Data Mining Application and Competitive Advantage Among Supermarkets in Nairobi County, Kenya

Abstract

The objective of the study was threefold; to establish the extent of data mining applications use, establish challenges experienced in data mining, and to determine the relationship between data mining applications and competitive advantage among Supermarkets in Nairobi County. In order to achieve these objectives, the study used descriptive survey. Primary data were collected using questionnaires. The responses were from supermarkets operating in the Nairobi County. Data analysis was conducted using frequencies, percentages, means, and regression. The results revealed supermarkets have greater extent of adoption of predictive modeling ability, moderate adoption of customer segmentation and market development. However, there is still little extent of adoption of customer insights through text analysis. Second, supermarkets experience various challenges that make them not to gain full benefits from data mining applications. Core challenges come from not understanding how to work with new software that needs updates and integration into legacy systems. They also noted difficulties of design data warehouse for purposes of supporting data extraction, loading, and transformation. Nonetheless, the results showed stronger positive statistically significant effect of data mining applications on competitive advantage by 36% variance. However, the concepts of data mining had different contribution. For example, predictive modeling ability was found to have the strongest positive. While customer segmentation and market development showed moderate positive effect, customer analysis on the other hand, had little positive impact. Data mining applications allows businesses collect large volumes of data from customer transactions at a high speed. The use of data mining in predictive modeling, customer segmentation, insights analysis, and market development makes it possible to identify hidden patterns to understand costs, revenue, marketing expenses, and reaction of customers towards products. Consequently, management relies on these insights to make decisions that shape differentiation and costing strategies. These are the backbones of competitive advantage not just in supermarkets, but also other business environment