Brand Architecture, Customer Loyalty, Competitive Intensity and Performance of Water Bottling Firms in Nairobi City County, Kenya

Abstract

This study aimed at examining the effects of brand architecture, customer loyalty and competitive intensity on firm performance. The study was carried out in the water bottling firms in Nairobi City County. The specific objectives were to determine brand architecture - firm performance influence; establish the role of customer loyalty in brand architecture- firm performance relationship; determine the effect of competitive intensity on brand architecture - firm performance relationship; establish the joint effect of brand architecture, customer loyalty, and competitive intensity on firm performance. The study was anchored on relationship marketing theory and two support theories namely resource advantage theory and industrial organization economics theory. The study tested four null hypotheses derived from the objectives. Descriptive cross-sectional survey was adopted in this study. Primary data was collected from 209 major firms. Structured questionnaires were used for data collection. The response rate was 67.9%. Descriptive and inferential statistic results were achieved from data analysis. Findings show a significant brand architecture - non-financial firm performance relationship (R2 =0.704, F= 333.64, p-value<0.05); financial firm performance (R2 = 0.692, F= 314.904, p-value <0.05). This study finding is consistent with previous study outcomes on brand architecture - firm performance relationship. The findings further show that customer loyalty partially mediated brand architecture -financial firm performance relationship (R2 =0.756, F=215.15, β =-.336, p-value>0.05); and non-financial firm performance (R2 =0.801, F= 184.656, β= 0.626, β =.346, p-value =0.05). Further finding revealed that competitive intensity moderated brand architecture - non-financial firm performance relationship (R2 =0.813, F=200.219, β =0.283, p-value <0.05); and financial firm performance (R2 =0.801, F=184.656, β =0.286, p-value< 0.05). A composite analysis of both financial and non-financial was used to achieve firm performance scores. The findings of the joint effect on brand architecture, customer loyalty, competitive intensity on firm performance relationship was significant (R2 = 0.989, F=85.743, β =0.704, p-value<0.05). The outcome was found to be statistically significant, implying that the null hypothesis stating that brand architecture, customer loyalty and competitive intensity on firm performance is not significant was rejected and alternative hypothesis stating that the joint influence of brand architecture, customer loyalty and competitive intensity on firm performance accepted. The study findings contributed to policy, practice, and theory. The study recommends the adoption of brand architecture in enhancing firm performance while incorporating customer loyalty and competitive intensity that have a joint influence on firm performance. The study suggests the use of longitudinal research design to establish brand architecture -firm performance relationship for generalization of findings. A similar study should be done in the beverage industry, that equally has proliferation of brands, for comparison of results and generalization of findings.