Marketing management capabilities and price setting: An empirical analysis in the EU traditional food sector

Abstract

In the EU, small and medium sized enterprises (SMEs), which constitute the majority of firms in the food industry, are fighting for survival as they face growing market competition from large firms (Knight, 2000). On the other hand, market opportunities for SMEs are connected to the evolution of consumer preferences toward food quality, especially for traditional food products (O’Reilly and Haines, 2004). To profit from such opportunities SMEs need to adapt their strategies, focussing on consumer requirements and improving their marketing activities. The purpose of this paper is to evaluate the marketing capabilities of SMEs producing traditional food products. Following the theoretical approach of Market Orientation (Kara et al., 2005; Jaworski and Kohli, 1993), our analysis is based on an assessment of the marketing management process (Kotler, 2004). The methodology refers to a survey made by a questionnaire published on the web, and a sample of 371 firms coming from Belgium, Italy, Spain, the Czech Republic, and Hungary. Cluster analysis was applied to find different levels of the firms’ market orientation. Moreover we used an ordinal regression model to explain the relationships between the ability of firms to influence the price and the variables affecting marketing management capability. The results revealed a certain lack of appropriate skills in the analysed firms’ marketing management, confirming literature evidence concerning SMEs. Nevertheless, cluster analysis outlined a group of firms that represent 40% of the sample, and these have good marketing capabilities and are market oriented. In addition, the firms show poor ability to influence price.