Women Entrepreneurs In Coimbatore City An Analysis Of Pricing Strategy

Transcription

1 Volume 3 Issue 2 October 2015 ISSN: International Journal of Informative & Futuristic Research Women Entrepreneurs In Coimbatore Paper ID IJIFR/ V3/ E2/ 034 Page No Research Area Commerce Index Terms Pricing Strategy, Demand, Pricing Methods, Multistage Sampling Techniques 1 st Dr. S.Sujatha 2 nd Dr. N. Yesodha Devi Assistant Professor Department of B. Com (CA) & M. Com PSGR Krishnammal College for women Peelamedu- Coimbatore Secretary PSGR Krishnammal College for women Peelamedu- Coimbatore Abstract Pricing strategy is an important element of a product marketing campaign, since pricing strategy directly impacts the amount of profit made in business. It seems to have a desire of empirical knowledge on pricing strategy of women entrepreneurs in Coimbatore city. Multistage sampling techniques have been employed in the selection of 300 women entrepreneurs engaged in service and manufacturing sector. Data were collected primarily using interview schedule. Data were analysed using percentage analysis, Kendall s coefficient of concordance (W), Descriptive analysis and chi-square analysis. The result reveals that demand based pricing method is followed to fix the price of the product and review the price of the product/ service at least once in a year. Demand plays a significant role in fixing the price and change of price for the product/service. 1. Introduction Pricing strategy is an important element of a product marketing campaign. More than any other element, pricing strategy directly impacts the amount of profit made in business. Price is the consideration in terms of money paid by consumers for the bundle of benefits he/she derives by using the product/ service. In simple terms, it is the exchange value of goods and services in terms of money. Pricing (determination of price to be charged) is another important element of marketing mix and it plays a crucial role in the success of a product in the market. If the price fixed is high, it is likely to have an adverse effect on the sales volume. If, on the other hand, it is too low, it will adversely affect the profitability. Hence, it has to be fixed after taking various aspects like cost, Available online through - Accepted After Review On: October 20, 2015 Published On: October 25,

2 demand, competition, marketing objectives and government regulation into consideration. Pricing strategy that helps to meet the sales objectives enhances reputation and provides the best profit point for the market demand. Before fixing the price market conditions have to be analysed and accordingly particular method of fixing the price have to be chosen. The various methods of fixing the price can be broadly divided into 5 categories namely, Competition based pricing, Customary pricing, Demand based pricing, Discount pricing and Geographic pricing. Women entrepreneurs follow any one of the pricing method to fix the price of the product/service. 2. Objective Of The Study To analyse the pricing strategy of women entrepreneurs 3. Methodology Of The Study The present study has been taken up in the Coimbatore city, in the state of Tamilnadu. Both primary and secondary data have been used for this study. Random sampling technique is used in this study. An interview schedule was used to collect data from 300 respondents. The study was conducted from December 2014 to February Review Of Literature Hannah and Henry (2013) have assessed the effects of entrepreneurial marketing practices on the growth of hair salons: in Kiambu Township. The main objective of the study was to find how the owners were marketing for the growth of the hair styles. Simple random sampling method was used to collect data from 30 hair salons and clients in every salon. It was found that the outcome on relationship shows that the hair salon owners create relationship marketing with the client and they realised that there is growth in their salons. The owners are able to create customers satisfaction through giving quality services which leads to growth of hair salon. It is observed that there is a relationship between the entrepreneurial marketing practices and the growth of their hair salons. It is also found that those who used entrepreneurial marketing indicated some level of growth and those who practice relationship marketing indicated that the growth was either excellent or very good. It is suggested that there is need of a comprehensive training for the SME owners on entrepreneurship traits among them and this will help them to compete effectively among themselves. Aremu et al. (2012) has examined the marketing mix practices as a determinant of entrepreneurial business performance. The investigation was based on primary data that were obtained from entrepreneurs spread across three local governments in Kawarastata, Nigeria which comprised of Ilorin West, Offer and Irepodun local governments with 50 respondents from each of the above local governments. The responses obtained from the questionnaire were evaluated using chi-square statistics at 5% level of satisfaction. The result revealed that there is a significant relationship between the entrepreneur business performance and sales volume/profit, but there is no significant relationship between entrepreneur business performance and market share. Results revealed a significant relationship between entrepreneur performance and return on investment. The study concludes that marketing mix has direct relationship with performance of entrepreneurial business. The purpose of the study by Raj Kumar (2011) was to know the pricing strategies of small business units in Punjab. The primary data has been collected using a structured and pre-tested questionnaire. The sample comprising of 173 units included 43 textiles units, 46 bicycle and 471

3 bicycle part units, 43 food products and beverages units and 41 leather and leather product units. Results revealed that a large majority of the units have been following competition based cost plus method of pricing. It has been observed that majority of the industries follow variable pricing policy and less number of units follows fixed pricing policy. With respect to review of pricing strategies majority of the units relating to all the industries review their pricing policies as and when required. It is suggested that the prices of products should match to the quality of product, demand conditions and competition in the market. 5. Analysis And Interpretation 5.1 Pricing Policy Table 1 shows the respondents pricing profile such as pricing policy followed and review of price. To know the distribution of the sample characteristics, percentage analysis is performed. Table 1 - Pricing Profile Factors Description No. Per Cent Competition Based price Customary pricing Pricing Policy followed Demand Based Price Discount Pricing Geographic Pricing Once in a Year Years Review of Prices After 5 years Source: Primary Data As and when required Any Other TOTAL Pricing Policy: It is observed from the above table that 35 per cent of the respondents follow demand based price, followed by 26.7 per cent of them who adopt competition based price. Customary pricing is followed by 25.7 per cent of the respondents, 6.7 per cent of the respondents follow geographic pricing and 6 per cent of them follow discount pricing. Thus it is inferred that most of the respondents follow demand based pricing. As the demand for the product/service is high the respondents follow demand based pricing policy. Review of Price: From the above table it is clear that 41.3 per cent of the respondents review the price once in a year, 26.7 per cent of them review the price as and when required, 25.7 per cent of the respondents review the price after 2 years but before 5 years, 4 per cent of the respondents follow any other methods and 2.3 per cent of the respondent review the price only after 5 years. It is inferred that nearly half of the respondents 472

4 review the price once is a year. Hence, there is fluctuation in price of raw materials the respondents review the price once in a year. 5.2 Kendall s Coefficient Of Concordance Kendall s coefficient of concordance (W) is used to find whether there is similarity among the respondents in the order of assigning the ranks for the factors considered in fixing the price. Higher the value of W more is the similarity among the respondents. Kendall s (W) ranges between 0-1. To know for which item more importance is given and to which least. Kendall s coefficient of concordance 1 s used to find whether the respondents agree in their ranking order of items. The mean rank for each item is given in the table 2. Table 2 - Factors Considered in Fixing Price and Influencing Price Change FACTOR REASONS MEAN RANK FIXING PRICE Cost Of Materials 3.37 Consumer Paying Capacity 4.00 Demand 2.70 Competitors Price 3.90 Market Condition 4.06 Profit Maximisation 2.97 Kendall s W.095 FACTOR REASONS MEAN RANK PRICE CHANGE Source: Primary Data Change In Competitors Price 3.56 Demand 2.52 Feedback Of Sales Force 3.90 Feedback Of Dealers / Distributors/Customer 4.25 Reduction / Increase In Operating Cost 3.64 Increase In The Cost Of Materials 3.12 Kendall s W.106 Factors Considered In Fixing Price The mean rank table shows that the highest importance is given to the demand factor (2.70), followed by profit maximization (2.97). The least important item is market condition (4.06). However the order of assigning ranks varies from person to person. Hence Kendall s coefficient of concordance (W) found for the given six items is which shows that there is little similarity among the respondents in assigning ranks for the factors considered in fixing the price. Price Change The mean rank table shows that the highest influence rank is given to demand (2.52), followed by increase in cost of material (3.12). The least rank is given to feedback of dealers/distributors/customers (4.25). However the order of assigning ranks varies from person to person. The Kendall s coefficient valued is which lies between the concordance values, ranges between 0-1. This indicates that there is low similarity among the respondents in assigning the ranks for the factors influencing price change. It is inferred that the order of similarity is same. 473

5 5.3 Opinion Of The Respondents Regarding Factors Affecting Pricing Table 3 gives a brief note on the respondent s opinion on factors considered for pricing. Factors include pricing based on production cost/material, competitors pricing strategy, packaging and periodical review of price. This table is prepared to check the opinion of the respondents regarding factors affecting pricing.descriptive analysis is used to find the mean rating for the opinion on the factors considered for pricing. The rating has been assigned for a set of statements as 5 for strongly agree, 4 for agree, 3 for neutral, 2 for disagree, 1 for strongly disagree. The opinion score is measured by summing up the rating given by the respondents for 4 items on 5 point scale. High score indicates strong agreements to the factors considered in fixing price of the product/service. Table 3 - Factors Affecting Pricing of Product /Service Items N Minimum Maximum Mean S D Pricing for the product/service is based on production /material cost Pricing for the product/service is based on competitor's pricing strategy Packaging should not affect the price of the product Periodical review of pricing is necessary to survive in the market Factors considered in fixing price overall pricing score Source: Primary Data It is inferred from the above table that out of the total 4 statements included in the study shows that the ratings vary between a minimum of 1 to a maximum of 5. The average rating was the highest (4.4800) for pricing of product/service is based on production/ cost material which shows that respondent s level of opinion is highest for this factor. Followed by periodical review of pricing is necessary to survive in the market having a mean score (3.8900). The lowest rating (3.5867) was given to packaging should not affect the price of the product. The standard deviation is low for (0.6411) pricing for the product/service is based on production/material cost, it implies that respondents have highly agreed that based on production and material cost they decide the price of the product/service. From the overall rating indicated in the above table, it is clear that the minimum rating found is and the maximum rating is The average mean rating is found to be Hence it is inferred that the respondent s opinion regarding factors considered in fixing price for product/service, the highest rating has been assigned to pricing based on production/ material cost. 5.4 Business Infrastructure And Pricing Policy Followed Table 4 reveals the relationship between the business infrastructure of the respondents and the pricing policy followed in business. 474

6 H 0 : There is no significant association between the business infrastructure and the pricing policy followed in business. Table 4 - Business Infrastructure and Pricing Policy Source: Primary Data NS Not Significant *- Significance at 1 % level Type of Enterprise: It is observed that irrespective to type of enterprise, both manufacturing and service type of enterprise is using demand based price with regard to pricing policy followed in business. It is found that the calculated value of chi-square is (7.315) less than the table value (9.488) and there is no significant association between the type of enterprise and the pricing policy followed in business. Hence, the null hypothesis is accepted. Capital Investment: table 5.11 reveals that irrespective to the amount of capital invested, It is found that most of the respondents have opted demand based price with regard to the pricing policy followed in the business. Chi-square value is (32.991) more than the table value (31.410) and it is seen that there is a significant association between the amount of capital invested and the pricing policy followed in business. Hence, the null hypothesis is rejected. Annual Turnover: It is inferred that the respondents annual turnover of the business were distributed among pricing policy followed in business. With respect to pricing policy followed in business majority of the respondents are found to have demand based pricing among all the category of annual turnover of the business. The calculated chi-square value is (5.176) less than the table value 475

7 (15.507) indicating that there is no significant association between annual turnover of the business and the pricing policy followed in business. Hence, the null hypothesis is accepted. It is inferred from the above table with regard to total capital investment the respondents follow demand based pricing policy to fix the price of the product/service. 6. Conclusion It is indicated that women entrepreneurs keep updated with the condition of the market through newspapers, magazines, media etc; according to the demand for the product the women entrepreneurs fix the price. They review the price of the product/ service at least once in a year according to the market condition. Demand plays a significant role in fixing the price and change of price for the product/service. It is very important for every women entrepreneur to analyse the cost, demand, competition, marketing objectives and government regulation before fixing the price of a product/service. 7. References [1] Amir Mohammad, Hamid Khodadad, Rosa and Aidin (2011), Developing Entrepreneurial Marketing Mix: Case Study of Entrepreneurial Food Enterprises in Iran. Journal of Knowledge Management, Economics and Information Technology, [2] Aremu, Mukilaayanda and Baniduro, Joseph Adefenu (2012), Marketing Mix Practices as a Determinant of Entrepreneurial Business Performance, International Journal of Business and Management, 7 (1), [3] Carson, Cromie, McGowan, (1995), Marketing and entrepreneurship in SMEs: An innovative approach, Prentice Hall (London and New York), 103. [4] Diane Martin (2009), The Entrepreneurial Marketing Mix, Retrieved on 26 th December, Emerald url: / [5] Grray Kinght (2000), Entrepreneurship and Marketing Strategy, The SME Under Globalization, Journal of International Marketing, 8(2), [6] Hannah Wambui Wangi and Henry Bwisa (2013), The Effects of Entrepreneurial Marketing Practices on the Growth of Hair Salons: A Case Study of Hair Salons in Kiambu Township, International Journal of Academic Research in Business and Social Sciences, 3 (5), [7] Kehindeoladele Joseph (2013), The Effects of Marketing Strategies on Entrepreneurial Development, entrepreneur article doc, retrieved on 29 th April [8] Kolabi (2011), Developing Entrepreneurial Marketing Mix Case Study of Entrepreneurial Food Enterprise in Iran, Journal of Knowledge Management, Economics and Information Technology, 1 (5), [9] Kotler Philip (2003), Marketing Management, 11th. Edition, Prentice Hall. [10] Raj Kumar Gautama (2011), Pricing Strategies of Small Business Units of Punjab, International Journal of Innovation Creativity and Management, 1(1), About Author s 1st. Dr. S. Sujatha is presently working as Assistant Professor in Department of B.Com (CA) & M.Com, PSGR Krishnammal College for women-coimbatore. She is having vast experience in her related field. She has published papers in international journals & attended national / international conferences. She has been awarded with best young teacher Award. 476

8 2 nd. Dr. N. Yesodha Devi Secretary, PSGR Krishnammal College for women Coimbatore. 477