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Question:
Select a topic that you feel is in need of marketing research – to help you in your choice do secondary research to identify a service which is facing problems or opportunities and, therefore, would benefit from marketing research. Your report should include the following sections:
Title page
Executive summary (include a summary of all sections in bullet points for the busy executive who may not have time to read the whole report)
Table of contents
Report
1. Introduction and problem definition (using the secondary data that you have collected on the topic of your choice, provide some background information on the topic using a company to explain the need for research. Clearly define the problem or opportunity that the company is facing, and identify the objectives and/or hypotheses of your research)
2. Research method and limitations (outline and justify your chosen research method and highlight the limitations of your research design)
3. Research findings (present key primary research findings in relation to your objectives and/or hypotheses)
4. Conclusions and Recommendations (key conclusions and recommendations for managers of the company in relation to your findings)
Appendices (if any)
Criteria for assessing the Marketing Research Report include:
– clarity of argument
– logical structure
– concise executive summary which summarises the key points of the report
– evidence of secondary data that frame the research problem
– clear, interesting and relevant objectives/hypotheses in relation to the research problem
– justification and discussion of chosen research methods in relation to research objectives/hypotheses
– identification of potential research limitations
– interesting primary research findings addressing the research objectives/hypotheses using appropriate quotes, graphs, tables and figures
– interesting and relevant conclusions and recommendations addressing the research objectives/hypotheses
– presentation
– references, both within and at the end of the text, that are accurately cited and presented
– originality and innovation
Marking Scheme
A B C D E/F
Executive Summary
(10% of final mark)
Excellent, clear and concise summary of all sections for the busy executive who may not have time to read the whole report. Very good, fairly clear and concise summary of all sections for the busy executive who may not have time to read the whole report. Some summary points are provided for the busy executive who may not have time to read the whole report, but lack the breadth and depth for the higher grade. Weak summary, not clear and not concise, provided for the busy executive who may not have time to read the whole report.
Very weak summary of the report’s key points. The summary is either missing or it is not eligible for compensation.
1. Introduction and Problem Definition
(20% of final mark)
Excellent, clear and concise background; very focused and convincing justification for the project, supported with several appropriate references. Excellent, clear and concise research objectives and/or research hypotheses. Very good, fairly clear and concise background; convincing justification for the project, supported with some appropriate references. Very good research objectives and/or research hypotheses Some relevant background is provided, some justification for the project, supported with a few references, and some research objectives and/or research hypotheses, but these need to be further refined. Very little background is provided, or has limited relevance to the project, incomplete justification for the project, or obvious flaws in the argument; supported with at least one reference. Weak research objectives and/or research hypotheses. This section is missing, or background and justification are unclear or incoherent; may lack any substantiation with appropriate references. Research objectives and/or research hypotheses are missing.
2. Research Method and Limitations
(20% of final mark)
Excellent – this section clearly outlines and justifies the chosen research design and highlights relevant limitations. The section is supported with several appropriate references. Very good demonstration and justification of the chosen research design and relevant limitations, supported with a few appropriate references. A satisfactory demonstration and justification of the chosen research design and relevant limitations, supported with limited appropriate references. Recognisable but limited demonstration and justification of the chosen research design. May not be supported by relevant references. This section is missing, or is either unclear or incoherent.
3. Research Findings
(20% of final mark)
Excellent. Original and interesting primary research findings that clearly and concisely address the research objectives and/or research hypotheses using appropriate quotes, graphs, tables and figures. Very good primary research findings that address the research objectives and/or research hypotheses using appropriate quotes, graphs, tables and figures. Lacks the critical evaluation and depth for an ‘A’ grade. Satisfactory primary research findings, but the link with the project’s research objectives and/or research hypotheses had to be clearer. Use of a few quotes, graphs, tables and figures. The output lacks the breadth and depth for the higher grade. Some primary research findings are presented, but these are not linked to research objectives and/or research hypotheses. There are limited quotes, tables and figures. Whilst the student is close to a satisfactory grade they fall slightly short on depth and breadth. Very weak or a clear fail. This section is missing, or is either unclear or incoherent.
4. Conclusions and Recommendations
(20% of final mark) Excellent. Original and interesting, clear and detailed conclusions and recommendations in relation to the project’s research objectives and/or hypotheses and relevant research findings. Very good conclusions and recommendations in relation to the project’s research objectives and/or hypotheses and relevant research findings. Lacks the critical evaluation and depth for an ‘A’ grade. Fairly clear conclusions and recommendations. May not clearly relate these to the project’s research objectives and/or hypotheses and relevant research findings. The output lacks the breadth and depth for the higher grade. Weak conclusions and recommendations. These are not clearly linked to the project’s research objectives and/or hypotheses or to relevant research findings. Very weak or a clear fail. This section is missing, or is either unclear or incoherent.
Overall structure and presentation
(10% of final mark)
The project is presented in a professional report format. There is a clear logical flow between the sections, making it very easy to follow the argument. The references, both within and at the end of the text, are accurately cited and presented. Very good demonstration of the aforementioned criteria, but lacks the clarity in structure and presentation required for an ‘A’ grade. The references, both within and at the end of the text, are accurately cited and presented. The project is presented in a satisfactory report format, meeting most of the aforementioned criteria; there may be a few limitations in the logical flow between the sections, making parts of argument less easy to follow. The references, both within and at the end of the text, are accurately cited and presented. The project is presented in adequate report format, meeting some of the aforementioned criteria. There are limitations in the logical flow between the sections, making several parts of argument less easy to follow. The references, both within and at the end of the text, are accurately cited and presented. The project is not presented in an adequate report format and does not meet most or all of the aforementioned criteria; there are serious flaws in terms of its structure and logical flow between the sections, making it difficult to follow. The references both within and/or at the end of the text are missing or inadequately cited and presented.
Grade Descriptor
Overall Grade descriptor Up to 100%
Evidence of a consistently authoritative grasp of concepts, methodology and content appropriate to writing a marketing research report, with evidence of depth and confidence in the understanding of issues underpinning the assessment task. A 70-100 %
A confident level of understanding based on an assured grasp of relevant concepts, methodology and content appropriate to writing a marketing research report. Evidence of significant skill in interpreting complex material articulated with a high level of competence. B 60-69%
A coherent response to the requirements of the assessment task. Evidence of accurate restatement and organisation of relevant concepts, methodology and material appropriate to writing a marketing research report. C 50-59%
Awareness of the requirements of the assessment task. Evidence of reading and organisation of relevant source material and of an attempt to draw relevant conclusions. Evidence of attainment of all learning outcomes described for the task. D 40-49%
The work presented does not show achievement of some (or all) of the learning outcomes described for the task. E/F 0-39%
Answer:
Pricing as a Marketing Strategy in Productivity of Brookside Dairy Company
Executive Summary
- Marketing is important to all companies. Pricing strategy is one of the critical strategies used by firms in setting prices. This study explored best way of maneuvering in dairy market through strategic pricing mechanisms. The study focused on Brookside, a market leader in the Kenyan dairy industry, where the need for a pricing solution was identified for the company to be able to realize its goals.
- Due to the fact that there is no single way of determining pricing, a sequence of steps may be followed in developing the pricing of a product. These steps include developing market strategy by performing market analysis, segmentation, positioning, targeting and promotion, distribution strategies. Good calculation of variable and fixed costs is directly associated with the product being marketed. There is need for a clear evaluation of the likely competitor actions and proper understanding of legal constrains. There is need for pricing objectives to be set strategically during efforts to stabilize prices while at the same time maximizing profits.
- The study also examined the role that a pricing strategy would play at Brookside dairy company. The ideal levels of preference for various pricing strategies are identified and specific solutions for use at Brookside dairy company are sought. Towards this end, a comparison is made between the price strategies of Brookside dairy company and those of dairy companies.
- This report concludes that poor preferences of certain pricing strategies have led inappropriate price setting hence poor market performance. It is therefore recommended that more preference should be put on competitive pricing as a pricing strategy at Brookside dairy company.
Contents
Title: Pricing as a Marketing Strategy in Productivity of Brookside Dairy Company. 1
Effect pricing strategy on supply and demand. 8
Summary of literature review.. 8
Research findings and discussions. 10
The rating of preference of pricing as a marketing strategy at Brookside. 11
Conclusions and recommendations. 12
Introduction
The term dairy marketing is best defined by focusing on the two component words: ‘dairy’ and ‘marketing’. Dairy activities are simply farming methods whereby milk and related products are produced. Marketing, on the other hand, marketing refers to a series of commercial activities and processes aimed at promoting, distributing and selling of the products or services. According to (McDonald 2007, p. 56) the term dairy marketing refers to marketing functions, channels, market integrations and price spread efficiency and cost analysis of dairy products. In common parlance, dairy marketing provides a link between dairy sector and non farm sector.
In Kenya, the dairy industry is highly regulated, and most of these regulations directly alter prices of milk and milk products. For a long time, this regulation has been a major cause of disagreement between players in this sector and the regulators. The issues of contention usually arise because of the actual or the perceived differences in how those regulations affect the prices for dairy products.
The Kenya National Commission on Agriculture clearly defines dairy marketing as a process that starts with an initial decision to produce salable dairy products and involves all dimensions of marketing structure systems, both institutional and functional, based on economic and technical considerations. These considerations include post-harvesting activities, assembling, grading and branding, storage and distribution. (Malhotra 2002, p. 67)
Daily products are characterized by their perishable nature thus making marketing a very crucial activity. This is because of the need for good terms of sales in terms of efficiency and effectiveness. Pricing is a one of the marketing strategies that have an enormous effect on the general productivity at Brookside.
Problem statement
As a marketing strategy, pricing is very important in that it can easily determine whether a company is going to succeed or to end up in failure. The study aims at assessing the key roles of pricing in marketing of Brookside’s dairy products. Several severe impacts of pricing of dairy products have led to low productivity or even total failure in dairy companies.
Brookside is one of the biggest dairy companies in the East African region but in resent past years it has faced much competition from other domestic and foreign dairy companies. Marketing efforts have not been pursued vibrantly enough. This has resulted in low participation in both domestic and international markets culminating in a low output.
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Purpose of study
The purpose of this study was to examine the role of pricing as a marketing strategy in productivity of Brookside dairy company. This study also sought to unveil an appropriate pricing strategy for use by the company. The general objective was to highlight the role of pricing as a marketing strategy, and its effects in productivity of Brookside dairy company. The specific objective was to find out the rating of preferences of various pricing strategies as well as to identify the level of preference of pricing that is most appropriate for Brookside dairy company. In this regard, of great concern is the price strategies used by Brookside, the preference of the company in terms of pricing strategy and the way the company prices its products in comparison to other Kenyan dairy companies.
Limitations
This study is limited to the most resent secondary sources of information. This situation is attributed to the difficulty in acquiring historical information on the marketing strategies of many key Kenyan dairy companies. Most of these companies consider it wise not to disclose their marketing strategies lest they are copied by competitors. Moreover, some ides that have been successfully in solving a problem elsewhere may not fit in solving related problems at Brookside.
Literature review
Pricing strategies
Various pricing strategies have been used by different firms to regulate and set prices of products. According to Sumner & Wolf (1996, p. 354), penetration pricing occurs when a company sets low prices in order to increase sales and market share. Once the company captures market share, it may then raise its price. Alternatively, a company may choose to use a price skimming strategy. Bradley (2007, p. 168) defines price skimming as a strategy whereby a company sets an initial high price and then gradually reduces the price as a way of making the products be more accessible to a wider market. The strategy aims at skimming profits to the market by step by step.
Competitive pricing, on the other hand, is the setting of prices of products on the basis of comparisons with those of other competitors. On basis of this strategy a company has three options in its quest for an ideal pricing strategy: lowering the prices, increasing the prices or maintaining the same prices (Dardis 1990, p. 374). In this case many companies ensure that they offer prices that match those being offered by competitors.
Alston (1988, p. 286) focuses on product line pricing, a term they define as a strategy whereby prices of products of the same category are set at varied points. In this case, the higher the benefits and level of satisfaction obtained by the customer, the higher he pays for the product. Alston (1988, p. 288) is of the view that this form of non-uniformity in pricing helps companies maximize their profits and turnover.
Alternatively, a company may use a bundle pricing strategy, whereby a group of products are bundled together by virtue of being offered at a relatively lower price. In this case, one of the most commonly used strategies entails a consumer getting one free promotion after pack upon buying one unit. Some firms have even started moving to the next level, whereby a customer gets two items free for every single item that he buys (Borden 1964, p. 7).
According to McCarthy (1961, p. 121), some companies use psychological pricing whereby they put into consideration the psychological predisposition of consumers when positioning price within the market. An excellent example entails the seller charging charge $99.99 for a commodity instead of $100 with the intention of making the buyer to be influenced favorably by the perception that the commodity will cost him less than $100.
The option of premium pricing has also been explored in recent literature. Doyle (2001 p. 257) defines premium pricing as a pricing strategy that involves setting prices high as an indication of exclusiveness in a product. The strategy mostly fits in with unique products as well as those presumed to be of high-end category. In contrast, optimal pricing entails a Company’s decision to sell optimal extras along with the items to increase their turnover. This strategy is commonly applied in the car industry (Kucher & Partners 2004, p. 345).
For Kotler & Keller (2009 p. 147), the two most important pricing include cost-based pricing and cost-plus pricing. In cost based pricing, the company takes into account the total cost of production and distribution and then decides on the ideal mark-up in terms of profit before coming to its final pricing decision. Mohan (2005, p. 131) explains that this commonly applies in companies that operate in a volatile industry where costs change regularly, thereby making it difficult to set fixed prices. On the other hand, cost-plus pricing occurs where a company adds a certain percentage of the cost to profit margin when coming up with its final price decision.
Effect pricing strategy on supply and demand
Al Halborg & Ross (2001 p. 15) argue that demand and supply are basic factors that determine price. According to the law of demand and supply, the market prices of products are determined by the relationship between the supply and demand. Theoretically, when supply is higher than demand, sellers tend to lower prices to increase sales. Likewise, when demand surpasses supply buyers pay higher prices, since buyers are compelled to compete for lesser products (Nagle & Reed, 2002, p. 89). In the theory of demand and supply, consideration is often put on the influence of factors of production on prices. However, the influence of factors of production is often taken to be an indirect one since it alters prices by causing a change demand, supply or even both (Schwager 1984, p. 45).
Smith (1985 p. 45) explains that the other factors that may affect prices indirectly include restrictive practices of monopolies and cartels and changes in consumption habits. The price-determining mechanism of demand and supply operates well only in an economic system where there is no unfettered competition.
Summary of literature review
Pricing is a major and critical strategy in any marketing endeavor. There are many pricing strategies each of which is applied with an aim of achieving a specific objective. Different companies approach and maintain market differently hence the variations in priorities with regard to pricing strategies. Other factors like demand and supply also significantly affect pricing strategy.
Research methodology
Introduction
This section contains a discussion on the methodology used by the researcher to carry out the study and collect data. The chapter discusses the applied research design, the data collection instrument and procedure, the analysis and representation of data.
Research design
The study was highly dependent on both qualitative and quantitative research. It involved the administration of the research instruments to top executives at Brookside and then using this information as the basis for making inferences and conclusions.
Population
The target population in this study consisted of the general manager, marketing manager, accounting manager, production manager and the logistics manager at Brookside.
Sampling design
Chain sampling, snowballing and purposive sampling methods were applied. The choice of these methods was arrived at because of the centralization of the companies departments, as well as to ensure maximum efficiency in the process of sampling data data.
Data collection
The triangulation method of data collection was used in this study during the application of both primary and secondary sources of data. Oral interviews were also used as a way of obtaining reliable first-hand information on important issues. The versatility of this method enabled the interviewer seek clarifications on even the most difficult questions, to probe the management on a variety of issues, as well as to record additional observations. Secondary data sources were used in the collection of further information regarding pricing problems at Brookside. These secondary sources include publications by various companies, research papers, and reports from various departments within Brookside.
Data analysis
Once the data obtained from interview and secondary sources, the researcher carried out an in-depth analysis, all the while pointing out and doing away with biasness and errors. This ensured consistency and accuracy of the data. The quantitative data obtained in the study was presented as descriptive statistics, in the form of frequencies, percentages, graphs and tables.
Research findings and discussions
Introduction
This section contains dissects all the data and information gathered on the dynamics of pricing at Brookside, the challenges being encountered therein, and what this means for future implementers of future pricing strategies. With the study objectives in mind, the researcher endeavors to highlight the aspects of both primary and secondary data that are of utmost relevance to problem-solving efforts in the case of pricing strategies at Brookside.
Research findings
The rating of preference of pricing as a marketing strategy at Brookside
| Pricing strategy | The level of preference in % |
| Cost pricing | 22 |
| Value based pricing | 20 |
| Competitive pricing | 18 |
| Buddle pricing strategy | 15 |
| Product line pricing | 9 |
| Penetration pricing | 8 |
| Target return pricing | 5 |
| Psychological pricing | 3 |
| Premium pricing | 0 |
| TOTAL | 100% |
Fig .1 the average percentage of preference of applied price strategies in Brookside dairy company
Interpretation
From the table above, it is clear that competitive pricing is the most preferred pricing strategy for Brookside. Cost pricing, value based pricing and buddle pricing strategies are also given a high preference. The table was derived from a threshold scale factor administered to the target group. The competitive pricing has mostly been applied to ensure company’s survival in the dairy industry.
Price comparison
| Products | Fresh Milk and cream | Butter and ghee | Dry milk |
| Average cost at Brookside dairy company in % | 50.5% | 52.2% | 53.1% |
| Average cost of Brookside’s
competitors in % |
49.5% | 47.8% | 46.9% |
Fig. 2 Relative cost of products at Brookside as compared to the Company’s competitors for the past 12 months
Interpretation
The above table clearly shows that the costs of product from Brookside dairy company are higher compared to its competitors. The difference is highest in the category of dry milk while it is lowest in the category of fresh milk and cream.
Conclusions and recommendations
Conclusion
Pricing is one of the most essential elements of the marketing mix since it is a key determinant of the ultimate turnover of any company. Pricing a product too lowly or too highly could mean a loss for Brookside. The company has performed rather poorly in all pricing initiatives since it has not yet managed to set its price consistently in comparison with those of its competitors. The data collected in the study indicates that the company incurs a lot of cost in production, and thus, it is forced to charge higher prices so as to recover the cost and make handsome profits.
Recommendations
- The managers of Brookside should clearly understand the price elasticity of dairy products so as to have an effective pricing strategy.
- Brookside’s managers should completely and carefully do a cost and price analysis before fixing the prices so as to ensure consistency relative to the standards being set by competitors.
- The company should embrace diversification with regard to the marketing and pricing strategies being used so as to tighten its grip on the dairy market leadership position.
- The competitive pricing strategy should be given more preference as compared to other price strategies.
- The company should apply modern technology in production to reduce the production cost, thereby affording to lower prices without encountering a drastic slump in turnover.
References
Al Halborg A, & Ross, C, 2001, Marketing: principles and practice, (4th Ed.), Penguin Books, New York.
Alston, J, 1988, ‘Market Distortions and Benefits from Research’, American Journal of Agricultural Economics, Vol. 70, No. 2, pp. 281-288.
Borden, N, 1964, ‘The Concept of the Marketing Mix’, Journal of Advertising Research, Vol. 5, No. 4, pp. 2-7.
Bradley, N, 2007, Marketing Research, Tools and Techniques, Oxford University Press, Oxford.
Dardis, R, 1990, ‘Consumer and Welfare Losses from Milk Marketing Orders’, Journal of Consumer Affairs, Vol. 24, No. 2, pp. 366–380.
Doyle, P, 2001, Marketing Management and Strategy, (3rd Edition), Penguin Books, New York.
Kotler, P, & Keller, K, 2009, A Framework for Marketing Management, (4th ed.), Pearson Prentice Hall, New York.
Kucher, S, & Partners, K, 2004, Power Pricing, Presentation at WHU Koblenz, retrieved from http://www.simon-kucher.com/deutsch/index.htm on June 28, 2011.
Malhotra, N, 2002, Basic Marketing Research: A Decision-Making Approach, Upper Saddle River, NJ: Prentice Hall,
McCarthy, E, 1961, Basic Marketing: A Managerial Approach, (4th Edition), Homewood, New York.
McDonald, M, 2007, Marketing Plans (6th ed.), Butterworth-Heinemann, Oxford.
Mohan, J, 2005, International Marketing, Oxford University Press, New Delhi.
Nagle, T, & Reed, H, 2002, The Strategy and Tactics of Pricing, Prentice Hall, New York. Schwager, J, 1984, A Complete Guide to the Futures Markets: Fundamental Analysis, Technical Analysis, Trading, Spreads, and Options, John Wiley & Sons, New York.
Smith, A, 1985, Milk Production in Developing Countries, University of Edinburgh Press, Edinburgh.
Sumner, D, & Wolf. C, 1996, ‘Quotas Without Supply Control: The Effects of Dairy Quota Policy in California’, American Journal of Agricultural Economics, Vol.78, No. 3, pp.354-366.
