An empirical investigation of creation and application of brand equity in Kenya: the case of the pharmaceutical sector.

Abstract

This study sought to investigate the various methods and practices deployed by pharmaceutical firms in enhancing the market value of their products. The research was conducted between June and September, 2000. The sampling frame comprised one hundred and thirty seven (137) pharmaceutical firms dealing with manufacturing and distribution of drugs as listed in the Medical Directory, 2000. Sixty nine (69) firms operating both within and outside Nairobi were selected using simple random sampling process. The underlying premise was that there have lately been a lot of hue and cry on the question of the quality and wholesomeness of various pharmaceutical products. Claims have been made of a number of firms trading in substandard, expired and relabeled drugs which have found their way into the local market irregularly or through dumping. Inadequate regulatory and lengthy bureaucratic procedures have led to inefficient and insufficient costly supplies of pharmaceutical products. Alongside these revelations, a wave of mergers, acquisitions and divestitures have also hit the local industry necessitating this study. Owing to these challenges, the need for a strong brand equity cannot be overemphasized especially in light of serious fragmentation and segmentation within the sector. The study had the following three objectives: 1. to determine the extent to which the concept of brand equity is being applied by pharmaceutical firms in Kenya; 2. to assess the relative importance of various factors which explain the degree of application of brand equity concept in the pharmaceutical sector; and 3. to identify and assess the relative importance of factors that hamper the-application of brand equity concept in the pharmaceutical sector. Both primary and secondary data was collected. Secondary data was obtained from extensive review of literature while primary data was collected using a partially structured questionnaire comprising of three parts. The techniques for analyzing the data comprised the use of descriptive statistics such as charts, tables, graphs and percentages. The study found that many of the firms which profess to be adhering to the brand equity concept are far from grasping its value and mode of implementation. The firms do not have adequate procedures and systems necessary for the execution of the brand equity concept. The author recommends that local pharmaceutical firms should deliberately adopt and implement fully the concept of brand equity rather than continue applying it haphazardly, thereby failing to realize its full benefits. Further, managers should be specifically appointed and charged with the responsibility of protecting and promoting brand equity with a view to realizing a brands' full potential. Marketing managers need factual, market-based information that will help them design innovative ways and strategies on how to keep their market share and profitability intact and growing, both in the short and long run. The study findings reported represent the population of the pharmaceutical industry that is involved with marketing activities. That is both the manufacturing and distribution firms while leaving out the consumer and the retail/wholesale chain. It is through the actions and decisions of these respondents that we are able to measure, learn and make conclusions and recommendations on how brand equity is created and applied .