Pricing decision making in a manufacturing organisation in Oyo state, Nigeria
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Date
2012
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Department of Business Administration, Ekiti State University.
Abstract
Relevant information on cost as input for effective pricing decision making is necessary organisation goals and objectives are to be attained. The quality of decision taken depends on the strength of the information received especially on pricing decision-making. Hence, this work seeks to establish the necessity of cost information in managerial decision making as it relates to the fixing of selling prices of manufactured goods, using a manufacturing pharmaceutical firm located in Oyo State as a case study. Secondary data were collected from the firm’s official books on prices for fives (2005-2011). The firm employed total cost plus method to compute the prices of its products. The secondary data also contained the prevailing market prices of other firm’s products for the same period (2006-2011). The mean prices of the firm’s product and the mean prices of the same products by other firm’s in open market were statistically analysed to see whether there is a relationship between them. Results revealed that the prices set by the firm, were within the same range with what obtained in the market. This suggests that some vital information on cost from the open market may have influenced the computation of prices set by the pharmaceutical firm examined. Hence, the upward and downward review of prices by the firm is a survival strategy. Consequently, we recommend as a policy option, that firms should embark on adequate data collection as it relates to cost before using them to fix prices of their products.
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Keywords
pricing decision, cost, prices, managerial decision
Citation
Osemene, O.F., Olaniyi, T.A. & Aliu, A. O. (2012): Pricing decision making in a manufacturing organisation in Oyo state, Nigeria. International Journal of Management and Development Study. 2(1); 142-148