Pricing strategies in pork-based agribusinesses: evidence from Zimbabwe

Abstract

Agribusinesses utilise an array of pricing strategies and practices that may be effective under certain circumstances. Price dictates income, directs the quantity supplied and demanded, provides an indication to customers, and shifts ownership. The objective of the study was to evaluate the current pricing strategies being employed in the Zimbabwean pork industry. The study utilised a cross-sectional survey of 166 pig producers, six pork abattoirs and 24 pork butchers in Mashonaland Central Province of Zimbabwe. A standardised pre-coded questionnaire was the research instrument utilised. Descriptive statistics, MANOVA and multiple linear regression were utilised to analyse the data. The results indicated that agribusinesses were utilising break-even pricing, which is cost-oriented, through a formula price, pursuing profit-oriented pricing objectives, through a one-price policy, aiming for a low-penetration pricing policy, with no discount policy and managing a profit-to-cost ratio between 0% and 4%. The study recommends that the industry be flexible in its pricing mechanisms through utilising sales-oriented objectives and appropriate discount policies to induce “goodwill” within the industry. The industry is also recommended to vertically integrate in order to spread and dilute price risk to allow flexibility in pricing, and to utilise premium pricing.

Keywords: Zimbabwe; pricing strategy; pork industry; agribusiness