption goods which maximizes its utility
level. With Marx, working time is not based on a Iree decision oI households, but the
outcome oI a class struggle between workers and capitalists, the Iormer trying to decrease,
the latter to increase working time.
According to marginalize, value is subjective (since the same item - leisure time,
consumption goods - will have a diIIerent marginal utility to diIIerent consumers, or even
to the same consumer under diIIerent circumstances) and thereIore cannot be determined
simply by measuring how much labor went into the production oI an item. In the Pareto
optimum, on the other hand, the exchange relations between commodities are not only
determined by their marginal utility, but also by the marginal productivity oI the Iactors oI
production available.
This means that, in marginalize, commodities exchange at the marginal amount oI labor
necessary to produce them. In this sense, an LTV, or, more precisely, a value theory oI
marginal labor inputs, holds. However, this applies to all Iactors oI production and also to
marginal utility. Labor is nothing special. That these several value theories can hold all at
the same time is made possible by marginal analysis. The Pareto optimum is deIined as a
situation where utility is maximized and at the same time all Iactors oI production are
employed most eIIiciently, leading to a situation, where all commodities exchange at their
marginal utilities and at their - marginal - amounts oI the diIIerent Iactors oI production
necessary to produce them.
In other words, iI empirically it was Iound out, that commodities exchange according to
their marginally necessary labor inputs, this would conIirm marginal theory. It would
contradict Marx theory, because according to Marx these exchange ratios are determined
by prices oI production, which are generally diIIerent Irom the necessary labor inputs, the

labor values. Implicitly, Marx is thus denying, that capitalism is in a state oI Pareto
optimality.
CHAPTER TWO
2.0 Literature Review
2.1 introductions
The main purpose oI this literature reviews is to identiIy and examine what has been done
by other scholars and researchers in relation to the price variation and its eIIects on sales oI
private branding .
This review also assists the researcher to limit the research problem to deIine it better. A
detailed knowledge oI what has been done helps the researcher to avoid unnecessary and
unintentional duplication oI the projects, demonstrates Iamiliarity with the existing body
oI knowledge, Iorm a Iramework within which the research Iindings are to be interpreted
and Iinally to overcome limitations oI previous studies. Much oI this research mentions the
strategies that Iirms use in determining the price oI commodities and how the charged price
is perceived by the customer in order to make a decision oI by buying the production as
pertain their brand.
2.2 Review of past studies
2.2.1 Understanding Pricing.
Traditionally, price has operated the major determinant oI buyer choice. This is still the
case in poorer nations, among groups and with commodity-type products. Although non-
Iactors have become important in recent decades price still remains one oI the most
important elements determining market share and proIitability. Consumers and purchasing
agents have more access to price inIormation and price discounters. Customer put pressure
on retailers to lower their prices. Retailers put pressure on manuIacturers to lower their
prices. The results is a market place characterized by heavy discounting and sales
promotion (otler, 2006)
2.2.2 Setting Prices

According to ibera (2002), price is the value placed on a good or service by the Iirm at
some point in time. Pricing is a problem when a Iirm has a set oI prices Ior the Iirst time.
This happens when the Iirm develops or requires a new service it introduces its regular
product into a new geographical area and when it enters bids on new contract work. The
Iirm must decide where to position its quality and price.
otler (1991), says that, deciding the price oI a product is not just a matter oI recording
production costs, adding the experiences oI operating the business and providing a
seasonal proIit. The Iollowing Iactors are important to consider when setting a price.
(i) The products Iashion and seasonal appeal.
(ii) Competition
(iii) Supply and demand
Costs and experiences
The manuIacturers and distributor oI a product involve many costs and experiences; these
include expenditure Ior product materials, employees` wages shipping charges, advertising
selling and business taxes.
Competition from similar products
Marketers are aware oI dissimilar goods and service and that customer might choose over
their goods and services. Also retailers compete with other retailers or discount stores
selling similar items at lower prices. II some retailers charge a higher price Ior an item and
sell Ior less at discount stores, they must oIIer customers services usually not oIIered by a
discount store that is credit or giIt warping.
According to Philip otler and Gary Armstrong in the book principles oI marketing
organizations set prices by selecting general pricing approaches.
2.2.3 Internal Factors To Consider When Setting Prices
BeIore an organization set prices Ior its products, it must consider some Iactors within the
organization that will aIIect pricing decision. These Iactors include;
a) The company`s marketing objectives
b) The marketing mix strategy
c) The cost

a) Marketing objectives
BeIore setting price, the company must decide on its strategy Ior the product. II the
company has selected its target market and positioning careIully, then it`s marketing mix
strategy, including price will be Iairly straight Iorward. Also the clearer the organizations
is about its objectives, the easier it is to set prices.
The company may seek additional general or speciIic objectives general objectives
include:-
i. Survival
ii. Current proIit maximization
iii. Market share leadership
iv. Product quality leadership
Many companies use current proIit maximization as their pricing goal. They estimate what
demand and costs will be at diIIerent prices and choose the price that will produce the
maximum current proIit cash Ilow or return on investment.
A company might decide that it wants to achieve product quality leadership. This
normally calls Ior charging a high price to cover higher perIormance quality and the high
cost.
b) The Organizational marketing mix
Price is the only one oI the, marketing mix tools that a company uses to achieve its
marketing objectives. Price decisions must be coordinated with product design,
distribution and promotion decisions to Iorm a consistent and eIIective marketing program.
Decisions made Ior other marketing mix variables may aIIect pricing decisions. For
example a decision to position the product on high perIormance quality will mean that the
seller must charge a higher price to cover higher costs.
Companies oIten position their products on price and then tailor other marketing mix
decisions to the prices they want to charge. Here, prices are a crucial product position
Iactor that deIines the products market, competition and design. Many Iirms support such
price-positioning strategies with a technique called target costing.

c) The Organizational consideration
Management must decide who within the organization should set prices. Companies
handle pricing in a variety oI ways. In small companies prices are oIten set by top
management rather than by the marketing or sales departments. In large companies pricing
is typically handled by divisional or product line managers.
d) The Cost of Production
The cost oI production sets the Iloor Ior the price that the organization can charge Ior its
products. The organization wants to set a price that covers both its costs oI production cost
oI distribution and cost oI selling the product and to deliver a Iair return the eIIorts and
risks involved during production.
Fixed costs are costs that do not vary with production or sales level. Whatever the
companies output e.g. rent, interest variable costs. Vary directly with the level oI
production, total costs are the sum oI the Iixed and variable costs Ior any given level oI
production. Management wants to charge a price that will at least cover the total
production cost at a given level oI production.
2.2.4 External Factors To Consider When Setting Prices
The Iactors include the nature oI the market and demand competition and other
environmental elements.
a) The Nature of the Market
The organization pricing varies with diIIerent types oI market. In a pure competition
market the market, consist oI many buyers and sellers trading in a uniIorm commodity
such as wheat, copper, or Iinancial securities. No single buyer or seller has much eIIect on
the going market price. A seller cannot charge more than the going price, because buyers
can obtain as much as they need at the going price and vice versa. II price and proIits rise
new sellers can easily enter the market.
b) The Consumer Perception
When setting prices the organization must consider consumer`s perception oI price and
value and how IE aIIects their buying decisions.

The pricing decision must be buyers oriented because where consumers buy a product,
they exchange something oI something oI value (price) to get something oI value (the
beneIit oI having or using a product).
c) The demand
When setting prices organization must consider the current demands oI the product
Pricing decision should be based on demand to avoid over pricing or under pricing the
relationship between the price charged and the resulting demand level is shown in the
demand curve below.
Figure 2.1 Demand level








The demand curve shows the number oI units the market will buy in a given time period at
diIIerent prices that might be charged. In the normal case demand and price are inversely
related, that is, the higher the price, the lower the demand. Thus, the company would sell
less iI it raised its price Irom P
1
to P
2
in short; consumers with limited budgets probably
will buy less oI something iI its price is too high.

d) Competition
Another external Iactor aIIecting the company`s pricing decision is competitors costs and
prices and possible competitors reaction to the company`s own pricing moves. BeIore
setting prices, organizations must base its price in relation to competition existing at that
particular moment.
P
2

P
1

P
2

P
1


e) The Economic situation
Economic condition can have a strong impact on the Iirm pricing strategies economic
Iactors such as boom or recession inIlation and interested rates aIIects pricing decisions
because they aIIect both the cost oI producing a product and the consumer perception oI
the products, price and value
f) The resellers
Organizations must not set prices that will discourage resellers Irom selling the products.
They must base their price in such a way that it will encourage resellers Irom engaging in
business.
g) The Government policy
Organization must consider the government policy beIore setting price to avoid
contradicting the rules and regulations put in place by government. In addition, social
concern must be considered beIore setting prices.
2.2.5 Global Perspective on Pricing
Due to globalization and improved communication technologies the world has become a
small village and international trade has been made easier and possible international trade
like any other trade Iaces diIIiculties when setting prices Ior products or services. Pricing
strategies are major problems Iaced by all marketing executives around the world.
International pricing is a complicated one by the Iact that an international business must
conIorm to diIIerent rules making bodies and to diIIerent competitors` situation in each
country. Also the Iluctuation in currency rates (inIlation) aIIects pricing decision.
The country and the competition are both constraints on pricing decision. Each
organization must examine the market, the competition and its own costs and objectives
and regional regulations and laws beIore setting prices that are consistent with the overall
marketing strategy.
Prices international market is not curved in stones they must be evaluated at regular
intervals and adjusted iI necessary. Similarly pricing objectives may vary depending on
the stage in the product liIe cycle and the country`s speciIic competitive situation

2.2.6 Evaluating the customers` price sensitivity.
A man who knows what inIluences target customer`s price sensitivity can do a better job
estimating the demand curve that the Iirm Iaces. Marketing researchers have identiIied a
number oI Iactors that inIluence price sensitivity across many diIIerent market situations.
The Iirst is the most basic, when customers have substitute ways oI meeting a need, they
are likely to be more price sensitive a cook who want a cappuccino market to be able to
serve something distinctive to guests at a dinner may be willing to pay a high price.
However iI diIIerent machines are available and our cook sees them us pretty similar price
sensitive will be greater. It is important not to ignore dissimilar alternative iI the customer
sees them as substitutes.
II a machine Ior espresso were less expensive than one Ior cappuccino, our cook might
decide that an espresso machine would meet his/her just as well
Customers are less price sensitive, the greater the signiIicance oI the end beneIit oI the
purchase. Computer makers will pay more to get Intel processor iI they believe that having
'Intel inside sells more machines.
Demand backward pricing.
This is setting an acceptable Iinal customer price and working backward to what a
producer can charge. It is commonly used by producers oI consumer products-specially
shopping products such as a woman`s clotting and appliances.
Prestige pricing
This involves setting a rather high price to suggest high quality a high standards. Some
target customers want the best, so they will buy at high price. But iI the price seems cheap,
they worry about quality and they don`t buy. Prestige pricing is most common Ior luxury
products such as Ior, Jewelry and perIumes. (William D Perrault, 2003)
2.2.7 Determination of Price
Saleemi (1997), suggest that price oI any commodity is determined according to the
demand and supply oI that commodity. Price is determined at that point where demand and
supply both are equal to each other. Quantity demanded and quantity supplied change with

price. The price which will tend to settle down is one at which demand bought and sold at
this equilibrium prices is known as equilibrium output. Market is said to be equilibrium
when equilibrium price prevails in the market.
II the equality demand and supply does not exist then due to competition either between
buyers or sellers prices will become equal to each other. It can be explained by the help oI
the Iollowing diagram.
Fig 2.2 Relationship between Demand and Supply (Equilibrium)




D
S




E



S D




M
Source: Saleemi et al (1997)
P
O

The above diagram used cloth as an example. At diIIerent prices oI cloth quantity
demanded and quantity supplied will be diIIerent. At price 35.00 per unit, demand and
supply both one equal to each other. So this is the equilibrium price.
In the above diagram DD is the demand curve and SS is the supply curve. When price is
$35.00 quantity bought and sold are 40 units. At price OP supply and demand both are
equal to OM because supply and demand curves intersect each other at point E so OP is the
equilibrium prices and OM is the equilibrium quantity. Similarly iI price is less than OP
demand will be greater than supply and due to competition between buyers, price will go
up.
Hanson (1986) says that there are three aspects that determine price. These are;
(i) Haggling.
II there are Iew sellers and Iew buyers in the market, the prices at which the
commodities will be sold will probably be determined by haggling.
(ii) Sale by auction.
Another method oI determining the price at which a commodity shall be sold is to put
up Ior auction. In such a case, there is one seller and a number oI prospective buyers.
The auctioneer oIIers an article Ior sale and asks Ior bid Ior it. Anyone desirous oI
purchasing it is then at liberty to make an oIIer, and the article will eventually be sold
to the highest bidder that is to the keenest buyer. The one prepared to pay the highest
price. The actual price he will pay depends on how much the second keenest buyer is
prepared to pay.
(iii) OIIers at Iixed prices.
These two methods oI determining price- private treaty or selling by auction are still in
operation at highly organized who sale markets. Either methods oI sale can be adopted
Ior consumer goods, particularly when the sales are inIrequent. Works oI art are oIten
sold by auction. For consumer goods in regular demand, both methods oI sale are too
cumbersome and would take up unnecessary amount oI time.
2.2.8 Consumer Psychology and pricing.

Many economists assume that customers or 'Price taker and accept price at 'Iace value
or as given. Marketers recognize that customer oIten actively process price inIormation,
interpreting prices in terms oI their knowledge Irom prior purchasing experience, Iormal
communications (advertising, sales calls and brochures) inIormal communications Iriends,
colleagues and Iamily members and point oI purchaser or online resource. (otler, 2006)
2.2.8.1 Consumer perception of Prices and value
In the end, the consumer will decide whether a products price is right. Pricing decisions
like other marketing mix decisions must be buyer oriented. When consumers buy a
product, they exchange something oI value the prices ( to get something oI value the
beneIits oI having or using the product) EIIective buyer oriented pricing involves
understanding how much value customer place on the beneIits they receive Irom the
product and setting a price that Iits value.
Consumers will use the value oI the product to evaluate a products price. II customers
perceive that the price is greater than the products value they will not buy they product iI
the customers perceive that the prices is below products value, they will buy it but the
seller loses proIit opportunities.
otler et al (2006) states that understanding how customers arrive at their perception oI
price is an important market priority There are three ways to achieve this:-
(a) ReIerence.
Prior research has shown that although customers may have Iairly good knowledge oI the
range oI prices involved surprisingly Iew can recall speciIic prices oI products accurately.
When examining products however customers oIten employ reIerence prices. In
considering an observed prices customer oIten compare it to an internal reIerences (such as
a posted regular retail price)
(b)Price Quality inIerence.
May customer use price as an indicator oI quality Image pricing is especially cars. For
example, a $100 bottle oI perIume might contain $10 worth oI scent, but giIt givers pay
$100 to communicate their high regard Ior the receiver.

(c) Price cues.
Consumer perception oI prices is also aIIected by alternative pricing strategies. Many
sellers believe that prices should end in and odd number. Many customers see a stereo
ampliIier priced at $299 instead oI $300 a price in the $200 range rather than $300 ranges
consumer tend to process prices in a leIt to right manner rather than rounding. Price
encoding in this Iashion is important iI there is a mental price break oI the higher rounded
price
2.2.9 Factors to consider when pricing
According to Saxena (2006) the choice oI a pricing strategy depends on the Iollowing.
(i) Corporate goals and objectives
(ii) Consumer characteristic
(iii) Intensity oI inter-Iirm rivalry
(iv) Phase oI the product liIe cycle
Corporate objective aIIect price decision while considering customer characteristics it is
important to research whether customer spend time in searching Ior alternatives. This is
because Ior some customers the cost oI this search is high but others it is low. II the search
cost is low Ior the customer. Then he or she will be shopping Ior bargains and will look Ior
discount sales. However, the same is not true Ior the Iirst group oI customers.
Another characteristic to look Ior is brand loyalty. Consumer can be categorized under Iour
groups starting with brand switchers. To endure a price strategy, it is high, it gives the Iirm
a greater degree oI leverage but not so when is low. Thus, customer`s characteristics play
an important role in stocking price strategies.
Intensity oI inter Iirm rivalry within an industry also determines the leverage a Iirm has in
pricing its product. Low intensity in competition, at times, results in a monopolistic market
encouraging a Iirm to produce the product or the brand at premium. But iI the intensity oI
inter-Iirm rivalry is high a Iirm has very little leverage and generally has no alternative but
to price at a level which ensures survival.
Price strategies also vary across the product liIe cycle and Ior the marketer it is important
to know where his product is in its liIe cycle.

2.2.9.1 Types of pricing strategies
Saxena (2006) says that a Iirm has diIIerent pricing strategies to adopt Ior new products.
These strategies are:-
(i) Skimming strategy
This strategy reIers to a Iirm`s desire to skim the market by selling at a premium price.
This strategy delivers results in the Iollowing situations,
(a) When the target market associates quality oI the product with its prices and high price
s perceived to mean high quality oI the product.
(b) When the customer is aware and willing to buy the product at a high price just to be an
opinion leader.
(c) When the product is perceived as enhancing the customers status in the society.
(d) When competition is non-existent or the threat Irom potential competition exists in the
industry because oI low entry and exit barriers.
(e) When the product represent signiIicant technological breakthrough and is perceived as
a high technology product.
In adopting this strategy, the Iirm`s objective to achieve an early break-even point and
maximize proIits in a shorter time span or seeks proIits Irom a niche.
(ii) Penetration strategy
The objective oI this strategy is to gain a Ioothold in a highly competitive market. Another
objective oI this strategy is to attain market share or market penetration. Here, the Iirm
prices its product lower than the others in competition. This strategy delivers results in the
Iollowing situations.
(a) When the size oI the market is large and is a growing market.
(b)When customer loyalty is not high, customers have been buying the existing brands
more because oI habit rather than a speciIic preIerence Ior it.
(c) When the Iirm uses it as an entry strategy.
(d)When the Iirm is characterized by intensive competition
(e) Where price-quality associated is weak.
(iii) DiIIerential pricing strategy

This strategy involves a Iirm diIIerentiating its prices across diIIerent market segments.
The assumption in this strategy is that diIIerent market segments do not commutate or have
diIIerent search cost and value perception oI the product. In other words, in erogeneity in
the market motivates a Iirm to adopt this strategy.
(iv) Geographical pricing strategy
This strategy seeks to exploit economic oI scale by pricing the product below the
competitors in one market and adopting a penetration strategy in another. The Iormer is
termed as second market discounting. There are three general principles on which strategy
is based.
(a) A Iirm should not discriminate between competing buyers in the same region.
(b)A Iirms` strategy should not appear to be predatory
(c) A Iirm should not attempt to Iix prices among competitors Ior basing point or zero
pricing.
otler (2004) says that pricing strategy is a method applied to marketers in order to come
up with a price that is equal to service oIIered. He gives several methods to be used and is
as:-
Market skimming this involves setting prices oI a new product to skim maximum
revenue layer Ior segments willing to pay high prices the company makes Iewer but more
proIitable sales.
Market penetration setting low initial price in order to penetrate the market quickly and
run a large market share
Discount and allowances it is a price where one pays less than the actual stated or quoted
price. It may also happen that depending on how much one buys he is given some
allowances.
Promotional pricing- this is temporarily pricing products below the list price and
sometimes even below cost to increase short run sales.
Geographical pricing this is pricing a service or product depending on the service point
geographically. When the service is located is what determines the price.

2.2.9.2 Selecting the pricing objective
The company Iirst has to decide what it wants to accomplish with its particular product or
service. II the company has selected it target market and market positing careIully, then its
marketing mix strategy including price will be Iairly straight Iorward. At the same time,
the company might pursue additional objectives. The clear a Iirm`s objective are the easier
will set the price. Each possible price will have a diIIerent impact on such on objectives as
proIits sales revenue and market share. (otler, 1996)
A company can perceive any oI the major pricing objectives as-
(i) Maximum current proIits,
Many companies try to set the price that will minimize current proIits. They will estimate
the demand and costs associated with alternative prices and choose the price the producers
maximize current proIit cash Ilow or rate oI return on investment.
(ii) Maximum current revenue,
Some companies will set a price to maximize sales revenue. Revenue maximization
requires only estimating the demand Iunctions. Many managers decline that revenue
maximization and market share growth.
(iii) Maximum sale growth
Other companies want to maximize sales. They believe that a higher sales volume will lead
to unit costs and higher long-run proIits. To set the lowest price, assuming the Iavors a low
price, stimulates more marketers` growth production and distribution costs Iall with
accumulated production experience and a low price discourages actual and potential
competition.
(iv) Maximum Marketing skills
Many companies Iavors setting high prices to skill the market estimates oI the highest
price on change oI compilation beneIits oI its new products versus the available substitute.
The company sets a price that makes it just worthwhile Ior some segments oI the market to
adopt the new materials (otler, 1999).
2.2.9.3 Selecting a price method

The According to otler (1999) given the three i.e. the customers demand schedule the
cost.
Function and competitors, the company is now ready to select the price will be somewhere
between one where there is too low to produce a proIit and one which is too high to
produce any demand. Competitors` prices and the price oI substitutes provide an orienting
point that the company has to consider in setting its prices.
Companies resolve the issue by the Iollowing considerations
(a) Break-earn pricing.
Your calculate the break-even point oI your business, the proIit at which your sales
income and your Iixed variable costs are equal and set the price by adding a proIit
margin to your unit price.
(b)Contract pricing
Viewing your competitors Ior contract can be risk. Your pricing will depend on what
your proIit objectives and general understanding oI what your competitors are likely to
oIIer your tender Ior a lot oI business and your success rate will be very high you might
be oIIering your services or products too cheap (otler 1999).
(c) Mark-up pricing
The most elementary pricing method is added to a standard mark-up to Iind the cost oI
the product.
(c) Perceived value pricing
(d)An increase in number oI companies base their prices in the product perceived
value. They see the buyer`s perception oI value not the seller cost as at the key to
pricing. They use non-value in the buyer`s minds (otler 1999).
(e) Target returns pricing.
The Iirm determines the price that would yield target rate oI return on investment
(I) Going rate pricing
The Iirms base its price largely on competitor`s price with less attention to the same
market or less its major competitors (otler 1999)
Berkowiz and Rudelius (2003) deIines price as money or other consideration exchange Ior
ownership oI goods and services.

otler (2002) recognizes the Iact that whether price is raised or lowered the action will
aIIect consumer distribution and suppliers it may interest the government. The existence oI
more than one production point Iacilitates price discrimination between diIIerent
geographical areas served as the price charged is important variable in proIit determination
(Wells and Parker, 1997).
The enyan government through the Act oI parliament seeks to control prices oI
commodities. Price control act (1989) section 35(1) at the minister oI Iinance may Irom
time to time by order Iix maximum prices Ior the sale either wholesale retail oI any good
(G.O. ,1989).
On the basis oI public interest rule, enterprise should set prices in order to reIlect the
marginal serial beneIits Irom additional output and marginal social cost oI producing that
output in private markets however the price consumers are willing to pay reIlects the
beneIits they receive Irom marginal consumption. (Rudelius, 2003)
Fig 2.3 Breakeven charts



Total Revenue
Break even point proIit
Loss zone
Total cost




TOTAL FIXED COST


Source: ibera (1999)
Price control

Price control means the state control on Iixing the prices oI diIIerent commodities. Prices
are normally determined according to demand and supply conditions. . It is possible only
where there is perIect competition and the government does not interIere. These days, the
prices oI most oI the commodities are Iixed by the government. This situation is known as
price control.
Price controls are justiIied in the Iollowing
i) Prices oI agricultural commodities Iluctuate to great extent. When the supply
oI these commodities is too high, then prices Iall rapidly and vice-versa. These
Iluctuations cause problems Ior consumers and producers. In such cases, the
prices must be Iixed by the government to protect the interests oI consumers
and Iarmers. Price controls can be applied to Iix the consumers to get these
commodities at reasonable prices and similarly to ensure the minimum prices
Ior the Iarmers.
ii) Price controls must be applied to check the inIlation and enable the poor
persons to maintain their standards oI living at a reasonable level.
iii) Price controls are also justiIied to encourage the production oI import
substitutes. It will help to improve balance oI payments. (Saleemi, 1987).
Effects of price controls
Price controls aIIect consumption and production oI various commodities. Prices oI
essentials oI liIe like Iood, sugar, Iuel etc are Iixed by the government comparatively at
low level to enable the consumers to buy these goods. This policy helps to maintain the
consumption level at a desirable level. For luxuries, prices are normally Iixed at a higher
level so that their consumption can be discouraged (Saleemi 1987).
The prices oI agricultural commodities like, rice, maize, coIIee, tea etc are Iixed by the
government to saIeguard the interests oI Iarmers. In this case, they become conIident that
they can secure their income by producing these commodities. It increased the production
oI these commodities.
Price control on the import substitutes encourages the domestic and increases the overall
production oI a country (Saleemi et al 1987).
2.2.10 Experience as a value

Saxena (2006) another approach to understand customer value is to examine a purchase
situation as an experience. Implicit in this are two key situations. Value in purchase and
value in consumption experience
Value in use on the other hand is a Iunctional outcome. It is a goal that is in the experience
a customer has in consuming the product/ service. In this seminal work the experience
economy prime II and crilmore have concluded that companies need to Iocus on customer
experience with their products and services, they believe that new competition is toady
built around experience rather than tangible product Ieatures or intangibles. Like services
alone customers` today pay Ior experience and not just Ior an acquisition or a service. The
more positive and rewarding an experience is higher is the price the customer is willing to
pay values which customer buys. Norman and Ramirez who propagated the concept oI
value on stellation have concluded that the Iocus has to be on a value creating system itselI
within which all economic actors ( supplier , business partners allies and customer value .
this involves taking care oI the Iollowing:
a) conIormance quality
b) customer satisIaction
c) market perceived quality and value relative to competition
Figure 2.4 Experience as a value
Value based price



Product quality

Service quality



Subsequent literature has shown that in contemporary marketing brands represents a set oI
values that customers are willing to pay Ior typically, a marketer creates value through
innovations, service, convenience in product acquisition Ior money propositions , thus,
Value maximization
triad

value maximization strategy is a triad with a value based price product quality and service
quality being the three ends which are interdependent .
2.3 Critical review
Lipsey and Crystal (2004), say that a basic economic hypothesis is that the lower the price
oI a product, the larger the quantity that will be demanded other things being equal. They
however don`t mention or state these other things which are equal.
According to Hussein (1997), the lower the price oI something the more oI the people will
buy. This law assumes that there are no oIIsetting changes such as lower incomes and
lower prices Ior other products. These may be arising in the price oI a product or a service
which may be Iollowed by rise in demand because oI perceived value which is associated
with price.
otler (1998) says that an organization has to consider many Iactors in setting its products
price and Iactors are, selecting the price objectives determining demand estimating cost,
selecting pricing methods analyzing competitors cost and oIIers and selecting the Iinal
product. However this does not indicate why there are Iluctuations in prices by diIIerent
Iirms or organization.
2.4. Summary
This chapter has dealt with complex pricing issues Iacing the global marketer showing how
institutional limitation constrains purely strategic consideration in pricing. It dealt with
pricing issues which aIIects the purchase oI a product and the problems related to
coordination oI prices.
The institutional limitations involved in pricing included price escalations due to tariIIs,
exchange rates problem and international credit arrangements. These Iactors combined to
determine what the actual price oI the product will be when it Iinally appears on the market
TransIer prices to local subsidiaries have various Iunctions in particular a role in
perIormance evaluation oI the subsidiaries
CHAPTER THREE
3.0 RESEARCH DESIGN AND METHODOLOGY

3.1 Introduction
In this section, the researcher describes the sample and the data collection procedures. The
Following are some oI the out lined subjects oI the study research design, target
population, sample size, sample design, sampling. Procedure, data collection instruments,
validity and reliability, and data collection method and interpretation.
3.2 Research Design
This study adopted a case study method since the research involved price variation and its
eIIect on sales oI private branding. This study used a case study design. contextual
analyses oI similar situations in other organizations, where the nature oI the problem and
public.
3.3 Target population
The target population reIers to the group oI people or study subjects who are similar in one
or more ways and which Iorms the subject oI the study in a particular study. The study
targeted the manager, departmental heads and employees oI enya cooperative creameries.
Table 3.1 Target population
Strata Target population
Manager 1
Departmental Heads 4
Employees 120
Total 125

3.4 Sampling design and sample size
Sampling is a procedure oI selecting a part oI the population on which research is to be
conducted. It ensures that conclusions Irom the study can be generalized to the entire
population. The researcher employed stratiIied random sampling to the selected
respondent because it is suitable to include the elements Irom each oI the segments and it
will enable to divide the population into subpopulation or strata. A simple random

sampling was employed in every stratum to select 30 oI its population to arrive at
respective sample size
Table 3.2 Sample size
Strata Target population Sample size
Manager 1 1
Departmental heads 4 1
Employees 120 36
Total 125 38
3.5 Data collection instrument
A selI-completed questionnaire were prepared and administered to each oI the respondents
by the researcher and the staIIs oI enya cooperative creameries to ensure higher
responses and completing clariIications. The questionnaires were the main data collecting
tool. This is because they enabled the researcher to obtain in depth inIormation and
clariIication Irom the employees, which could only be given in the questionnaires Ior
secretive purposes.
3.6 Data collection procedures
The researcher personally administered the questionnaires to the respondents and this was
done aIter receiving permission Irom the institutional management to carry out research in
the identiIied area oI study. AIter Iamiliarization data was collected Irom the respondents
using questionnaires as the main collection tool. A Iollow up was made to ensure that the
questionnaires are answered according to the research objective.
3.7 Reliability and validity
Validity is the extent to which diIIerences Iound with a measuring tool reIlect true
diIIerences among residents being tested. The purpose oI validity in the study was to seek
relevant evidence that conIirms the answers Iound with the measurement device which is
the nature oI the problem
3.8 Data Analysis and presentation

The data Ior the study was adopted and coded Ior completeness and accuracy oI
inIormation Data capturing using excels soItware. The data Irom the completed
questionnaires was captured, re-coded and entered in to the computer using the statistical
package Ior social science Ior data analysis and interpretation. Data analysis and Iinding
will be reported in chapter Iour.
CHAPTER FOUR
4.0 DATA ANALYSIS PRESENTATION AND INTERPRETATION
4.1 Introduction
AIter data collection, procedure the researcher dealt speciIically with data analysis oI the
collected procedure. The researcher ensured that all the data collected, inIormation was
close or near to the realized issue. This strategy was undertaken in enya Co-Operatives
Creameries Limited where the target group was Branch manager Departmental heads and
general employees. The research was done by administration oI questionnaires to the target
groups which were done in a conducive environment in which the respondent could not
Ieel intimidated.
The collected data was analyzed and presented in Iorm oI statically tables according to the
research questions.
4.2 Demographic information of the respondents
The demographic Ieatures oI the respondents are vital to this study. They provide a
base Ior Iurther analysis oI the speciIic research objectives and their Iindings using
descriptive statistics, tables, Irequency and percentages. Demographic analysis is crucial
since demographical Iactors aIIect respondents` social, economic political behaviors
hence they are useIul tools in analysis oI research objectives.
4.2.1 Gender of the respondents
The research was carried out to determine the gender oI the respondents as it plays a major
role in employment in most organization. The gender oI the respondent was analyzed and
results were tables as Iollows


Table 4.1 Gender of the respondents
Gender Frequency Percentages
Male 20 60
Female 14 40
Total 34 100

The results reported that 60 were male, and 40 were Iemale, this means those males are
the majority oI the sampled respondents. The gender diIIerence in the organization was not
high.
4.2.2. Age distribution of respondents
The researcher sought to establish the age distribution oI respondents. This is a
demographic Ieature that aIIects behaviors or perception oI respondents. It was
important to assess the age oI respondents as this would aIIect the way each would
behaves in the work place. At an early age, many people love to be stable and
comIortable. People at diIIerent ages to think diIIerently and thus their perception
diIIers. Data on age distribution is presented in table 4.2
Table 4.2 Age of the respondents
Age Frequency Percentage
Below 20 - -
20-30 6 17
30-40 16 48
40-50 8 22
Above 50 4 13
Total 34 100

The Iindings showed that 17 oI respondents were between 20-30 years old, 48
between 30-40 years old, 22 between 40-50 years old and 13 50 and above years.
This indicates that majority oI the respondents are above 25 years. It will be interesting
to see how age Iactor has aIIected the objectives oI the research. DiIIerent age groups

think diIIerently hence the query to the management diIIers. The younger a person is
the higher the dreams and expectations.
4.2.3 Marital status
It was also necessary to Iind out marital status oI the staII since this would also determine
the commitment. This would also give the organization in terms oI seeing to it that the
social responsibility oI the staII care oI. The marital status Iindings are as per the bellow
Iigure;
Table 4.3 Marital status
Status Frequency Percentages
Single 8 24
Married 26 76
Total 34 100

The table above indicates that the higher percentage oI staII is married hence indication oI
positive signs oI social stability.
4.2.4 Academic qualification
The research sought to establish the level oI education among managers and general
employees in order to determine level oI understanding oI the nature oI their business and
price.
Table 4.4 Academic qualification
Academic qualification Frequency Percentage
CertiIicate 8 25
Diploma 12 35
Degree 10 29
Masters 4 11
Total 34 100

It was reported that 25 have certiIicate level oI education, 35 are diploma holders,
29 are degree holders, and 11 masters holders. Others still reported other

qualiIications such as, A-level, CPA and proIessional proIiciency. The result shows
that majority oI the employees are well educated. This implies that most oI the
employees do understand the kind or type oI environment they are expected to work in
and what is best Ior the organization as pertains the allocation oI prices oI its products.
4.2.5 Position in the organization
The positions held by the respondents in the Iirm are major source oI important
inIormation since they are inIluential
Table 4.5 Position in the organization
Position Frequency Percentages
Branch manager 1 3`
Departmental head 1 3
General employee 32 94
Total 34 100

The results Irom the table shows that, 3 oI the respondents are manager, 3 are
departmental managers, and 94 are employees. This indicated that general employees
are the majority in the organization.
4.2.6 Working experience
The research sought to know the number oI years the staII have worked in the
organization, since this will indicate the exposure and experience that the staII has had in
the organization and which may relate in the criteria the Iirm uses in allocation oI its prices
on the product and how it aIIect the branding. Experience contributes to his competence on
execution oI organization in enhancement oI their perIormance. The Iindings oI this
enquiry are presented in table 4.6

Table 4.6 Working experience
Experience Frequency Percentages
Below 1 year - -
1-2 years 5 16

2-5 years 7 22
5-8 years 15 41
Above 8 years 7 21
Total 34 100

The results Irom the table indicated that none has worked Ior less than 1 year, 16 have
worked Ior 1-5 years, 22 have worked Ior 2-5 years, 41 have worked Ior 5-8 years and
21 have worked Ior over 8 years. The highest numbers oI respondents have a good
working experience as they have worked with the organization Ior more than 2 years which
shows that they are aware with the organization requirement and the expectations required
too.
4.3 Price Variations
4.3.1 Factors affect prices of your products
The researcher sought to know the Iactors aIIecting the price oI the product; this is because
price is the value placed on a good or service by customer at some point in time. Pricing is
a problem when a Iirm has a set oI prices Ior the Iirst time. This happens when the Iirm
develops or requires a new service it introduces its regular product into a new geographical
area and when it enters bids on new contract work. The Iirm must decide where to position
its quality and price. The Iindings were presented in table 4.7
Table 4.7 Factors affect prices of your products
Factors Frequency Percentages
Costs and experience 2 3
Competitors Irom similar
products
14 42
Perception 7 20
Fashion, taste and
preIerences
11 33
Total 34 100


The results showed that 42 said competitors Irom similar products, 33 said Iashion,
taste and preIerences while 20 said perception oI the customers and 3 said cost and
experience. ThereIore, it is evident that Marketers are aware oI dissimilar goods and
service and that customer might choose over their goods and services. Also retailers
compete with other retailers or discount stores selling similar items at lower prices. II some
retailers charge a higher price Ior an item and sell Ior less at discount stores, they must
oIIer customers services usually not oIIered by a discount store that is credit or giIt
warping.
4.3.2 Criteria used by the firm to determine prices of products
The researcher wanted to Iind out the criteria used by the Iirm to determine price oI its
product, this was important because Price is determined at that point where demand and
supply both are equal to each other. Quantity demanded and quantity supplied change with
price. The price which will tend to settle down is one at which demand bought and sold at
this equilibrium prices is known as equilibrium output. Market is said to be equilibrium
when equilibrium price prevails in the market. The Iindings were presented in table 4.8
Table 4.8 Criteria used by the firm to determine prices of products
Criteria Frequency Percentage
Cost- plus pricing 4 10
Break- even analysis 14 42
Target proIit pricing 14 42
Quality oI the product 2 6
Total 34 100

The results showed that 10 said cost-plus pricing, 42 said Break-even analysis and
Target proIit pricing while 6 said quality oI the product, Irom the Iindings it`s clear that
the Iirm set prices to break even on the cost oI making and marketing a product or setting
prices to make a target proIit. The organizations try to determine the price at which it will
break-even or make the target proIit it is seeking.
4.3.3 Price variation affects the sales performance of the firm

BeIore setting price, the company must decide on its strategy Ior the product. II the
company has selected its target market and positioning careIully, then its marketing mix
strategy, including price will be Iairly straight Iorward. Also the clearer the organizations
are about its objectives, the easier it is to set prices and also get a clear picture oI the
overall perIormance. The Iindings were presented in table 4.9
Table 4.9 Price variation affects the sales performance of the firm
Effect Frequency Percentages
Maximization oI proIit
margin
11 32
High cost oI production 18 54
Survival oI the Iirm in a
competitive Iield
3 10
Status quo oI the Iirm 2 4
Total 34 100

The results showed that 32 said maximization oI proIit margin, 54 said high cost oI
production, 10 said Survival oI the Iirm in a competitive Iield and 4 said status quo oI
the Iirm. It is thereIore clear that cost oI production sets the Iloor Ior the price that the
organization can charge Ior its products
4.3.4 Communication with customers when there are price changes of the products
The Iound it relevant to Iind out iI the Iirm communicates with its customers iI they are
price changes oI the products this because customer oIten actively process price
inIormation, interpreting prices in terms oI their knowledge Irom prior purchasing
experience, Iormal communications (advertising, sales calls and brochures) inIormal
communications, Iriends, colleagues and Iamily members and point oI purchaser or online
resource. The Iindings were presented in table 4.10
Table 4.10 Communication with customers when there are price changes of the
products
Response Frequency Percentages

Yes 27 78
No 7 22
Total 34 100
The results showed 78 said it is important to communicate to the customers when there
are price changes while 22 said no it is not important. It is thereIore evident that
Purchase decision one based on how customers perceive prices and what they considerd to
be the current actual price-not the marketers stated prices.
4.3.5 Customers reaction when prices of products change
The researcher sought to know the reaction oI the customers towards any price changes
Many economists assume that customers or 'Price taker and accept price at 'Iace value
or as given. Marketers recognize that customer oIten actively process price inIormation,
interpreting prices in terms oI their knowledge Irom prior purchasing experience, Iormal
communications (advertising, sales calls and brochures) inIormal communications Iriends,
colleagues and Iamily members and point oI purchaser or online resourceThe Iindings
were presented in table 4.11
Table 4.11 Customers reaction when prices of products change
Reaction Frequency Percentages
Complain 21 63
Take oII 10 28
No change 3 9
Total 34 100
The results showed 63 said the customer would complain, 28 said they will take oII
while 9 said there will be no change. It is clear Irom the Iinding that complains always
accompanying price changes, this because customers identiIy complaining as their solution
to price changes.
4.3.6 How price affect overall sales
It was paramount Ior the researcher to Iind out iI there was any relationship between price
and sales. The Iindings were presented in table 4.12

Table 4.12 How price affect overall sales
Response Frequency Percentages
Yes 31 92
No 3 8
Total 34 100
The results showed 92 said price actually aIIect the overall sales while 8 said it
doesn`t aIIect the sales. It is thereIore clear that price do aIIect sales that are high price
mean low sales while low prices mean high sales.
4.3.7 Challenges faced by price variation on product branding
The researchers sought establish the challenges Iaced by price variation on product
branding since this will ultimately aIIect the overall perIormance oI the Iirm and more so
its stability in the Iuture. The Iindings were presented in table 4.13
Table 4.13 Challenges faced by price variation on product branding
Challenges Frequency Percentages
Low sales turnover 2 8
Reduce inventory cost 4 12
High competition 10 28
Substitute product price 15 43
Government policies 3 9
Total 34 100
The results showed that 8 said low sales turnover, 12 said reduced inventory cost, 28
said high competition, 43 said substitute product price and 9 said government policies.
It is evident that the Iirm should look Ior brand loyalty. Consumer can be categorized
under Iour groups starting with brand switchers. To endure a price strategy, it is high, it
gives the Iirm a greater degree oI advantage but not so when is low. Thus, customer`s
characteristics play an important role in stocking price strategies.
CHAPTER FIVE
5.0SUMMARY OF THE FINDINGS, CONCLUSION AND RECOMMENDATIONS

5.1. Introduction
The Iindings presented in chapter Iour are Iurther summarized here so that speciIic
Iindings can be obtained clearly in relation to the research objective. Then
recommendations are made on what needs to be done to improve the use price
variations on product branding
5.2 Summary of the findings
5.2.1 General information
The study designed research objectives and research questions with the aim to solve the
problem statement which was the theme oI the study. The study Iindings oI this
research have thus been derived Irom these objectives and answers to research
questions. The research questions that were to be answered by this study were:-
a) What Iactors aIIect the use price variation on Iirm`s products?
b) What criteria do the Iirm uses in determining prices oI its product?
c) What is the relationship existing between price variation and product branding with
regard to sales perIormance oI the Iirm?
d) What are the challenges Iaced by price variation on product branding?
5.2.2 Gender of the respondents
The results showed that 60 were male, and 40 were Iemale, this means those males are
the majority oI the sampled respondents. The gender diIIerence in the organization was not
high. This is Iacilitated by the work environment as most oI the job description in the
organization needs active and productive workers. Both genders do play a vital role
especially when it comes to the marketing and decision making in the organization.
5.2.3 Age of the respondent
The Iindings showed that 17 oI respondents were between 20-30 years old, 48
between 30-40 years old, 22 between 40-50 years old and 13 50 and above years.
This indicates that majority oI the respondents are above 25 years. This means they are
at their prime age and so still have many expectations in liIe. It will be interesting to
see how age Iactor has aIIected the objectives oI the research.

5.2.4 Marital status
The table above indicates that the higher percentage oI staII is married hence indication oI
positive signs oI social stability.
5.2.5 Academic qualification
It was reported that 25 have certiIicate level oI education, 35 are diploma holders,
29 are degree holders, and 11 masters holders. Others still reported other
qualiIications such as, A-level, CPA and proIessional proIiciency. The result shows
that majority oI the employees are well educated. This implies that most oI the
employees do understand the kind or type oI environment they are expected to work in
and what is best Ior the organization as pertains the allocation oI prices oI its products.
5.2.6 Position of the respondent
The results Irom the table shows that, 3 oI the respondents are manager, 3 are
departmental managers, and 94 are employees. This indicated that general employees
are the majority in the organization. The work environment oI each employee diIIers Irom
one to another as their job description is diIIerent. In spite oI work environment being
diIIerent all the employees would love to be given an opportunity to give their opinions as
what they Ieel is beneIicial to the Iirm.
5.2.7 Working experience
The results Irom the table indicated that none has worked Ior less than 1 year, 16 have
worked Ior 1-5 years, 22 have worked Ior 2-5 years, 41 have worked Ior 5-8 years and
21 have worked Ior over 8 years. The highest numbers oI respondents have a good
working experience as they have worked with the organization Ior more than 2 years which
shows that they are aware with the organization requirement and the expectations required
too.
5.3 Specific objective
Question 1 what factors affect the use price variation on firm`s products?

The results showed that 42 said competitors Irom similar products, 33 said Iashion,
taste and preIerences while 20 said perception oI the customers and 3 said cost and
experience.
Question 2 what criteria do the firm uses in determining prices of its product?
The results showed that 10 said cost-plus pricing, 42 said Break-even analysis and
Target proIit pricing while 6 said quality oI the product, Irom the Iindings it`s clear that
the Iirm set prices to break even on the cost oI making and marketing a product or setting
prices to make a target proIit.
Question 3 what is the relationship existing between price variation and product
branding with regard to sales performance of the firm?
The results showed that 32 said maximization oI proIit margin, 54 said high cost oI
production, 10 said Survival oI the Iirm in a competitive Iield and 4 said status quo oI
the Iirm. It is thereIore clear that cost oI production sets the Iloor Ior the price that the
organization can charge Ior its products. . Companies with lower costs can set lower prices
that result in greater sales and proIits.
5.4 Conclusion
From the Iindings it showed the gender diIIerence in the organization was not high. This is
Iacilitated by the work environment as most oI the job description in the organization
needs active and productive workers. The results showed that majority oI the respondents
are above 25 years. The results indicated that general employees are the majority in the
organization. However In spite oI work environment being diIIerent all the employees
would love to be given an opportunity to give their opinions as what they Ieel is beneIicial
to the Iirm. From the Iindings it showed the highest numbers oI respondents have a good
working experience as they have worked with the organization Ior more than 2 years which
shows that they are aware with the organization requirement and the expectations required
too. From the Iindings it is evident that Marketers are aware oI dissimilar goods and
service and that customer might choose over their goods and services.
5.5 Recommendation

Based on the Iindings and conclusions oI the study the researcher Ielt that the Iollowing
recommendations are necessary to improve the use oI price variations on product
branding. The recommendations were;
a) The company to continuously improve their product branding Ior Iair prices as the
end results
b) The company to continuously develop new channels oI distributions while trying
to maintain the existing one towards customers satisIaction
c) Prices should not be changed regularly as this will aIIect consumption oI products
d) The management should always communicate price changes to avoid customer
Irustration associated with price adjustment.
e) Cost oI production should be maintained low so as not to aIIect Iinal price oI the
product
I) Prices should be associated with branding quality oI the product because customers
believe that the higher the price the quality oI the product.
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publishers.Cooper . (1971). Principles of Marketing management. New jersey:
McGraw hill publishers.
Forbers. W (1996). Distribution channels management. New york: McGraw Hill
publishers.
eegan J. (2003). Principle of marketing management, 11th Edition. New Jersey: Prentice
Hall.