A competitive strategies adopted by petroleum retail stations in Kenya

Abstract

The objectives of this study were two; to identify the competitive strategies being applied by the petroleum service stations in Mombasa by using Porter's Generic Model of cost leadership, differentiation and focus strategies. The second objective was to establish the challenges these stations face when applying the competitive strategies. The study covered all the 75 service stations in Mombasa and the data was collected through questionnaires. 65 stations responded and 10 stations did not. The data was analyzed by using descriptive statistics which involved frequency tables and percentages. The findings showed that most of the stations are owned by multinationals with a moderate size owned by local companies and a small section by individuals. The findings also showed that all stations are applying some strategies for competition but most of them combine both the cost leadership and differentiation strategies at the same time, most of which are the multinationals due to their favorable financial capabilities. A few local companies and the independent owners mainly focus on price strategy and sell at lower prices. The findings also showed that challenges are mainly lack of financial capabilities for growth and marketing promotions, also the challenge of recruiting and maintaining highly skilled personnel who are innovative and creative. Other major challenges are the cost of safety procedures & regulations and the lack of proper systems & controls. Multinationals do not find these as major challenges but they are found to be major challenges to the local stations and those independently owned. However, the independently owned and local stations give high competition to the major stations by selling at very low prices, due to their lower overheads.