Differentiation Strategy and Performance of Taxi Firms in Nairobi County, Kenya

Abstract

Sustainability of performance of firms is currently of much importance more than ever in facilitating the survival and growth of businesses. Many organizations have thus diverted their core focus into gaining competitive edge against their rivals which increases relevancy of implementing differentiation strategies. Differentiation strategy involves looking at utilizing marketing techniques, advertisement and sales in enhancing return. Success in differentiation will transform organizations from price-based competitions to non-price-based competitions or promotions in gaining competitive advantage. However, most local taxi firms in Kenya have failed to effectively formulate and adopt the differentiation strategies with the sector not been fully sustainable in the recent past which calls for an evaluation in this developing paradigm. The objective of the study was to determine the relationship between differentiation strategy and sustainable business performance of taxi firms in Nairobi County, Kenya.Two theories formed a guide for this study namely Contingency Theory and Winton’s Theory. In this study, a descriptive research design was used. The study population was all the local taxi firms in Kenya where a census approach was adopted so as to encompass all the 60 taxis that have been operational for at least 3 years according to the records held by the taxi association of Kenya. Data for the study was collected using questionnaires which were structured into sections; each section addressing a specific research objective. Descriptive statistics including mean, frequencies and standard deviations, and inferential statistics including correlation and regression analysis were employed in the data analysis. The data was then presented in tables and figures. From the descriptive statistics results, the study found out a large extent on the adoption of the differentiation strategies including Value-based Services (x̅=4.23), Core Competencies (x̅=3.98), Technology innovations (x̅=3.84), and Advertising and promotions (x̅=3.70). From the correlation analysis results, all the research variables including Value-based Services (r=0.367, p<0.05), Core Competencies (r=0.526, p<0.05), Technology innovations (r=0.513,p<0.05), and Advertising and promotions (r=0.180, p<0.05) were established to have a positive and significanct effect on the performance of the taxi firms. From the regression analysis results, the differentiation practices studied were found to explain 57.4% of the variations in performance of the taxi firms (R2=0.574). According to the study, differentiation approaches have a considerable positive influence on taxi company success. The study recommends that management prioritise strategy formulation in their businesses' strategies in order to improve and expand strategy use. According to the study, taxi businesses should invest more in differentiating their services by constantly enhancing client interactions, vehicle kinds, and customer service. The research also recommends that the government and other regulatory bodies enact favourable legislation to facilitate the adoption of corporate differentiation strategies