What is the role of marketing capability to be a price maker? : an empirical analysis in Italian food SMEs

Italian food industry is characterised by growing vertical competition along supply chains due to increasing market retailer power, and by horizontal competition between large firms and SMEs. This situation highly affects the ability of small businesses to fix the price of their products. Nevertheless, there are SME market opportunities related to demand evolution toward food quality and traditional products. SMEs can focus their differentiation strategy by enhancing their marketing activities to bring them closer to consumer requirements, and develop better ability to set the price. This paper aims to evaluate the ability of Italian food SMEs to be price makers, assessing whether good marketing capabilities can lead to better skill in setting prices. The data were collected through an on-line questionnaire and the sample is composed of 130 Italian food SMEs. The statistical analysis includes an ordinal regression model. The empirical analysis showed a certain ability of Italian food small businesses in price setting (55.1% of the sample). We found that good marketing capabilities of firms enhance the skill to be a price maker, especially in relation to the product differentiation and market research, exploiting the value of specialty products.