PRICING STRATEGY AND PERFORMANCE OF MOTOR VEHICLE COMPANIES IN KENYA

Abstract

This research investigated effects of pricing strategies on performance of motor vehicle companies in Kenya. The four pricing strategies were considered as the predictor variables. McCarthy’s 4Ps Theory, Game Theory, and Attribution Theory created the theoretical framework. The descriptive research was adopted for this study where 47 management staff who was all recruited into the sample size using census sampling method. A questionnaire was employed as a data collection tool which was tested for validity and reliability using Cronbach’s Alpha following a pilot study. The findings indicated no significant effects of competition based pricing, value based pricing, and target-return pricing strategies on performance. However, cost based pricing strategy had an effect on performance. It is recommended that Isuzu E.A. Limited should adopt cost-based pricing and this can be implemented by cost-plus and break-even pricing. The study concludes that only cost-based pricing strategy positively contributes to performance of Isuzu E.A. Limited. The study concludes that Isuzu E.A. Limited should adopt the cost based pricing. The study recommended that the company should not adopt the target-return pricing strategy as it does not contribute to performance. The company should price its products using cost-based strategy by implementing cost-plus and break-even pricing.