1.1 Background to the Study
Manufacturing firms especially brewery sector a foundation for growth, employment and revenue. They make substantial contributions in improving economic and social industries of a nation through stimulating large scale employment, investments, development of indigenous skills and technology, promoting entrepreneurship and innovation, enhancing exports, and also building a commercial base at different levels (Njau & Karugu, 2014; KNBS, 2016). Additional, brewery sector forms a supply chain for large local and multinational firms, form a more resilient, expanded economy with more dynamic private sector participation, drive innovation and homegrown champions who can contest globally, gender equality along with assisting in accomplishing a more balanced, inclusive development by addressing the lowest of the income pyramid (RoK, 2020).
Cespedes and Piercy (1996), Menon, Bharadwaj and Howell (1996) postulated that pricing policy has been a dependable and essential tool for organizing decisions across all channels of promotion, marketing and sales of products in an effort to maximize performance. A diagnostics evaluation of performance of any firm may be hampered by the kind of marketing, promotion and sales strategies employed which are impacted by the forces of pricing and sales reward strategies. These are significant and thus connected toward the same kinds of objectives, such as market share growth and profit maximization and it ensures that pricing strategies are the key factor of organization performances.
Marketing, and particularly entrepreneurial marketing serves an essential function to the superior efficiency and survival of firms. Entrepreneurial marketing is an organizational work and a collection of procedures for creating, communicating and providing value to clients and for managing customer relationships in ways that profits the company and its stakeholders, which is characterized by innovativeness, risk-taking and pro-activeness (Kraus, Harms & Fink, 2010). Additional, businesses in the current setting experience increasing degrees of uncertainty because of rapid changes in operating environment, fluctuations in the economy, technology and thus the advertent require more innovative and cost-effective practice-based marketing methods that companies can use to increase performance. For that reason, firms can just efficiently deliver on their essential functions when a great number of techniques including the formulation and application of suitable entrepreneurial marketing methods such as efficient pricing strategies are implemented to exert a positive impact on performance (Sven, Schuhmacher & Kuester, 2019).
Hutt (1995); Menon, Bhardwaj, Adidam and Edison (1999); Malshe and Sohi (2009) recommended that to improve communication between the marketing and sales, sound pricing strategy should be implemented. Nevertheless, poor performance of brewery industry might continue if the marketing and sales are not interacting well enough regarding the essential aspects of pricing strategy. The marketing and sales functions are primarily in charge of manufacturing company performance with improved income generation. Particularly, pricing strategy should be taken into consideration for a competitive pressures and customer choices when establishing the revenue per unit for a company's services and products.
Homburg, Jensen and Hahn (2012); Lancioni and Gattorna (1993) in their study attested that pricing strategy has a positive correlation with the initiation and implementation of an advertisement and sales strategies that is expected to improve performance whenever there is a synergy between marketing and sales duty and, the company benefits. However, when chaos happens between these two functional areas, it posts inverse influence on the organization and consequently hinders their general performance (Crepedes & Piercy,1996; Dewsnap & Jobber 2000). Consequently, pricing strategy is concluded to be a marketing technique (Varadarajan 2010).
However, a critical evaluation of different researches and literatures on pricing strategy and performance especially in brewery industry disclosed that a lot had not been said regarding the existing relationship between these two vital elements in Nigeria. Thus, to add to the body of knowledge based on this discovery; this research will be carried out to examine the existing relationship and the impact of pricing strategy on the performance of brewery industry by using Champion Breweries as a case study.
1.2 Statement of the Problem
Despite the widening demand for beer in Nigeria, Okorie and Humphrey (2016) observed that the myriad of macro-economic challenges facing businesses in Nigeria, particularly, the manufacturing sector like the breweries industry will cause a poor response to many pricing strategies by consumers. Therefore, beverage brands will feel the pinch more with lower profits as consumers look for cheaper brands than quality/differentiated products. This therefore weakens the argument of value based- pricing strategies such as price discrimination and price skimming.
Brewery industries are faced with unstable power supply and health and hygiene standards needs coupled with taxation and undue interferences by local, state and federal government which needs to be addressed (Odumodu, 2012). These has led to the failure of many manufacturing sector and has such constituted the bane of this study. Despite the gained prominence of pricing strategy, the interrelationship between Pricing strategy and Improved performance in organizations has been frequently discussed, to which some researchers and scholars like Eskidson (1994) and Harari (1997) claimed that pricing strategy programme are ineffective or not very efficient in most studied organizations. Judging by the aforementioned, it becomes imperative to evaluate the influence of pricing strategy on marketing performance especially in a nation like Nigeria to ascertain its extent of relationship.
Before, the lack of adequate attention to pricing strategy as a practice-based approach reduced the competitive edge and hence the performance of micro, small and medium-sized enterprises. Therefore, the need for an understanding of pricing strategy as an entrepreneurial marketing approach and its applicability to micro, small and medium enterprises for enhanced performance has gradually become a matter of key concern to many intellectuals and entrepreneurs. Thus, this study investigated the impact of pricing strategy on the performance of brewery industry by using Champion Breweries as a case study.
1.3 Objectives of the Study
The main aim of this study is to examine the impact of pricing strategy on the performance of brewery industry by using Champion Breweries as a case study. However, the specific objectives include:
i) To examine the relationship between Pricing Strategy and Organizational Performance
ii) To examine the impact of pricing on organizational performance
iii) To identify the challenges of pricing on organizational performance.
1.4 Research Questions
The following research questions are developed as a guideline to achieve the objectives of this study:
i) What is the relationship between Pricing Strategy and Organizational Performance?
ii) What are the impact of pricing on organizational performance?
iii) What are the challenges of pricing on organizational performance.?
1.5 Research Hypotheses
The following research hypotheses are developed for this study:
i) There is no significant correlation between pricing strategies employed by Champion Breweries and their organizational performance
ii) There is no significant relationship between pricing strategies and customer satisfaction
iii) There is a significant relationship between different pricing strategies and performance of Champion Breweries.
1.6 Significance of the Study
This study investigated the impact of pricing strategy on the performance of brewery industry by using Champion Breweries as a case stud Therefore, the result of this work shall be of immense assistance to management in organizations as this will assist them in understanding the vital role and effect of pricing strategy and its ability to foster marketing performance and how its appropriate types and dimensions can be adopted to educating management and employees towards better and efficient activities and decision making thereby providing better incentives towards performance improvement.
1.7 Scope of the Study
This study on the impact of pricing strategy on the performance of brewery industry will be limited to Champion Breweries, Akwa Ibom state, Nigeria.