Price Panicking and Competition: The financial implications for theNigerian flour industry

Abstract

The last five years in Nigerian flour industryhave witnessed massive usage of price panicking as a marketing strategyto achieve short run boost in sales target. The continued usage of the strategy had overtime weakened the loyalty bond between the flour firms and their customers.Using evidence from the sales volume of the two leading flour mills, Flour Mills of Nigeria (FMN) and Honeywell Flour Mills (HFM), and evaluating the outcomes from7 occurrences of price panics in the industry between July, 2012 andMarch, 2015, the study observeda near-equal average growth rate in the sales of the two firms with and without the adoption of price panicking. Were price panicking allowed to continue with the rapidity as currently being practiced, the uncertainty and distortions that will be created therefrom would retard, rather than boost sales in the long run. The study suggests a rethinking by theNigeria Flour Mills (NFM) and Honeywell Flour Mills (HFM) who are the leading promotersof the dangerous strategy, and argued that both the firms and the industry potentially stand to lose were panicking to be sustained long into the future.