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CHAPTER ONE .................................................................................................................. 2INTRODUCTION ............................................................................................................... 2
Background of the Study ................................................................................................. 2Statement of the Problem .................................................................................................3
Purpose of the Study (General Objective) ....................................................................... 3.......................................................................................................................................... 6Sources: Researcher .........................................................................................................6
CHAPTER TWO ................................................................................................................. 9LITERATURE REVIEW .................................................................................................... 9
Introduction ...................................................................................................................... 9WHAT A PRICE SHOULD DO ................................................................................. 9PRICING OBJECTIVES ........................................................................................... 10PRICING STRATEGIES ..........................................................................................11PROMOTIONAL PRICING .....................................................................................12A DEEP CUT STRATEGY .......................................................................................14
THE ALTERNATIVE STRATEGY .........................................................................16PRODUCTIVITY IN TERMS PROFIT MARGIN ......................................................17Gross Profit Margin ...................................................................................................18 Net Profit Margin ....................................................................................................... 19
PRODUCTIVITY GROWTH IN SUPERMARKETS ..................................................20CONCLUSION ..............................................................................................................24
CHAPTER THREE ...........................................................................................................26METHODOLOGY ............................................................................................................26
Introduction ....................................................................................................................26Type of Research ...........................................................................................................26Population ...................................................................................................................... 26
Sampling and sampling technique .................................................................................27Data Collection ..............................................................................................................27Instrument of Data collection .........................................................................................27Instrument validity .........................................................................................................28Instrument Structure to meet Research Objectives ........................................................ 28Procedure for data collection .........................................................................................28Method of data analysis .................................................................................................28Conclusion .....................................................................................................................28
References ..........................................................................................................................30
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CHAPTER ONE
INTRODUCTION
Background of the StudyThe Rwandan supermarket industry as per the description of supermarkets that I will
relate to my study has over the past decade experienced an increasing number of new
entrants, a sustained increase in number of participants as well as an accelerated rate of
increase in market growth for this industry till date. Factors accounting for this ongoing
saturation and expansion of this industry can be attributed to more than one reason, all of
which may fall beyond the scope of this study and consequently will likely not be
discussed here.
The researcher’s interest in choosing this topic aroused from my observance of the
increasing number of participants into this sector of business in Rwanda. Another reason
was my keen interest into wanting to gain knowledge of how these supermarkets are able
to thrive and survive in the present and emerging market competition.
There are different forms of retail firms within the retail industry which may be
considered as supermarkets but for the scope of this study I will like to limit my
definition of supermarkets to the conventional supermarkets which maybe defined or
described as a self-service or departmentalized food store with meat, grocery, produce
departments, as a well as a range of assorted foods and related products.
Retailers have to select prices which are most competitive and offer consumers with a
satisfactory value for prices which they pay for the products received and services
rendered unto them. Pricing may not have been so relevant if supermarkets did not face
competition, competition provides consumers with choice and substitutes at the expense
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of the retailers and thus in a competitive environment retailers need to consider the
sensitivity of consumers to product prices when pricing goods.
Statement of the Problem
Retailers in considering the other principles of the retailing concept may tend to shift
their focus and emphasis from the value driven principle and price orientation whilst
highlighting the other principles in an attempt to formulate a profitable retail strategy.
This study aims to highlight the importance of pricing in a retail supermarket, the
different pricing techniques available and whether we can effectively manage product
pricing to achieve productivity targets. There fore the researcher will give answer to the
following questions:
• To what extent is supermarkets are able to efficiently carry out pricing strategies?
• What is the actual level of operations in the supermarkets?
• To what extent does product pricing improve the operation of supermarkets in
Rwanda?
• What are the challenges faced by the supermarket in efficiently carry out pricing
strategies?
Purpose of the Study (General Objective)
This study is intended to improving productivity of Rwandan supermarkets through
product pricing.
Specifically the study will have the following objectives:
• To evaluate the extent to which supermarkets are able to efficiently carry out
pricing strategies
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• To assess the actual level of operations in the supermarkets
• To evaluate the extent to which product pricing improves the operation of
supermarkets in Rwanda
• To find out about the challenges faced by the Rwandan supermarket in efficiently
carry out pricing strategies
Significance of Study
• To provide Rwandan retailers with significant insight about pricing strategy and
its potential impact on profit margins and inventory turnover period, all of which
have a direct relationship with sales, revenue and profit.
• Providing Rwandan retailers with significant knowledge of the value driven
principle of the retailing concept and its relationship with pricing and profit
margins of a retail supermarket.
• A guide retailer’s can follow in understanding what price strategy or approach
will be most applicable for every condition, product and service offered.
Hypothesis
The improvement of Rwandan supermarket productivity can not be improved
through product pricing
Basic Assumptions
1. All the respondent are in one Region
2. The respondents will all be from Rwanda
3. Most of the respondents will be females.
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Limitations of the Study
During the period of the research, the researcher anticipates the following
limitations:
There are a lot materials required to carry out the research but its access is limited.
It is much more difficult to come up with the right facilities like computers, pens, Internet
access and most of all printers to print the compiled work.
There will be an enormous of data that will be analyzed but finding it and
retrieving it is very difficult because it may be too much and it may take a very long time
to get something small.
Respondents’ unwillingness to cooperate, the researcher will not take it for
granted and guarantee that every respondent will be willing to answer the question. The
researcher will overcome this obstacle by asking the same question in different ways, a
method referred to as triangulation.
Possible Solutions
The researchers will use books and Internet where possible in retrieving the
necessary data required in their research.
The researchers intend to use self administered questionnaire on their respondents
in obtaining the necessary information required in their research.
The researchers will work within the time frame given by the Institution during
their research by use of their own personal timetable of scheduled meetings, by being
committed and disciplined.
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Conceptual framework
Sources: Researcher
Delimitation of the Study
Content scope
The study is limited to the improvement of Rwandan supermarket profitability
through product pricing strategy. The researcher will look keenly at the stages of product
pricing and how it can be improved in order to improve the profitability of supermarket.
Time scope
The research will take a period of 3 months from the period when the proposal
will be approved by the supervisor to the period of the presentation of the final findings.
In this period, there will be collection of raw data from the field, sorting out the relevant
information, interpretation of the data and writing the final copy which will be handed
over to the supervisor
Operational Definition of Terms
Retailer: A retailer is a name assumed by anybody in the decision making process of a
retail supermarket
PRODUCT PRICING
Premuim PricingPenetration pricingPrice Skimming
PRODUCTIVITY IN
TERMS OF
PROFITABILITY
MARGIN
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Retail Supermarket: A self-service or departmentalized food store with grocery, meat,
produce foods, a wide range of assortment of foods and other related products
Retail Strategy: The overall plan guiding a retail firm
Pricing Strategy: The overall plan guiding a retail supermarkets pricing process
Profit Margin: Can be referred to as profit for the period divided by total sales revenue
for the period multiplied by a hundred
Value Driven Principle: Retailer offers good value to customers, whether it to be
upscale or discounts. This means having prices appropriate for the level of products and
customer service.
Productivity: Cost as a percentage of sales. Productivity can also be the efficiency with
which a retail strategy is carried out.
Organization of the Study
The study is composed of three chapters namely: Introduction, Literature review
and Research Methodology
Chapter 1 contains the Background of the Study, Statement of the Problem,
Purpose of the Study, Significant of the Study, Statement of Hypothesis, Basic
Assumptions, Limitation of the study, Delimitation of the Study, definition of terms and
Organization of the study.
Chap 2 contains the Literature, other similar studies and ideas for the
development of the conceptual framework and an understanding of the research in
general.
Chap 3 outlines the methodology. This includes the methodology that the
researcher is going to use in order to carry out the research. It includes Population of the
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Study, Sample Size and Sampling Procedure, Procedure of the Study, Research Design,
Data Collection, and Data analysis.
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CHAPTER TWO
LITERATURE REVIEW
Introduction
This chapter presents literature reviewed on improving productivity of Rwandan
supermarkets through product pricing. It includes literature about pricing, what a price
should do, what is promotional pricing, productivity and supermarkets.
PRICING
Pricing is the process of determining what a company will receive in exchange for its
products. Pricing factors are manufacturing cost, market place, competition, market
condition, and quality of product. Pricing is also a key variable in microeconomic price
allocation theory. Pricing is a fundamental aspect of financial modelling and is one of the
four P’s of the marketing mix. The other three aspects are product, promotion, and place.
Price is the only revenue generating element amongst the four Ps, the rest being cost
centres (www.thepricingpractice.com)
WHAT A PRICE SHOULD DO
There are three things a well chosen price is expected to do i.e. achieve the financial
goals of the company (e.g., profitability), fit the realities of the marketplace (Will
customers buy at that price?), support a product's positioning and be consistent with the
other variables in the marketing mix.
Prices are influenced by the type of distribution channel used, the type of promotions
used, and the quality of the product. A Price will usually need to be relatively high if
manufacturing is expensive, distribution is exclusive, and the product is supported by
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extensive advertising and promotional campaigns. Low prices can be viable substitutes
for product quality, effective promotions, or an energetic selling effort by distributors.
An efficient price is a price that is very close to the maximum that customers are prepared
to pay. In economic terms, it is a price that shifts most of the consumer surplus to the
producer. A good pricing strategy would be the one which could balance between the
price floor (the price below which the organization ends up in losses) and the price
ceiling (the price beyond which the organization experiences a no demand situation)
www.LSBF.org.uk .
PRICING OBJECTIVES
The firm's pricing objectives must be identified in order to determine the optimal pricing.
Common objectives include the following:
Current profit maximization
This seeks to maximize current profit, taking into account revenue and costs. Current
profit maximization may not be the best objective if it results in lower long-term profits.
Current revenue maximization
This seeks to maximize current revenue with no regard to profit margins. The underlying
objective often is to maximize long-term profits by increasing market share and lowering
costs.
Maximize quantity
This seeks to maximize the number of units sold or the number of customers served in
order to decrease long-term costs as predicted by the experience curve.
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Maximize profit margin
This attempts to maximize the unit profit margin, recognizing that quantities will be low.
Survival
In situations such as market decline and overcapacity, the goal may be to select a price
that will cover costs and permit the firm to remain in the market. In this case, survival
may take a priority over profits, so this objective is considered temporary.
Status quo
The firm may seek price stabilization in order to avoid price wars and maintain a
moderate but stable level of profit.
For new products, the pricing objective often is either to maximize profit margin or to
maximize quantity (market share). To meet these objectives, skim pricing and penetration
pricing strategies often are employed. Joel Dean discussed these pricing policies in his
classic HBR article entitled, Pricing Policies for New Products. (www.netmba.com)
PRICING STRATEGIES
There are many ways to price a product. Let's have a look at some of them and try to
understand the best policy/strategy in various situations.
Premium Pricing
Use a high price where there is uniqueness about the product or service. This approach is
used where a substantial competitive advantage exists. Such high prices are charge for
luxuries such as Cunard Cruises, Savoy Hotel rooms, and Concorde flights.
Penetration Pricing
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Prices are set artificially low in order to gain market share. Once this is achieved, the
price is increased. This approach was used by France Telecom and Sky TV.
Economy Pricing
This is a no frills low price. The cost of marketing and manufacture are kept at a
minimum. Supermarkets often have economy brands for soups, spaghetti, etc.
Price Skimming
Charge a high price because you have a substantial competitive advantage. However, the
advantage is not sustainable. The high price tends to attract new competitors into the
market, and the price inevitably falls due to increased supply. Manufacturers of digital
watches used a skimming approach in the 1970s. Once other manufacturers were tempted
into the market and the watches were produced at a lower unit cost, other marketing
strategies and pricing approaches are implemented.
Premium pricing, penetration pricing, economy pricing, and price skimming are the four
main pricing policies/strategies. They form the bases for the exercise. However there are
other important approaches to pricing.
PROMOTIONAL PRICING
Promotional pricing is a sales and marketing technique which involves reducing the price
of a product or service to attract customers. This technique can be effectively used across
numerous industries including food services, cosmetics, and household cleaning supplies.
This often involves reducing prices to unsustainably low levels. In some cases, products
and services may be sold at or below cost. A buy one get one free scheme may even be
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used. When this is done, interest in goods can be greatly increased; meaning sales are
also likely to increase dramatically (www.LSBF.org.uk )
Psychological Pricing
This approach is used when the marketer wants the consumer to respond on an emotional,
rather than rational basis.
Product Line Pricing
Where there is a range of product or services the pricing reflect the benefits of parts of
the range. For example car washes. Basic wash could be $2, wash and wax $4, and the
whole package $6.
Optional Product Pricing
Companies will attempt to increase the amount customer spend once they start to buy.
Optional 'extras' increase the overall price of the product or service. For example airlines
will charge for optional extras such as guaranteeing a window seat or reserving a row of
seats next to each other.
Captive Product Pricing
Where products have complements, companies will charge a premium price where the
consumer is captured. For example a razor manufacturer will charge a low price and
recoup its margin (and more) from the sale of the only design of blades which fit the
razor.
Product Bundle Pricing
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Here sellers combine several products in the same package. This also serves to move old
stock. Videos and CDs are often sold using the bundle approach.
Geographical Pricing
Geographical pricing is evident where there are variations in price in different parts of the
world. For example rarity value, or where shipping costs increase price.
Value Pricing
This approach is used where external factors such as recession or increased competition
force companies to provide 'value' products and services to retain sales e.g. value meals at
McDonalds (www.marketingteacher.com)
Retail Pricing
Retailers offer a wide selection of goods and consumers often make a choice of a
purchase decision in respect of a basket of goods not a single product. The consequence
being that retailers decide what price policy is most like to encourage consumers to
patronize his shop rather than that of a competitor. The basic choice of pricing strategies
(assuming that price is an important element in the market mix) is between a series of
deep price cuts (i.e. in relation to the recommended or the usual competitive prices) no
limited number of products and more modest price cuts on a wider range of products.
A DEEP CUT STRATEGY
Amongst the two strategies there appears to be dialectic of thought as to which strategy
works out best for both retailers and consumers. The latter approach was justified on the
grounds that since the cost sine the cost of search makes it difficult for consumers to
judge whether the overall level of prices (or indeed the prices of the basket of goods that
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they intend to buy) are lower in one shop than in the other, they will evaluate the prices
on the basis of the number of goods. Thus the retailer need reduce on a limited number of
prices, ensuring of course that the reductions are adequately advertised. The advocates of
this approach could point to the fact that it had been adopted by the multiples, and
especially the grocery multiples, who had rapidly increased their market shares in the
recent years.
More recently deep price cut approaches may not always be most successful even in the
groceries but let us accept that there will be in at least some circumstances grounds for
adopting a policy which involves substantial differences in gross margins earned on
different product.
A sound guide to pricing policy is that margins should vary inversely with the elasticity
of demand and in a manufacturing firm price will continue to reduce only so long as
either the profit or the revenue derived from the product continues to rise.
In retailing prices of the products may be reduced beyond the point at which the profit
and even the revenue derived from these products begin to decline. This may occur if the
retailer believes that the loss will be outweighed by the revenue and profit derived from
the other products bought by the consumers who have been attracted into the shop by the
price cuts. WE can therefore conclude that the higher the internal cross elasticity’s among
products, the more successful a policy of selective price cuts is likely to be.
Holdren has suggested that the products for which the transfer effect (a similar concept to
cross price elasticity) is likely to be greatest are those (a) which are produced in multiple
units, (b) whose price is high enough to permit a reduction which is perceptible, (c)
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which are of great budgetary importance, (d) which are advertised so heavily as to leave
consumers highly price conscious. Products having one or more of these characteristics
include flour, tinned milk, baby foods, coffee, sugar etc. Products with a low transfer
effect also include things like condiments and shoe laces, goods with a high price
elasticity, fresh produce and impulse items such as potted plants.
It is not always easy to draw the lines between these two groups of products and the
transfer effects of products do change over time. What retailers can do is to stock shops
mainly non food items which were customarily sold by specialty shops at high margins.
Once consumers become accustomed to seeing such products on supermarket shelves, the
transfer effect may become much greater. An equally important consideration in these
outlets is the high own price elasticity attaching to some of these products, together of
course with the convenience to the consumer of finding a wide product range under one
roof.
THE ALTERNATIVE STRATEGY
I referred earlier to the fact that much of the running in the U.K. grocery market in the
recent years has been made by firms which have adopted a policy of cutting prices across
the board. Some indication of the advantage in prices offered to consumers by these firms
in a given study of food prices in the North of England. A survey of prices of 120 food
products showed that while the cheapest conventional multiple store sold, this basket at
12.5 percent below the recommended prices, the 9 discounters sold at from 14.3 percent
to18.9 percent below, the majority tending towards the higher figure. The likely outcome
of the competition between firms adopting these alternative strategies is that both will
survive, each appealing to groups of consumers having somewhat different requirements
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and attributes. Nevertheless the indications are that current economic conditions, with a
rapid rate of inflation, favours across the board’ policy.
Consumers may become confused about the market price of individual products. It also
appears that this confusion may be accompanied by irritation when frequent price
promotions make the identification of prices even more erratic. Consumer’s attitudes on
this point are especially important for the large retailer who stocks many categories of
goods, since he has of course the greatest scope for varying the margins amongst these
categories. Consumers are likely to respond more favourably to lower price levels on
goods various alternative substitutes.
There are a range of options open to the retailer at both the strategic and the tactical level
added to the many different forms of non-price competition, the alternative competitive
stances that can be adopted by the retailer are very varied.
PRODUCTIVITY IN TERMS PROFIT MARGIN
A ratio of profitability calculated as net income divided by revenues, or net profits
divided by sales. It measures how much out of every dollar of sales a company actually
keeps in earnings. Profit margin is very useful when comparing companies in similar
industries. A higher profit margin indicates a more profitable company that has better
control over its costs compared to its competitors. Profit margin is displayed as a
percentage; a 20% profit margin, for example, means the company has a net income of
$0.20 for each dollar of sales.
Looking at the earnings of a company often doesn't tell the entire story. Increased
earnings are good, but an increase does not mean that the profit margin of a company is
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improving. For instance, if a company has costs that have increased at a greater rate than
sales, it leads to a lower profit margin. This is an indication that costs need to be under
better control.
Imagine a company has a net income of $10 million from sales of $100 million, giving it
a profit margin of 10% ($10 million/$100 million). If in the next year net income rises to
$15 million on sales of $200 million, the company's profit margin would fall to 7.5%. So
while the company increased its net income, it has done so with diminishing profit
margins. (www.investopedia.com)
A company's earnings do not always tell the entire story. Increased earnings are good, but
an increase does not mean that the profit margin of a company is improving. For instance,
if a company's costs are rising at a faster pace than are sales, this will lead to a lower
profit margin, indicating that the company should rein in its costs. Consider a company
that has net income of $10 million from sales of $100 million, giving it a profit margin of
10% ($10 million/$100 million). If in the next year net income rises to $15 million on
sales of $200 million, the company's profit margin will fall to 7.5%. Although the
company has increased its net income, it has done so with diminishing profit margins
(www.financial-dictionary.thefreedictionary.com)
According to (begineerinvest.about.com) every organization or business entity must
come up with two types of profit margin in order to evaluate the productivity of an
organization in terms of profit margin
Gross Profit Margin
Although we are only a few lines into the income statement, we can already calculate our
first financial ratio. The gross profit margin is a measurement of a company's
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manufacturing and distribution efficiency during the production process. The gross profit
tells an investor the percentage of revenue / sales left after subtracting the cost of goods
sold. A company that boasts a higher gross profit margin than its competitors and
industry is more efficient. Investors tend to pay more for businesses that have higher
efficiency ratings than their competitors, as these businesses should be able to make a
decent profit as long as overhead costs are controlled (overhead refers to rent, utilities,
etc.) To calculate gross profit margin, use this formula: Gross Profit ÷ Total Revenue
Calculating Sample Gross Profit Margin
For illustration purposes, let's calculate the gross profit margin of company X Golf
Supply (a fictional company) using its income statement.
Assume the average golf supply company has a gross margin of 30%.
We can take the numbers from X company Golf Supply's income statement and plug
them into our formula: $162,084 gross profit ÷ $405,209 total revenue = 0.40.The
answer, .40 (or 40%), tells us that Greenwich is much more efficient in the production
and distribution of its product than most of its competitors.
Net Profit Margin
The profit margin tells you how much profit a company makes for every $1 it generates
in revenue or sales. Profit margins vary by industry, but all else being equal, the higher a
company's profit margin compared to its competitors, the better.
Calculating Net Profit Margin
To calculate net profit margin, several financial books, sites, and resources tell an
investor to take the after-tax net profit divided by sales. While this is standard and
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Pepsi’s sales (2006). Wal-Mart’s success is often attributed to its expert logistics systems
(2006; 2001) and its cost conscious “corporate culture.” The productive gap between
large national chains and single unit retailers is quite large (2006) and it is conceivable
that food retailing exhibits even more asymmetries than the retail sector average. In
addition, Wal-Mart’s aggressive pricing has been credited with reducing operating
margins of competing supermarkets and lowering consumer prices for many food items
(2007).
Still with reference with what is said in www.lvthesis.typed.com on, there has been much
speculation about the competitive effects of Wal-Mart’s expansion such as for example,
the February 2005 bankruptcy filing of Winn-Dixie, large supermarket chain based in
Florida, was widely blamed on Wal-Mart’s rise (2005). In fact, vast majority of
supermarket bankruptcy cases in the last decade have cited Wal-Mart as a catalyst (2003).
For strategic management, budgeting as well as pricing, there can be recognition of Every
Day Low Pricing strategy has proved to be successful innovation resulting in higher
profits to super-markets adopting it in competition with Promotional Pricing.
Conventional wisdom attributes this success either to lower costs or to Every Day Low
Pricing better serving time constrained consumers, while discouraging cherry pickers
who seek promotions.
However, it is unclear that such cost savings are being fully realized since Every Day
Low Pricing stores also engage in price promotions. Aside, continued existence of promo
stores means that costs are not the only factor, and they compete effectively without
relying just on the cherry pickers. Furthermore, experimental evidence suggests that a
supermarket cannot obtain higher profits by merely setting constant low prices, leading to
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the question: exactly what makes Every Day Low Pricing successful? This question is of
particular relevance to both academics and practitioners who have been intrigued by the
success of this retailing strategy. Amiably, supermarket issues will be a part of research,
economic analysis of competition, and the empirical findings should be of interest to the
broader community of researchers and managers.
Strategic decision-making simply refers to the long-term direction of an organisation. By
means of the configuration of the resources of the organisation, the organisation
strategizes to achieve sustainable competitive advantage while also fulfilling the
expectations and aspirations of all the stakeholders. Budgeting, as the foundation of all
financial plans, refers to the process of determining planned expenses and revenues. It is
also planning for investments either long-term or short-term. Product pricing, on the other
hand, means to establish a selling price for a product. Prices of the products have a direct
effect on the success of the business. As such, prices should cover costs and profits and
must be established to assure sales (www.12manage.com).
Definition of supermarkets
There are different forms of retail firms within the retail industry which may be
considered as supermarkets but for the scope of this study I will like to limit my
definition of supermarkets to the conventional supermarkets which maybe defined or
described as a self-service or departmentalized food store with meat, grocery, produce
departments, as a well as a range of assorted foods and related products.
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Profile & Trends in retail business environment in Rwanda
The retail industry in Rwanda is gradually expanding. In urban areas, a prospering
population just returning from working in Europe or the US is seeking foods from these
western markets. There is a developing trend towards larger outlets and chains. The
Ghanaian consumer has shown a preference for imported foods and high value consumer-
ready products, which are prepared and packaged for use on one or two occasions. The
development of the retail sector will be fuelled by this demand in the coming years. By
Western standards, the food retail industry in Rwanda is rudimentary. There are only
three supermarkets, which have branches in more than one city or urban centre. Three
large supermarkets with only one outlet are located in the capital city, Kigali. Several
medium-sized independent supermarket units have recently been opened in the urban
centers. The majority of outlets in the country are tiny groceries in rural and urban areas
of below 10 sq. m., offering basic product lines. The import of food products is
increasing, encouraging the development of larger ranges to offer more choices to
consumers, annual retail food sales in Rwanda increased by about 30% during the mid to
late 1990’s. Following the liberalization of the Rwandese economy, there has been an
increase in private sector economic activities. In 1999, retail food sales grew by about 10
percent. The establishment of several small to medium sized retail outlets in Rwanda, by
independent retailers, has greatly contributed to the growth of the retail food sector.
Given the fact that these retailers constitute the companies with the largest buying power,
they also act as importers and distributors for imported goods to other, smaller retailers
and vendors in the rest of the country. Rwanda’s population is rapidly growing at
approximately 3.2% annually. With improved income levels (resulting from the increase
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in private sector economic activities), better customer service policies, and continuing
inefficiency in local food production and processing, the Rwandese environment is
supportive of growth in retail sales of imported consumer-ready food products. Since the
Government of Rwanda is projecting, Rwanda as the gateway to the East-Africa sub-
region, opportunities exist for increased sales of U.S food products, since imported food
products are often exported as "new products" from Rwanda into the sub-region.
CONCLUSION
Profit Margins and pricing strategies are quickly reformulating the “rules of the game”
for competitors in this industry. To prepare competitors to take advantage of
opportunities and meet challenges requires special and immediate attention and a re-
design of retail strategy to secure a market share in the emerging industry of
supermarkets in Africa and Rwanda for that matter. Development agencies in this sector
must understand that “traditional product markets” will mean supermarkets.
Market-oriented programs and policies will have to be supermarket-oriented because in
any given economy three or four chains can command up to 50% or more of the
supermarket sector. Development programs and policies must learn to deal with just a
handful of giant companies. This is an enormous challenge, and demands an urgent
review and revision of current ideas, strategies, and practices.
There are only three supermarkets which have branches in more than one city or urban
centre. (Adade 2005) States that there are three large supermarkets with only one outlet
located in the capital city Kigali although there are several medium-sized independent
supermarket units were opened in the urban centers. Supermarkets served 10% of the
market size with full-line stock level and self-serve service method. There are several
areas therefore that Rwandese supermarket could be improved such as strategizing for
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better services for the customers, for instance, and by means of effective budgeting and
product pricing.
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CHAPTER THREE
METHODOLOGY
Introduction
The chapter elaborates on the type of research population, sampling design and sampling
technique, data collection procedure and method of data analysis. In an attempt to find
out how profit margins can be related to product pricing in the retail sector, this topic was
chosen. Guided by the principles of conducting surveys, several methods would be
employed in gathering the information and analyzing them.
Type of ResearchThe research strategy that the study will utilize is the descriptive method. A descriptive
research intends to present facts concerning the nature and status of a situation, as it
exists at the time of the study (Creswell, 1994). It is also concerned with relationships
and practices that exist, beliefs and processes that are ongoing, effects that are being felt,
or trends that are developing (Best, 1970). In addition, such approach tries to describe
present conditions, events or systems based on the impressions or reactions of the
respondents of the research (Creswell, 1994). This research is also cross-sectional
because of limited time. This research is a study of a particular phenomenon (or
phenomena) at a particular time. (Saunders et al , 2003) Accordingly, cross-sectional
studies often employ the survey strategy, and they may be seeking to describe the
incidence of a phenomenon or to compare factors in different organizations
Population
For me to proceed with the study, I decided on a population: an identifiable group of
elements that are of interest to the researcher and pertinent to the specific information
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problem. (Hair, 2003). The target population for this study will be two supermarkets
located on the Spintex road.
Sampling and sampling technique
Convenient con-probability sampling would be used in obtaining forty representatives
amongst consumers from both supermarkets. Twenty customers from each supermarket
to prevent the selection from being biased, also two representatives from the management
of both supermarkets were selected to equip the researcher with a management
perspective of the issues at hand.
Data Collection
Type of Data
In this study, primary and secondary research will be both incorporated. The reason for
this is to be able to provide adequate discussion for the readers that will help them
understand more about the issue and the different variables that involve with it.
Source of Data
The primary data for the study will be represented by the survey results that will be
acquired from the respondents. The secondary sources of data will come from data
collected from other sources for other purposes that are of relevance to this research like
the website of of the supermarkets and their reciepsts.
Instrument of Data collectionData will be collected through administering of questionnaires
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Instrument validity
In General validity refers to the degree to which the instrument measure the constructs
that are intended to measure. My questionnaires was validated by giving it to my
supervisor to read through it for approval.
Instrument Structure to meet Research Objectives
From the consumer questionnaire: Questions 7 to 9 is structured to meet research
objective 1, question 10 satisfies research objective 2. From the management
questionnaire: Questions 7 to 10 is structured to meet research objective 1, questions 11
to 14 is structured to meet research objective 2, questions 15 to 19 are structured to meet
research objective 3
Procedure for data collection
This will require me to obtain a letter from my university introducing me as a student to
the two supermarkets for them to give me approval to conduct a research at their
premises by handing in questionnaires to consumers and management. When permission
is granted I will then proceed to acquiring the Data by going to the supermarkets and
handing in questionnaires to the consumers and management.
Method of data analysis
Figures, table, charts and percentages would be included in analyzing the result of the
study after administering the questionnaire with the aid of Microsoft Excel. This would
help for easy understanding of the data collected.
Conclusion
To elicit the views of both consumers of supermarkets and management of supermarkets
I will carry out this survey by preparing two main set of questionnaires for both
consumers and management to create a perspective on what drives consumers to shop at
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supermarkets and how management seeks to attract consumers. The researcher hopes to
deduce reformed recommendations as to what best practices by the diffusion of these two
perspectives.
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References
www.thepricingpractice.com
www.thepricingpractice.com
www.LSBF.org.uk .
www.netmba.com
www.LSBF.org.uk
www.marketingteacher.com
www.investopedia.com
www.financial-dictionary.thefreedictionary.com
www.lvthesis.typed.com,
www.lvthesis.typed.com
www.12manage.com