THE EFFECT ON PRICING STRATEGIES IN THE PROCESS OF STRATEGIC DECISION
MAKING IN VIEW OF COST OF PRODUCED GOODS
Syed
Mohammad Faisal
Jazan
University, Saudi Arabia
E-mail: dfaisal@jazanu.edu.sa
Ahmad
Khalid Khan
Jazan
University, Saudi Arabia
E-mail: drahmadkhalidkhan@gmail.com
Submission: 9/9/2020
Revision: 9/25/2020
Accept: 10/13/2020
ABSTRACT
This
research examined the effect of the cost of produced goods on pricing
strategies in the process of strategic decision. Also examined in this research
is the extended effect of pricing strategies on consumers purchase decision
making. The research aimed to answer questions on the extent to which cost of
produced goods affects pricing strategies of products, how decision makers
realize the value-based pricing strategy of corporations and the extent to
which pricing policy help consumers to make purchase decisions. This research
being historical and descriptive depended basically on secondary sources of
information. The research used a historical and descriptive method and depended
basically and simply on secondary devices as sources of data. Results from the
data acquired reference that customers have an understanding of fair value
reflected in prices of the firm's
products. The researcher will use both analytical and descriptive methods which
appropriate the context of the current research which is generally based on the
theoretical underpinnings and fieldwork. The outcomes indicate that the cost of
produced products used in organizations provides quality information; there is
an effect of this information on the pricing decision-making; there are parts
in which pricing strategy much relied on the information provided by the cost
systems.
Keywords: Product; Pricing; Strategy; Decision Making;
Consumers
1.
INTRODUCTION
The
customers use to identify the prices way which is valued and perceived due to
the impact of purchasing decisions by customers(Dong, Jiang & Jiao,
2017).It has been noticed in different studies including (Constantinides,
2006)that the price is one of the most significant factors when customer make a
purchase decision. Moreover, this purchase decision when any product is
purchased on a frequent basis impact on brand and product directly. Similarly,
for the company, it is necessary to select proper pricing strategy that is
objective and linked with the strategy and play an important function for the
concerning business in an integral format and help in process of planning
respectively(Dutta, Zbaracki & Bergen, 2003).
According
to Constantinides (2002) it is necessary for the company and marketer to
calculate the cost of production of the product and also add the concerning
markup. When the customers perception is not properly understand by any company
and pricing strategy is utilized it impact directly on the product cost and
demand of the products usually decrease.
Coughlan(2014)
Examined that the business need to fill products by giving them appropriate
cost by using wide range of pricing strategies that use to help and support
them to give tough competition in the marketplace. For bringing any kind of
change, the company needs technology to be adopted in the environment for
handling challenges by giving adequate prices strategies (Erickson &
Johansson, 1985).
1.1.
Limitation of the
study:
For
this research study, the researcher is working productively for formulating the
study in an adequate way. Moreover, the researcher will collect the data from
respondents that will be presented in the Danube Super market, Hyper Panda
Retail Company, and Al Raya and making decisions for purchasing products. There
will some limitations of this study also presented that include:
·
The researcher conducted the current
research study in Saudi Arab in Jazan region. Moreover, due to limited time he
not considered other cities so the sample size is also small.
·
Due to scarce means only one city is
considered.
·
The questionnaire is in English but most
of the customers are Arabic so next time properly translated questionnaire must
be considered.
1.2.
Research questions:
Following are the research questions
presented in which the research is based:
·
Determine the effect of the cost of
produced products on pricing strategies.
·
Identify the challenges faced by companies
in adopting pricing strategies.
·
Examine the impact of pricing strategies
based on the consumer to take decision for purchasing products.
Following are the hypotheses
presented in which the overall research is based:
·
There is a direct effect of the cost of
produced products on pricing strategies.
·
There is an effect of the cost of products
based on pricing in process of strategic decision.
·
There is a positive effect of value-based
pricing strategy in the process of strategic decision.
·
There is a direct relationship presented
in between produced products and consumers purchasing power in the market.
·
The pricing strategies possess direct and
positive effect on the process of strategic decision making.
The research has elaborated about
the pricing strategy of how the organizations develop strategies related to
pricing. There are many types of
research regarding the pricing strategies how the prices could be set to get
the prime pricing structure for the products despite their costs (Anderson,
2010).
Product pricing is the part of the
marketing mix and it will affect how the product is positioned in the market.
It must consider that pricing will be the combination of fixed and variables
cost of the products and effort that is put in the making of the product
(Bakker, 2006). It will also include competitions, buying the power of target
groups, their willingness to buy the product etc. When the pricing is set it should be kept in
mind that organizational goal of targeting financials. Pricing should be rational
and it must be according to the marketing mix (Hendrick, 2007).
Many of the organizations use
different pricing strategies as per their organization norms. Organizations
must follow some strategy which should be according to some steps (Herlin,
2011). Researchers have shown that the start of the strategy setting must be
market analysis, positioning the product, targeting the audience, product
segmentation. Studies suggested that the strategy must have to determine all
aspects of the marketing mix (Khoja, 2015).
Developing a strategy for marketing
is important and the first step is to develop a marketing strategy for product
and service. Researches show that this
is the point when the organization has to decide on targeting the market and
positioning the product (Kovács, 2011). As per research, this state will help
to define how the product will going to be sold and it will be set as an
example for setting pricing for other items as well (Kovács, 2011).
The second step will be based on
identifying a marketing mix that can involve defining the product,
distribution, and supply of the product and promotion of the product (Meena,
2011). It is important to determine that pricing is based on the distribution channel
of the product and along with that the promotion of the product (Merkx, 2012).
As per research, it can be defined
as setting the price of the product as high as to make it rear to be available
for the customers (Nollet, 2005). Thirds step of the process is actually
realizing the demand curve that will determine how the price of the product
will have an impact on their demand (Pazirandeh, 2012).
Researches show that there is a
significant relationship between price and demand in the quantity of the
product. This is why the demand curve is important to form and analysis for
pricing strategy (Pfeffer, 2003). The first step of this will be setting out
the standards of setting the pricing and how I will affect the demand of the
product. Researchers say that when the
same types of products are available in the market so it will be easier to set
the price and also how to analyze the demand curve (Anderson, 2010). It will also help to analyze the price
elastic of the product or services.
The fourth step will focus on
identifying the cost of the products; it will help them to identify fix cost
and variable cost (Ross, 2003). As per
research, it is said that when marketers set the price of the product is must
also know that hat is the cost involved in it. This kind of cost is referred to
as unit cost. This cost identification
is used to reach the breakeven point.
When the price is set higher than unit cost it will show the margin
(Rozemeijer, 2000).
These strategies will help to
identify the pricing strategy of the product. The fifth stage will be the
analysis of the environmental factors, in this responses of the customers and
the competitors will be analyzed (Schotanus, 2005). In this step, the legal aspects of a product
launch or its consequences to launch will be identified. This will help to
overcome the discernment over the price (Schotanus, 2007). Researches show that
it will help them to identify how higher the prices can go as per law and how
early the organization can reach the breakeven point as breakeven point.
Abiding the law is a very important factor to sustain in the market (Schotanus,
2008).
The sixth step will help to define
the pricing objectives (Schultz, 2008). There are many different types or
pricing strategy that will help to set the prices such as profit maximization,
revenue maximization, maximize the
profit margin, increase the quantity,
differentiation of the price, survival pricing, partial cost recovery (Taylor,
2009). Profit maximization pricing strategy is the type of strategy that will
help the organization to set a price which will help them maximize the profit
for the organization (Turner, 2000).
Researchers say that most of the
firms opt for profit maximization strategy for their company as a standard
practice. This is the type of strategy that is mostly used by most of the
organization in a competitive market (Yin, 2003). Researches elaborated that
this will help them to analyze the factors and variables that the company is
doing for the variables. This concept will run and accepted when the
organization strives to achieve the expectation of the stakeholders (Aaker,
2008). Profit maximization pricing strategy will help the firm to get to know
about price factors and association costs.
Pricing strategy also has revenue
maximization as a strategy for setting the prices (Akindele, 2016). Revenue
maximization involves around marketing strategy that mostly revolves around the
theme of arising the theme of how the revenues and sales can be maximized
(Coughlan, 2014). A pricing strategy that can deal with the cost factor of the
product and this will also effect on customer purchase power of the product
(Herbes, Braun& Rube, 2016).
When the firm strives to develop the
revenue maximization strategy focus must be developed on its distribution and
supply chain (Farese, 2010). Distribution of the product to the certain place
will also incur the cost and will be added to the final product cost. When the
product is supplied to certain places and cost is high so it will affect the
pricing strategy of the product (Gibbons, 2014).
Researchers suggest that if the
product cost is low so it will be easy to set the price and profit or revenue
maximization will be easier to follow (Burnham, 2003).The profit margin, on the
other hand, deals with how to set create pricing strategy that will help in
getting the desired profit margins (Kelly, 2004). It will also analyze the cost
of the material that is being in the product of the product. The net profit can be calculated after
subtracting all the product related cost (Kotler, 2001).
The profit margins have
representation in the percentages and it will be shown in per unit cost. When the price of any product is set so
strategically per unit profit margin is also been kept separated so that also
help the company to reach the target break even and after that reaching the
profit goals (Mazumdar, 2010). Profit margins of the product can also be
defined in different terms such as gross margins, operating margins (Aaker, 2008).
Price differentiation is another
type of pricing strategy that will focus on competitive strategy. Competitive pricing strategy will focus on
setting the prices in relation to the competitors (Anderson, 2010). Competitive
pricing strategy will have to focus on a pricing strategy that will create a
competitive edge of your prices over the customers.
These types of pricing strategies
will focus on keeping prices low (Bakker, 2006). This type of pricing strategy
generally tends to keep the profit margins low. Researches show that
differentiation pricing strategy will keep the profit and revenue generation at
the lower side and difficult to reach the breakeven target (Burnham, 2003).
As per researchers when the product
is easily available in the market and in easy reach of the customers so by the
prices of the product will become low as the cost of the product will also
reduce (Hendrick, 2007). This will work on demand and supply of the product as
when the supply of the product is in less quantity demand will increase and
prices will be high and when the supply of the product increase it will also
reduce the prices of the product (Herlin, 2011).
Penetrating pricing strategy is the
type of pricing strategy in which the organization focuses on keeping the price
on the lower side. Before setting the price of the product it is important to
analyze the market for a price check. So that prices could be set comparatively
low (Kelly, 2004). As per researchers, this type of marketing mix will focus on
selecting the pricing very carefully.
This type of pricing strategies very
close to the actual price of the product and the profit margins are very low
but consistent (Khoja, 2015). As these
types of products are not much focused on innovative products the product cost
will be comparatively lower side. This will help the company to maintain
sufficient and consistent profits and revenues (Kotler, 2001).
As per the research economy pricing
strategy will work when the organization has lower overhead and over costs
(Merkx, 2012). This lower cost factor will help the organization to sell their
products on comparatively lower price as compared to the others who have higher
overheads. When the overhead is high this will have a significant impact on the
price of the product (Meena, 2011). Overhead of the product will help to keep
the price of the product at the higher side.
When the cost of the product is
analyzed overhead cost will also be included to make the final cost (Kovács,
2011). When the product is set at lower price quality of the product is
maintained to good and it will be an obligation on the customers. Economic
pricing factor will help to survive the company in the bad financial and
economic situations (Rozemeijer, 2000).
Those business units who are opting
for economic pricing strategy for their products have to strive hard to gain
profits as the profit margin in these products are near to none, due to this
fact they are being classified as economic pricing strategy and will help to
maintain overall market presence by keeping the cost factor in mind along with
consumer buying power (Yin, 2003).
Premium pricing strategy means
charging a premium price for any product or service as compared to the actual
cost of the product. In premium pricing, strategy profit margins of the
products are higher side. (Turner, 2000).
This type of product or service will help the organization to gain
higher profit margins and higher revenue gain in the overall sense (Taylor,
2009).
The companies who are opting premium
pricing are mostly that product that is considered luxury items and not the
consumer products (Schultz, 2008). These types of products are mostly targeted
to the elite class and to those who have purchasing power for the product.
Brand image that the company made on the mind of the customers are priceless
and with the help of that brand, image customers are able to pay for that extra
price of the product and service (Schotanus, 2005).
Premium pricing is also referred to
as prestige pricing. Premium pricing strategy will act as a competitive
advantage of the product and service and will help the company to maintain its
position in the market as an elite product. Premium pricing strategy will help
the company to maintain its own visibility in the market and in the shares
(Aaker, 2008).
As there is a separate demand for
premium priced products and its target market is totally different. As per
different authors, it can be proved that it has improved profits margins as the
pricing that is set for the product is comparatively on the higher side as
compared to the normal pricing of the product (Schotanus, 2005).
The disadvantage is its marketing as
the premium priced product are only targeting upper social class and hence the
marketing and targeting must also be of the kind that only targets elite class
to gain the effective marketing response rate (Rozemeijer, 2000). The customers
of the premium pricing strategy are limited in number as the elite class is the
only target market.
Value-based pricing strategy is the
type of pricing strategy which will help to charge the price of the product
based on its value hat is in the mind of the customers about the product or
service (Ross, 2003). The value creation in the mind of the customer is with
the help of the positioning technique. Positioning is the perception of the
product or service in the mind of the customer and this is where the value of
the product or service is created (Akindele, 2016).
Value-based pricing is the type of
pricing strategy that can charge for the extra value that customers pay for
product loyalty. Value-based pricing is very difficult to handle as it can have
many other implications. It is very difficult to build a mindset of the person
about any product or service (Turner, 2000).
It takes an extra effort to position
a brand in customers mind and make its perception in their mind and thought so
strongly that they pay an extra amount of their perception. It will take a lot
of effort and time that the company invests in making the customers loyal of
their specific product and they need pay for that the extra amount in the name
of value-added pricing (Taylor, 2009).
There are many types of cost that
are linked with the product cost and will be part of the cost of finished
goods. These costs are direct labor, direct material, and overhead (Hendrick,
2007). Direct labor is the cost of the labor that is working directly on the
product on the production side of the product. These labors are involved
directly in the production side and are working with the other labor directly
for the product (Meena, 2011).
The overhead cost that is incurred
on the production of certain goods will also be part of the cost of the final
product and it will affect the buying power of the product. When the cost of a
product is high customer buying power will decrease (Bakker, 2006). Developing
a strategy for marketing is important and the first step is to develop a
marketing strategy for product and service (Hendrick, 2007).
Researches show that this is the
point when the organization has to decide on targeting the market and
positioning the product. As per research, this state will help to define how
the product will going to be sold and it will be set as an example for setting
pricing for other items as well. When the currency of our country becomes
devalue against the dollar the purchasing power of the customer decrease
(Turner, 2000).
On the other hand, if the currency
of our country is appreciated against the dollar purchasing power of the
customer will increase. It is said that
prices of consumer goods cannot be increased drastically due to the higher
demand and it will affect the purchasing power of the customer a lot. It is
mostly related to value-added product as per some researches (Merkx, 2012).
Purchasing power is defined as strength of the customer to buy any product or
service (Mazumdar, 2010).
It is the very crucial and important
determinant of the economy as it will show how weakly the economy is and how
wealthy are the people who are living in the nation. Cost of living is also a
very important factor to measure the purchasing power of the customers as
higher cost of living will be negatively linked with the purchasing power of
the customers (Kovács, 2011). There are many different factors that will impact
the purchasing power of the customer from one aspect or the other that is
defined below (Aaker, 2008).
Prices of the product or service are
very important to identify customer buying power in society. When the prices
are higher that will be more chances that buying the power of the customers is
low (Mazumdar, 2010). Researchers show that those organization who set their
prices low there will be many people who can buy their product easily
(Hendrick, 2007).
The pricing strategy has a
significant impact on customer buying power of the product. When the economy is
not flourishing and the cost of the living is high, the purchasing power of the
customer will become low (Mazumdar, 2010). On the other hand, it is also
elaborate that those people who are living in elite areas but their income does
not increase so the purchasing power of the customer will decrease.
Research of Kovács (2011) says that
cost of carrying the product will also have an impact on its cost and will
ultimately affect the cost of the product and purchasing of the product
(Anderson, 2010). The cost of final goodwill undertakes the cost of the
warehouse where the final product is kept of the final distribution. Work of
(Farese, 2010) says that developing a strategy for marketing is important and
the first step is to develop a marketing strategy for product and service
(Hendrick,2007). Researches show that
this is the point when the organization has to decide on targeting the market
and positioning the product.
Research of (Hendrick, 2007)
elaborates that there is a significant link of inflation and purchasing power
of the customer is shown in the studies (Anderson, 2010). Researchers have
shown that there is a direct relationship between inflation and the purchasing
power of the customer. Research of Coughlan (2014) elaborated that there is no
impact of supply and demand curve on the purchasing power of the customer and
these are only dependent on the inflation and income while some of the sources
have added that these are significantly linked with each other and have
stronger relationships (Gibbons, 2014).
Developing a strategy for marketing
is important and the first step is to develop a marketing strategy for product
and service. Researches show that this
is the point when the organization has to decide on targeting the market and
positioning the product (Kovács, 2011). As per research, this state will help
to define how the product will going to be sold and it will be set as an
example for setting pricing for other items as well (Kovács, 2011).
Figure 2: Framework
3.1.
Population and Sample
Size
In statistics, the concept of
population is known as the involvement of the general public belong to the same
group, community or society. The term population is always referred to data
collection from human beings. In this investigation, a total number of
populations are 300 respondents. Simple random sampling methods are used for
data collection. This simple random sampling method is work according to
non-probability random sampling methods.
The limit of sample size is not more
than 150 respondents that are directly and indirectly linked with respect to
the effect of the cost of produced products on pricing strategies in the
process of strategic decision making. Preferred Retail Store is in the area of
Danube, Hyper Panda Retail Company and Al-Raya super market.
3.2.
Data Collection
Technique
In this investigation, there are two
kinds of data collection technique is used for completing this study. These
data collection techniques are in practices of primary source and secondary
source. In according to primary sources researcher work through using
questionnaire technique. This questionnaire technique is used for the further
proceeding of the investigation. This investigation is in the form for data
collection and practically applies various statistical tests.
This questionnaire is divided into
two key components. These key components are demographic information about
users and another component is based on research variables. All questions are closed ended in the situation
and using a Likert scale for processing. A secondary source of information is
associated with past and similar literature, model and related theories that
are helpful for design framework model and determining the effect of the the
cost of produced products on pricing strategies in the process of strategic
decision making.
Table 1: Reliability Statistics
|
Reliability
Statistics |
|
|
Cronbach's
Alpha |
No.
of Items |
|
0.772 |
20 |
The outcome of reliability
statistics is composed of two key components. This key component is in
practices of the worth of Cronbach’s Alpha and n of items. The outcome shows
that in this investigation N of items are 20 and having the value of Cronbach’s
Alpha is .772, that is considered as good for further practically apply various
statistical tests. These statistical tests are related to correlation analysis
and multiple regression analysis models.
3.3.
Data analysis,
Results and Interpretation
This data analysis, results and
interpretation chapter is composed of three statistical tests. These
statistical tests are in practices of demographic information about users. This
demographic information includes gender, age, marital status, occupation and
preferred retail store in the environment. In this investigation, researcher
practically appliescorrelation analysis for testing of proposed research
hypotheses derived through theoretical framework model of the study and also
use of multiple regression analysis models to the known current worth of
variables in this investigation. Some of the important statistical tests are
presented in the form of a table are assumed below:
Some of the important demographic
information related to examining the effect of the cost of produced products on
pricing strategies in the process of strategic decision making is assumed
below:
Figure 3: Gender vs. Frequency
Table 2: Gender
|
|
Frequency |
Percent |
Valid
Percent |
Cumulative
Percent |
|
|
Valid |
Male |
83 |
55.3 |
55.3 |
55.3 |
|
Female |
67 |
44.7 |
44.7 |
100.0 |
|
|
Total |
150 |
100.0 |
100.0 |
|
|
This gender information plays
important demographic information in this investigation. This gender component
is divided into two parts. The first part is about male and another part is
female. In according to the outcome demonstrated that male having a percentage
of 55.3% and female having a percentage of 44.7% helpful for conduction of this
investigation. The ratio of the male is higher instead of female. It wasbeen
observed that the response of male is more affecting of cost with respect to
produced products on pricing strategies in the area of the process of strategic
decision making instead of females.
Figure 4: Age vs. frequency
Table 3: Age
|
|
Frequency |
Percent |
Valid
Percent |
Cumulative
Percent |
|
|
Valid |
10-16
years |
13 |
8.7 |
8.7 |
8.7 |
|
17-25
years |
50 |
33.3 |
33.3 |
42.0 |
|
|
26-34
years |
44 |
29.3 |
29.3 |
71.3 |
|
|
35-44
years |
27 |
18.0 |
18.0 |
89.3 |
|
|
45
or above |
16 |
10.7 |
10.7 |
100.0 |
|
|
Total |
150 |
100.0 |
100.0 |
|
|
This age information is associated
with respondents. In this investigation, respondents are having ages such as
10-16 years, 17-25 years, 26-34 years, 35-44 years and 45 and above years. The
outcome demonstrated that respondent age is in between 10-16 years having
percentage of 8.7%, respondent age is in between 17-25 years having a
percentage of 33.3%, respondent age is in between 26-34 years having percentage
of 29.3%, respondent age is in between 35-44 years having a percentage of 18%,
and respondent age is in between 45 or above years having percentage of 10.7%,
obliging tools for conduction of this investigations.
Figure 5: Marital status vs. Frequency
Table 4: Marital Status
|
|
Frequency |
Percent |
Valid
Percent |
Cumulative
Percent |
|
|
Valid |
Single |
43 |
28.7 |
28.7 |
28.7 |
|
Married |
107 |
71.3 |
71.3 |
100.0 |
|
|
Total |
150 |
100.0 |
100.0 |
|
|
This marital status information
plays important demographic information in this investigation. This marital
status component is divided into two parts. The first part is about the single
and another part is married. In according to the outcome demonstrated that
single having a percentage of 28.7% and married having a percentage of 71.3%
helpful for conduction of this investigation. The ratio of married is higher
instead of single. It wasbeen observed that the response of married is more
affecting of cost with respect to produced products on pricing strategies in
the area of the process of strategic decision making instead of single
respondents.
Figure 6: Occupation vs. frequency
Table 5: Occupation
|
|
Frequency |
Percent |
Valid
Percent |
Cumulative
Percent |
|
|
Valid |
Jobholder |
23 |
15.3 |
15.3 |
15.3 |
|
Businessman |
40 |
26.7 |
26.7 |
42.0 |
|
|
Housewife |
19 |
12.7 |
12.7 |
54.7 |
|
|
Other |
26 |
17.3 |
17.3 |
72.0 |
|
|
Student |
42 |
28.0 |
28.0 |
100.0 |
|
|
Total |
150 |
100.0 |
100.0 |
|
|
This occupation information is
associated with respondents. In this investigation, respondents are having
occupation such as jobholder, businessman, housewife, other and student. The
outcome demonstrated that respondent occupation is in the area of job holder
having a percentage of 15.3%, respondent occupation is in the area of a
businessman having a percentage of 26.7%, respondent occupation is in the area
of housewife having a percentage of 12.7%, respondent occupation is in the area
of other having percentage of 17.3% and respondent occupation is in the area of
student holder having percentage of 28.0% obliging tools for conduction of this
investigations.
Table 6: Preferred Retail Store
|
|
Frequency |
Percent |
Valid
Percent |
Cumulative
Percent |
|
|
Valid |
Danube |
50 |
33.3 |
33.3 |
33.3 |
|
Hyper
Panda retail company |
50 |
33.3 |
33.3 |
66.7 |
|
|
Al-Raya
super market |
50 |
33.3 |
33.3 |
100.0 |
|
|
Total |
150 |
100.0 |
100.0 |
|
|
This preferred retail store
information is associated with respondents. In this investigation, respondents
are having preferred retail store such as Danube, Hyper Panda Retail Company
and Al-Raya supermarket. The outcome demonstrated that respondent of preferred
retail store is in the area of Danube having a percentage of 33.3%, respondent
preferred retail store is in the area of hyper Panda retail company having
percentage of 33.3%, respondent preferred retail store is in the area of Al-Raya
super market having percentage of 33.3% obliging tools for
conduction of this investigations.
3.5.
Correlation Analysis:
This correlation analysis is used
for testing of suggested hypotheses derived from the theoretical framework
model. The outcome of the correlational analysis is assumed below:
|
Correlations |
||||||
|
|
Cost |
Produced Products |
Pricing Strategy |
Consumer Purchasing Power |
Decision Making |
|
|
Cost |
Pearson
Correlation |
1 |
.215** |
.017 |
.100 |
.210** |
|
Sig. (2-tailed) |
|
.008 |
.000 |
.224 |
.000 |
|
|
N |
150 |
150 |
150 |
150 |
150 |
|
|
Produced Products |
Pearson
Correlation |
.215** |
1 |
.290** |
.217** |
.339** |
|
Sig. (2-tailed) |
.008 |
|
.000 |
.008 |
.000 |
|
|
N |
150 |
150 |
150 |
150 |
150 |
|
|
Pricing Strategy |
Pearson
Correlation |
.017 |
.290** |
1 |
.088 |
.512** |
|
Sig. (2-tailed) |
.838 |
.000 |
|
.285 |
.000 |
|
|
N |
150 |
150 |
150 |
150 |
150 |
|
|
Consumer Purchasing Power |
Pearson
Correlation |
.100 |
.217** |
.088 |
1 |
.167* |
|
Sig. (2-tailed) |
.224 |
.008 |
.285 |
|
.000 |
|
|
N |
150 |
150 |
150 |
150 |
150 |
|
|
Decision Making |
Pearson
Correlation |
.210** |
.339** |
.512** |
.167* |
1 |
|
Sig. (2-tailed) |
.000 |
.000 |
.000 |
.000 |
|
|
|
N |
150 |
150 |
150 |
150 |
150 |
|
|
**. Correlation
is significant at the 0.01 level (2-tailed). *.
Correlation is significant at the 0.05 level (2-tailed). |
||||||
The outcome demonstrated that the
first research hypothesis there is a direct effect of the cost of produced
products on pricing strategies. The correlation value of the cost of produced
products and pricing strategies i-e .210**, level of significance is 0.000.
Second research hypothesis there is
an effect of the cost of products based on pricing in process of strategic
decision. The correlation value of the cost of produced products and pricing
decision making i-e .339**, level of significance is 0.000.
Third research hypothesis there is a
positive effect of value-based pricing strategy in the process of strategic
decision. The correlation value of pricing strategies and decision making i-e
.512**, level of significance is 0.000.
Fourth research hypothesis there is
a direct relationship presented in between produced products and consumers
purchasing power in the market. The correlation value of produced products and
consumer purchasing power i-e .167*, level of significance is 0.000.
Fifth research hypothesis the
pricing strategies possess direct and positive effect on the process of
strategic decision making. The correlation value of pricing strategies in the
process of decision making i-e .512**, level of significance is 0.000. Hence
these all research hypotheses are approved and support framework model of this
investigation.
This ANOVA analysis is derived
through the effective use of multiple regression analysis models. The outcome
of ANOVA analysis is assumed below:
|
ANOVA b |
||||||
|
Model |
Sum of Squares |
df |
Mean Square |
F |
Sig. |
|
|
1 |
Regression |
65.029 |
4 |
16.257 |
6.647 |
.000a |
|
Residual |
354.620 |
145 |
2.446 |
|
|
|
|
Total |
419.648 |
149 |
|
|
|
|
|
a. Predictors:
(Constant), Consumer Purchasing Power, Pricing Strategy, Cost, Produced
Products b.
Dependent Variable: Decision Making |
||||||
In according to the outcome
demonstrate that the key functionality of ANOVA analysis is used to determine
the overall impact of all the independent variables on the dependent variable
by using frequency analysis. The outcome demonstrated that frequency shows the
worth of model i-e 66.47%, shows variance in the model, at the level of
significance is 0.000. The values of regression and residual are evaluated in
terms of the sum of square and df i-e (65.029, 354.620 and 4,145) and mean
square is (16.257 and 2.446). Hence these values are considered as good and
work for the betterment of investigations.
3.7.
Simple Regression
Analysis:
The outcome demonstrated that
coefficients analysis in relations with respect to cost and decision making is
assumed below:
|
Coefficients |
||||||
|
Model |
Unstandardized
Coefficients |
Standardized
Coefficients |
t |
Sig. |
||
|
B |
Std.
Error |
Beta |
||||
|
1 |
(Constant) |
1.164 |
.777 |
|
1.499 |
.000 |
|
Cost |
.227 |
.116 |
.156 |
1.967 |
.000 |
|
|
a. Dependent Variable: Decision Making |
||||||
This coefficient analysis is derived
through multiple regression analysis models. This coefficient analysis is
composed of two key components. These key components are in practices of
unstandardized coefficients and standardized coefficient. In according to the
investigation outcome of standardized coefficients is obliging tools for
finding best predictors from research model through beta value. The worth of
cost is based on beta value i-e .156 at level of significant is .000. Hence
these research predicators are considered as good and helpful for improving
current business network.
3.7.2. Analysis for
Produced Products
The outcome demonstrated that
coefficients analysis in relations with respect to produced products and
decision making is assumed below:
Table 10: Analysis for Produced Products
|
Coefficients |
||||||
|
Model |
Unstandardized
Coefficients |
Standardized
Coefficients |
t |
Sig. |
||
|
B |
Std.
Error |
Beta |
||||
|
1 |
(Constant) |
1.164 |
.777 |
|
1.499 |
.000 |
|
Produced
Products |
.568 |
.158 |
.303 |
3.594 |
.000 |
|
|
a. Dependent Variable: Decision Making |
||||||
In according to the investigation
outcome of standardized coefficients is obliging tools for finding best
predictors from research model through beta value. The worth of produced
products is based on beta value i-e .303 at level of significant is .000. Hence
these research predicators are considered as good and helpful for improving
internal and external current business operations in market.
3.7.3. Analysis for
Pricing Strategy
The outcome demonstrated that
coefficients analysis in relations with respect to pricing strategy and
decision making is assumed below:
Table 11: Analysis for Pricing
Strategy
|
Coefficients |
||||||
|
Model |
Unstandardized
Coefficients |
Standardized
Coefficients |
t |
Sig. |
||
|
B |
Std.
Error |
Beta |
||||
|
1 |
(Constant) |
1.164 |
.777 |
|
1.499 |
.000 |
|
Pricing
Strategy |
.123 |
.117 |
.084 |
1.048 |
.000 |
|
|
a. Dependent Variable: Decision Making |
||||||
The outcome demonstrated that of
standardized coefficients is obliging tools for finding best predictors from
research model through beta value. The worth of pricing strategy is based on
beta value i-e .117 at level of significant is .000. Hence this research
predicator plays an important role for overall improve business operations.
3.7.4. Analysis for
Consumer Purchasing Power
The outcome demonstrated that
coefficients analysis in relations with respect to consumer purchasing power
and decision making is assumed below:
Table 12: Analysis for Consumer
Purchasing Power
|
Coefficients |
||||||
|
Model |
Unstandardized
Coefficients |
Standardized
Coefficients |
t |
Sig. |
||
|
B |
Std.
Error |
Beta |
||||
|
1 |
(Constant) |
1.164 |
.777 |
|
1.499 |
.000 |
|
Consumer
Purchasing Power |
.205 |
.131 |
.124 |
1.562 |
.000 |
|
|
a. Dependent Variable: Decision Making |
||||||
The outcome demonstrated that of
standardized coefficients is obliging tools for finding best predictors from
research model through beta value. The worth of consumer purchasing power is
based on beta value i-e .124 at level of significant is .000. Hence this
research predicator is considered as good and helpful for improving business
operations in market.
For formulating this research study
in an adequate aspect, proper research was conducted. The selected topic of the
research is “The effect of the cost of produced products on pricing strategies
in the process of strategic decision making.” For this research, three
different companies of Saudi Arabia were considered including Danube, Hyper
Panda Retail Company and Al-Raya supermarket respectively.
For this research study, the sample
size was considered as 150 respondents from a total population of 300. Hence,
the research was exploratory in nature. Simple random sampling methods were
used for data collection. Moreover, both primary and secondary data collection
was considered for this research study.
The primary research was based on
the questionnaire that was later uploaded on SPSS to get numerical values and
MS. Excel was also used for making tables respectively. Moreover, the data was
analyzed by focusing on multiple regressing analysis, model summary, ANOVA
analysis, and coefficient analysis. The secondary data was based on past
researches which were taken from online libraries, books, research papers,
journals, websites, and blogs.
It has been noticed from the overall
research that companies need to adopt a proper pricing strategy for their
product or services which they are offering in the marketplace. If the pricing
strategy is properly adopted only then customers could gain attraction and
purchase their products. Hence, forgetting the positive attitude of customers,
the companies need to consider value pricing strategy with the passage of time.
This strategy is one of the best and
productive in nature that supports the company in enhancing sales of companies
like Danube, Hyper Panda Retail Company and Al-Raya. The companies use to do
proper marketing research before adopting any pricing strategy and after
getting results, they could apply any suitable strategy that helps them to gain
a sustainable competitive advantage in a timely perspective.
In addition, there is a direct
effect of the cost of produced products presented on pricing strategies. As the
concerning companies are responsible to give suitable pricing strategy to grab
maximum concentration of customers. Hence, when the cost of products is based
on pricing is productive, and then customers could make a strategic decision in
a positive aspect. The value-based pricing strategy is one of the best and
suitable strategies that support companies in tough time and help customers to
take proper decision for purchasing such product or services.
When the consumers contain proper
purchasing power only then they can purchase any product. This is because the
government taxes on products are controlled properly along with pricing
strategy used by the company for any product. As an outcome, the consumer
purchasing power gets enhanced. The cost of any product when produced is
important and it also playsa vital role. Companies usually face challenges when
they adopt specific pricing strategies. These challenges are handled with the
passage of time by utilizing appropriate pricing strategies and boost customers
to purchase products in repeated aspect.
After the overall research study,
there are few recommendations made. These recommendations are presented below:
·
The companies need to use a proper pricing
strategy for their products or services which is being offered to customers. If
the pricing strategy is adequate, it helps in increasing the purchasing power
of customers.
·
It is recommended to the companies to
perform proper marketing research. This would support them in examining
competitor pricing strategies. Once the pricing strategies are known only then
they can apply them in the company for their own products and services.
·
It is recommended to such companies to
cost the produced products in a productive manner. This is only possible when
they select proper pricing strategy and work to gain a competitive advantage by
sustaining the customers to purchase products in repeated format.
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