| dc.description.abstract | In the wake of deepening competition following the enforcement of the traffic act in
the early 2004, which intended to introduce and restore sanity in the public road
transport industry, the sector is awash with new transport companies of all shapes
and sizes offering a similar service, passenger transport. One way in which the
public service transport companies can cover costs and therefore survive is through
pricing. This study set out with the objective of determining whether firms in the
public road transport industry set pricing objectives; to establish which factors they
consider while setting prices; to determine which pricing methods used in the public
road transport industry and to determine challenges faced within the public road
transport industry while pricing their services. A descriptive study was appropriate.
To do this a survey was conducted on the 82 public service bus companies that are
members of KEBOA. The population of interest in this study was all short and long
distance public transport bus companies with headquarters in Nairobi who were
members of Kenya bus owners association (KEBOA).
Primary data was collected using a semi structured questionnaire. In each company, one
respondent was interviewed. This was -,the marketing manager or any officer who
participated in setting prices for the company. A total of 82 questionnaires were
distributed to companies' headquarters in Nairobi. "Out of which, 50 responded by
completing and returning the questionnaires. 32 did not respond. This gave a response
rate of 60.9% which the researcher deemed adequate and sufficient for the study, for the
purposes of data analysis. The collected data was analyzed and summarized using SPSS
package to obtain descriptive statistics for this analysis.
All the firms surveyed recognized the importance of pricing and setting pricing objectives
even though some of them did not have pricing departments. The study also established
that cost of purchasing the vehicle, monthly bills, cost of fuel and spare parts, cost of
servicing the vehicle, the distance covered, sitting capacity and availability of substitutes
·are the strong factors considered while setting prices. It was also established that in their
pricing methods, the companies estimated total cost and added a standard mark up profit.
They also considered target rate of return and buyers' perception. But they did not
consider as important differentiation, psychological pricing and even seasons as factors to
be used in pricing. The challenges faced by the public transport bus companies includes
high cost of fuel, stiff competition within the public transport industry, poor road status
that leads to high breakdowns, high maintenance costs, high cost in compliance to new
traffic rules, unpredictable demand, lack of level playing field, high level of corruption
andthe demand of superior quality at low prices by customers.
The results of this study addressed the objectives of the study and it may be of
importance to the owners of the vehicles as it may give some information and create
awareness of pricing to their businesses. The ministry of transport and communication as
it may give relevant materials and information that can help in educating small and
medium entrepreneurs in the field of public road transport services, and Academic
researchers as it may provide a source of references to their studies. Traditionally price
has operated as the major determinant of buyer choice. Although non price factors have
become more important in buyer behavior in recent decades, price still remains one of the
most important elements determining company market share and profitability. | en |
