Influence of Pricing Strategies on Growth of Small and Medium Enterprises in Imenti North Sub-County, Kenya

Abstract

SMEs should supply goods and services to clients in both wholesale and retail perspectives with considerations to the targeted clients. Nevertheless, Kenyan SMEs have been facing poor market access particularly on their exports due to low quality of products and services that have volatile extortionate prices. The general objective was to determine the influence of pricing strategies on growth of SMEs in Imenti North Sub-County, Kenya. The specific objectives were to examine the influence of value-based pricing, competition-based pricing, cost-plus pricing and dynamic pricing on growth of SMEs in Imenti North Sub- County, Kenya. The theories of the study were marketing mix theory, competitive signaling theory and theory of pricing. Further on, descriptive research design was used in data collection from 25 SMEs. The target respondents were 58 managers and 234 officers in marketing, procurement, and finance who answered questionnaires. The study adopted simple random method so as to identify the sample size of 31 managers and 71 officers who were interviewed and answered the questionnaires respectively. The piloting of the questionnaires was conducted at Fairlymatt supermarket and Happy foods farms limited in Imenti South Sub-County, Meru County. Thereafter, the study measured reliability through Cronbach alpha. Face, content and criterion validity were also examined. In addition, the study conducted descriptive statistics and inferential statistics. Thereafter, the study presented the findings using tables and explanation. The study found out that value-based pricing, competition-based pricing, cost-plus pricing and dynamic pricing had a positive influence on growth of SMEs. On value-based pricing, the study concluded that there was a short turn-around time taken to address pricing complaints. On competition-based pricing, SMEs had trained their staff on negotiation skills to counter the competitive market prices through provision of diverse quality and brands of products. On cost-plus pricing, decisions related to strategies of pricing were well informed, articulated and took into consideration the cost and profit margins of the SMEs. On dynamic pricing, there was an improvement of sales on national holidays due to adjustment of prices. The recommendations on value-based pricing are that there should be policy framework establishment to expose staff into pricing determining processes. On competition-based pricing, the management should diversify into various products and services to promote differentiation of prices. On cost-plus pricing, the management should set frequent training programs on pricing. On dynamic pricing, SMEs management should ensure that they also take advantage of international holidays for consistent sales.