Strategic Pricing and Firm Success: A Study of SMEs in Zimbabwe

Abstract

Small to medium enterprises in Zimbabwe face a number of challenges. Access to financing continues to be a significant impediment to the creation, survival and growth of SMEs. SMEs are perceived to be a high risk profile by financial institutions. Managerial skills in handling finances and other technical requirements are often limited. This study focuses on yet another critical factor that determines the success and viability of any business. It is strategic pricing. This factor has received very little attention from researches. SMEs have multiple costs such as licensing, property fees, electricity, administrative costs, mailings and advertising. Strategic pricing means analysing diverse factors and deciding on a price that will cover costs of goods, overhead and gross margin. To that end, this study wishes to show the relationship between strategic pricing and firm performance in the context of Zimbabwe. Thus the relationship between strategic pricing and firm performance is measured using the following business perspectives, namely, profit maximisation, sales maximisation, customer satisfaction, survival, liquidity achievement, price differentiation and cost coverage. The questionnaire approach was used to collect data from a convenient sample of 50 SMEs drawn from all sectors of the economy. The study was conducted in Gokwe District in the Midlands Province. The SPSS Version 20 Software was used to analyse data. The results of the study show that there is a positive relationship between strategic pricing and firm performance (r = 0,654, p = 0, 01).