An assessment of the influence of price on consumer demand for soaps: The case of Olivine Industries

Abstract

Pricing is a key element for most organizations yet the influence it has on customers’ preferences and how it relates to other factors in the marketing mix is never fully understood in different settings particularly in low cost purchase Fast Moving Consumer goods like bathing soaps. This results in organizations incorrectly pricing their products thereby facing consumer resistance and decreased demand. This dissertation focused on assessing the influence of price on consumer preferences for family bath soaps as well as the effect of other non-price factors in relation to price. This research met these twin research objectives through an extensive study of relevant literature and the implementation of practical research. The latter was carried out using a case study with Olivine Industries using semi structured interviews with key marketing personnel as well as customer representatives of the main retail supermarkets like OK, SPAR, and Pick n Pay. The research produced three findings; price does influence consumer preferences to a large extent when consumers have certain perceptions of the bath soap and secondly, the other factors like product attributes and quality will only be considered after the price but they are expected to meet the customers’ expectations for the soap to be preferred and finally, it was also found that Olivine’s management perception of quality and value is different to that of their customers. The main conclusions drawn from this research were that Olivine’s products are not price competitive for the Zimbabwean consumers who are price sensitive. Organizations like Olivine that set their prices higher to competition will experience a decrease in demand and market share if the customers perceive the value of the product to be not worth the price. Another conclusion was that the other factors are secondary to price when customers choose soaps on the shelf but they still should be considered to customers specifications when manufacturing since they set the basis of the products perceived value. This research recommends that Olivine should price its products relative to competition, they should balance the influence of other factors and price’s importance when manufacturing and finally information between consumers and Olivine should be in sync to avoid asymmetry of important on subjective issues like quality and perceived value of a bath soap.