IS PRODUCT DIFFERENTIATION STRATEGY AN ANTECEDENT OF FIRM PERFORMANCE? EVIDENCE FROM KENYAN MOTOR VEHICLE ASSEMBLERS
IS PRODUCT DIFFERENTIATION STRATEGY AN ANTECEDENT OF FIRM PERFORMANCE? EVIDENCE FROM KENYAN MOTOR VEHICLE ASSEMBLERS
Kenneth Ndolo - Department of Administration, School of Business, Economics and Tourism, Kenyatta University, Kenya
Dr. Godfrey Muigai Kinyua - Department of Administration, School of Business, Economics and Tourism, Kenyatta University, Kenya
ABSTRACT
The motor vehicle assembly industry in Kenya has experienced declining production volumes, low production efficiency and market share despite policies promoting local manufacturing. Customer dissatisfaction remains high leading many buyers to prefer fully built imports. This persistent shift in consumer preferences highlights the need for product differentiation to improve competitiveness and market penetration among local assemblers in Nairobi City County. This paper examined how product differentiation strategies influence the performance of firms within the motor vehicle assembling sub-sector in Kenya. The research was anchored on the the Generic Competitive Strategies Model by Porter and the Balanced Scorecard Model. The study used explanatory research design to establish causal relationship between variables. The target population comprised of 233 employees in three strata of senior, middle, and operational level management among three motor vehicle assemblers in the Nairobi City County, Kenya. Stratified random sampling method was used to achieve a proportional representation of 147 respondents. The semi-structured questionnaire was used to collect data to obtain both quantitative and qualitative analysis. The data was analyzed using SPSS in which descriptive and inferential analysis were produced and explained. The data was displayed in figures and tables. The research obtained necessary authorization from different authorities before data collection. The respondents voluntarily participated in the study where anonymity and confidentiality were maintained. The study found that product differentiation strategy had positive and significant effect on the performance of firms in the motor vehicle assembly industry in Nairobi City County. Companies should thus focus on value-based pricing that is based on the quality of the products and customer value instead of price wars.
