TIME SERIES ANALYSIS FOR SMALL-MEDIUM ENTERPRISES STRATEGIC PRICING: A CASE STUDY FROM ROMANIAN SMALL CONVENIENCE STORES
DOI:
https://doi.org/10.24193/subbnegotia.2018.1.03Keywords:
pricing strategies, forecasting, time series analysis, cost-plus pricing.Abstract
This paper illustrates how time series analysis can support regular price decision making for small convenience grocery stores. The existing literature indicates an increasing importance of strategic pricing. However, small-medium enterprises (SMEs) lack both the know-how and the financial capabilities required for advanced price analysis. The carried research illustrates a relatively simple approach for forecasting the impact of different pricing strategies. A case study based on a Romanian SME: SM, operating in the retail sector, was selected. The collected sales data and financial performance indicators provide an interesting insight into both practices and problems faced by SMEs. Following a detailed investigation, a particular category of products: bread and pastry products, was identified as having a major impact on both sales and gross profit. Based on a series of analyses which include: forecasts, best and worst case scenarios, impacts on revenues and gross profit, SM was recommended to increase their mark-ups with 10% for all bread and pastry products. The change is predicted to produce a 9.86% increase in total gross profit and 1.31% increase in all revenue, with minimum risks and minimal loss of sales.
JEL Classification: L11
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