A survey of product differentiation strategies adopted by firms in the water bottling industry in Nairobi

Abstract

The bottled drinking water a few years back was treated as a reserve for the well to do. This is no longer the case as the demand for safe drinking water has been on the increase in all sectors. This demand has been catalyzed by the failure of local authority in the provision of a clean drinking water. Despite being in its early stages of development the water bottling industry has experienced reasonable competitive rivalry. This has driven firms to attempt to differentiate their products and offerings to prospects. This study was conducted with the objective of determining the extent of product differentiation strategies adopted by firms operating in the bottled water industry and if any differences existed between the adoption of product differentiation strategy with respect to size of enterprise. Other factors investigated included the factors influencing choice of these strategies. This was a descriptive survey with the population of interest being waterbottling firms located within Nairobi city. The study focused only on registered firms (totaling to 59) therefore, a census was conducted. Data was collected using structured questionnaires. The respondents were marketing managers or their equivalent. Data was collected and analyzed using percentages, mean and standard deviation. The results of the survey indicated that firms do exercise product differentiation strategies and firms, depending on size will often adopt different strategies. The results also revealed that various factors influence strategy selection. Financial strength emerged as a major determinant of strategy selection, whereas the market trends dictated product differentiation strategies for adoption. Small and medium firms expressed concern for stiff competition and were pessimistic about the future. On the other hand large firms were optimistic that there was still a lot of market potential that needs to be exploited. During the survey several huddles were encountered, however on that stood out was the number of firms approximately 49% who never participated in U1e exercise due to varied reasons. Out of these 24% out-rightly refused to participate, 15% never returned the questionnaire and 10 % had moved premises and we were not able to locate them for interview. This reduced our response rate to 51% compared to the initial target of 95%. This study only focused on KRAregistered firms, however evidence indicates that there are other water bottling firms operating but are not registered with KRA.Wewould therefore recommend for further research to be carried out that will involve all the players in the industry.