Project Abstract

Project Overview

<p> </p><p><b>INTRODUCTION</b></p><p><b>1.1 &nbsp;</b><b>Background<br>to the Study</b></p><p>In<br>the competitive environments, investing in customer satisfaction is a means of<br>creating a sustainable advantage, given that it serves as a link between<br>purchase and consumption with important post purchase development, such as<br>loyalty and word of mouth (Muogbo, 2013). Today, firms especially the paint<br>firms have realized how important it is to understand, meet and predict<br>customers’ needs. Customers have also become increasingly conscious of their<br>value to these firms. Due to the highly competitive nature in the manufacturing<br>sector, paint companies have become more interested in assessing their<br>customers’ satisfaction, being aware that the higher the customer satisfaction,<br>the greater the inelasticity of demand for their products. Thus, paint<br>manufacturing companies need to determine the factors that affect customer<br>satisfaction, in order to assess the balance between customer expectations and<br>the paint manufacturing companies’ services offered and identify their major<br>advantages and disadvantages (Guilaninia, 2008).</p><p>Strategic<br>management is the process of decision making, coordinating, planning, and<br>taking actions by the top managers of a firm in order to achieve certain goals<br>and objectives. According to Dauda, Akingbade and Akinlabi (2010), strategy is<br>a detailed plan for a business in achieving success and since business involves<br>a lot of risk, an ill planned strategic move could result in loss of millions<br>of Naira, bankruptcy of business or even loss of thousands of jobs (Dauda, et<br>al., 2010). One of the strategies to compete effectively in the business world<br>is the pricing determinants. Thus, this calls for strategic management in order<br>to develop an effective pricing determinants (Dess, Lumpkin, &amp; Eisner,<br>2007). This implies that top managers should allocate the necessary resources<br>in order to bring the intended strategies to reality (Dess, et al., 2007).</p><p>Furthermore,<br>there is a rapid change in recent business environment which has made the<br>competition among industries to increase (Muogbo, 2013). To compete<br>successfully, firms need to develop some strategies and take some actions which<br>may include: enhancing product quality and productivity, reducing cost of<br>production, promoting product innovations and improving the speed at which the<br>product is delivered to the market and to the customers. Firms also need to<br>strive to meet up with the changes that are occuring globally, gain competitive<br>advantage position and improve performance relative to their competitors<br>(Muogbo, 2013).</p><p>According<br>to Guilaninia<br>(2008), pricing determinants involve segments, ability to pay,<br>consumer behaviour, market conditions, government policies, competitor actions,<br>trade margins and input/operational costs, amongst others. Price is among the<br>four (4) P’s of marketing namely: Product, Place, Promotion and Price, five (5)<br>P’s of marketing which are: Product, Positioning, Place, Promotion and Price<br>and seven (7) P’s of marketing Product, Place, Promotion, Price, People,<br>Process and Physical Evidence (Guilaninia, 2008). Price can be seen as the<br>amount of benefit a consumer pays for having or using the product. If the<br>customers accept it, it is appropriate, otherwise it would be changed<br>immediately (Guilaninia, 2008).</p><p>However, price is the most<br>flexible elements of marketing, unlike the other characteristics of the goods<br>that depend on the use of a distribution channel, price can be changed very<br>easily (Guilaninia, 2008). Furthermore, price setting and competition are the<br>problems which many executives in marketing face. Among several pricing<br>strategies, managers can choose their favourite type. The overall aim of<br>pricing is to enhance sales and profits worldwide (Kigan, 2001). Thus, any firm<br>that is concerned with the production and rendering of goods and services<br>respectively, has to initially answer the question of what to produce and for<br>whom to produce? Secondly, firms have to answer the question of how much the<br>actual and potential customers will be able and willing to pay for the goods.<br>This curiosity about price fixing and other different interfering factors such<br>as cost of producing goods, government factors, price of competitors, demand<br>for goods, environmental/social factors and so on, concerned in fixing prices<br>of goods and services, have proved to be a headache to many paint manufacturing<br>firms in Nigeria (Obigbemi, 2010).</p><p>Furthermore, decision concerning price is a<br>very important decision a firm has to make, because it will affect their<br>objectives, directly or indirectly (Obigbemi, 2010). A business whether big or<br>small, complex or simple, public or private, is designed to provide prices that<br>are competitive (Ayozie, 2008). Hilton (2005) stated that setting prices for<br>the products or services of an organisation is one of the essential decisions<br>managers have to face as well as one of the difficult decisions because of the<br>number of factors that have to be put into consideration. However, Lovelock and<br>Wirtz (2004) argued that the most important tactic to a successful pricing<br>determinants is managing firms’ revenues in a way it will support their goals.<br>This will lead to the question of how well can the firm supplement the<br>different factors that affect pricing decisions, in order to achieve their<br>objective, which is to gain customer satisfaction. Therefore,<br>the focus of this study is on pricing determinants and customer satisfaction of<br>selected paint manufacturing companies in Abia state, Nigeria.</p><p><b>1.2 &nbsp;</b><b>Statement<br>of the Problem</b></p><p>The relationship between a company and a customer in<br>the past was purely based on the company producing the best quality product in<br>order to maintain the relationship, however, the relationship<br>between the two parties has recently taken a new turn making customers’ the<br>main focus in maintaining relationships (Gaiardelli, Saccani &amp; Songini,<br>2007).</p><p>In<br>the face of constant technological and economic changes, today‘s consumer is<br>more curious, more educated and conversant with what they really want. The<br>changes have also affected the need of firms, thereby making marketing managers<br>to face huge problems in weighing the behavioral forces and in handling the<br>marketing mix with focus<br>on the resources, which they have to consider<br>when developing marketing programs to fit the needs of their firm (Muogbo,<br>2013). Philips (2009) noted that customers would prefer paying less, sometimes,<br>they would rather prefer not to pay at all but it is simply not feasible to give away products without<br>price. An organization that does that will go out of business and would not be<br>able to create value for the customer (Philips, 2009). These constitute problems that affect<br>the organizations’ output.Consumers worldwide have various views<br>about products based on their prices, however, product pricing for consumers is<br>a strenuous task. This is true due to the fact that a high price may cause a<br>negative feeling about the product, and also a low price can be deceptive as<br>regards the quality of the product (Philips, 2009). Decisions affecting the<br>distribution, product and price for large markets are special as well unique to<br>every industry, this has constituted a great challenge to managers who have not<br>considered it to be able to have a negative influence on customer buying<br>behavior and this has led to complaints from unsatisfied customers. Based on the above, the effect of<br>buying behavior on customer complaints is been investigated.</p><p>Pricing<br>has been identified as one of the difficulties a decision maker faces when<br>trying to place a price on a product or service (Rohani &amp; Nazim, 2012).<br>Sije and Oloko (2013) noted that executives are complaining that pricing is a<br>big headache and one that is getting worse day by day. Markets have largely<br>been characterized by improper pricing, taking into consideration market<br>demand, costs and competition. In Nigerian market, the inability of firms to<br>freely set prices without considering the policies of their competitors<br>concerning price, has led to a decline in profit margin made by many companies<br>(Rohani &amp; Nazim, 2012). If the price is too high, the firm’s product will<br>not be competitive in the market and if it is too low, the firm may not<br>break-even (meet operational cost). The operational cost of the paint<br>manufacturing firms has been high and this has led to the constant increase of<br>the prices of the firms’ products and has led to a negative customer attitude towards their product, which in<br>other hand has also resulted to the under productivity of the firms due to low patronage. (Rohani<br>&amp; Nazim, 2012). Based on the<br>above, the effect of operational cost on customer attitude is examined.</p><p>According<br>to Egwakhide, Nyor and Terzungwe (2012), the levying of additional taxes by the<br>government in order to subsidize the public service enterprises has had an<br>adverse effects on the manufacturing companies. This is because manufacturing companies have to pay<br>more in the form of additional taxes and their ability to break-even is<br>adversely affected. When the<br>government covers the losses of public service enterprises by giving subsidies<br>through taxation, it cripples the productive capacity of the manufacturing<br>companies by way of over taxation of their facilities. This will also<br>affect the quality of services rendered to customers (Egwakhide, Nyor &amp; Terzungwe, 2012). Based on the above, the effect of government<br>policy on the quality of services delivery by enterprises is evaluated.</p><p>Uslay (2012) proposed that firms’<br>inabilities to advance and protect their strategic positions often come at<br>great cost. Customers who are aware of the price of just one retailer are<br>“loyal” customers, whereas customers who know the prices of many retailers are<br>“switchers” and switchers give strength to competitors. Studies have shown that<br>there are higher number of switchers than loyalists in the market thereby making it<br>extremely difficult for organizations to decide on their pricing strategies.<br>The segmentation of switchers in pricing policy has led to disjoint between organizational goals and<br>customer demands (Koca &amp; Bohlmann, 2008). <br>Subsequently, with<br>the introduction of information technology which has made the world a global<br>village, it is now easy for customers to get price information of many firms as<br>fast as possible (Uslay, 2012). This has made competitions among firms stiffer,<br>thereby making pricing decisions to be a herculean task for managers (Koca<br>&amp; Bohlmann, 2008). Based on the above, the effect of competitors’ action on<br>customer loyalty in the paint manufacturing companies is evaluated.</p><p>However,<br>the study identified four gaps namely: buying behaviour, operational cost,<br>government policy and competitors’ action which have prevented the management<br>of the selected paint manufacturing companies to attain maximum customer<br>satisfaction.</p><p><b>1.3<br>Objective of the Study</b></p><p>The<br>main objective of this study is to investigate Pricing determinants and<br>customer satisfaction of selected paint manufacturing companies in Abia state,<br>Nigeria. The specific objective are to:</p><ol><li>assess the effect of buying<br>behaviour on customer complaints in the paint manufacturing companies in<br>Abia state;</li><li>determine the effect of<br>operational cost on customer attitude in the paint manufacturing companies<br>in Abia state;</li><li>investigate the effect of<br>government policy on service delivery in the paint manufacturing companies<br>in Abia state and</li><li>evaluate the effect of<br>competitors’ action on customer loyalty in the paint manufacturing<br>companies in Abia state.</li></ol><p><b>1.4<br>Research Questions</b></p><p>The<br>proposed study seeks to answer the following research questions:</p><ol><li>How does buying behaviour<br>affect customer complaints in the paint manufacturing companies in Abia<br>state?</li><li>To what extent does operational<br>cost affect customer attitude in the paint manufacturing companies in Abia<br>state?</li><li>How does government policy<br>affect service delivery in the Nigerian paint manufacturing companies in<br>Abia state?</li><li>What effect does competitors’<br>action have on customer loyalty in the paint manufacturing companies in<br>Abia state?</li></ol><p><b>1.5 &nbsp;</b><b>Hypotheses</b></p><p>The<br>hypotheses for the proposed study are as follows: the hypotheses were tested<br>0.05 level of significant</p><p>H01: &nbsp; &nbsp; buying behaviour has no significant effect<br>on customer complaints in paint &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; manufacturing<br>companies in Abia state.</p><p>H02: &nbsp; &nbsp; &nbsp; operational cost does not significantly affect customer<br>attitude in paint &nbsp; &nbsp; &nbsp; manufacturing<br>companies in Abia state.</p><p>H03: &nbsp; &nbsp; government policy has no significant effect<br>on service delivery in paint &nbsp; &nbsp; manufacturing<br>companies in Abia state.</p><p>H04: &nbsp; &nbsp; Competitors’ action have no significant<br>effect on customer loyalty in paint &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; manufacturing<br>companies in Abia state.</p><p><b>1.6 Scope of the Study</b></p><p>This study investigated Pricing<br>determinants and customer satisfaction of selected paint manufacturing<br>companies in Abia state, Nigeria. The identified variables of pricing<br>determinants have been examined as well as that of customer satisfaction. Abia<br>State is made up of seventeen local (17) government areas with two major cities<br>namely Umuahia and Aba. All the paint manufacturing companies are sited in<br>these major cities which have five (5) local government areas in it out of the<br>seventeen (17) local government areas. Hence, because of the wide scope of<br>paint manufacturing companies in these two major cities, the researcher<br>therefore limited the research to the following five (5) major paint<br>manufacturing companies namely: Chemlap Nigeria Limited, Nicen paints limited, Saclux Industries Nigeria Limited,<br>Clover Paints Nigeria limited and Berger<br>Paints Nigeria Plc, which were selected from the five local<br>governments areas that make up the cities namely: Aba south L.G.A, Aba North<br>L.G.A, Osisioma Ngwa L.G.A, Umuahia South L.G.A and Umuahia North L.G.A.</p><p>This<br>study evaluated pricing determinants and customer satisfaction in Abia State.<br>Variables identified for pricing determinants have been examined alongside<br>those identified for customer satisfaction. Manufacturing industry was selected<br>because of their importance to the development of the nation and because there<br>is a high level of pricing determinants <br>employed by them to ensure customer satisfaction in their operations and<br>in getting their products out into the market through the middle-men to the end<br>users. Well-structured<br>questionnaire was used to obtain data for this study. The use of stratification<br>to group respondents into<br>locations such as Aba South, Aba North, Osisioma, Umuahia South and Umuahia,<br>was also employed. Then, the random sampling techniques was used to select the designated paint<br>companies for each region.</p><p>The target respondent for the study consists<br>of the total number of management personnel as well as supporting personnel<br>working at the strategic level and operational level within the firms. The<br>total figure for the population arrived at, based on survey of few selected<br>firms, was six thousand and fifty (6,050) personnel. Information with regards to the<br>population number was sourced from the Human Resource Department (HRD) of the<br>firms. Using Taro Yamane (1967) formula for sample size determination, the<br>study was able to arrive at a sample size of four hundred and thirty three<br>(488) respondents including a provision for thirty percent non respondent. The<br>stratified sampling method was used because of the stratification variables<br>included in the scope of the study. The research is focused on paint<br>manufacturing companies that are operating in Abia State, Nigeria.</p><p><b>1.7 Significance of the Study</b></p><p>The general understanding of this study<br>would serve as a useful guide to management, practitioners, executives,<br>corporate managers in the manufacturing industry. It would help them to<br>understand how factors affecting pricing determinants such as buying behaviour, operational cost,<br>government control/policies and competitors’ action, affect and the extent of<br>its effect on the attainment of customer satisfaction by the companies.</p><p>The study would also enable the selected<br>companies and the manufacturing industry to proactively respond to changes<br>within their environment more effectively. It would l also enable the<br>management of these companies to realize the necessity of implementing better<br>pricing strategies in the industries. This study would enable stakeholders in<br>the manufacturing industry to understand that employing all these resources<br>together would enable them produce a unique capability that is rare and<br>distinct to the company.</p><p>It would also enable the government to<br>create better policies and regulation that would enhance development and growth<br>in the manufacturing sector of the economy. Findings from this study would<br>enable the society to be more informed about the pricing determinants as they<br>relate to customer satisfaction. It would also provide more knowledge<br>concerning pricing determinants and reveal what makes it to vary from one<br>company to another. Lastly, it is also<br>hoped that these findings would contribute to the body of knowledge and<br>stimulate more researcher’s interest in this field of study.</p><p><b>1.8<br>Operationalization of Variables</b></p><p>The<br>variables of this study are operationalized as follows:</p><p>Y = <i>f</i>(X)</p><p>Y = Dependent Variable</p><p>X = Independent Variable</p><p>Where:</p><p>Y<br>= customer satisfaction</p><p>&nbsp;X = pricing determinants</p><p>Y = (y1, y2, y3,<br>y4)</p><p>Where:</p><p>&nbsp;y1 = customer complaint (CC)</p><p>&nbsp;y2 = customer attitude (CA)</p><p>&nbsp;y3 = service delivery (SD)</p><p>&nbsp;y4= customer loyalty (CL)</p><p>X = (x1, x2, x3,x4)</p><p>Where:</p><p>&nbsp; &nbsp; &nbsp; x1 =buying behaviour (BB)</p><p>x2<br>=Operational cost (OC)</p><p>x3<br>=Government policy (GP)</p><p>x4=competitors’<br>action (CA)</p><p>The working equations are:</p><p>y1=<br>f (x1) ………………………………. Equation 1</p><p>y2=<br>f (x2) ………………………………. Equation 2</p><p>y3=<br>f (x3) ………………………………. Equation 3</p><p>y3=<br>f (x4) ………………………………. Equation 4</p><p>Y=f (x1, x2, x3,<br>x4 + et) ………………………………. Equation 5</p><p>The variables in Equation 5 are the working<br>Equations to be evaluated in this study.</p><p>y1<br>= a0 + ß1×1 + et &nbsp;</p><p>y2<br>= a0 + ß2×2 + et</p><p>y3<br>= a0 + ß3×3 + et &nbsp;</p><p>y4 = a0 + ß4×4 +<br>et &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;</p><p><b>1.9 Operational Definition of Terms</b></p><p>The proposed operational definitions of<br>terms for this study are:</p><p><b>Pricing<br>determinants: </b>factors that determines the setting of<br>prices of goods in order to attain organizational goals and objectives through<br>prices on products and services. Almost<br>all companies, large or small, determine the prices of their products and services<br>on production, labour and advertising expenses but for this study buying<br>behaviour, operational cost, government policy and competitors’ action were<br>examined to communicate to the target market.</p><p><b>Customer<br>satisfaction:</b>&nbsp;a state in which a consumer of a product<br>or service shows that his/her expectations, needs or desires have been met.</p><p><b>Buying<br>behaviour: </b>The response or reaction of a consumer towards a<br>situation or change made by an organisation.</p><p><b>Operational cost: </b>expenses incurred while carrying out production<br>activities in the firm.</p><p><b>Government policy: </b>The act of setting laws by the government to<br>regulate or check the activities of various business organisations.</p><p><b>Competitors’ action: </b>activity oforganisations that produce similar<br>products or services, which are in contest for the acquisition of highest<br>number of customers.</p><p><b>Customer complaint: </b>An<br>act of complaining by a customer to show dissatisfaction towards a product or<br>service rendered.</p><p>Customer<br>attitude:The way a customer perceives and behave towards a product.</p><p><b>Service delivery: </b>the act of providing a distinctive characteristics,<br>standard and quality service to customers.</p><p><b>Customer loyalty: </b>a state of being loyal or having allegiance to an<br>organisation. In other words, it is an act of not switching from one<br>organisation to another.</p><p><b>1.10 &nbsp; &nbsp; &nbsp; &nbsp; <br></b><b>Historical Background of the Paint<br>Companies Selected for the Study</b></p><p>This is the brief historical development<br>of the firms selected for the study.</p><p><b>1.10.1 </b><b>Chemlap<br>Nigeria Limited &nbsp; &nbsp; </b></p><p>Chemlap Nigeria Limited is a paint<br>manufacturing company and other products like resin, adhesives, plastics and polymerizing vinyl chloride<br>(pvc) gums. It was incorporated in 1983 and commenced manufacturing in 1985.<br>Chemlap Nigeria Limited is the first pioneer company in the manufacturing of<br>Resin in south-east Nigeria and later went into manufacturing of paints. It has<br>depots in eight (8) states of the federation which include Lagos,<br>Abuja, Kano, Jos, Benin, Uyo, Onitsha, Enugu, with its Headquarters at Aba, Abia state. This company<br>from inception has distinguished itself in achieving high quality products and<br>services which have earned it wide market recognition and patronage in Nigeria.<br>The company is purely indigenous with staff strength of<br>one thousand seven hundred and ninety eight (1798).</p><p><b>1.10.2 Saclux Industries<br>Nigeria Limited</b></p><p>Saclux Industries Nigeria Limited took its feet in the early 1970’s as a<br>trading concern with the name “Sammy Bros Nigeria” in line with his quest,<br>passion and drive to fashion a viable business, the Chairman/CEO,<br>single-handedly supervised and nurtured the outfit basically with the concern<br>of dealing on paints. By 1981, Sammy Bros Nigeria won the heart of discerning<br>end-users of paints as a major distributor to so many manufacturing companies<br>in Nigeria. Consequently upon its position in the surface coating, the need to<br>establish a paint company was muted. However, in 1986, production of Saclux<br>paints commenced under the business name Saclux Industries Nigeria Limited. In<br>the same 1986, Saclux Industries Nigeria Limited was incorporated as a Limited<br>Liability Company with RC. NO 79691. </p><p>Saclux Industries Nigeria<br>Limited is today a company and a major player in the Manufacturing sub – sector<br>of the Nigeria economy, with a staff strength of nine hundred and fifty nine<br>(959). In view of its expansion, the company in 2007 moved into its permanent<br>industry complex located at Ohokobe – Afaraukwu Ibeku along Old Aba Road<br>Umuahia, while at the same time retaining and maintaining its old factory at<br>Amuzukwu – Ibeku also in Umuahia.</p><p><b>1.10.3 Berger Paints Nigeria Plc</b></p><p>Berger<br>Paints Nigeria Plc, started operation in Nigeria on the 9 January, 1959. It has<br>grown to be a leader in the Coating and Allied Industry in Nigeria – a legacy inherited<br>from Lewis Berger, the German colour chemist who founded the Berger Paints’<br>dynasty in London, in 1760. Their other well-known brands such as Luxol<br>(Clinstay), Super Star, Classic, etc continue to enjoy extreme popularity<br>across Nigeria today.</p><p>Operating<br>in 5 business segments; Decorative/Architectural finishes, Industrial coatings,<br>Marine &amp; Protecton coatings, Berger/KCC Heavy Duty coatings,<br>Automotive/Vehicle refinishes, wood finishing and Preservers, with 16 depots,<br>Colour World centres and a countrywide distribution network of dealers and Mega<br>dealers in strategic locations spread throughout the country, the company is<br>well placed to serve the growing requirements of the Nigeria market.</p><p>In<br>2012, Berger Paints Nigeria Plc entered into partnership arrangement with the<br>biggest Heavy Duty Coating manufacturing company in South Korea, KCC<br>Corporation to jointly serve the Nigerian Paints and Coating market. This<br>partnership affords their customers the quality and durability that marine and<br>protective market have found synonymous with the KCC marine and heavy duty<br>brands. Berger Paints Nigeria Plc is located at 137 Aba/Owerri<br>Road, Umungasi, Aba North, Abia, Nigeria.</p><p><b>1.10.4 Korama<br>Clover Industries</b></p><p>Korama Clover<br>Industries has a combined staff strength of seven hundred and fifty four (754).<br>The company which is an indigenous privately owned paint and plastic<br>manufacturing firm was incorporated in October 1983. Korama Clover Industries<br>Limited produces high quality Clover Paints range of products for Household<br>decorative and Hi-tech coatings, industrial and marine paints, Sinclair<br>Automotive and protective coatings, as well as fillers, lacquers and wood<br>finish. It has a good distribution network, with twelve (12) sales depots<br>strategically located nationwide, which include Calabar, Port Harcourt,<br>Owerri, Onitsha, Benin, Lagos, Kano, Kaduna.</p><p><b>1.10.5 Nicen Industries Limited</b></p><p>Nicen<br>Industries Limitedproduces high<br>quality range of emulsion paints, gloss paints, car paints and plastics<br>products for household decorative and Hi-tech coatings. It has depots in several cities of the<br>federation which include Lagos, Abuja, Port Harcourt, Kano, Benin,</p><br> <br><p></p>