Differential pricing & promotion and their effect on growth of SMEs which offer standardized services : A Case Study of Snowhite Dry Cleaners Pakistan

University essay from Högskolan i Skövde/Institutionen för teknik och samhälle; Högskolan i Skövde/Institutionen för teknik och samhälle

Abstract:

Problem: In bid to stay competitive in the industry, SMEs have to apply several  formal marketing techniques which will help them edge past their competitors regardless of the many operational challenges they are facing. Moreover, through the first questionnaire the authors realized that if the case company could appreciate the use of marketing techniques in the market, it would gain more market share hence realizing organic growth. However this entirely depends on the leadership and management teams which also have to be innovative in the market place which will eventually create value for the customers who tend to be loyal and as such purchase the service or product repeatedly. In addition, the management and leadership teams should seek cultural integration and talent which will enable the SMEs to achieve their vision hence survival in the business.

Purpose: The issue under investigation during this research will be “the effect of differential pricing and promotion on the growth of SMEs which offer standardized services.” This research will add to the existing knowledge relevant to the SMEs in line with the marketing activities and growth. In addition, this research will help Snowhite Dry Cleaners in particular, to achieve growth if the managerial implications are put into consideration as highlighted in this thesis. For the authors, this thesis is a pre-requisite to the award of a masters‟ degree in marketing with a major in business administration once successfully completed.

Method: An inductive approach has been used through out this thesis while we adopted a case study design. In order to fulfill the purpose of this thesis, three unstructured questionnaires were sent to the director of operations of the case company.

Theories: The theoretical areas  that were used in this thesis consisted of theories regarding; Competitive strategy,  Pricing of services,  Promotion of services,  Services marketing management, Business growth, Marketing management etc

Conclusions: The authors came to a conclusion that promotion strategies induce trial of product or service hence organic growth in the long-run. They also impact on customer choice of product or service and service provider which leads to increased demand hence organic growth. As well, value-adding promotions for services increase the demand and market share arising from less competitor activity due to fear of adverse price wars. In addition, promotions increase perceived customer value which results into repeated purchases of a product or service hence organic growth. However, value-increasing promotions are recommended for product firms otherwise they will have a negative impact on sales save for objectives like margin reduction or tarnishing the competitors‟ image. Notably, if value adding promotions are run for a long time, they risk becoming obsolete to the customers who seek value on a daily basis. In addition, differential pricing has no effect on sales growth for a service firms which offer standardized services  like laundry but rather, it is likely to have a positive impact on firms which sell tangible products as a primary objective and treating the services offered as peripheral.

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