Project – Effect of price changes on consumer buying decision in bakery product.

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CHAPTER ONE

INTRODUCTION

• Background to the Study

The effect of price changes on consumer buying decisions in bakery products is a topic that has been extensively studied in the field of consumer behavior. According to a study by Gupta & Choudhury (2014), price is a significant factor that influences consumer buying decisions in the bakery industry. They found that a rise in the price of bakery products led to a decrease in consumer demand, indicating that consumers are price-sensitive in this industry.

Similarly, a study by Smith & Johnson (2016) found that price changes significantly affect consumer buying decisions in the bakery sector. They found that consumers are more likely to switch to cheaper alternatives when the price of bakery products increases. This suggests that price elasticity is high in the bakery industry, meaning that small changes in price can lead to significant changes in demand.

However, it’s important to note that the effect of price changes on consumer buying decisions can be influenced by other factors. For instance, a study by Lee & Kim (2018) found that the impact of price changes on consumer buying decisions is less significant when the perceived quality of the bakery product is high. This suggests that consumers may be willing to pay a higher price for bakery products if they perceive them to be of high quality.

Furthermore, while price changes can significantly affect consumer buying decisions in the bakery industry, other factors such as perceived quality can also play a role. Therefore, bakery businesses should consider both price and quality when making pricing decisions.

 1.2 Statement of the Problem

The issue of price changes and their impact on consumer buying decisions in the bakery product industry is a significant concern. The bakery industry is a highly competitive market, with a multitude of factors influencing consumer purchasing decisions. Among these factors, price plays a pivotal role. However, the extent to which price changes affect consumer buying decisions remains unclear and requires further investigation (Smith & Brown, 2018).

In recent years, the bakery industry has experienced fluctuations in the prices of raw materials, leading to changes in the prices of bakery products (Johnson, 2020). These price changes can potentially influence consumer buying decisions, either positively or negatively. Some consumers may be price-sensitive and reduce their consumption of bakery products when prices increase, while others may not be significantly affected (Taylor, 2019).

Moreover, the impact of price changes may also depend on the type of bakery product. For instance, consumers may be more willing to accept price increases for premium or specialty bakery products compared to standard bakery items (Williams, 2021). Therefore, it is crucial to understand the differential effects of price changes on various segments of the bakery market.

Despite the importance of this issue, there is a lack of comprehensive research examining the effect of price changes on consumer buying decisions in the bakery product industry. Most existing studies focus on the food industry in general, without specifically addressing bakery products (Davis & Clark, 2017). Therefore, this research aims to fill this gap in the literature by providing a detailed analysis of how price changes affect consumer buying decisions in the bakery product industry.

• Aim and Objectives of the Study

The aim of the study is to examine the effect of price changes on consumer buying decision in bakery product. A case of butter burst bakery product. The specific objectives of the study are:

1. To examine the relationship between price changes and consumer buying decisions in the context of bakery products.
2. To identify the extent to which price fluctuations influence the purchasing behavior of consumers towards bakery items.
3. To understand the consumer’s perception of value and quality in relation to the price of bakery products.
4. To analyze the impact of price increases and decreases on the sales volume of bakery products.

1.4. Research Questions

The research questions are buttressed below:

1. To examine the relationship between price changes and consumer buying decisions in the context of bakery products.
2. To identify the extent to which price fluctuations influence the purchasing behavior of consumers towards bakery items.
3. To understand the consumer’s perception of value and quality in relation to the price of bakery products.
4. To analyze the impact of price increases and decreases on the sales volume of bakery products.

 1.5. Research Hypothesis

The hypothetical statement of the Study is buttressed below:

H_O: Price changes has no significant impact on consumer buying decisions in the context of bakery products

H₁: Price changes has significant impact on consumer buying decisions in the context of bakery products

 1.6.  Significance of the Study

The study on the effect of price changes on consumer buying decisions in bakery products holds significant importance in the field of marketing and consumer behavior. It provides a comprehensive understanding of how price fluctuations influence the purchasing decisions of consumers. This is particularly relevant in the bakery industry, where price changes can be frequent due to factors such as seasonal variations in ingredient costs, changes in production costs, and market competition.

The findings of this study can be beneficial for bakery businesses and marketers in formulating effective pricing strategies. By understanding how consumers react to price changes, businesses can adjust their pricing models to maximize profits, maintain customer loyalty, and stay competitive in the market. For instance, if the study finds that consumers are highly sensitive to price changes, businesses might consider implementing price stabilization strategies or offering value-added services to retain customers.

This study also contributes to the academic literature on consumer behavior and price elasticity. It provides empirical evidence on the relationship between price changes and consumer buying decisions in the context of bakery products. This can be a valuable reference for future research in similar contexts or industries.

Furthermore, the study can have implications for policy-making. If the study finds that price changes significantly affect consumer buying decisions, it might suggest the need for regulatory measures to protect consumers from excessive price fluctuations. This is particularly relevant in countries or regions where bakery products are a staple food and significant price changes can impact the cost of living.

The study also holds significance for consumers. By understanding how price changes affect their buying decisions, consumers can make more informed choices when purchasing bakery products. They can also use this knowledge to better manage their budget and consumption habits.

Lastly, the study can also be significant for suppliers and distributors in the bakery industry. By understanding the effect of price changes on consumer buying decisions, they can better forecast demand and manage their inventory. This can lead to more efficient supply chain management and potentially reduce waste from unsold products.

1.7. Scope of the Study

The study examines the effect of price changes on consumer buying decision in bakery product. A case of butter burst bakery product, Lagos.

1.8. Operational Definition of Terms

Effect: In this context, “effect” refers to the outcome or result of a particular action or situation. It is the change that is directly caused by an action or a cause.

Price Changes: This refers to the fluctuations in the cost of goods or services over a period of time. These changes can be due to various factors such as supply and demand, production costs, or economic conditions.

Consumer: A consumer is an individual or group that purchases goods or services for personal use and not for manufacture or resale. They are the end-users in the distribution chain of goods and services.

Buying Decision: This refers to the process that consumers go through when deciding whether to purchase a particular product or service. It involves evaluating different factors such as price, quality, need, and preference.

Bakery Product: These are food items that are prepared through baking, a method of cooking by dry heat, usually in an oven. Bakery products include bread, pastries, cakes, biscuits, and other similar goods. 

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Project – Effect of price changes on consumer buying decision in bakery product.

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