The effect of pricing on market share of supermarkets in the ngaka modiri molema district of the North-West Province of South Africa

Abstract

This study propped up as a result of the lack of awareness on the role of pricing in market share gain or loss among retailers in general. The empirical focus of the study was in the Ngaka Modiri Molema district. The study was performed on the three largest supermarkets in the fast consumer goods retail sector within the Ngaka Modiri Molema district (Pick n Pay, Spar and Shoprite). The research objectives were to: • To examine the impact of pricing on the market share of the three largest grocery retailers in the Ngaka Modiri district. • To investigate the type of pricing decisions made by the three largest grocery retailers in the Ngaka Modiri district. • To examine the challenges face by these supermarkets in making pricing decisions. • To determine the influence of these pricing decisions on their consumer's behaviour and market share performance. • To determine the importance of market share for Ngaka Modiri Molema grocery supermarkets. • To recommend possible pricing decision majors that can be use by Ngaka Modiri Molema retailers to gain market share. Literature review was done on pricing and market share related issues. The research methods employed were exploratory and a quantitative research design. The population of the study comprised of the three largest supermarkets in the Ngaka Modiri Molema district. Focus was in the Ditsobotla, Mafikeng and Ramotshere local municipalities. The head quarters of each of the focus local municipalities comprised the targeted area for selected participating supermarkets. Purposive sampling was used in selecting participating supermarket stores. Participating employees included the regional and branch managers of each sampled supermarket brand. Data collection involved the selling price index (SPI) and the sales figures for 11 selected items commonly available in the database of the selected supermarkets (Appendix 4). The data analyses employed an ordinary linear simple regression model specification and a panel data analyses technique. The study revealed that pricing play a major role in market share gain or loss among Ngaka Modiri Molema retailers. Hence, there is need to increase retailers awareness with regards to the mentioned finding. Practical recommendations were made and a pricing decision support system suggested to assist Ngaka Modiri Molema retailers