Influence of Value-Based Pricing 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, to earn profits. Nevertheless, Kenyan SMEs have been facing poor market access. The purpose of the study was to examine the influence of value-based pricing on growth of small and medium enterprises in Imenti North Sub-County, Kenya. The study adopted a descriptive research design whereby quantitative data was collected using close-ended questionnaires. The target population was 25 SMEs, with 58 managers and 234 officers in marketing, procurement, and finance who were the respondents.  Notably, the study adopted a simple random method to identify the sample size from the population to get 30% of the 25 SMEs resulting in 8 SMEs from which the respondents was drawn. Further, the study collected quantitative data in form of a closed-ended questionnaire from 13 marketing managers, 9 procurement managers, 9 finance managers, 39 marketing officers,19 procurement officers, and 13 finance officers making a total of 102 respondents. Further, the study conducted a pilot study at Fairlymatt supermarket and Happy Foods farms limited in Imenti South Sub-County. SPSS software was used for analysis process to provide descriptive and inferential analysis. The results from the questionnaire indicated that 40(49%) participants strongly agreed and 19(23%) agreed that customers had become loyal due to considerations given on every complaint they made (mean-4.24). However, 26(32%) strongly disagreed and 17(21%) disagreed that there were clear communication systems that allowed information to swiftly reach the top management in less time (mean-2.66). Additionally, the correlation of value-based pricing r=0.628 at α < 0.000 and 99% significance level. The study concluded that there was a short turnaround time taken by SMEs to address the various pricing complaints from the clients. That notwithstanding, most value-based pricing decisions made by the senior management did not have a window for discussion with junior staff. The recommendations on value-based pricing are that there should be a policy framework established to expose staff to processes used to determine various prices.