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EFFECTIVE PRICING STRATEGY OF NEW PRODUCTS

ABSTRACT

Prior to our contemporary time, the  bottling  industry will dominated  by the products of Nigerian Bottling Company Plc. Recently,  7-up bottling company Plc reemerged in the scene to compete with the Nigerian bottling company Plc, both also struggle with  other   manufacturers of mineral soft  drinks.  The scene was  complicated  further  by   poor  economic situation in the country. Therefore, innovation, dynamism and efficiency vis-à-vis  marketing are necessarily required as a means of not just surviving but also ensuring  profitability and co-operate growth.  The implementation of marketing strategies as well as successful co-operate performance of the sales force. As a result this work  sought to determine the implication of the  effective performance of salespersons as  an  indicator of corporate growth potentials  (a case study of 7 –up bottling company  Plc) used questionnaire, design and tests of hypothesis.  The hypothesis was tested  based on the data  collected and analyzed and the following findings  were accepted. The consumption pattern  of 7-up drinks  customers is dependent on the company sales  persons performance. The  returns generated by 7-up bottling company is directly proportionate to the effectiveness of the salespersons. Consumers have favourable attitude  toward  7 –up soft drinks. Furthermore, conclusions and recommendations were made, the  conclusions are: An  average salesperson  of 7-up  bottling company is professionally   unskilled. There is  a direct relationship between a company’s  growth sales potentials and profitability with  sales force performance. The 7-up salespersons do not  effective and intensively distribute their products. Consumers  have favourable attitude towards 7-up  drinks. The company should strive to  increases it’s market share. There is  a need to give proper training  and orientation to the salespersons. 7-up bottling company should  enhance it’s distribution network. It is hoped that  if these recommendations are applied  by the 7-up  bottling company, the effectiveness of it’s salespersons will be enhanced.

CHAPTER ONE

INTRODUCTION

1.1  BACKGROUND OF THE STUDY

A Firm having carried out  some researches  and found out what the buyers want, specifications and requirements converts these findings into product concepts and lastly into goods and services that can satisfy these identified wants, in their exact specification  and requirement.  Hence” the typical firm can be seen as on input-output system" ”(Okeke C. I 1993). It is not enjoy  to look at  a firm more so in the context of marketing as on input-output system.  This is because  several other chain of  activities preceed the input as well as the output.

A wholestic  perspective  considers all these interlocking and interrelated activities that  preceed input and follow after output.  For example, the output must be in  the right proportion, must be effectively priced, promoted and  distributed. Yet all these do not even guarantee exchange and transfer of title from the firm to  the buyers,  neither do they even guarantee a reward or profit to the firm. In other words, all these activities may be properly integrated, blended and as well form the bases on which a firm should b e viewed.

“Good distribution, new products, improved manufacturing resources, skillful advertising  and many other  factors in marketing  must inevitably fail if a manager is unable  to build  a team of  men able to compete with strong  competition  and  sell efficient to every type of buyers”. (Jack 1983 P.80). Hence the popular sloggan in marketing that  “nothing happens until a sale is  made” (Okeke 1993). To implement these marketing variables, the sales force has  to  be utilized by the sales  manger, they have to exhibit their primary sales manship  functions whereby they act  as intermediaries between the company and prospective  customers, discharging their duties as the voice of the company to the customers and directs the voice of the customers to the company. Therefore, personal  selling brings the buyer and seller  into direct contact.  It is important that every organization should have some number of persons known as the sales force whose responsibility are to be sure that customers and  prospects are contacted and convinced to accept the items offered in exchange for a value needed by the organization.

There is no amount of advertising, sales promotion and publicity that can be equal to personal selling. This is because, contacts must be established  by somebody with buyers  some  where for market transactions to take place. The sales force in modern  marketing do  not  only perform the current  sales, they are also concerned with laying the foundation for further sales through the performance  of information gathering function. To properly carry out this, there should  always exists in an organization, a skilled manager who manages the sales force efficiently and effectively. As a result, sales management is defined “as the organization efforts necessary  in planning sales objectives, specifying selling efforts needed in realizing the objectives, selecting, training and motivating appropriate sales force and controlling their operations towards  ensuring the full realization of sales objectives (Okeke 1993: 40).

Salespersons are trained in a method of analysis and customer management. Today, selling is a profession that involves mastering and applying a whole set of principles, personal selling has some different styles,  some antithetical to the spirit  of the marketing concept.

Three major aspects of personal selling are sales manship, negotiation and relationship management (Kotler  1993). Sales  manship is the act  of the sales persons persuading  the customer or prospect to see his point of view or do  something the way he wants. Negotiation means the act  of two or more  parties reacting an agreement on the price and the other  terms of  sales.  Most business selling involves negotiating skills. Price is the issue being negotiated always, others include contract completion  time, quality of goods and service offered, purchase volume, responsibility for financing risk taking, promotion, product safety etc.

Relationship management is a larger concept  that guide the seller’s  dealings with customers.  Sales manship and negotiation are transaction or   rented. The company has continued to grow from strength to strength both in plant expansion and product popularity amongst customers.  By 1990, the company has  had plant location within it  short period of operation in Lagos, Ibadan, Kano, Kaduna, Aba, Ilorin, Benin and that of Enugu (9th Mile Corner).

A new glass industry for the manufacture of bottles was also constructed in the Northern part of the country. New Deposits are opened in many parts of the country to ensure  that  their products react their products reached their ultimate customers even in tar-flung places.  The company commitment to quality  is consistent and unsurpassed in the soft drink industry.

This they develop over the years and lately enhanced by their partnership with Pepsi-Cola international.  The company have remained stead fast in their effort to maintain the quality and excellence of their product. Furthermore, it’s marketing strategies have been geared towards  making their products acceptable, available and affordable through creation of awareness and aggressive  sales of sales promotion by the sales persons. Their objective therefore is to establish a steady consumer trend in the soft drink business.  This is endorsed by their  innovative and modest promotional campaign in which the people benefit immensely by getting added value for their money. In terms of sales, the company has made  an  appreciable volume  and profit  margin growth over the years.

The head of corporate affairs, (Promotion Division) claimed that the company has an appreciable percentage of the market share.  It c an be however adduced that the company has a strong capital base. The company has  been competed to increase the price of it’s brands for so many times now, the current price of their product is N25. This according to them  is to keep to their  marketing  strategies and objectives to it’s target customers.  It is interesting to note therefore, that these development  has no visible effects on the volume and sales return to the firm.  The company has come along way hence their slogan upholds. “The Difference is Clear” because it is the clear choice for a new generation.  Their interest is to help marketers close a particular sales with a customer.

As regards relationship management, any seller who  builds and manages  strong  relationships with key customers will have a reasonable turnover from the customers and mostly important to those customers who can typically affect the company’s  future. Furthermore, sales representative covers a broad range of positions in our economy.  The following classification of sales positions was devised by many as quoted by Kotler 1993. 

Delivery Sales man/Deliveries:           Positions where the salesperson’s job is predominantly to deliver products to buyers.

Inside order taker:       The salesperson  here is  predominantly an inside order taker.  Where the salesperson stands behind the counter and serves  buyers.

Field order taker:        This is the kind of sales position where the sales person is predominantly an order taker but goes outside to meet buyers. For example, shampoo salesperson calling on the super market manger.

Missionary:      This is a position where the salesperson is not expected or permitted to take an order but to build goodwill for his company or to educate the actual or potential user.  He does not do direct selling.

Technical Salesman :   Position where the major emphasis is placed on technical knowledge. That is the salesperson selling only technical goods and offering technical services.  For example, the engineering salesperson who is primarily a consultant to the client companies.

The conclusion is that salespersons realize profit from various sales and that customers are satisfied in buying organization outputs. And this calls for corporate growth potentials.  This work therefore aims at critically evaluating the effects of this all important marketing function of personal selling corporate performance.

Overview of the Company

The production of soft drinks in Nigeria started off in 1933 when a foreign concern established the Nigeria mineral waters Limited. Since then many other companies have established various brands of soft drink companies.  Some of the early companies to make an impact in the industry in Nigeria then was the Pesi-Cola  company (franchised by seven-up  bottling company), the London and  Kano trading company with it’s “sword brand”, the Nigerian bottling company with it’s Coca-Cola, Fanta, Sprite and others.

Some other soft drink companies  existed, however most of them collapsed under the weight of heavy and aggressive competition in the  industry.  One of the contributing factor which led  to the extinction of most soft drink  companies was the then Niagara Civil War.

The seven-up bottling company Plc came into the Nigerian Business Scene in 1959 through the efforts of the founder, a well known and respected figure, Late Sheikh Mohammed CL Khalil. The company which was franchised to bottle seven –up bottling international, incorporating of US came up with a brand of softdrink “7-up” in 1960, in 1986, the franchise for “change crush” was added; thus began  their gradual  incursion into the Nigeria market with just two brands, 7-up and orange crush.

In 1989, the company future rose to a new height with the acquisition of Messrs John Holt soft drink business in Nigeria.  This led to the successful negotiation  of another franchise from  Messrs Pepsi –Cola, Merinda orange, Merinda Soda and tonic.  This full complement of flavours offers the company a tremendous competitive advantage in their expansion programme and future growth as these products  now  measure competitively with other soft drinks especially with the products of the Nigerian Bottling company, who  have dominated and enjoyed a large percent of the market share of the industry.

Despite the apparent increase in soft drink companies in the country today, the seven-up bottling company with it’s target sighted planning aggressive marketing strategies, heavy promotional  and distributional network, the company with it’s ten plats as against twenty ix of the strong threat to the NBC in the industry. Due to the activities of the salespersons, the  company  products are in high demand and with sustenance and increase of it’s  effort  in these areas.

1.2 OBJECTIVE OF THE STUDY

In order to properly evaluate the effective performance of salespersons as indicator or cooperate growth potentials, certain basic data are required, the objectives focus on how the goals of the study are to be accomplished. To ascertain them,  the objectives includes:

-                      To determine the nature and scope of the company’s sales force

-                      To determine the salesperson’s performance on the achievement of the organization corporate growth.

-                      To determine the impact the sales persons have created on the customer act of patronage.

-                      To determine the nature and basis of allocating quote as to the salespersons. 

-                      To determine whether sales of the company justify investment in it’s expenditure.

-                      To ascertain the relationship but between performance of the salespersons and corporate growth potentials.

-                      To determine how efficiently 7-up bottling  company Plc organizes and manages it’s sales force.

1.3  SIGNIFICANCE OF THE STUDY

Personal selling is a unique promo tool in the sense that it is the marketing function with the task of converting the organization’s produce to cash. It is always at the point of personal selling that the point of efforts  of a firm either fails or succeed.  It is the act of the salespersons that converts a  prospect into  customer and the customer into user and  brand loyality.  In other words, personal selling is not only the key to company’s success but also a very crucial and decisive marketing function.

Personal selling brings the buyer and seller into direct contact.  It is the heart of marketing, representing the market transactions with it’s inherent issue of exchange and values.

The study is further of great significance in the sense that every product or service marketed, no matter how technical or non-technical it is. Final analysis for it’s success is dependent on the  ability and performance of the salespersons.

Finally exchange  is the key factor in marketing and  this exchange is a function of personal selling.  Whether industrial products  or not, exchange relationship must exist  between the corporate organization and it’s customers.  Exchange  is effected through personal selling.  Therefore, personal selling could have a  strategic impact on the performance of the corporate entity. Based on the above, there is a very strong need to determine the extent  at which the  quality and other related profits of the sales force impinge on the corporate performance.

1.4 HYPOTHESIS FORMATION

The following are the basic assumptions for the research.

Consumption pattern of seven-up soft drinks  customers is dependent on the company’s salespersons performance.

Consumers have favourable attitude towards 7-up soft drinks.

Returns generated to 7-up bottling company is directly proportionate to the effective performance of the salespersons on the sales of the  products.

1.5 SCOPE OF THE STUDY

The study is expected to cover the activities of the salesperson of the Seven up bottling company, Enugu plant.

Competitors of the seven-up bottling company was also considered as they make up  the major players in the study.

1.6 DEFINITION OF TERMS

Sales Force, These are sales personals that deal directly with the customers on behalf of the entire organization.

Selling, This is getting orders from customers and supplying the orders.  It involves the act of salesmanship.

Salesmanship, This is the act of persuading people to buy, hence it can be seen as the ability, hence it  can be seen as the ability to persuade, convince and motivate a customer to take action.

Prospecting, This can be defined as the search for potential customers.

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