The Influence of Micro Environment Factors on Marketing Mix Strategy: a Case of Retail Businesses Within Shopping Malls in Nairobi

The Influence of Micro Environment Factors on Marketing Mix Strategy: a Case of Retail Businesses Within Shopping Malls in Nairobi

THE INFLUENCE OF MICRO ENVIRONMENT FACTORS ON MARKETING MIX STRATEGY: A CASE OF RETAIL BUSINESSES WITHIN SHOPPING MALLS IN NAIROBI BY MAUREEN WANJIKU GICHIRI UNITED STATES INTERNATIONAL UNIVERSITY – AFRICA SUMMER 2020 THE INFLUENCE OF MICRO ENVIRONMENT FACTORS ON MARKETING MIX STRATEGY: A CASE OF RETAIL BUSINESSES WITHIN SHOPPING MALLS IN NAIROBI BY MAUREEN WANJIKU GICHIRI A Research Project Submitted to the Chandaria School of Business in Partial Fulfilment of the Requirement for the Degree of Masters in Management and Organizational Development (MOD) UNITED STATES INTERNATIONAL UNIVERSITY – AFRICA SUMMER 2020 ii STUDENT’S DECLARATION I, the undersigned, declare that this is my original work and has not been submitted to any other college, institution or university other than the United States International University Africa for academic credit. Signed: ______________________________ Date: __________________ Maureen Wanjiku Gichiri (659170) This project has been presented for examination with my approval as the appointed supervisor. Signed: _______________________________ Date: _____________________ Dr. Peter Kiriri Signed: _____________________________ Date: ____________________ Dean, Chandaria School of Business iii COPYRIGHT Maureen 2020© iv ABSTRACT Companies develop and execute marketing strategies to understand the customer and competition and devise ways of persuading the customer to purchase and consume their products and services. In the face of dynamic changes in their micro and macro environments, this has become a complex and difficult exercise. The purpose of the study was to investigate the influence of micro environment factors on marketing mix strategy among retail business in shopping malls in Nairobi. The objectives were to investigate the influence of customers on marketing mix strategy among retail business in shopping malls in Nairobi; to establish the influence of competition on marketing mix strategy among retail business in shopping malls in Nairobi; and to determine the influence of distribution channels on marketing mix strategy among retail business in shopping malls in Nairobi. A descriptive research design was used in the study. The population encompassed retailers operating in Village Market Mall. There were 239 retailers operating in the mall. Simple random sampling was used to generate a sample size of 150 retailers for the study. Data was collected using a validated and standardized questionnaire. The questionnaire was self- administered to the respondents at their place of work. Collected data was cleaned and analyzed using SPSS 23 for descriptive and inferential statistics. The descriptive measures included frequencies, percentages, means and standard deviations. To establish the influence of micro environment factors on market mix strategy, the study used multiple regressions. The results were presented using charts, graphs, and tables, accompanied by narrative descriptions. Findings on the influence of customers on marketing mix strategy show that with regard to customer behavior, customers were concentrated around where the outlet was operating. Customers were also attracted to the stores due to the outlet’s design aesthetics and display. The store was situated in a neighborhood where customers had disposable income that could allow them to access products and services at the prices offered at the mall. Findings on customer preferences indicated that customers made decisions based on the prices offered, and that the preference of one retailer to the other was dependent on the prices of the products. Customers also preferred the malls due to high perception of product quality and benefits of effective product promotions, since they were mainly drawn to recognizable brands. Customer satisfaction levels were comparatively high and driven by product quality, staff responsiveness, and customer loyalty. Multiple regressions demonstrated that all the dimensions of customers, notably, customer satisfaction, customer preferences, and customer satisfaction had a positive and statistically significant influence on marketing mix strategy. Findings on the influence of competitive forces on marketing mix strategy show that in terms of the threat of entry, retailers moderately agreed that goods they sold were from patented innovations and that competitors enjoyed economies of scale. A significant amount of capital was also needed to enter the market, and government regulation and levels of profitability influenced competition among retailers. On competitive rivalry, retailers noted that there were many small competitors in the mall, rather than big competitors. The prices were comparable with retailers dealing in similar products. Most products had substitutes drawn from the same group of suppliers. The retailers contended that the price and performance attributes were competitive. However, the competitiveness of the retailers was greatly dependent on the competitiveness of the mall. As a result, even though the study reported a positive relationship between the threat of entry and competitive rivalry, these did not have a statistically significant v influence on marketing strategy. The abundance of substitutes had a negative but not statistically significant influence on the retail outlet’s marketing strategy. Findings on the influence of distribution on marketing strategy decisions indicate that direct distribution channels were characterized by delivering products faster to customers, possessing considerable control over product marketing and selling, building direct relationships with customers and accessing goods only in fixed positions. The level of agreement with these characteristics was slightly above average. Indirect distribution was characterized by distributing products through agents, building relationships primarily with distributors, leveraging existing brand recognition, and interacting more with end-users. Findings indicated comparatively low levels of agreement when compared to direct distribution. Extensive distribution, characterized by characteristics from the two channel strategies, reported moderate level of agreement among respondents. Overall, multiple regression demonstrated that direct distribution was the main predictor of marketing mix strategy, as opposed to indirect or extensive distribution. The study concludes that customer related micro-environment factors have a positive and statistically significant influence on market mix strategy among retail outlets in Kenya. Multiple regressions showed that customer behavior, customer preferences, and customer satisfaction had a statistically significant effect on marketing mix strategy. Competition related micro-environment factors have a positive but not significant effect on marketing strategy among retail outlets in Kenya. Competition was conceptualized based on Michael Porter’s five forces theory. Multiple regressions revealed a positive but not significant relationship between threats of entry and the choice of market mix strategies, a positive but not statistically significant relationship between competitive rivalry and marketing mix strategies, and a negative non-significant effect on the choice of marketing mix strategies. Distribution channels, as micro-environment factors, have a positive and statistically significant influence on the marketing mix strategy of retail outlets in Kenya. The regression results showed that direct distribution had a positive and statistically significant effect on marketing mix strategies. Indirect distribution had a positive effect on marketing mix strategies, but the effect was not statistically significant, while there was a negative relationship between intensive distribution and marketing mix strategies. The study recommends that the retail outlets should upgrade store designs and product display formats, increase the availability of store information online to aid information searches, and align operational hours according to customers shopping habits such as time of the day, weather, or season. The retail outlets should establish competitive prices, increase the quality of products offered, increase promotions, and stock highly established brands. Finally, with regard to customer satisfaction, the firm’s marketing strategies should focus on improving the quality of service, staff responsiveness, and product quality. The retail outlets should innovate, exploit economies of scale, and build capital reserves in anticipation of changing market conditions and to respond to market opportunities before other competitors. Retail outlets should improve the efficiency of product delivery to customers, investing additional resources in marketing of stores and products. vi ACKNOWLEDGEMENT I am thankful to my employer, fellow classmates and my family. Special thanks to my supervisor Dr. Kiriri. vii DEDICATION I dedicate this project to my family and friends. A special feeling of gratitude to my parents Joseph and Cecilia Gichiri whose words of encouragement and push for tenacity ring in my ears. Special thanks to my siblings Martin Kiruthi, Maryann Wanjiru and my cousin Dennis Njiiri who have supported me throughout the process. I also dedicate this work to my MOD 2019 classmates for being the best cheerleaders during the course of the entire Masters program. viii TABLE OF CONTENTS STUDENT’S DECLARATION .......................................................................................................... iii COPYRIGHT .....................................................................................................................................

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