The Determinants of Price Adjustments in Retail Supermarkets

Abstract

This paper examines the determinants of price adjustment decisions by supermarkets to increase or decrease prices for 11 different food categories and evaluates the characteristics of these firms that influence these decisions. We use a unique dataset to analyze firm variables and industry variables and their impact on price adjustment in supermarket stores. The study contributes to the price adjustment literature by identifying determinants of price behavior by stores and product category. We find that the rationale for increasing prices differs from that for decreasing prices, retailers make different adjustment decisions based on product category, and market-level controls have little impact.

Pricing Strategies in Pork-based Agribusinesses: Evidence from Zimbabwe

“…However, there is a disparity in the use of negotiated pricing as identified by Nagler et al (2015), Kenyon and Purcell (1999), Ajala and Adesehinwa (2007) and McEwan and Duffy (2000). The study also supports the findings by Volpe, Risch, and Boland (2015) and Jumah (2000) of the use of profit orientation in pork industries. However, it falls contrary to Buhr's (2004) findings of competitiveness objectives in pork industries.…”

“…Buhr (2004) found that pig industry organisations utilised competitive pricing objectives. However, Volpe, Risch, and Boland (2015) found that pork price increases and decreases were highly dependent on supplier prices and promotional prices, with least influence from competitor prices, indicating that pricing objectives were mainly swayed towards profit and sales orientation.…”

Competitors matter: How competitors' actions moderate the influence of firm profitability on the prioritization between growth and efficiency increase

“…The negative consequences of competitors' price cuts come quickly into effect for the focal firm because they “work directly on purchase behavior […] rather than on cognitive processes preceding purchase” (Steenkamp et al, 2005, p. 38). Price cuts of competitors can lead to an erosion of market share and profitability of the focal firm (Chen & MacMillan, 1992; Smith, Ferrier, & Ndofor, 2001; Steenkamp et al, 2005; Upson, Ketchen, Connelly, & Ranft, 2012; Volpe, Risch, & Boland, 2017). They are especially threatening if other companies imitate this competitive action and thus start a price war (Rindova et al, 2004; Smith et al, 1991).…”

Market competition and pricing strategies in retail supply chains

“…Second, this paper is based on store‐level analysis rather than product‐level analysis. Many researchers have studied dynamic pricing, changing the optimal price as demand varies, to analyze the retail industry, but they have merely taken into account the retailers' store level competition effect (Bitran & Caldentey, 2003; Elmaghraby & Keskinocak, 2003; Hamister & Suresh, 2008; Volpe & Cho, 2019; Volpe, Risch, & Boland, 2017). Previous marketing studies have employed the brand or product category as a level of analysis since each product line has a different demand pattern as well as a unique product life cycle (Nijs, Srinivasan, & Pauwels, 2007; Shankar & Bolton, 2004).…”