Factors Affecting Purchasing Decision of SPSPS Senior High Students on the Varying Product Pricing of Canteen Stalls
In partial fulfillment of Practical Research 1
A Research Proposal
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Celestine Carcellar (11-Galatians)
LJ Nicole Yu (11-Galatians)
Paula Marie A. Yu, RN, MAN
Purchasing commodities, mostly needs, are part of any consumer’s daily routine. Decision-making is crucial when it comes to the purchase of products, and it is very dependent on the desired needs of the consumer in order to conclude its effectivity. In one of the context provided by the University of Pennsylvania (2015) “purchase decision” was defined as a thought process that leads a customer to identifying a need, generating, and choosing a specific product.
Consumers are influenced by situational and personality factors when it comes to food choices – time, reason for the purchase, mood, gender, knowledge about the product, attitude, culture, social class, and stage of life. These factors plays a big role on the food selection of students.
Students usually buy their food at the canteen. Besides, school canteen is an integral part of the school environment and is an ideal site to encourage healthy eating. It shapes the eating behavior of the students. However, healthy menus are difficult to implement when the canteen is not supported within the school system. One of the study of Health Education Research identifies that many of the schools are not supported as an integral part of the school system due a range of influences such as maintaining profit, reduced volunteer support and student choice negatively impacted what was sold on the canteen menu (2011).
Saint Paul School of Professional Studies (SPSPS), an institution has its own school canteen where five out of six food stalls are owned by the board of trustees. SPSPS canteen has a wide array of target market – senior high school students, college students, law students, teachers and staff wherein it offers food suitable for breakfast, snack and lunch. The stalls are financed by certain personnels. That being said, the profit gained is not stated in the financial statement of the school.
Sellers follow different types of pricing strategies to gain the desired profit and acquire loyal customers that will continuously buy the products and services offered. In the Entrepreneurship lesson of the researchers, ten types of pricing strategies has been mentioned – cost plus pricing, penetration pricing strategy, value-based pricing, competition based pricing, skimming pricing, product line pricing, psychological pricing, premium pricing, status quo pricing and optional pricing. These strategies affects purchasing decision.
Several approaches have been made to explain factors affecting purchasing decisions. This research intend to identify factors that affects the purchasing decision of student consumers and the influence of product pricing made by the sellers in SPSPS canteen towards this decisions. The amount of money that a consumer sacrifices is very dependent upon the type of product exchange into for that value. Consumer perception with respect to price has a positive and negative influence on the buying behavior. (Thu Ha ; Gizaw, 2014)
As consumers, it is important to be aware of the factors affecting purchasing behaviors. There is a need of self-awareness as to how and why individuals purchase products to be based on certain causes. And as for the students, knowing where to buy and what to purchase helps in making smart choices in saving money and being financially smart.
Therefore, the study aims to determine how the products are priced based on the business strategy of the vendors and how it affects the purchasing power and decisions of students considering various variables that may affect their choices.
Background of the Study
Similar products can be sold in different prices depending on the pricing strategy of the store owner. In that case, there is a need to assess whether it is worth buying on a particular store or the price is lower in the other stores. This way, one can be sure that they spent their money wisely.
Due to the recent adjustments of tax in the Philippines, the TRAIN law made a significant increase in the price of the products. Now that the prices increased, the affordability of the products comes with large costs.
So the students, even all the constituents in Saint Paul School of Professional Studies will find a way to lessen their expenses and choosing the right store to buy the products that they need will help them in doing so.
Overpricing of stores can add to this difficulty of students. Recently, significant increase in prices was observed in the SPSPS canteen and since many students patronize the school canteen as their main go-to once they need to buy something, somehow the increase will also affect the buying capacity and purchasing frequency of products for many students in SPSPS.
The school canteen offers various products that cater to most needs of the students from supplies, food, snacks, accessories and many more. Buying there, however, gives less hassle than still going out of the school because of the accessibility.
The study aims to examine the pricing strategy of the stalls present in the SPSPS canteen since the existing problem of overpricing from most of the students in the school are common complaints. Understanding the strategies used would presumably justify the prices whether or not they are reasonable enough, overpriced or underpriced.
This study will cater to purchasing decision of the students if it is more efficient to buy outside or inside the school. Not only that they will know the factors that causes these products to increase in prices, but also why is there a need to patronize the school canteen regardless of these factors.
Nowadays, there is a need to become a wise consumer especially for those who are having an unstable financial status or lacking of economic capacity.
Significance of the Study
The findings of this study will benefit the:
a. Society. The awareness of the bases on how pricing the products work will help calculate purchasing power. Purchasing power will determine the purchasing decision. Considering that every individual is a consumer, deciding what product or service to buy and which product or service is benefitial or not will help any personality become wiser consumers.
b. Students. This research will assist students in budgeting allowances, analyzing expenses and saving money for future purposes.
c. Sellers. This is a helping hand in making the consumers understand the prices of the certain products and services. This will also let the consumers infer that the vendors are not trying to rich off of them but make a living.
d. Researchers. The study will help uncover critical areas in understanding the nature of pricing and purchasing decision that many researchers were not able to explore.
Thus, a new theory on how consumers, specifically students, purchase products considering the various variables that affect their choices, may be arrived at.
Students spend almost half of the day in school hence food consumption is greatly influenced. Moreover, school canteens take a big role in in the intake of healthy food and beverages. As mentioned by Mahreen et al. (2010), schools take hold in endorsing healthy food related behaviors in student and help ensure befitting food consumption.
Food products sold by the school canteen vendors plays a special role in school life for it supplies refreshments that stipulate energy requirements of student. This has an impact to the student’s performance in academics and curricular activities so it is really important for the school canteen to provide the nutrition that the students need.
However, there are times that these nutritious food are not availed by the students. This is for the reason that main purpose of the canteen stall owners is to gain profit. Several factors affect the pricing strategy of the sellers causing the high cost of these products.
According to a related sudy of Shannon et al. (2002), results indicated that, when choosing foods from the school cafeteria, taste and getting a lot for their money were important to most students (93.7% and 71.7%, respectively). Females, and students who thought about their health and weight more frequently when deciding what to eat, were more likely to report greater interest in labeling and nutrition information and availability of low-fat foods in the school cafeteria. Findings suggest that efforts to promote low-fat foods to adolescents need to address the taste of low-fat foods, availability of low-fat options, and point-of-purchase labeling of low-fat foods. Focusing on the value and cost of low-fat foods may offer a key strategy for promoting low-fat foods to males.
Profit from the operations of the school canteen is often a significant source of revenue for a school. Therefore, it is of great importance that the nutritious food items attract students and are offered at a price affordable to the students and that will contribute to the profit (Labay et al., 2015). Despite to what has aforementioned, some canteens of universities and colleges are not part of the integral of the school. With this, the revenue is not for the school but for the owners.
One of the colleges with these kind of system is Saint Paul School of Professional Studies. Aforesaid, the school canteen is capitalized by the stakeholders of the school. The main goal of every business owners is to gain profit and because of several factors, these yield to high price of the product. By that the purchasing power of the students deplete and deciding for what food product to purchase becomes tough.
Furthermore, various preferences affect the food purchase of students. A study shows that demographic characteristics such as dailly allowance, food budget and total monthly family income average are determinants of purchasing decision. Moreover, as a whole extent of contentment of students with the determinants of food characteristics is satisfactory. With sometimes extent of influence students would not like to have the same menu all the time. (Dumlao, 2014)
Pricing strategies are made in order to adapt to the environment of the business but the main purpose of this is to gain a reasonable profit that aims to necessarily exceed the capital invested for it. Not only that there is a need to carefully select the pricing strategy for every business venture, there is also a need to readjust however especially if there are abrupt and sudden changes. This however, may not be viewed as a very important factor in establishing a certain business venture, but the appropriate choice for a certain strategy helps the business survive and last through keeping the trust and loyalty of consumer as well as attracting customers.
“Price is the only element in the marketing mix that produces revenues, all other represent costs,” according to Business Link, a public-private partnership business support organization. Choosing the right price for your helps send the correct price-quality signal. Price-signaling occurs when the cost of something reflects the products perceived quality. Whether or not your product is the best quality for the best price, your pricing strategy aims to convince the buyer that is the case.” (Griffin, )
In the extreme, price theory in economics deals with how markets behave while price theory in marketing science deals with how managers should act. It is true that one must understand how managers behave in order to model market behavior and that one must understand how markets behave in order to advise managers. (Hauser, 1984)
Purchasing Decision Behavior of Students
Food choice is used to describe a body of literature which explores factors in consumer decision making. The most influencial factors in food choice are price or affordability, prefrence, quality and the quantity or the amount of food. Darnton identified that people will not change their behaviors for food security reasons unless the requirements suggested are met (2016).
Price is the monetary value of a product. It is the amount that the customers pay in exchange for the benefits of having and or using a product or service. It is important beacuse it serves as a purchase stimulus that has a key role in price management. Studies have identified that prices show and important factor in purchase decision, especially for frequently purchased products, affecting choices for store, product and brand. Since it determine not only the way prices are perceived and valued but it also influences the purchase decisions, it is very relevant in the purchasing decision behavior of every consumer (Faith and Edwin, 2014).
Individuals are exposed to different window of information and varieties of products. Many great deal of choices available in the market increase the impulse of purchase decision. However every individual has a different preference and there are factors influencing these preferences.
As stated in one of a resaerch study: “The sensory attraction of a food product and the visual appearance of its packaging are powerful influences on consumer acceptability. Packaging can persuade consumers to purchase the products and the sensory attributes will confirm if they like it.” (Subaskaran, 2015) While according to Murumi et al. (2016), one’s environment shape food choices and the availability of food offered influence eating pattrens.
Other factors affect preferences as well. Some of these are religion, culture, attitude, perceived value for money, income, familiarity with store brand, and perception of quality, consumer prior knowledge and cognitive ability. Different perception of different consumers yeild to different action in purcahsing behavior (Thuha and Gizaw, 2014).
Quality of a product can be explained as the consumer’s judgment about the superiority or the degree of excellence of a product (Alfred, 2013). Nor Hazlin Nor Asshidin et al. (2015) stated that in the field of marketing, perceived qulaity has been recognized as the primary driver of purchase intention. He also said that the qulaity provides the customers the reason why to buy and differentiate it from competing brand.
Every individual perecives for a high quality product. Perception of quality varies depending on a range of factors such as the moment the costumers purchase and consume the product and the place where it is bought and enjoyed (Nor Hazlin Nor Asshidin et al., 2015).
Vendors’ main goal is to gain profit. One of the ways to increase sales is to have the right pricing strategy for it attracts customers. According to Principles of Marketing 12th Edition of Philip Kotler and Gary Armstrong (2008), pricing strategies usually change as the product passes through its life cycle.
a. Market Skimming Pricing – setting high initial prices to ‘skim’ revenues layer by layer from the market.
b. Market Penetration Pricing – setting low initial price to penetrate the market quickly and deeply – to attract a large number of buyers quickly and win a large market share.
c. Product Line Pricing – setting the price steps between various products line based on cost differences between the products, customer evaluations of different features, and competitors’ prices.
d. Optional-Product Pricing – pricing of optional or accessory products along with a main product.
e. Captive-Product Pricing – setting a price for products that must be used along with a main product, such as blades for a razor and film for camera.
f. By-Product Pricing – setting a price for by-products in order to make the main product’s price more competitive.
g. Product Bundle Pricing – combining several products and offering the bundle at a reduced price.
h. Psychological Pricing – a pricing approach that considers the psychology of prices and not simply the economics; the price is used to say something about the product.
i. Reference Pricing – pricing the product with the reference price. Referent prices are prices that the buyers carry in their minds and refer to when they look at a given product.
Statement of the Problem
The purchasing capacity as well as the purchasing frequency of every consumer mainly depends on the affordability and availability of products in their vicinity and this is also coordinated with the pricing strategy of the stores available in the area. In the SPSPS canteen, significant difference in price interval between product prices was observed and the products in SPSPS are higher than what is normally sold outside the school premises. Many students aim to budget their allowances due to the increase of products prices also due to the recently implemented tax reform. The researchers seeks to answer the following questions;
1. What is the student’s profile in terms of:
b. Daily Allowances?
2. What is the profile of the sellers in terms of;
a. Type of products sold
b. Number of products sold
c. Estimated income in a day
3. What are the different pricing strategies applied by the vendors in:
a. Stall 1
b. Stall 2
c. Stall 3
d. Stall 4
e. Stall 5
f. Stall 6
4. How does the following factors affect the purchasing decision of the student in terms of;
a. Preference of food
b. Quality of food
c. Quantity (or the amount of food)
d. Affordability of the price
5. How do the following factors affect students’ decision to purchase in terms of;
a. Daily allowance
b. Saving Strategy
c. Price of the Product
6. How can the succeeding factors affect the pricing strategy of the sellers:
a. Type of products sold
c. Utilities Expense
The research design that will be used to conduct the research is a case study wherein questionnaires will be used as survey instruments to gather the data and information needed to complete the study. Case study will be used because since the study is qualitative which means that there is subjectivity between varied perceptions of the research environment.
The research environment will focus around the SPSPS canteen food stalls, owners and the customers which the entire Paulinian community which equates to a population of more or less 3,000.
The researchers would have two categories of respondents. The first would be the senior high students which is identified by cluster sampling. After cluster sampling, a total of 120 students, 10 respondenst from each class will be chosen by simple random sampling so that all potential respondents gets equal chances of being chosen. The second would be the canteen stall vendors that will be identified by convenience sampling, one from each stalls will be interviewed.
Survey questionnaires and interviews will be used as the tool in data gathering. The questionnaires will be used in determining the perception of the students towards the product pricing in the canteen stalls of SPSPS and its effect to purchasing decision. Part I will include the demographic profile of the students and part II will include the survey proper. For the sellers, an interview will be conducted to gather data about the demographic profile, the pricing strategy of each stalls and examine how the vendors price the products.
a. Gathering of data
The researchers will use naturalistic approach in conducting the collection of data. The methods that will be applied in this study are questionnaires and interview.
Questionnaire for the students
With the guidance of the research adviser, _____ questions will be developed where the respondents will be asked to provide feedbacks. ____ multi-choice questions and ___ open ended questions will be given. The multi-choice questions will allow a wide coverge of topics that will save time for the respondents while open ended questions will help gather more divergent views. To increase the ease of answering the questions, the questionnaires will be designed in a ______ format.
Interview with the sellers
To provide more insight and understanding of how pricing strategies work, a formal interview will be conducted between the researcher and the canteen stall sellers with a formal interview guide designed with the quidance of the research adviser. Although interview follow a formal guide, respondents will be given the opportunity to express their views independently and will be probed further through the questions that will arise in the the discussion. For the protection and privacy, an intereview consent form will be signed that will outline the usage of data collection. The interviews will be audio recorded for further analysis and interpretation without losing details.
b. Statistical treatment
The researchers will use simple random sampling in determining the respondents with a sample size of ____ out of the total population of grade 11 senior high school students of SPSPS with ___. The fortunate respondents selected fairly will be the one to answer the questionnaires. While for the sellers that will be interviewed, convenience sampling will be used.
The returned questionnaires will be coded and collected data will be transcribed processed into the computer using the Statistical Package for Social Sciences (SPSS). The SPSS statistical software program will be used in the data analysis. Data entry errors will be corrected by revisiting the actual coded questionnaires.
The researchers will use descriptive for the data anlysis. For the descriptive statistics, simple frequency will be calculated for the students’ demographic profile. Mean rating of the respondent’s perception towards the factors (dailly allowance, saving strategy and price of the product) affecting purchasing decision will also be calculated. In addition, mean rating of the most used pricing strategy of the canteen vendors will be computed as well.