Industries that use price-based marketing strategies have a large market share than their competitors
The current business environment requires appropriate strategies to remain competitive in the market since the strategies help and guide firms to withstand the challenges posed by stiff competitors. According to the Rolland (2016) competitive environment requires a business to identify the best that will work for them and against their competitors and much business uses marketing strategies such as product, physical, people, price, promotional among many others in attracting their consumers, who are the determinant of the success of every business. , the, however, the price has been the fancy of many business organizations as it is the determinant of the purchasing behavior of consumers across the world.
Textile industry business environment experiences high competition as many companies provide the same product to the potential customers. Therefore, it is significant for every firm to analyze the level of completion in the marketplace. According to Michael Potter, the Competitive Advantage depends on five forces: new entrants, threats from substitute products, bargain power of customers, bargaining power of suppliers and rivalry within the industry (Parola,Risitano,Ferretti & Panetti,2017). This paper analyses the impact of price-based marketing strategies on the competitive advantage in the textile industry
Australians textile industry faces stiff competition as a result of the emergence of the online retailing of clothes and the constant customer’s behaviors. Different companies, use strategies such as pricing, promotional, people among others to remain relevant in the market and maintain the competitive advantages (Ibisworld, 2018). The Austrian textile is not strong enough to have a better global competitive edge since most of Australians cloth casually and the moderate climatic conditions, make the population spend relatively less amount in clothing as compared to other aspects such as housing, transport entertainment among many others(Shi,2015). Studies indicate that most of the companies use pricing strategy based upon the demand of the customers rather than the supply side of the industries, which tend to evoke the purchasing behavior of the customers Tawalbeh & Abu-Rumman 2015). The strategy is familiar to most hence tend to be irrelevant if not well constituted, therefore, it is very imperative for the textile industries to use price to gain a competitive advantage over competitors.
The major aim of this study is to determine the extent of impact created by price based marketing strategies on the competitive advantage in textile industry of Australia
• To determine the importance of price-based marketing strategies in the textile industry of Australia
The textile industry in Australia employs natural materials such as Banyan Tree fibers and Hemp, making it one of the leading international markets.
• To identify various price based marketing strategies adopted by textile organizations of Australia
• To determine the impact of price-based marketing strategies employed in the textile industry on the competitive advantage
• How does price based marketing strategies impact competitive advantage in the textile industry of Australia?
H1: Price based marketing strategies have a direct impact on the competitive advantage of the textile industries
H2: Industries that use price based marketing strategies have large market share than their competitors
Business sustainability relies on the level of the command in the marketplace that keeps on changing with the constant rise of competition especially with the popularity of the online shopping. The changing nature of the market, therefore, calls for every business entity to keep an eye on their competitor’s behavior while setting strategies to have the required competitive advantage over them. The competitive forces according to Porters are potential entrants, buyers, substitutes, and rivalry among the existing business. These forces are always the determinant of every business’ ability to compete and remain in the marketplace, therefore pricing competition is the major component employed by most firms.
Price refers to the amount of money that a consumer has to pay to get a particular product/service from a business organization. Pricing is important to the business operator and the consumers, as well as the competitors in the same environment (Beracha & Seiler, 2016). Price is one of the marketing strategies used by most of the business to outdo competitors as it defines the competitive position of every business. Most of the consumers use price as the determinant of the purchasing behavior as well as the strategy to evaluate the quality of a product
The pricing of a product is determined by various factors that are categorized as either internal or external: the internal include the cost of production since every business organizations are always established in recovering the variable and the fixed cost and are only recoverable through the pricing(Binkley & Chen,2016). Second, the predestined objectives of the firm such as those that want to increase return on investment charge higher prices while those that want large market share charge lower rates. Third, the image of the firm, for example, those than want goodwill in the market tend to charge lower prices than the counterpart and lastly the product lifecycle, for example during the product entry into the market, the price is always more economical to attract customers and during the growth, the price tends to increase.
The high cost of exportation due to freight charges and tariffs is a major challenge for the textile industry in Australia
On the other hand, the external factors include competition that will force firms to lower their prices in a competitive environment while raising the rates in a less competitive environment. Secondly, the consumers’ needs and purchasing power shapes the pricing of a product in a business environment (Gerber & Bury, 2018). Third the government control such as regulations to reduce the prices of specific products to enable the consumer’s accessibility. Fourth the economic conditions, for example during the recession consumers tend to possesses less money hence have low purchasing power.
Competitive Advantaged is a concept that suggests business capability to withstand the competition force through the satisfaction of the customer needs in a more effective way than the competitors (Huang & Lee, 2012). According to Porter Competitive advantage entails three strategies: Cost Leadership, Differentiation, and Focus. Through the cost Leadership, the business entity aims at becoming the lowest-cost provider by practicing large-scale production allowing the exploitation of the economies of scale, hence establish prices that cannot be replicated by competing companies (Yetkin,2013). Differentiation strategy requires firms to offer more differentiated products and services regarding quality to outdo the rival companies, while the Focus requires the firm to concentrate on the needs of the target customers specifically.
Since the product price controls customers purchasing behavior, then definitely, the pricing strategy of a firm determine the level of the market share (Wei,Xuehui & Kai,2013). If a firm lowers the cost of a product, without affecting the profitability, then it acquires the cost advantage over the competitor as more customers will be attracted towards the product, increasing the sales and the market share.
Textile industry entails production of clothes worn on the body and tends various materials on couches. It is one of the industries that have tremendously changed over the past years making the most competitive business environment. Traditionally, the Australia textile industry focused on the production of woven out of jute, yarn, and fiber, however, today the industry has improved to the production of other materials such as medical and automotive products. The Australian textile industry currently employs about 36,000 and uses natural materials such as Banyan Tree fibers and Hemp making it one of the leading international market. However, the industry faces one biggest challenge which is the high cost incurred during the exportation of the products to other countries due to the high freight charges and tariffs. The large exportation cost does not only reduces the profit margin of the products but also increase the final product price that makes them much higher than what is charged b the competitors. The high cost deters consumers from buying the products, hence reducing the competitive advantage of the company. The Australia casual lifestyle and the moderate climatic conditions make the Australians spend more relatively less on the clothing than the western economies population. A study carried out indicates that about AUD$18 billion was spent on clothing in 2016-2017, hence requiring the intervention of the strategies.
The textile consumers tend to be more price-sensitive, and the luxury pricing strategy focuses on brand positioning and marketing as the key determinants of the pricing structure
Different companies have different methods of setting up their prices, for example, the manufacturing companies and textile industries tend to use cost-based pricing strategy. As indicated in the above, the strategy is majorly influenced by the objectivity of return on the investment or particulars markup on costs.
Luxury pricing is also another strategy used by textiles industries. The textile consumers tend to be more price sensitive, an aspect attributed to the brand’s image rather than the inherent product quality, social status and self-expression in the consumer’s minds (Menggi,Wenjie,Xiaohong,Chen & Guo,2014). Therefore, the strategy focuses on brand positioning and marketing as the key determinants of the pricing structure.
Additionally, the industries also use the value-based pricing. In this strategy, the prices are set up by the value perceived to the customer rather than the cost of the product or historical prices(Baldwin & Evenett,2015). The textile industry is one of the competitive business environments requires the management to have the strategy that will ensure the loyalty of customers, and maintain their preferences and fashion that keep on changing. The key to this strategy is to have a balance between the cost and the quality of the textile product for meager prices resulting in the creation of a brand logo (Li,Lu,Wang & Li,2018). The popularity of the brand logo, therefore, will attract many customers than the competitors, who will always be willing to pay more than the apparel is worth since they have strong believed on the value and durability of the product.
In this chapter, the literature review research design, methodology, data collection tools and procedures, sampling designs and procedures are explored.
Research design refers to data collection method perceived to obtain the desired information. The research design allows the collection of evidence to answer and understand the topic under discussion. The widely used research designs include descriptive, correlational, semi-experimental and experimental (Fetters,Curry & Creswell,2013). This study acquires a descriptive research design based on both the qualitative and the quantitative techniques.
Qualitative research helps the researcher to obtain relevant information from the past works on the topic, thus enables the researcher to identify the factors that are attributed to the relationship between the price and the competitive advantage.
On the other hand, the quantitative research will be applied to obtain the numerical data regarding the impacts of the price on the competitive advantages on the textile industry. The captured data is essential in ascertaining the information collected on the secondary data
Value-based pricing sets the prices based on the value perceived by the customer rather than the cost of the product or historical prices
The target population of the study is the textile industries in Australia that are about///. The top two companies: Billabong and Rip Curl will provide the population of the research, whereby total of100 customers of these two brands will be interviewed.
According to Letue,Martinez,Samson,Villain(2018) the population is just the broader group of people under the study from which a sample size /subset of the population is retrieved to generalize the result of the study. The customers/participants will be selected by simple random and purposive sampling to offer all customers the chance to participate in the study. The list of the customers can be obtained from the company’s customer database.
The simple random sampling will be used to select the textile companies among the top population of the industries in Australia. The choice is to offer every sector a chance to be decided.
The purposive sampling will be used to select the customers, especially from the company’s database. The researchers understanding of the customer’s loyalty based on pricing other than other factors is the key to the competitive advantage of the company over others.
For this study, the most appropriate data collection method will be primary and secondary data sources.
The secondary data is obtained from the review of various kinds of literature regarding the study. Therefore, various sources such as Google Scholar, Published journals, peer-reviewed articles and various books related to competitive advantage, pricing, marketing strategies, textile industries websites such as Stata, Trade Economics and Whitepapers were used (Nakano & Muniz Jr., 2018) . A good literature review process is essential to every research process as it develops theoretical origin for the empirical research; hence facilitate the understanding of the topic.
To accurately support the factors obtained from the literature review, the researcher will employ semi-structured interview among the Australian textile industries customers and managers to ascertain how the price impacts of pricing on the competitive advantage of the textile industries. The interview will be conducted on the premises after the required procedure is obtained from the textile industries to conduct the study. Customers will be randomly picked and requested to participate after full explanation of the purpose of the study. Each interview is expected to take a maximum of 20 minutes considering the busy schedule of the customers; therefore the questionnaire will be designed in such a way that collects the most relevant information o the study
The objective of this study is analyzing the impact of price-based marketing strategies on the competitive advantage of textile industries. The two variables are price and the competitive advantage, and from the literature review, a positive relationship is expected between the two variables. Therefore, the dependent variable will be price and the independent variable will be a competitive advantage.
The collected information both from the literature review and the interview on the impacts of price-based marketing strategies on the competitive advantage in textile industries will be analyzed through mixed methods: both the qualitative and quantitative analysis methods.
The qualitative data analysis will make use of the content analysis to understand the content of the impact of the price based strategies on the competitive advantage of the textile industries. The choice of content analysis is based on the previous studies that relate price and the competitive advantage of various industries. The contents data analysis of the secondary information will help the researcher to understand the theoretical aspects and factors about the topic fully.
On the other hand, the quantitative data analysis will use the primary information collected to analyze the impact of the price based strategies on the competitive advantage on the textile industries through the use of figures, pie charts, excel sheets, mathematical and statistical formulas. Descriptive statists will be used to obtain the mean, median, standard deviation and distribution on the key variables (price and competitive advantage).
According to Pulverer and Rmbruster (2017) participants are obliged to voluntarily participate and are free to quit the process at any time they feel like. Moreover, the researcher will not influence the participants to provide a response that will change the results of the study. The secondary data collected from the past works will be accessed after permission is granted by the owners, and privacy will be maintained to prevent the use of unauthorized information.
The organizational study of this proposal is as follows:
Chapter One: Entails the Research proposal outlining the proposal background, the problem statement, the justification, objectives, research questions and hypothesis.
Chapter Two: Literature review entails the exploration of the past works from journals, articles books and websites related to the topic to enhance the understanding the research questions by exploring factors of pricing based strategies on the competitive advantage.
Chapter Three: Research methodology examines the process of data collection methods that will be used and the data analysis that will be used in decoding the collected information.
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