n Journal of Contemporary Management - The value of a price differentiation strategy for small retail and wholesale businesses amongst price-sensitive consumers




The rationale for this study is to determine how small formal retail and wholesale businesses compete against increasing competition mainly from businesses located in new shopping malls in Soweto. This study focuses on price (as part of the value package) as a differentiation strategy option. According to small business management literature, price is not necessarily the preferred option for small businesses to compete upon. However, in a previously disadvantaged, price-sensitive area such as Soweto the research question is 'how important is price as a differentiation strategy and marketing aspect for small businesses amongst price-sensitive buyers, while facing tough competition from large retailers in nearby shopping malls'?

The research was conducted by means of a questionnaire and personal interviews with a sample of 650 small businesses in Soweto.
With this quantitative study, it was found that small formal retail and wholesale businesses in Soweto have to compete in terms of price, and those businesses that use price differentiation as a strategy and as the most important element of their value package (through low prices and best value prices), tend to survive and grow.


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