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An Investigation of Pricing Strategies used by Supermarkets in Eldoret Town

Author: 
Joseline Kwamboka Metobo
Subject Area: 
Social Sciences and Humanities
Abstract: 

This study was an analysis of the pricing strategies used by supermarkets in Eldoret town. Supermarkets in Eldoret town were began by white settlers. The oldest of the supermarkets that was set up in 1968 was Aziz and Akbar. By the year 2004 the number of supermarkets in Eldoret town had increased to 25. A survey of these supermarkets shows that each one of them has different pricing for the same product that has been supplied by the same supplier. There is need to investigate why these supermarkets are charging different prices for the same product yet they are serving the same market. The objectives of the study are to identify the pricing strategies used by supermarkets in Eldoret town and to establish factors considered in choosing pricing strategies. The study is based on a strategic pricing model by Kotler (2000), which states that any organisation should have a strategic pricing plan to be able to exchange its products or services successfully in the market place. This study was a descriptive research, and it followed a cross-sectional design. The sample population comprising of 25 supermarkets in Eldoret town was targeted. However, only 13 supermarkets’ managers were interviewed. The rest of the managers’ declined to be interviewed. Data was collected by use of questionnaires that were issued to the supermarket managers and by observation. The results of the observation were recorded in a notebook and later analysed together with the results from the questionnaires.The data was quantitatively analysed using the SPSS package and is presented in tables. The research established that most supermarkets in Eldoret town used the ‘one price strategy’ (fixed price) and leader pricing strategies. The other pricing strategies were in use too but at varying degrees. Price lining was the least in use. The study established that the most commonly used pricing strategies were one price, leader pricing, unit pricing and giving discounts to customers. This study recommends that since supermarkets have become a common phenomenon in Kenya in recent years broader based researches can be carried out to assess the growth trends and factors influencing their growth. The study also recommends that since other retail outlets are a threat to supermarkets in Eldoret town a study to establish the application of various pricing strategies by the retailers be carried out.

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