CONSUMERS PERCEPTION ON THE LEVEL OF ADOPTION IN PRICING

PRACTICES AMONG RETAILERS IN MOLAVE, ZAMBOANGA DEL SUR

A Research Paper Presented to the

Faculty of the Institute of Business and Financial Services
Gov. Alfonso D. Tan College
Maloro, Tangub City

In Partial Fulfillment
of the Requirements for the Degree
BACHELOR OF SCIENCE IN BUSINESS ADMINISTRATION
MAJOR IN MARKETING MANAGEMENT

Glazjane L. Banawan
Juliemae U. Dalo

October 2021
 Chapter 1

THE PROBLEM AND ITS SCOPE

Background of the Study

The value that makes it worthwhile for you, to your manufacture, to your

customers and to utilize your product is defined by the price. Based on the pricing point,

customers can determine whether or not anything is worth their time and money. Some

businesses devote a significant amount of time and money on determining the appropriate

pricing practice for their products because a poor practice might result in the loss of

crucial clients and company revenue. Price is the monetary value attributed to a product

or service, and it is the consequence of a complicated combination of mathematics,

research, comprehension, and risk-taking skills. Segments, ability to pay, market

conditions, competitor actions, trade margins, and input costs are all factors that go into a

pricing practice. It is aimed at a certain set of clients as well as competitors.

According to Trinh et al. (2012) in today's society, pricing techniques used to

advertise items and services to consumers, such as '3 for $5,' '60 percent off,' or' sale –

one week only,' are extremely common. Furthermore, rather than economic

considerations, price tags, rebates, discount advertisements, cell phone plans, bundle

offers, and so on are increasingly focused on psychological aspects (Poundstone, 2009).

Sigurdsson et al., (2010) stated that, this is perhaps unsurprising, given how difficult it is

to offer things that are not available at competing merchants. According to Sigurdsson et

al. (2010), popular products are quickly adopted by other retailers and competitors are
more responsive to pricing changes than to most other approaches. Hinterhuber & Liozu

(2014) stated, that as a result, the task of developing and defining prices is complex and

difficult, because managers involved in this process must understand how their customers

perceive prices, how to develop perceived value, what are the intrinsic and relevant costs

to meet this requirement, as well as consider the company's pricing objectives and

competitive position in the market.

Molave, Zamboanga del Sur is a municipality with a fast – growing market.

There are plenty of wholesalers and retailers in the area. In order for small retailers to

survive this kind of competition, they must adopt pricing practices to create and sustain

competitive advantage in the marketplace. Retailing has changed rapidly in today’s

generation; adoption of suitable pricing practices is undeniably important. However,

some retail stores in the area are still unsure on what pricing practice to use in order to

improve the performance and sustainability of their respective retail store. For the reason

that, there has no study conducted yet to measure the level of adoption in pricing

practices of retailers in Molave. The retailers need to adopt the right pricing practice in

order to gain competitive advantage in the market. They need to connect with their

consumers because consumer plays an important role on why the retailers are still

operating in the market. The consumers perception on the level of adoption in pricing

practice among the retailers could be a great help upon knowing what type of pricing

practice they should use and to determine what pricing practice needs improvement.

In this regard, the proponents in this study aim measure the level of adoption in

pricing practices among the retailers in Molave, Zamboanga del Sur as perceived by the

consumers. In addition, this study will be a basis for retailers to know the
recommendations and suggestions of their consumers on how to improve their pricing

practices to highly compete in the market. Also, results from this study can be a basis for

course activities and instructional improvement especially in retail management and

pricing strategy.

Theoretical Framework

This study will be anchored to the study of Hinterhuber & Liozub (2014) titled “Is

innovation in pricing your next source of competitive advantage?”. In their study, they

stated that there are basically three sets of pricing practices that are mostly utilized across

various industries namely: (1) Value-Informed Pricing Practice, (2) Competition-

Informed Pricing Practice, and (3) Cost-Informed Pricing Practice.

According to Ingenbleek et al. (2010), the pricing practice in which the firm

bases the price of a product on customer value information is referred to as value-

informed pricing. Ingenbleek et al. (2013) stated that, managers can use customer value

information to determine how customers perceive the relative benefits of a product and

how they will trade these benefits off against the price. According to a study of Cressman

(2012) value-based pricing, as a business cultural orientation, is generated from a set of

regular principles and organizational methods that a specific company can utilize to focus

on customer pleasure and, as a result, boost profitability. Ingenbleek et al. (2003) explore

the implications of value-informed pricing, as well as pricing techniques involving

competitor and cost information, on new product performance and according to their

findings, value-informed pricing has the greatest overall impact on new product

performance. Nagle & Hogan (2006) acknowledge that, the findings also support the
notion that value-informed pricing is the most important pricing practice for obtaining

returns on product advantage because it allows the firm to determine what a product is

worth to the customer.

The pricing practice in which the firm

bases the price of a product on customer value infor-
mation is referred to as value-informed pricing. Note
that this is theoretically generalizable over firms that
use different means to set selling prices, such as list
prices, negotiations, and contracts. Customer value
information enables managers to assess how custom-
ers perceive the relative advantages of the product and
how they will trade these advantages against the price
(Ingenbleek, 2007). Value-informed pricing practice is
thus grounded in the price perception literature.
The pricing practice in which the firm
bases the price of a product on customer value infor-
mation is referred to as value-informed pricing. Note
that this is theoretically generalizable over firms that
use different means to set selling prices, such as list
prices, negotiations, and contracts. Customer value
information enables managers to assess how custom-
ers perceive the relative advantages of the product and
how they will trade these advantages against the price
(Ingenbleek, 2007). Value-informed pricing practice is
thus grounded in the price perception literature.
The pricing practice in which the firm
bases the price of a product on customer value infor-
mation is referred to as value-informed pricing. Note
that this is theoretically generalizable over firms that
use different means to set selling prices, such as list
prices, negotiations, and contracts. Customer value
information enables managers to assess how custom-
ers perceive the relative advantages of the product and
how they will trade these advantages against the price
(Ingenbleek, 2007). Value-informed pricing practice is
thus grounded in the price perception literature.
The pricing practice in which the firm
bases the price of a product on customer value infor-
mation is referred to as value-informed pricing. Note
that this is theoretically generalizable over firms that
use different means to set selling prices, such as list
prices, negotiations, and contracts. Customer value
information enables managers to assess how custom-
ers perceive the relative advantages of the product and
how they will trade these advantages against the price
(Ingenbleek, 2007).
The pricing practice in which the firm
bases the price of a product on customer value infor-
mation is referred to as value-informed pricing. Note
that this is theoretically generalizable over firms that
use different means to set selling prices, such as list
prices, negotiations, and contracts. Customer value
information enables managers to assess how custom-
ers perceive the relative advantages of the product and
how they will trade these advantages against the price
(Ingenbleek, 2007).
The pricing practice in which the firm
bases the price of a product on customer value infor-
mation is referred to as value-informed pricing. Note
that this is theoretically generalizable over firms that
use different means to set selling prices, such as list
prices, negotiations, and contracts. Customer value
information enables managers to assess how custom-
ers perceive the relative advantages of the product and
how they will trade these advantages against the price
(Ingenbleek, 2007).
According to Hinterhuber et al. (2008), Competition-informed pricing practice

collects data on customer expectations from current and potential competitors and uses it

to establish prices and also this price strategy can be beneficial when it's tough to

distinguish your items from those of competitors. Liozu et al. (2011) conducted research

mapping, managers utilize their expertise and experiences to establish prices, as well as

cost models, contribution margin targets, and well-structured profit goals, according to

the pricing processes of companies that base their prices on competitors. Ingenbleek et al.

(2003) stated that, the capacity to understand rivals' prices in terms of their market

position enables a quantitative assessment of the firm's relative position. Furthermore, in

highly competitive markets, rival pricing information quickly becomes outdated

(Ingenbleek et al., 2010). Simon et al. (2008) states that, it's critical to control

competitors' capacity to respond to the company's pricing plan, while also keeping in
mind that in competitive marketplaces, this can raise the risk of a price war and lower

profit margins.

According to Simon et al. (2008), cost-informed pricing practice is the most

straightforward and often used pricing practice because it conveys a sense of financial

prudence. Milan et al. (2013) stated that, the process entails calculating the unit and total

costs, as well as properly setting prices in accordance with the company's profit

objectives. Furthermore, the price-setting committee/team is in charge to show

clients the value of items and services, as well as the reason for whatever

rates are charged placed on them (Urdan et al., 2005). According to a study of 84

companies performed by Milan et al. (2013) it showed that, the following businesses

place a stronger emphasis on cost-informed pricing and as a result, this strategy

encourages businesses to use more efficient spending methods.

Adopting pricing practices aids in determining what prices customers can afford

before deciding what products to purchase and in what quantity. This enables businesses

to determine whether they can compete in the low-cost market, where customers are

primarily concerned with price, or whether they can compete successfully in the

premium-price market, where customers are primarily concerned with the quality and

characteristics of goods. This study will measure the retailer’s level of adoption on

pricing practices as perceived by the consumers. Consumers can also make

recommendations and suggestions towards retailers in order for them to improve on their

pricing practices and compete in the market.

 Pricing Practice:
Determine the Consumers Generate the comments

Value-Informed Pricing perception on the level of and suggestion of the

Practice consumer and basis for
adoption in pricing
Competition-Informed practices among the improvements on the
Pricing Practice
retailers in Molave, retailers pricing practice
Cost-Informed Pricing
Zamboanga del Sur
Practice.
 Figure 1. Schematic Diagram of the Study

Statement of the Problem

This study aims to determine the level of adoption in pricing practices

management among the retailers in Molave, Zamboanga del Sur; and to recommend

area(s) that requires improvement.

This study will seek to answer the following questions.

1. What is the retailers level of adoption on pricing practice as perceived by

consumers in terms of:

a. value-informed;

b. competition-informed;

c. cost-informed?
 2. Which among the pricing practices is the least adopted by the retailers in

Molave Zamboanga Del Sur?

Significance of the Study

The result of this research will be beneficial to the following individuals or

groups:

Consumer. This will provide them the knowledge of adopting pricing practice.

Moreover, this will help them to purchased easily on the product.

Retailers. This study will help them know the level of adoption on pricing

practices and serves as an instrument to recognize area that require/s

improvement.
Future Researcher. This study will give appropriate insights which will help the

future researchers to relay on for having better research inclined with this

study.

Scope and Limitations

This study will be conducted to know the level of adoption in pricing practices of

selected retail store in Molave Zamboanga Del Sur. The proponents of this study will

select retailers in the said location. A set of questionnaires will be given to the retailers to

answer the questions related to the study. The study will be conducted within the

academic year 2021-2022.

Research Methods

This part discusses the research design, research respondents, research setting,

research instrument, instruments validity, data gathering procedure and statistical

treatment of data.
Research Design. This study will use an explanatory sequential research design.

According to Ivankova et al. (2006) sequential explanatory research design is

collecting and analyzing data in two consecutive phases within one study. In

the first phase, the proponents will collect and analyze quantitative data and

in the second phase the proponents will collect qualitative data related to the

outcome from the quantitative phase.

Research Setting. This study will be conducted in selected retail store of Molave

Zamboanga Del Sur, where the chosen selected retailers is located.

Research Respondents. The respondents of the study were the consumers on the

Selected retail store in Molave Zamboanga Del Sur.

Research Instrument. An adapted modified questionnaire from Hinterhuber &

Liozub (2014) will be used in this study. The questionnaire will contain

questions about consumer perceived on pricing practices. It focuses on the

three variables of the study which are determine the level of adaption among

retailers in terms of; value-informed pricing, competition-informed pricing,

and cost-informed pricing. Also, an interview guide will be crafted based on

the result of quantitative phase. This part of the questionnaire the proponents

will give the respondents freedom to express freely their additional thoughts

and opinions towards pricing practices among retailers.

Data Gathering Procedure. Preceding the lead of this study, the proponents will

ask permission to the adviser to gather data. And when the plea is permitted,

the questionnaires will be administered to the respondents. The researcher

 will personally interact to the respondents by using the questionnaire that will

serve as a data gathering tool. The answered instruments will be collected,

tabulated, analyzed, and interpreted statistically.

Data Analysis. To address the aim of this study, the proponents will use an

adopted questionnaire with the use of Likert scale. To summarize the data

that will be gathered, weighted mean will be used. Weighted mean is a kind

of average that will be used when some data points contribute more weight

than others. Every indicator will have a computed mean to be interpreted

using scaling and the corresponding description given in the table.

Numerical Hypothetical Qualitative Implication

Value Range Description
4 3.26-4.00 Strongly Agree Fully Adopted
3 2.51-3.25 Agree Adopted
2 1.76-2.50 Disagree Less Adopted
1 1.00-1.75 Strongly Disagree Not Adopted

Verbal Interpretation

4 – It signifies that the responses of respondents strongly agreed to the

indicators towards the level of adoption in pricing practices and the pricing

practices are fully adopted by the retailers as perceived by the consumers.

3 – It signifies that the responses of respondents agreed to the indicators

towards the level of adoption in pricing practices and the pricing practices are

fully adopted by the retailers as perceived by the consumers.

 2 – It signifies that the responses of respondents disagreed to the indicators

towards the level of adoption in pricing practices and the pricing practices are

fully adopted by the retailers as perceived by the consumers.

1 – It signifies that the responses of respondents strongly disagreed to the

indicators towards the level of adoption in pricing practices and the pricing

practices are fully adopted by the retailers as perceived by the consumers.

Ethical Consideration. The respondent’s confidentiality would not be revealed to

anybody. Before the start of the dissemination of the questionnaire a

written informed consent was given to the respondents. It would also

emphasize that the data gathered from the questionnaires will be used for

academic purposes only.

Definition of Terms.

In this study the following terms are theoretically defined for the purpose of

additional clarity on the content of this research.

Retailer. A retailer is a business that purchases goods from a manufacturer or

wholesaler and sells them to end users or customers.

(https://www.myaccountingcourse.com). In this study,

Pricing Practice. A pricing practice is a method or model for determining the best

price for a product or service. It assists you in determining prices in order to

maximize profits and shareholder value while taking consumer and market

demand into account (https://blog.hubspot.com/sales/pricing-strategy).

 Consumers. This refers to the party that receives or consumes product (goods or

services) and has the ability to choose between different products and

suppliers (https://www.businessdictionary.com)

Value-Informed Pricing Practice. Is the extent to which a firm uses information in

the process of price determination on the perceived relative advantages.

(https://www.emerald.com)

Competition-Informed Pricing Practice. Is a pricing practice that entails

comparing your rates to those of your competitors.

(https://www.priceintelligently.com)

Cost-Informed Pricing Practice. Adding a margin to the costs is a cost-informed

pricing approach. The items and services are given a standard proportion that

is added to them. The procedure entails estimating sales revenues, calculating

unit and total costs, and determining pricing that are matched with the

company's profit goals.

(https://www.mdpi.com)
 Gov. Alfonso D. Tan College
Maloro, Tangub City

CONSUMERS PERCEPTION ON THE LEVEL OF ADOPTION IN PRICING

PRACTICES AMONG RETAILERS IN MOLAVE, ZAMBOANGA DEL SUR
Questionnaire for Consumers

Name: (Optional) Date: _

________
Part I. Direction: given are questions that seek the Consumers Perception on the Level
of Adoption in Pricing Practice Among Retailers in Molave, Zamboanga Del Sur.
Rate each accordingly by the given scale below.

4-Strongly Agree 3-Agree 2-Disagree 1-Strongly Disagree

RATING

INDICATOR 4 3 2 1

Value-Informed Pricing Practice

1. As a consumer, I perceived that the prices set by retailers to
their products have considerations on the product
advantages.

2. As a consumer, I perceived that customer’s perceived value

of product is considered when retailers are setting prices to
their products.
3. As a consumer, I perceived that product offered by retailers
in comparison to substitutes, is considered when they are
setting their prices.

4. As a consumer, I perceived that those possible benefits to

both buyer and seller will be considered by the retailers in
setting the prices of their products.
2. Competition-Informed Pricing Practice

a. As a consumer, I perceived that the retailer competitor

product prices are considered when setting the prices of
products.

b. As a consumer, I perceived that the current pricing

practice of the retailer’s competitor is considered when
setting the prices of products.

c. As a consumer, I perceived that, retailers when

determining the product prices, the competitive
advantages of competitors on the market are taken into
account.

d. As a consumer, I perceived that, retailers when

determining the product prices, the degree of
competition (number and strength of competitors) is
considered?

e. As a consumer, I perceived that retailer’s competitive

advantages of competitors on the market is considered
when setting the prices of products

3.Cost-Informed Pricing Practice

a. As a consumer, I perceived that retailer’s cost on

purchasing the product is considered when setting the
prices of products as to give benefit to the consumer.
b. As a consumer, I perceived that retailer’s price necessary
for break-even is considered when setting the prices of
products.

c. As a consumer, I perceived the company needs to set

Profit margin for each product when setting the prices of
products.
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