Food SMEs face increasing competition in the EU market: Marketing management capability is a tool for becoming a price maker

Abstract

The price-making ability of food small and medium-sized enterprises (SME) is important for their market survival. Since pricing is a part of marketing activities, by developing specific marketing capabilities, firms can improve their ability to make pricing decisions. This paper aims at evaluating the relationship between marketing capabilities and a firm's price-making ability. A survey was conducted based on a sample of 371 food SMEs in the EU. We applied an Ordinal Regression Model to evaluate the determinants of a firm's price-making ability. The analysis results revealed a certain ability of SMEs to set prices. Market analysis and marketing strategy planning capabilities are positively related to the price-making ability of a firm, while firm size is not. Supply chain relationships play a crucial role in price-making due to the strong constraint presented by the presence of vertical competition between food SMEs and supermarkets. © 2013 Wiley Periodicals, Inc.