Effectiveness of commodity pricing along the pork value chain in Zimbabwe : a case of Mashonaland Central Province

Abstract

The main objective of this study was to give a reflection of the pricing strategies, articulate organizational attitudes; feelings and behaviour regarding these strategies and how they all influence value creation within agribusinesses in the Zimbabwean pork industry. The research hypothesis is that the particular pricing objectives, strategies and policies utilised have an indirect influence on how organizations create value. Specifically, the research sought to determine influence of marketing in value creation, establish influence of price in marketing mix, ascertain pricing strategies, determine influence of attitudes, feelings and behaviours and measure pricing efficiency. Utilising interview-administered-questionnaires, the study sought responses from strata of producers, abattoirs and retailers in Mashonaland Central Province of Zimbabwe totalling a sample size of 226 respondents. The study utilised a cross sectional survey research design and quantitative research methods. The study utilised correlation analysis, ANOVA analysis, MANOVA analysis, multiple regression analysis and marketing margin analysis in establishing correlations, mean differences, influences and efficiencies in pricing. The study found out that marketing is not an influential value creating activity within the pork industry at p < 0.05. Price was also not the most influential marketing mix component within the industry. Most industry players were utilising formula prices, pursuing profit oriented pricing objectives through a one price policy, aiming for a low penetration price level policy, with no discount policy and managing a profit to cost ratio of between 0 percent and 4 percent. The most significant feeling was of being indifferent to a price change as it is offset by changes in units sold. Attitudes of industry players disregarding pricing mechanisms as long as it covers costs of production as well as substitute products determining prices were significant in influencing pricing objectives. Pricing within the industry was inefficient. The study recommends leveraging on the most influential industry value creating activity, which is production and processing, to take advantage of the myopic pricing objectives, lack of discount policy and avoiding substitutes. Also recommended is leveraging on the most influential industry marketing mix component, which is the product, to take advantage of lack of premium pricing, inefficient pricing and avoiding substitutes. Evading the low profit to cost ratio in the industry through utilising price flexibility policies and vertically integrating were also recommended.