Effect Of Competitive Strategies On Customer Loyalty Among Retail Business In Garissa Town, Kenya

ABSTRACT

This study aimed at analyzing the effect of competitive strategy and customer loyalty

among retail business in Garissa Town. Under this objective, the study intended to

examine the extent to which cost leadership strategy affects customer loyalty; to find

out how the focus strategy influences customer interest; to assess the effect of

differentiation strategy in retail business. The findings of this study will help the

organisations to understand the relationship between the competitive strategies and

customer loyalty. The study objectives included; determining the effects of cost

leadership strategies on customer loyalty in retail business; to establish how focus

strategy affects customer loyalty in retail business; to establish the differentiations

strategies used by businesses to enhance customer loyalty in retail business in Garissa

town. The study used descriptive research design in the collection of data. The target

population was drawn from four hundred and fifty retail business in Garissa town.

Through Stratified proportionate random Sampling technique a total of one hundred

and thirty five respondents was obtained. This study concluded that cost leadership

strategy, requires a continuous search for cost reductions in all aspects of the business.

Differentiation is a viable strategy for earning above average returns in a specific

business because the resulting brand loyalty lowers customers’ sensitivity to price.

Differentiation creates a better entry barrier. Retail business in Garissa town use focus

strategy on a particular buyer group, product segment, or geographical market. Focus

strategy means achieving either a low cost advantage or differentiation in a narrow

part of the market. This has creates a defendable position within that part of the

market of retail business in Garissa town. The study recommended that retail business

in Garissa town should ensure continued capital investment to maintain cost

advantage through economies of scale and market share. Develop cheaper ways to

produce existing products. Increase capital investment in new technology, which can

lead to large market share in the long-run. achieving a successful strategy of

differentiation usually requires strong marketing skills, Product innovation as opposed

to process innovation, research and development, customer support, less emphasis on

incentive based pay structure etc. Retail business in Garissa town can also do

differentiation of their products through different design, brand image, number of

features, new technology etc. Retail business in Garissa town should embrace a focus

strategy in order to gain a competitive advantage by aiming at attending to specific

small niches that require special features or prices. The retail business in Garissa town

should use a focus strategy by selecting a segment or a group of segments within the

industry for which a strategy is tailored and also have different segments in which it

can focus on or represent the impossibility to go to the broader perspective, because

these are facts creating tradeoffs and so barriers to imitation.