Pricing Strategies at Bamburi Cement Company Limited, Kenya

Abstract

The cement industry in Kenya has grown significantly. At the end of 2014, there were six cement companies in the country. There were, and there are still potential entrants into the field. The consumption of cement has been growing at a double digit over the last ten years. As a result, local and international companies have been on an investment mission in Kenya, in order to have a piece of the pie. This increase in the number of players has seen an increase in the production, and supply of cement to the market. It has also had an effect on the price of the product to the consumer. Each company had its cement price which it offered to the market. In the past, the price used to be relatively stable for the few companies like Bamburi Cement and East African Portland Cement, who had a monopolistic advantage. From what we have seen in the recent times, the price is a factor which all the companies have to consider in their strategies, in order to have an advantage over competitors. This could lead to price wars in the market, and as such, the companies have to come up with pricing strategies in order to have a significant share of the market, and outdo the competition. For this reason, companies have come up with pricing strategies in order to have an advantage over their competitors. The objective of this project was to find out the different pricing strategies that cement companies are using, and how these pricing strategies are working out for the companies. It highlighted how other factors come into play when companies have these pricing strategies, for example, what effect the pricing strategies have on the companies’ profits, and are they sustainable in the long run. From the study, Bamburi cement has an effective pricing strategy, alongside other strategies that it employs. The company also has good systems to ensure that the strategies are protected under information protection, which is essential to prevent competitors from having this information which they could use against Bamburi Cement. It is also seen from the study that the company plans to remain the market leader in the several years to come through the strategies’ applications, among which is the pricing strategy which is important in the growing cement industry in Kenya. The company also looks at increasing the shareholder value through the employment of the pricing strategy in order to have competitive prices in the market which increases the business value. The pricing strategy also ensures that the company operates within the regulations set by the Competition law of Kenya, amongst other competition related regulations that have been set by other business governing bodies, both with the cement industry, and out of the industry.