An Investigation Into the Retail Network Planning Strategies Along Major Petroleum Marketers in Kenya

Abstract

The study sought to investigate the retail network planning strategies among major petroleum marketers in Kenya. A major petroleum marketer was defined for the purpose of this study as being any marketer registered with the Ministry of Energy with more than one branded retail outlet commonly known as petrol station. The study is based on nine firms that met this definition.

The specific objectives of the study were firstly, to establish the extent to which retail network planning strategies have been developed and used among major petroleum marketers in Kenya and secondly to identify the perceived benefits, if any, to marketers applying formal network planning strategies in their retail developments.

It was found that 67.7% of the marketers are foreign owned. The 67.7% of the foreign owned marketers includes a joint venture marketer (11.1%). The rest of the marketers are locally owned. Generally all the marketers studied apply network planning strategies, the degree of application varying from one marketer to another. The extent to which formal network planning strategies are applied was found to be wider among foreign owned marketers forming the majority of those studied (67.7%). This may be attributable to knowledge sharing between these marketers and their affiliates in other parts of the world. 62.5% of the marketers identified traffic patterns as a critical factor in network planning, 50% identified road network plans as critical and 25% identified demographics as critical though 62.5% identified this factor as very important.

In market share growth, 100% of the marketers gained substantial benefits by using demographics as a demand factor in network planning, 67.7% of those marketers that used road network plans as a factor .gained substantial benefits in market effectiveness improvement and 67.7% of those marketers who used traffic pattern as a factor received substantial benefits in environmental protection. The other benefits of applying formal planning strategies include; improved profitability performance, _ improved staff competence, company growth, and prudent use of investment funds, ability to locate stations at ideal locations, image improvement, margin stability and divestiture of non-performing outlets. The study focused on marketers with branded outlets registered with the Ministry of Energy. There are however several independent

marketers who have not branded their outlets nor registered with the Ministry of Energy, but who have more than one outlet Some of these marketers may be having network planning strategies that guide their investments. It is suggested that further research be carried out on these category of marketers to further enrich this study.