Price.Pride (2014), stated that price is the value paid for a product in marketing exchange that affects directly to the generation of total revenue of a firm. It also means that, price competition emphasizing the price of the product or service to the needs of the consumer and beating competitors through lower 12price. To compete effectively based on the price, firm should be in the low-cost seller of the product to customer in order to become profitable.
According to Renko et al. (2011) justified that price competition among bakery products has been more strongly divided in the market place since there are a great number of bakery business existing in the market sector. In addition, price fluctuations of basic raw materials significantly affect the pricing strategy of the goods and consequently the price of the bread depends on the price of raw materials leads to the minimization or maximization of profit. Nevertheless, lack of baking industry investments and expensive technology create demand for additional financial means in which the suppliers are financial institutions that have an impact on the profitability of the baking industry.Doolittle et.
al (2013) cited that the most important determinant of competition in the baking industry is price, consumers have high purchasing power and the majority of small producers cannot compete with the lowest prices. It means that, baking industry is homogeneous and product differentiation is necessary to separate from competitors, also innovation and differentiating products is important to remain a strong competitor. Therefore, marketing and pricing strategies of managers must be a priority to increase demand as brand recognition is another key competition factor since consumers are likely to pay and purchase more for a well-known brand. Similarly, Fejza (2013) indicated that most of the bakeries used price based products offered to customers to compete in a very competitive business environment, bakeries compete in price as a solution in the intense competition and the most suitable to compete for sustainable growth of the business and 13the generation to maximize profit.
Moreover, bakeries are based on achieving their competitive advantage in the market through lower prices so that the bakery have a better image and got customer loyalty in the market sector. In addition, Smith (2012) studied that the price is a strategic challenge face by many businesses with a direct impact on profitability. It requires an extent knowledge of pricing information and the right managerial technique of the owner. Thus, setting the right price can directly affect the profits of a firm and ability to serve its customers. However, when goods and services are priced too high, many customers refuse to purchase the products. In effect, the financial sustainability of a firm goes lower. Therefore, gathering information, conducting quantitative analysis and accurate understanding of the range prices of goods and service that drive a positive result is important.
Hinterhuber and Liozu (2014), pointed out that baking industry should have an innovation of pricing strategies that implies one of the business strategies to put on use in understanding of consumer buying behavior or the change of consumer perceptions on price and value of the product as a result to meet customers satisfactionand achieving to increase profits of the firm.Chládková and Kudová (2008), explained that in order to compete the baking Industry in the marketplace, it requires to search for cheaper raw materials, modern technologies and reduce energy consumption. As a result, offering a variety of top-quality products for the best price and top-quality services constantly improve the bakeshop financial sustainability. Eglite and Kunkulberga (2017), conceptualized that bread is a basic food and consumers are responsive to price. Price may affects the behavior of 14consumers in choosing baked goods, consumers believed that an increase in bread consumption could be achieved by producing tastier bread. Also, higher prices of bread means with higher quality products and richer in nutrients.
In addition, price is the reasons for the consumer’s choice in different kinds of bread offered by the bakeries.However, Farkas (2009) showed that the law of demand is important to the price mechanism to manage individual’s need. Given that, the quantity demanded of a good falls when the price of the good rises and influence the buyer’s purchasing power. Therefore, when prices change, buyer changes how much of a particular good they are willing to buy. If the price gets lower, other consumers become more likely to buy more goods that affect the sales of the business.