EFFECTS OF COST LEADERSHIP STRATEGY ON CUSTOMER LOYALTY AMONG PHARMACEUTICAL COMPANIES IN NAIROBI COUNTY, KENYA

Abstract

Pharmaceutical firms need to come up with innovative strategies to achieve competitive advantage in a market with many manufacturers of generic products. Kenya is currently the largest producer of pharmaceutical products in the Common Market for Eastern and Southern Africa region. Customer loyalty is developed over a period of time from a consistent record of meeting, and sometimes even exceeding customer expectations. Customer loyalty is very difficult to be achieved with more and more unique ways being adopted to meet the ever changing nature of the pharmaceutical industry. Cost leadership involves becoming the low cost firm in an activity and can be operationalized as low input costs, economies of scale, experience, products, process design and low pricing. The study objective was to determine the effect of cost leadership strategy on customer loyalty among Pharmaceutical companies in Nairobi County. The research was carried out using descriptive survey design where 119 pharmaceutical firms targeted in Nairobi County, dealing with manufacturing and distribution of drugs as listed in the Kenya medical directory. The sample size was computed using 30% of the target population which gives a sample size of 35 pharmaceutical companies. These 35, were randomly selected from the list of 119 pharmaceutical companies. The study used questionnaires as an instrument of collecting data. Inferential statistics was used to determine the effect of the independent variable on the dependent variable. The findings reveal that, cost leadership strategy had a positive effect on customer loyalty in pharmaceutical firms, with a good indication that increase in cost leadership strategies improves the customer loyalty among pharmaceutical firms in Nairobi County. It was recommended that since cost leadership was found to be a key determinant in customer loyalty, the stakeholders should allocate adequate resources to the cost reduction implementation strategy plans among pharmaceutical firms in Nairobi County. Article visualizations: