Examining price setting behaviour in Namibia: Evidence from the manufacturing sector

Price-setting behavior is a key variable to any central bank, as it determines the nature of price stickiness and the effect of monetary policy on inflation and real variables. As a result, this study examines the price setting behaviours (behavioural mechanisms) of companies in the manufacturing sector in Namibia by establishing the decision process companies followed in their price setting practices. The study used an in-depth price setting behaviour questionnaire survey on 20 manufacturing companies based in Windhoek. It used quantitative analytical approach using confirmatory factor analysis (CFA) to tests propositions and hypothesis related to the linkages between the price setting practices and the manufacturing firms’ pricing decisions. The study found significant positive relationships between Price Review Strategies and Product Sales Pricing (beta = 0.282). The findings also revealed a direct positive relationship between Price Decisions and Price Review Strategies (beta = 0.539) while Market Structure was found to have a direct positive relationship with Price Decisions (beta = 0.607). This concludes that price decisions were linked to price setting behaviours by way of price review strategies that forces companies to make fixed price increases influenced by the market structure. The study recommends that managers should not only stick to one particular pricing approach. They should use a mix of cost based and value-based approaches that ensure that their price decisions process incorporates the distribution channels, cost effects, price hindrances, price setting methods, price review strategies, price elasticity and market structure.

Grantor dc:publisher

University of Namibia

Year dc:date.issued

2020

Author dc:creator

• Oyedokun, Alarape I.

• Price stickiness
• Price decision-process
• Price setting behaviors
• Confirmatory factor analysis

Language dc:language.iso

en

Handle dc:identifier.uri

http://hdl.handle.net/11070/2940

OAI identifier oai:identifier

oai:repository.unam.edu.na:11070/2940