EFFECT OF PRICING STRATEGIES ON COMPETITIVE ADVANTAGE OF SELECTED CEMENT MANUFACTURING FIRMS IN KENYA
Abstract
The main purpose of the study was to establish the effect of pricing strategies on competitive advantage among firms in cement industry in Kenya. The study was informed by Capability-Based theory. The study utilized an explanatory method and employed quantitative approaches. The target population encompassed a total 553 employees and 5 departmental heads from 5 cement manufacturing firms (Commercial Manager, Finance manager, Safety Health and environmental Manager, Manufacturing Manager. The study used stratified and simple random sampling to select a sample size of 226 employees who were selected as an adequate representation. The study used questionnaires to collect primary data. Quantitative data was analyzed using descriptive statistical techniques which included frequencies, means, and standard deviations. Inferential statistics such as Pearson Product Moment correlations were used to establish the relationships between the variables. Multiple regressions were used to establish the cause effect relationship. The findings showed that value-based pricing strategy had a positive and significant effect on competitive advantage of selected manufacturing firms in Kenya, β1 = 0.214, p = 0.001. In addition, competition-based pricing strategy had a positive and significant effect on competitive advantage, β2 = 0.302, p < 0.001. The study was of great importance to cement companies in Kenya as it provided insight into best pricing strategy that could enhance competitive advantage and also challenges encountered and how such strategies were affecting organizational performance. The study helped the government and its policy making agencies as it served as a guide to policy makers on existing pricing strategy among research agencies and difficulties confronted in executing the pricing strategy.
Keywords; Competitive Advantage, Manufacturing, Firms, Pricing Strategy, Competition-Based, Value-Based
Full Text:
PDFReferences
Amit, R.; Shoemaker, P. (1993): “Strategic Assets and Organizational Rent”, Strategic Management Journal, vol. 14, pp. 33-46.
Anna Codini, Nicola Saccani and Alessandro Sicco. (2012) The relationship between customer value and pricing strategies: an empirical test. Journal of Product & Brand Management 21:7, 538-546. Online publication date: 26-Oct-2012.
Avlonitis, A.F. & Indounas, K.A. 2006. Pricing practices of service organizations. Journal of Services Marketing, 20(5): 346-356.
Besanko, D., Dranove, D., Shanley, M., & Schaefer, S. (2012). A economia da estratégia (5th ed.). Porto Alegre: Bookman.
Boehe, D. M., Milan, G. S., & De Toni, D. (2009). Desempenho do processo de desenvolvimento de novos produtos: o peso relativo de fatores organizacionais, mercadológicos e operacionais. RAUSP - Revista de Administração, 44(3), 250-264.
Cooper, D.R., Schindler, P.S. (2006) Business Research Methods, McGraw-Hill
Cooper, Donald R.; Schindler, Pamela S. 2000. Business Research Methods, McGraw-Hill,
Cressman, G. E., Jr. (2012). Value-based pricing: A state-of-the-art review. In G. Lilien, & R. Grewal (Eds.), Handbook on business to business marketing. Massachusetts: Edward Elgar Publishing.
David, J. and David, S. (2012). Marketing-orientated pricing: Understanding and applying factors that discriminate between successful high and low price strategies. European Journal of Marketing, 46(11),
De Toni, D., & Mazzon, J. A. (2013). Imagem de preço de produto: proposição de um modelo conceitual. RAUSP - Revista de Administração da USP, 48(3), 454.
De Toni, D., Milan, G. S., & Reginato, C. E. R. (2011). Fatores críticos para o sucesso no desempenho de novos produtos: um estudo aplicado ao setor moveleiro da Serra Gaúcha. Gestão & Produção, 18(3), 587-602.
Diamantopoulos, A. (2005). Determinação de preços. In: M. Baker (org.), Administração de marketing, Rio de Janeiro: Elsevier
Füreder, R., Maier, Y., & Yaramova, A. (2014). Value-based pricing in Austrian médium-sized companies. Strategic Management, 19(10), 13-19.
Ghasemizad, Alireza. (2013). Study of the Relationship between Teachers and Principals’ Spiritual Leadership, Quality of Work Life, Job Satisfaction and Productivity. American Journal of Scientific Research. .
Grant, Robert M., (1991) "The resource-based theory of competitive advantage: implications for strategy formulation" from California Management Review 33 (3) pp.114-135, Berkeley, Calif.: University of California
Haas MR. Hansen MT, 2001. Competing for attention in knowledge markets: Electronic document dissemination in a management consulting company. Administrative Science Quarterly, 46: 1-28.
Heil, O.P., K. Helsen (2001). Toward an Understanding of Price Wars: Their Nature and How They Erupt. International Journal of Research in Marketing, 18 (1-2), 83-98.
Hingley, M. (2005a). Power imbalance in UK agri-food supply channels: Learning to live with the supermarkets? Journal of Marketing Management, 21 (1), 63-88. DOI: 10.1362/0267257053166758.
Hingley, M. (2005b). Power to all our friends? Living with imbalance in supplier–retailer relationships. Industrial Marketing Management, 34 (8), 848 – 858. DOI: 10.1016/j.indmarman.2005.03.008.
Howard, F. and James, M. (2013).The Effect of Decision Context on Perceived Risk in Pricing Strategies: how managers view uncontrollable environmental forces. Journal of Product & Brand Management, 22(1), 79-86.
Ingenbleek, P., Debruyne, M., Frambach, R. T., & Verhallen, T. M. (2003). Successful new product pricing strategies: A contingency approach. Marketing Letters, 14(4), 289-305.
Ingenbleek, P., Frambach, R. T., & Verhallen, T. M. (2010). The role of value informed pricing in market oriented product innovation management. Journal of Product Innovation Management, 27(7), 1032-1046.
Joachim, H. (2008).Outlook on the global cement and clinker trade.One Stone Consulting Group GmbH, Buxtehude, Germany
Juran, J. M., & De Feo, J. (2010). Juran's quality handbook: The complete guide to performance excellence (6th ed.). New York: McGraw-Hill.
Kinyua, N., W., (2007) Strategic responses by the cement manufacturing companies in Kenya. Unpublished MBA Project, University of Nairobi.
Kostis, I. and George, A. (2011). New industrial service pricing strategies and their antecedents: empirical evidence from two industrial sectors. Journal of Business & Industrial Marketing, 26(1), 26-33.
Krejcie, R.V. & Morgan, D.W. (1970). Determining sample size for research activities. Educational and Psychological Measurement, 30, 607-610
Lee, K. C., S. Lee and I. W. Kang (2001), KMPI: Measuring knowledge management performance. Information & Management, Volume 42, No. 3, pp. 469-482. http://dx.doi.org/10.1016/j.im.2004.02.003
Liozu, S. M. (2013). Pricing capabilities and firm performance: A socio-technical framework for the adoption of pricing as a transformational innovation. (Electronic Project or Dissertation). Retrieved from https://etd.ohiolink.edu/
Liozu, S. M., & Hinterhuber, A. (2012). Industrial product pricing: A value-based approach. Journal of Business Strategy, 33(4), 28-39.
Liozu, S. M., & Hinterhuber, A. (2013). Pricing orientation, pricing capabilities, and firm performance. Management Decision, 51(3), 594-614.
Liozu, S., Boland, R., Hinterhuber, A., & Perelli, S. (2011). Industrial pricing orientation: The organizational transformation to value-based pricing. Paper presented at First International Conference on Engaged Management Scholarship, June 2, 2011. Available at SSRN: http://ssrn.com/abstract=1839838
Lu, W. (2006). A system for assessing and communicating contractors' competitiveness. Doctoral dissertation, The Hong Kong Polytechnic University, China
Mata, F. J., Fuerst, W. L., and Barney, J. B. Information Technology and Sustained Competitive Advantage: A Resource-Based Analysis,“ MIS Quarterly (19:4), 1995, pp. 487-505.
Milan, G. S., De Toni, D., Larentis, F., & Gava, A. M. (2013). Relação entre estratégias de preços e de custeio. Revista de Ciência da Administração, 15(36), 229-244.
Nagle, T., & Holden, R. K. (2003). Estratégias e táticas de preços: um guia para as decisões lucrativas. São Paulo: Prentice Hall.
Paul, T., Ivo A. and van, L. (2013).Relating price strategies and price-setting practices. European Journal of Marketing, 47 (1/2), 27-48.
Payne, A., & Frow, P. (2014). Developing superior value propositions: A strategic marketing imperative. Journal of Service Management, 25(2), 213-227.
Seboru S. W., 2013. Environmental Challenges Affecting Performance Of the Cement industry In Kenya - A Case Of East African Portland Cement (Unpublished project from Kenyatta University.)
Sekaran, U. and Bougie, R. (2013) Research Methods for Business: A Skill-Building Approach. 6th Edition, Wiley, New York.
Simon, H. (1992). Pricing opportunities - and how to exploit them. Sloan Management Review, 33(2), 55.
Simon, H., Bilstein, F. R., & Luby, Frank. (2008). Gerenciar para o lucro, não para a participação de mercado. Porto Alegre: Bookman.
Sirmon, D.G., Hitt, M.A. & Ireland, R.D. (2003). Managing firm resources in dynamic environments to create value: looking inside the black box. Academy of Management Review, 32(1), 273-292
Slater, S.F. & Olson, E.M. (2001). “Marketing’s Contribution to the Implementation of Business Strategy: An Empirical Analysis”, Strategic Management Journal, 22 (11): 1055-1067
Spyros, E., George, N. and Nikos, T. (2012). Wholesale provision of broadband services: alternative pricing strategies and associated policies. info, 14(3),16-34.
Spyros, E., George, N. and Nikos, T. (2012). Wholesale provision of broadband services: alternative pricing strategies and associated policies. info, 14(3): 16 – 34.
Teece, D. J., Pisano G. and Schuen A. (1997). Dynamic capabilities and strategic management. Strategic Management Journal, 18 (7), 509-533.
Turocy, T. & von Stengel, B., 2001. Game Theory. London: Academic Press, London School of Economics.
Urdan, A. T., & Osaku, W. A. A. (2005). Determinantes do sucesso de novos produtos: um estudo de empresas estrangeiras no Brasil. Anais do Encontro da Associação Nacional do Programas de Pós-Graduação em Administração. pp. 29. Brasil: Brasília, DF
DOI: http://dx.doi.org/10.61426/sjbcm.v5i2.731
Refbacks
- There are currently no refbacks.
This work is licensed under a Creative Commons Attribution 3.0 License.
PAST ISSUES:
This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License.