women entrepreneurs in coimbatore city an analysis of ... · dr. s.sujatha, dr. n. yesodha devi::...

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Available online through - http://ijifr.com/searchjournal.aspx Accepted After Review On: October 20, 2015

Published On: October 25, 2015

International Journal of Informative & Futuristic Research

ISSN: 2347-1697 Volume 3 Issue 2 October 2015

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,

Women Entrepreneurs In Coimbatore

City – An Analysis Of Pricing Strategy Paper ID IJIFR/ V3/ E2/ 034 Page No. 470-477 Research Area Commerce

Index Terms Pricing Strategy, Demand, Pricing Methods, Multistage Sampling Techniques

1st Dr. S.Sujatha

Assistant Professor

Department of B. Com (CA) & M. Com

PSGR Krishnammal College for women

Peelamedu- Coimbatore

2nd

Dr. N. Yesodha Devi

Secretary

PSGR Krishnammal College for women

Peelamedu- Coimbatore

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ISSN: 2347-1697 International Journal of Informative & Futuristic Research (IJIFR)

Volume - 3, Issue -2, October 2015 Continuous 26th Edition, Page No.:470-477

Dr. S.Sujatha, Dr. N. Yesodha Devi:: Women Entrepreneurs In Coimbatore City – An Analysis Of Pricing Strategy

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 2015.

4. 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

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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

Pricing Policy followed

Competition Based price 80 26.7

Customary pricing 77 25.7

Demand Based Price 105 35.0

Discount Pricing 18 6.0

Geographic Pricing 20 6.7

Review of Prices

Once in a Year 124 41.3

2-5 Years 77 25.7

After 5 years 7 2.3

As and when required 80 26.7

Any Other 12 4.0

TOTAL 300 100.0

Source: Primary Data

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

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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

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 0.095 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 0.106 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.

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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 300 2.00 5.00 4.4800 .6411

Pricing for the product/Service is based on

competitor's pricing strategy 300 1.00 5.00 3.8267 .9763

Packaging should not affect the price of the

product 300 1.00 5.00 3.5867 .9010

Periodical review of pricing is necessary to

survive in the market 300 2.00 5.00 3.8900 .7788

Factors considered in fixing price overall

pricing score 300 11.00 20.00 15.78 1.81


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 11.00 and the maximum rating is 20.00. The average mean rating is found to be 15.78.

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.

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H0: 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

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(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, 1-17.

[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), 205-213.

[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

26th

December, Emerald url: 10.1108/13522750910 993310.

[5] Grray Kinght (2000), “Entrepreneurship and Marketing Strategy, The SME Under Globalization”,

Journal of International Marketing, 8(2), 12 – 32.

[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), 467-480.

[7] Kehindeoladele Joseph (2013), “The Effects of Marketing Strategies on Entrepreneurial

Development”, www.lonvenantuniversity.edu.ing entrepreneur article doc, retrieved on 29th

April

2013.

[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), 75-91.

[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), 55-68.

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.

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2nd

. Dr. N. Yesodha Devi

Secretary, PSGR Krishnammal College for women

Coimbatore.

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