A STUDY ON PRICING STRATEGY AT THIEN AN BAKERY A dissertation submitted in partial fulfillment of the requirements for the degree of BSc in Business Management OFF CAMPUS DIVISION Full Name of Student: Pham Chu Viet Hoang Student Code: 2124768 Module Title: BAM6001 – Dissertation Module Tutor: Dr. David Ratcliffe Supervisor: Dr. Ron Smith Date of submission: May 1st, 2023 ABSTRACT This study focuses on the Vietnamese family-owned business, Thien An Bakery, and aims to examine the impact of pricing decision on the bakery's pricing strategy. The purpose is to provide an in-depth understanding of the factors influencing the bakery's pricing decision and to present data-driven recommendations to enhance its pricing strategy within a competitive market.
The research employs a mono-quantitative approach, using quantitative data collected through a questionnaire featuring a Likert scale for 23 observed variables. The data analysis, conducted using Excel and SPSS 20, encompasses descriptive statistics, reliability testing via Cronbach's Alpha analysis, exploratory factor analysis (EFA), correlation analysis, and regression analysis. The findings reveal that government regulations and policies have the most substantial influence on Thien An Bakery's pricing strategy. Based on these insights, the study proposes objective pricing strategies for the bakery to consider, aiming to increase its market share while addressing the opportunities and challenges associated with various pricing strategies.
1 DECLARATION I crertify that I am the sole author of this thesis and that no part of this thesis has been published or submitted for publication. I crertify that the work in this dissertation titled "A study on Pricing Strategy at Thien An Bakery" has been carried out by me except for references cited herein, I commit that this thesis has been composed solely by myself. This thesis has not been ever submitted for any degree in any universities or other training institutions. Student: Date: Pham Chu Viet Hoang Ho Chi Minh, May / 1 / 2023 2 ACKNOWLEDGMENTS I would like to express my profound gratitude to my supervisor, Dr.
The completion of this study could not have been possible without his expertise, support, and guidance throughout the process. I am deeply grateful to all the respondents who participated in the survey, generously sharing their time and insights, which have been crucial for the successful completion of this research. Their cooperation and assistance were instrumental in the success of this study. Thank you all for your support and contributions to this dissertation.
Your collective efforts have played an essential role in making this accomplishment possible.Sincere thanks! 3 TABLE OF CONTENTS LIST OF TABLES. 7 LIST OF FIGURES. 8 LIST OF ABBREVIATIONS. 10 1) About Thien An Bakery.
10 2) The area of study. 11 d) Significant of the study. 12 4) Justification for the topic. 12 CHAPTER 2: LITERATURE REVIEW.
13 1) Bakery Pricing Strategies. 13 a) Cost-plus Pricing. 13 b) Value-based Pricing. 14 d) Competition-based Pricing.
15 2) Factors influencing pricing decision. 19 d) Government Regulations and Policies. 21 4) Research hypotheses and summary conceptual framework. 23 CHAPTER 3: RESEARCH METHODOLOGY.
28 5) Research’s time horizone. 28 6) Research’s techniques and procedures. 29 7) Research’s methods of analysis. 35 CHAPTER 4: FINDINGS AND ANALYSIS.
38 Exploratory Factors Analysis (EFA). 41 2) Pearson’s correlation analysis. 49 CHAPTER 5: CONCLUSION AND RECOMMENDATIONS. 50 3) Limitations of this research and direction for future study.
70 6 LIST OF TABLES Table 1: Sample size. 27 Table 2: Observation variables construction. 31 Table 3: Descriptive statistics of sample. 37 Table 4: Cronbach’s Alpha of Internal Factors.
38 Table 5: Cronbach’s Alpha of Market Factors. 38 Table 6: Cronbach’s Alpha of External Factors. 39 Table 7: Cronbach’s Alpha of Government Regulations and Policies. 40 Table 8: Cronbach’s Alpha of Pricing Strategy.
40 Table 9: Cronbach’s Alpha results. 41 Table 10: KMO and Bartlett's Test of Pricing Decision. 41 Table 11: Total Variance Explained of Pricing Decision. 42 Table 12: Rotated Component Matrix of Pricing Decision.
43 Table 13: KMO and Bartlett's Test of Pricing Strategy. 44 Table 14: Total Variance Explained of Pricing Strategy. 44 Table 15: Rotated Component Matrix of Pricing Strategy. 45 Table 16: Pearson correlation analysis results.
46 Table 17: Model Summary. 47 Table 19: Regression Coefficients. 47 Table 20: Conclusion of hypotheses. 49 7 LIST OF FIGURES Figure 1: Framework for value-based pricing.
14 Figure 2: Determinants of Retailer Pricing Strategy. 22 Figure 3: Summary of conceptual framework. 23 Figure 4: The Research Onion Framework. 25 8 LIST OF ABBREVIATIONS ABBREVIATIONS MEANINGS IF Internal Factors MF Market Factors EF External Factors GRP Government Regulations and Policies ANOVA Analysis of Variance EFA Exploratory Factor Analysis SPSS Statistical Package for the Social Sciences KMO Kaiser-Meyer-Olkin Measure of Sampling Adequacy 9 CHAPTER 1: Introduction 1) About Thien An Bakery: Setting a commercial price for a product or service is an important aspect of any business.
Price setting is the process of recognizing the present and future market trends in an industry to gain an edge by adjusting the business prices accordingly. It has been firmly established that pricing plays a vital role in the growth of a business because it determines a company's revenue and profit. Attracting customers is becoming increasingly difficult when businesses must compete on price with other stores while also maximizing profits. According to the research conducted by Kühn and Riedel (2014), pricing decisions are heavily influenced by a range of factors, including market size, competition, and risk aversion.
Similarly, Lein (2010) also agrees that prominent levels of competition and volatile market demand lead to more frequently adjusted prices. However, the research above has primarily focused on a consistent marketplace where businesses grow consistently. This body of theory presents a problem for industries that confront unforeseen circumstances - for example, the Covid-19 pandemic - which cause the whole market to stall and force numerous companies to go bankrupt. The Covid-19 pandemic has further added to the uncertainty, with commodity prices becoming subject to market fluctuations and altering consumer behavior.
Hence, businesses must adopt a scientific and comprehensive pricing strategy that considers the cost of goods sold, competition, and customer demand to maximize their profits. Thien An Bakery is a renowned bakery with a widespread presence in Ho Chi Minh City. Despite the widespread damage caused by the Covid-19 pandemic to small and large businesses in Ho Chi Minh City, the bakery has achieved considerable success over time. However, Thien An Bakery takes extreme caution in managing their operations to remain competitive in a rapidly changing market.
The key differentiating factor for Thien An Bakery from other bakeries is its pricing strategy, which determines the prices of its products and how it reacts to market trends and consumer behavior. Consumer preferences have shifted abruptly because of market volatility, posing a challenge for all industries, including Thien An Bakery. Due to this uncertainty, Thien An Bakery must evolve, adapt to consumer preferences, and abandon traditional methods to maintain their position in the market and continue to generate profits. 2) The area of study: Survey location: Thien An Bakery in Ho Chi Minh City.
10 Survey participants: Employees at the bakery and Thien An Bakery's customers. Survey timeframe: Data collection will take place from January 2023 to March 2023. 3) Research’s aims: a) Research’s questions: This study aims to answer the following research questions: What factors in pricing decision impact Thien An Bakery's pricing strategy? How do these pricing decision factors influence Thien An Bakery's pricing strategy? What suggestions can be offered to improve Thien An Bakery's pricing strategy in the future? What challenges and opportunities arise for Thien An Bakery when adjusting their pricing strategies? b) Research’s objectives: These research objectives will guide the research process and help ensure that the dissertation provides a thorough and detailed analysis of Thien An Bakery's pricing strategy: To conduct a literature review on Pricing Decision and Pricing Strategy. To identify the components of Pricing Decision that affect Pricing Strategy of Thien An Bakery.
To measure the impact of the components of Pricing Decision on Pricing Strategy of Thien An Bakery. To propose recommendations for the future enhancement of Pricing Strategy at Thien An Bakery. c) Research’s method: To answer the above questions, this dissertation will use quantitative research methods, including questionnaire surveys, and primary data. This research will be based on previously published literature on pricing strategy, pricing decision, and data provided by Thien An Bakery executives and employees.
The study's purpose is to provide insights and recommendations that can help Thien An Bakery optimize its pricing strategy and better serve its customers while also meeting financial goals. The collected data will be examined using the SPSS 20 (Statistical Package for the Social Sciences version 20) software. This process will include evaluating the scale 11 reliability via Cronbach's Alpha coefficients, conducting exploratory factor analysis, and utilizing regression analysis to assess the suggested hypotheses. d) Significance of the study: This study will contribute to enriching the body of knowledge on price valuation by examining and assessing Thien An Bakery's pricing strategies and approaches, in which knowledge is swiftly and constantly evolving.
Consequently, this study will assist in filling the current research shortage in this field and provide practical value to organizations that operate in similarly dynamic settings. 4) Justification for the chosen topic: In the aftermath of the Covid-19 pandemic, Thien An bakery's current operational status is unfavorable. Despite striving to provide customers with the highest quality bakery products, the bakery's growth rate is gradually slowing down. This may be due to the fact that during quarantine, other bakeries have adopted technology that appeals to customers and promoted their brand along with discounts and special offers, resulting in a decline in Thien An bakery's revenue.
As a result, Thien An bakery urgently needs an effective pricing strategy to retain and attract new customers through the communication channels that competitors have utilized, while also creating a unique selling point for customers to choose their products over those of competitors. The author believes that in the Vietnamese bakery industry, there have been limited studies examining the impact and influence of pricing strategies. Consequently, the author has chosen "A study about Pricing Strategy at Thien An Bakery" as the research topic. 5) Summary: In Chapter 1, the author presents the selected organization for the study and explains the rationale behind choosing the research topic.
Additionally, the author outlines the research objectives, questions, subjects, and scope. The subsequent chapter will provide a review of pertinent literature on pricing strategy and the factors influencing it, as examined and selected by the author. 12 CHAPTER 2: LITERATURE REVIEW Prior to examining the pricing strategy of Thien An Bakery, it is crucial to recognize the factors contributing to price differences among various bakeries. According to Kotler et al.
(2021), price represents the monetary amount that customers must pay in order to obtain or use a product, and it is one of the four Ps in the Marketing Mix. Nilda et al. (2020) determined that price plays a significant role in consumers' purchasing decisions for packaged bread. The diverse pricing of goods across different bakeries stems from each bakery's unique pricing strategy, designed to attract customers.
Noble and Gruc (1999) discovered that companies employ various pricing strategies based on their cost structure and competitive circumstances. In highly competitive markets, a well-executed pricing strategy is essential for any business, not just those in the bakery sector. Companies in these markets face fierce price competition, necessitating the adoption of efficient pricing strategies to maintain their competitive edge (Bourdon, 1992; Heide et al. The exploration of pricing strategies in the bakery industry is an intriguing area of research, covering a complex interplay of various factors such as production expenses, market demand, and competition, etc.