CHAPTER ONE: INTRODUCTION

• Background of the Study

            In the recent years, agricultural products trade in the global scale has developed rapidly, it has more than doubled between 1995 and 2024.Agriculture in the backbone of most economy and therefore plays a significant role in economic development of countries and Cameroon in particular (Wang et al.,2022).The core of competitiveness of agricultural product supply chain comes from the resource endowment and climatic conditions of the area of cultivation which is determined by the farmer .Research shows that the core of enterprises in the supply chain have pricing power.

            The effect of pricing strategies on sales performance has been a topic of interest in various industries including the agriculture industry. In the context of Agro Limited, understanding the effect on pricing strategies on sales is vital for developing effective marketing strategies and maintaining competitiveness in the market. In the agricultural sector, pricing strategies can be influence by various factors such as production cost, market demand and completion. (Kotler & Keller, 2016).

            Pricing strategy is a fundamental aspect of marketing that plays a pivotal role in determining a company’s sales performance, particularly in the agricultural sector. Agro Company Limited, operating in Bamenda, faces unique challenges related to pricing due to market volatility, competition, and consumer behavior. The agricultural market is characterized by fluctuating supply and demand, seasonal variations, and diverse consumer preferences, all of which necessitate a well-thought-out pricing strategy. Effective pricing can not only enhance sales but also improve customer loyalty and brand perception (Kotler & Keller, 2016).

            Research has shown that different pricing strategies such as penetration pricing, price skimming, and competitive pricing can significantly impact consumer purchasing decisions and overall sales performance (Nagle , 2002). However, there is a lack of empirical evidence specifically examining how these strategies affect sales performance within the context of agricultural enterprises in Bamenda. This research aims to explore the relationship between pricing strategies and sales performance at Agro Company Limited, providing insights that could enhance the company’s market position and profitability.

            The agricultural system plays a vital role in the economy of Bamenda, providing employment opportunities and contributing to the regions food security. Agro limited a leading agricultural company in Bamenda, has been facing challenges in maintaining its market share due to intense competition and changing consumer preferences.

            The pricing strategy of agricultural product not only affects the product demand and purchasing. According to (Feng et al., 2019)The pricing strategy is developed mainly from three aspects: premium pricing, discount pricing, and dynamic pricing .The product prices that the company sets affect the likelihood of customers to buy a company’s products, their perceived value of products and, of course, the total firm’s profits (Cornelisse, et  al., 2020).

            Price is not just an ordinary number, written on the labels of products or services. It can appear in different forms and plays different functions, for example: travels, education, food, clothing, etc., are just some of the services and products that we pay in order to use them. Nykiel (2003), has given a simple definition of price, according to which price represents the monetary value of a product or service. Price is a direct reflection of the company’s image, its market position and the perceived brand value of the products/services it offers. The price policy definition is one of the most important decisions in management as it affects corporate profitability and market competitiveness (Toni, et al., 2017).

            Pricing strategy is a critical component of a company’s marketing mix, influencing consumer purchasing decision and ultimately affecting sales performance. However, there is a lack of understanding on how different pricing strategies impact sales at Agro limited in Bamenda. This study aims to investigate the effects of pricing strategy on sales performance at Agro Limited in Bamenda, providing insights for the company to improve its pricing strategy and maintain a competitive edge in the market. Bamenda, the capital of North West region of Cameroon is a major area for agricultural activities. The agricultural sector in Bamenda contribute significantly to the region’s economy, proving employment opportunities and generating revenue, (Feng et al., 2019).

            Globally, there have been a realisation of the effects that pricing strategies have on the product performance. Therefore the pricing strategy adopted has become extremely important in the face of rapid economic and technological changes in which the modern day consumer has become more eager and educated with what he/she exactly wants. Cameroon and Bamenda in particular, are not left out, with the advent of the internet, e-commerce and e-shopping allowing consumers to get loads of information about a product both from the manufacturer and external sources. (Kotler & Armstrong, 2011).

            Price is the amount of money a customer pays for a product or the sum of the values that consumers exchange for a product or service (Bearden et al., 2014. Pricing is the process whereby a business sets the price at which it will sell its products and services, which is part of the business’s marketing plan (Dibb, et al, 2013). Pricing is a very important aspect of the marketing plan, which is a component of a business plan (Rao & Kartono, 2009). The main objective of pricing is to adequately to cover overhead costs produce adequate profits which helps to maintain growth in the business and create organizational sustainability (Nikoomaram & Jafari, 2011).

            Bamenda is the capital of North West region of Cameroon located in the western highlands of the country. The city has a population of approximately 500,000 people and a major hub for agricultural activities. Agro limited, a leading agricultural company in Bamenda, has been    operating in the region for over a decade. The company specializes in the production sand marketing of agricultural products including beans, maize and potatoes. Cameroon experienced over a decade of rapid and steady economic growth from 1972 to 1986, before internal and external factors such as poor management, inefficient and heavy bureaucracy, and waste of resource, a fall in world coffee, cocoa and oil prices; and a general global recession arrested its economic progress. The economic advancement experienced by Cameroon during that period was led by growth in the agricultural sector and an increase in oil exports. The agricultural sector contributed up to 58 percent of the GDP before 1978 which fell to 30 percent after the export boom, (Wang et al.,2022).

            This sector currently contributes 24 percent of: GDP and 27 percent of export revenue. It also employs about 70 percent of the active force. The decline in the two main export crops in 1986, accompanied by the fall in the price of oil, brought considerable financial hardship to the Cameroonian people, which subsequently resulted in severe political and social instability. This financial crisis also resulted in serious under-funding of many state institutions. The GRC, in an effort to reverse the trend of its ailing economy, sought the assistance of aid donors such as the World Bank, the European Economic Community and the United States Agency for International Development (USAII).USAID which has nearly thirty years of development experience in Cameroon and an excellent relationship with tile GIRC, recommended picy reform measures as the best means of restructuring the economy. The liberalization of agricultural commodities was considered as a priority areas. (MINEFI, 2002)

            In 1973 agriculture provided 65 percent of the gross domestic product for the province and the province accounted for over 18 percent of the agricultural production of Cameroon, and made an important contribution to both food crop production and industrial export crops. Since that period, coffee crop production in the province has decreased. Though there is some evidence that the quantity of food crops has increased, there is no concrete statistical information to confirm this.

• The statement to the problem.

            Despite the important role of pricing strategies in driving sales performance, Agro Company Limited has faced challenges in optimizing its pricing approach to align with market demands and consumer expectations in Bamenda. Preliminary observations indicate that the company’s current pricing strategies may not effectively address competitive pressures or consumer preferences, potentially leading to diminished sales outcomes, (Wang et al.,2022).. Additionally, there is a scarcity of empirical research focused on the impact of pricing strategies within the agricultural sector in this region. This gap underscores the necessity for a comprehensive analysis to understand how various pricing tactics influence consumer behavior and sales performance at Agro Company Limited. Addressing this issue will provide actionable insights that can refine the company’s pricing strategy, ultimately contributing to enhanced sales performance and market competitiveness.

            The current pricing strategy employed by Agro limited in Bamenda is not aligned with the changing market dynamics, leading to a significant decline in sales and revenue. Agriculture which contributes over 70 percent of Cameroon’s GDP and employs about 75 percent of the labor force has also experienced a decline over the past decade. The revenues coming from cocoa and coffee, the two main export crops of Cameroon, have fallen drastically from 1986/87 to the present, (MINEFI, 2002).

1.3 Research Questions

1.3.1 Main Research Question

                            What are the effects of pricing strategies of Agro limited sales in Bamenda?

1.3.2 Specific Research Questions

• What is the effect of cost-plus pricing on Agro limited sales in Bamenda?
• What is the effect of competition base pricing on Agro limited sales in Bamenda?
• What is the effect of penetration pricing on Agro limited sales in Bamenda.

1.4 Objectives of the Study

1.4 1 The Main Objective

To examine the effects of pricing strategies of Agro  limited sales in Bamenda.

1.4.2 Specific Research Objectives

• To examine the effect of cost-plus pricing on Agro limited sales in Bamenda.
• To examine the effect of competition base pricing on Agro limited sales in Bamenda.
• To examine the effect of penetration pricing on Agro limited sales in Bamenda.