The Effect of Reducing Prices by 15% on the Market Segment - Essay Example

The effect o reducing prices by 15% on the market segment Introduction Pricing strategy is one of the common ways of dealing with the competition in acquiring a competitive advantage (Nagle & Holden 2013). From the perspective of the business, the sustainability of the method is the main issue. However from the customers perspective, the most important aspect is the value that they receive for their expenditure or money. This notion drives the amount of research that has to be devoted to the understanding of the consumer segments for a product. It is highly likely that the prices set for a commodity is a driving factor in shaping the market segment and the realisation of the overall profitability in a business. In order to reach profitability, the dynamics of the consumers and specifically the market segment of the product must play a role. In this proposal, the modality of investigating the roles played by the pricing strategy is investigated. At a more specific level, the effect of reducing the prices of the commodity by 15% on the overall market share is reviewed. Problem Statement The impact of reducing prices could be varied and unknown depending on the specific nature of the market. With the emergence of capitalism, the levels of competition are bound to go very high in any particular sector. The result of this capitalism and competition is a decision to create a strategy that would outdo the competitors and increase the market share and customer loyalty. In porters five forces analysis, the factors that are considered are mainly to deal with the level of competition that is exhibited by the players in the sector or business that a firm is involved. Several dynamics play important roles that are related to the segmentation of the market. An important intervention is the inclusion of an intervention mechanism in terms of pricing. The pricing mechanism employed by a firm in its products can either be beneficial or disadvantageous depending on the reaction of the overall market. The price reduction strategy is aimed at creating a best possible position in order to make the products if the company more acceptable. Its effects on the market segment can be unknown. This paper seeks to provide research into the dynamics occasioned by the prize change of the Daz detergents in the UK market. Aims and objectives Pickard (2012) explains aims and objectives in a proposal as the core issues to be resolved in a study. It claims that for a study to be conducted, the presence of an aim or objective is imperative and as such a study cannot exist without the same. The specific definition that this study gives is related to the overall desire of the researcher and accounts to the information gathered by the study. The study aims at looking into the specific changes that relate to the changes in prices of a specific commodity. In this case, the Daz consumer segment is the focus of the study. The study tries to relate the effects of the consumer segment with the relative effects of the change in the consumer prices. A specific change that has been proposed for study, in this case, is a 15% change to the lower side of the prices of the detergent in the consumer market. This study also aims at making a generalisation (Gomm 2009) in the fact that it is possible to alter the segment of the consumers through price reduction. The study also aims at explaining the possible causes of the change in the segmentation of the market due to the price variation. Research methodology Social research requires the use of an appropriate methodology that will capture the required data and information for the same research. In a bid to develop the solution to any form of research problem, there is need to take the appropriate research methodology that would align the required results to the main aim of the study (Hammond & Wellington 2013). There are two types of research that are available to scientists willing to derive a given type of information from the public. A research can either be conducted in qualitative or quantitative methodology. It is also possible to take a mixture of both the methods in one study (Creswell & Clark 2007; Reed and Marsh 2002). In this case, the research method is referred to as a pluralistic method of study. The pluralistic method employs both the qualitative and quantitative methods and is mostly applicable in the proof of the validity of a study. In social science, the most applicable method of study is a qualitative method of research. The applicability of this method stems from the fact that the methodology implies the inception of meaning other than the quantification of the information that is available on the subject. This study will adopt an ethnographic form of a survey. It will include an extensive interview (Weathington, Cunningham & Pittenger 2010) on the topic and determine whether the percentage change in the prices of the detergent is likely to spark an equivalent change on the market or not. Advantages of the method This method of study or research is perfectly suited for social sciences (Babbie 2013). According to (Bryman 2004) the suitability of this methodology is derived from the ability of the methodology to provide an explanation rather than a quantification of the available information. In social research, the explanation of a phenomenon is more crucial than its quantification. In as much as the quantification is a crucial process, the explanation of the causes of the change in the segmentation will shed more light in the applicability of the change than when numeric data about the same is presented. An in-depth study is also possible through the application of the method. Depending on the design of the questions that are used, it is possible that the research can provide more information than the quantitative methods that only seeks figures in explaining the frequency of an occurring phenomenon. Apart from offering the chance to collect qualitative data about the subject, the qualitative methodology adopted through interviews gives the researcher a chance to make decisions on the effectiveness of the information provided by the respondent. Whether the survey is effected through the use of telephone or the interviews are done manually, the researcher is in a position to seek clarification through asking ancillary questions (Elliott 2005). Through the ancillary questions, the researcher can take a position of verification on the data that is provided by the respondent. The verification of the data can be based on how the respondent reacts to the question and the level of self-esteem that is projected at the time of taking the question that is posed. Disadvantages of the research method The level of difficulty in carrying out this method of study is the main source of limitation. In many cases, the development and testing of the interviews normally take a considerable amount of time. Apart from the time taken to design the questions and the design of the study, personal involvement and the ethical issues that arise on the sane are a stumbling block to the efficacy of the study. In most cases, the time requirement normally leads the researcher to hire the services of other individuals. When other individuals are hired to help with the development and implementation of the study, the costs are likely to be higher. It is, therefore, difficult to conduct a survey using this method of interviews in a large and dispersed sample size. Conclusion In conclusion, this study aims at deriving not only the percentage change of the market segment occasioned by the reduction of the Daz detergents but also to understand the reasons occasioning the change. It is, therefore, efficient to take a method of study that will yield both the results requires the same. The qualitative approach is an effective modality of understanding the change while it also yields the data that will project the change in the consumer dynamics for the product. Bibliography BABBIE, E. (2013). The basics of social research. Cengage Learning. BRYMAN, A. (2004), Social Research Methods. Oxford: Oxford University Press. CRESWELL, J. W., & CLARK, V. L. P. (2007). Designing and conducting mixed methods research. ELLIOTT, J. (2005). Using narrative in social research: Qualitative and quantitative approaches. GOMM, R. (2009). Key concepts in social research methods. Palgrave Macmillan. HAMMOND, M., & WELLINGTON, J. J. (2013). Research methods: The key concepts. Routledge. NAGLE, T. T., & HOLDEN, R. K. (2013). Strategy and tactics of pricing. Pearson Education Limited. Sage. PICKARD, A. (2012). Research methods in information. Facet publishing. REED, M. AND MARSH, D. (2002) Combining Quantitative and Qualitative Method, in Marsh, DAVID AND GARY STOKER (eds.) Theory and Methods in Political Science. 2nd Edition. Basingstoke: Palgrave Macmillan. WEATHINGTON, B. L., CUNNINGHAM, C. J., & PITTENGER, D. J. (2010). Research methods for the behavioral and social sciences. John Wiley & Sons. Read More