Introduction
This is a research report on the effects of price on the sales of a given product. The product analyzed herein is the sweat pants from the KGU goods store, since it is the most sold item in this store. The sweat pants are most popular among the KG’s current students since they wear them during various sporting activities and in sport clubs. The research study therefore extends to cover the effects of these clubs on the sales of the analyzed product.
This research was conducted to investigate the effects of price on the sales of the KG university sweat pants.
Methodology
This research report contains the first hand information from the respondents. The research study was conducted through questionnaires which were completed by the KG university students in both campuses.
Relationship between Club Affiliations and Product Purchase
Out of the respondents issued with a questionnaire, 21 and 26 said they belong to club activities and to a circle respectively. However, 46 said they had no affiliation to either club or circle. Only 12.76% of club or circle students purchase sweat pants. As per Graph 1, there is a weak correlation between the number of sweat pants purchased and the club or circle to which purchasers is affiliated to. This shows that club affiliation doesn’t affect the decision to purchase sweat pants and thus little influence on sales. This is because 22.5% of the students who responded as having the sweat pants are not affiliated to any club or circle as represented in graph 2. Thus, there is a weak relationship between the club affiliation and the product purchase.
Reasons for Not Buying the Product
The study noted that there are different reasons as to why the KGU store visitors or non visitors never purchase the KGU sweat pants. According to graph 7, the findings show that the reasons revolve around the pricing, the desired need, and the taste and preference for the product design. From graph 7, out of the total respondents, 31 said they never purchased the product because they least needed it. Thus, 42% of respondents did not buy the KGU sweat pant because they don’t need it. They had no desired need to be fulfilled by the KGU sweat pants. They visualized zero utility. Besides, 9 respondents said the product did not match their taste and therefore disliked it outright. This translates to 12% of those who argued that they disliked the product due to its poor design. Pricing of the product also had an effect on product purchase. For instance, 33% of the respondents said that they don’t make a purchase order for KGU sweat pants because of the exorbitant price charged on the product. However, 54% said they will never buy the product no matter price charged. This could be as a result of the effects of other demand related factors like taste and preference which make price not to be a major factor to purchase decisions.
Price sensitivity
Price is the major factor that affects sales of any given product. In most cases, a reduced price results into an increase in the demand of a given product (law of demand). However, if the price rises, the demand falls and the sale of the given product is adversely affected. Graph 6 depicts the effects of price on sales. From this graph, a general conclusion can be made; that is, the sweat pants from KGU stores are generally expensive. 75 of the 85 respondents classified the product as expensive, with 23 stating that the product is too expensive, 29 citing that the product is expensive, and 23 considering the product as a little expensive. Only 10 respondents regarded the product price as reasonable, with only one respondent stating that the product is cheap. From these figures, it was found out that 88% of the students considered the sweat pants as expensive and only 12% regarded the product price as reasonable. This explains the low sales of the sweat pants. It means that only 12% of the students are willing and are able to buy the sweat pants from the KGU goods store.
Product price proposal from the consumer perspective
Graph 8 gives the various price proposals from the customers’ point of view. From the graph, we can clearly point out that the customers are very price sensitive as suggested by 76 out of the 85 respondents. Only 9 respondents would buy the product regardless of the price. From these findings, we deduce that 89% of the customers consider the price before they purchase the sweat pants and only 11% of the customers don’t consider the product price. Of the respondents who are price sensitive, majority (32) proposed a price of 2000 yen. This can be taken as the most desirable price among consumers. However, we should not forget the effects of other individual and market factors on the demand of a given commodity, as given in graph 7. From the comparison of the Uniqlo price and the KG respondents’ price (graph 4), we deduce that KG customers are highly price sensitive as indicated by a 1% inclination.
Graph 8 gives an important relationship between the price of a given commodity and the demand of that commodity. With a high price, say 3500 yen, only 3 customers are willing and are able to buy the product. If the price decreases a little, say 3000 yen, then the demand increases to 12. A continued reduction in price leads to a subsequent increase in demand. However, a very low price seems not to attract more customers. When the price is too low, then the customer must ask about the product quality since price and quality are directly related.
Conclusion
For the store to improve the sales of its sweat pants, it must consider lowering the price, in order for the price to be competitive considering other competitors’ prices. A price of 2000 yen should be adopted for the sweat pants. However, the quality of the product should not be interfered with; instead, the store should ensure that the quality meets the tastes of the customers.
