Rhoda Wangui Gakuya, Dorris Mbugua


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:

Hit counter



effect, cost leadership, strategy, customer loyalty, pharmaceuticals

Full Text:



Acquaah, M., & Agyapong, A. (2015). The relationship between competitive strategy and firm. Performance in micro and small businesses in Ghana: The moderating role of managerial and marketing capabilities. Africa Journal of Management, 1(2), 172-193.

Allen, R. S., & Helms, M. M. (2006). Linking strategic practices and organizational performance to Porter’s generic strategies. Business Process Management Journal, 12, 433-454.

Andrews, K.R. (1971), The Concept of Corporate Strategy, Dow-Jones Irwin, Homewood, IL

Ansoff, H.I., & McDonel, l .E., (1990). Implementing Strategic Management: 2nd Ed, Prentice Hall

Adamson, A. P. (2006). BrandSimple: How the Best Brands Keep it Simple and Succeed. New York, NY: Palgrave MacMillian

Barney, J. B., (2008). Strategic Management and Competitive Advantage: Concepts and Cases. Pearson Prentice Hall Inc.

Barney, J.B. & Hesterly, W.S. (2008), Strategic Management and Competitive Advantage: Concepts and Cases, Pearson/Prentice-Hall, Upper Saddle River, NJ.

Barney, J.B., Wright, M. & Ketchen, D.J. Jr (2001): “The resource-based view of the firm: ten years after 1991”, Journal of Management, 27(6), 625-641

Bay, S., Petrizzi, R., & Gill, P. , (2008). The why of the buy: Consumer behavior and Fashion marketing. New York: Fairchild Books.

Birkinshaw, J.M. & Morrison, A.J., (2005), "Configurations of Strategy and Structures of Multinational Corporations," Journal of International Business Studies (Fourth quarter)

Biswas, A, & Blair, E.A. (2002). Contextual effects of reference prices in retail advertisements, Journal of Marketing, Vol. 55 pp.1-12

Bitner, M. J., Booms, B. H., & Mohr, L. A. (2005). Critical service encounters: The employee's viewpoint. Journal of Marketing, 58, 95-106

Bradley, S. P., Jerry A. H. & Richard L. N., (2003) "Global Competition and Technology." in Stephen P. Bradley, Jerry A. Hausman and Richard L. Nolan(eds.), Globalization, Technology and Competition, Boston, MA: HBS Press.

Caulkin, S. (1999).The pursuit of immortality, Management Today.

Collis, D.J., Montgomery, C.A. (2005): "Competing in resources: strategy in the 1990s",Harvard Business Review, 73(4), 118-128

Conant, J.S., Mokwa, M.P., & Varadarajan, P.R. (1990), "Strategic types, distinctive marketing competencies and organizational performance: a multiple measures based study", Strategic Management Journal.

Cooper, D. R, & Schindler, P.S. (2006). Business Research Methods, 8th ed. New York: McGraw-Hill.

Craig, C. S. & Douglas, S.P., (2006) "Developing Strategy for Global Markets:An evolutionary Perspective" Columbia Journal of World Business (spring)

Cross, L. (2009). Strategy drives marketing Success, Graphic Arts Monthly, 71 (2): 96.

Caruana, A. (2002). Service loyalty: The effects of service quality and the mediating role of customer satisfaction. European journal of marketing,36(7/8), 811-828.

Chang, C.H., (2010). A study on brand loyalty and customer lifetime value. Journal of Information and Optimization Sciences, 31, 3, 719-728.

Czerniawski, R.D. & Maloney, W.M. (2007) Creating Brand LoyaltyThe Management of Power Positioning and Really Great Advertising. Hudson House Publishing

Davidow, B., & Uttal, M., (2012). Hyper-competition: Managing the dynamics of strategic maneuvering. New York: Free Press.

David, F. (2000), “Strategic Management Concepts and Cases”, Prentice Hall, Englewood Cliffs, NJ

Davidson, S. (2001), "Seizing the competitive advantage", Community Banker, Vol. 10 No.8Day,

Deming, W.E. (1995), the New Economics for Industry; Government; Education, MIT,

Cambridge, MA.

Dess, G.G., Davis, P.S. (2009): “Porter’s (1980) generic strategies as determinants of strategic group

Dulo, G.A (2006). The sources of competitive advantage and the performance of firms in the Kenya sugar industry.Unpublished MBA Project. School of Business University of Nairobi.

Ehigie, B. O. (2006). Correlates of customer loyalty to their bank: a case study in Nigeria. International Journal of Bank Marketing, 24(7), 494-508

Eric E. Mang’unyi, Oumar T. Khabala & Krishna K. Govender (2017).The relationship between e-CRM and customer loyalty: a Kenyan Commercial Bank case study.

Fornell, C. (2010). A national customer satisfaction barometer: The Swedish Experience. Journal of marketing, 56(1):6-22.

Gild S., & Wesley, R. (2008), “Assessing advantage: A framework for diagnosing competitive superiority”, Journal of marketing, Vol. 52.

Grabowski, H. (2004), "Are the economics of pharmaceutical research and development changing? Productivity, patents and political pressures", Pharmacoeconomics, Vol. 22

Grant, R. M. (1997). Contemporary Strategy Analysis: Concepts, Techniques and Applications. Cambridge: Black-well Publishers.

Grant, R. M. (2002). Contemporary Strategy Analysis, 4th ed., Blackwell, Oxford.

Grant, R.M., (2010) The Resource-based Theory of Competitive Advantage: Implications for Strategy Formulation, California

Hamel, G. (2008), Strategy as revolution, Harvard Business Review (July–August), 69–82

Hancott, A. (2008). Competing in resources: strategy in the 1990s, Harvard Business Review, 73 (4): 118-119

Hermanson, R.H et al (1989). Financial Accounting. 4th Edition; Richard Irwin Inc. USA.

Hlavacka, H.T, Dicken, P., Forsgren, M., & Malmberg, A. (2001), the local embeddedness of transnational corporations. In Amin, A., Thrift, N. (eds.) Globalisation, institutions and regional development in Europe, Oxford: Oxford University

Hoskisson R.E et al (2004) Competing for Advantage 2nd edition. Thomson Higher education 5191 Natorp Boulevard Mason, USA.

Hunt, D., RM Morgan (2005): “The Comparative Advantage Theory of Competition” Journal of Marketing, 2(3), 55-58

Homburg, C., & Giering, A. (2012). Personal Characteristics as Moderators of the Relationship between Customer Satisfaction and Loyalty: An Empirical Analysis. Psychology & Marketing, 18(1), pp. 43–66.

Hyatt, L. (2001), A simple guide to strategy. Nursing Homes, 50(1), 12-3

Jarney,T. (2012)"Firms resources and sustained competitive advantage," Journal of

Management," 27, 643-650, 1991[151

Johnson, G., and Scholes, K. (2000), Exploring Corporate Strategy, 3rd ed., Prentice-Hall International, Hemel Hempstead, Keen P. G. W.,(2001) Shaping the Future, Boston, MA: HBS Press.

Johnson, J.C., Wood, D.F., Wardlow, D.L., & Murphy Jr., P.R., (2006) Contemporary Logistics, 7th Edition. Prentice-Hall, Englewood Cli!s, NJ.

Johnson, G. & Scholes, K.(2005). Exploring corporate strategy. New York: Prentice Hall

Johnson, G, & Scholes, K.(1993), Exploring Corporate Strategy. New York: Prentice Hall

Johnson, G, & Scholes, K. (2011), Exploring Corporate Strategy, Englewood Cliffs, NJ. Prentice-Hall.

Kalaycı, S., Karatas, A., Coskun, A., & Kırtas, A., 10 (1), 103- 125, (2005).Financial Ratio Classification of Manufacturing Firms in Istanbul Stock Exchange. The Journal of Entrepreneurial Finance and Business Ventures.

Karuku, E. (2010). Cultivating brand loyalty in Kenya. Business Community.

Kamonzo, K.J. (2011). The effect of competitive strategies on performance of Veterinary

Pharmaceutical firms in Nairobi County. Kenya. Unpublished MBA Project. School of Business Kenyatta University.

Kaya, N., Alpkan, L., & Seyrek, H., (2004). Performance Impacts of Strategic Orientations: Evidence from Turkish Manufacturing Firms. The Economics and International Business Research Conference Proceedings

Kinyanjui, K. (2009). Brand loyalty pays for mobile customers. Business Daily.

Kombo, A. (2010). Estimates of parameters of a censored regression sample. Journal of the American Statistical Association, 67: 664-671.

Kothari, C. R. (2004), Research Methodology: Methods and Techniques, (Second Edition), New Age International Publishers.

Ko¨seoglu, M., Topaloglu, C., Parnell, J. & Lester, D. (2013), “Linkagesamong Business strategy, uncertainty and performance in the hospitality industry: evidence from an emerging economy”, International Journal of Hospitality Management, Vol. 34 No. 9, pp. 81-91

Kumar, R. (2011). Research methodology: a step-by-step guide for beginners. Los Angeles: SAGE.

Kuo, Y., Wu, C. & Deng, W. (2009), “The relationships among service quality, perceived value, customer satisfaction, and post-purchase intention in mobile value-added services”, Computers in Human Behavior, Vol. 25 No. 4, pp. 887-896.

Linn, M. (2007).The Importance of Managing Strategically. The Bottom Line, New York.

Luliya, T. (2013). Competitive strategies and firm performance: the mediating role of performance measurement, International Journal of Productivity and Performance Management, Vol.62 Issue: 2, pp.168-184,

Lumpkin, G. T., & Dess, G. G. (2013). The effect of ‘simplicity’ on the strategy-performance relationship: A note. Journal of Management Studies, 43, 1583-1604.

Macmillan, H., & Tampoe, M. (2000).Strategic Management–process, content, and implementation. London: Oxford University Press

McCracken, L. (2002), Differentiation: win new business with less effort. Principal's Report 2(4), 1.

McDonald, M. & Keen, P.(2012). The eprocess Edge: Creating customer value & business in the internet era. United States of America: The McGraw-Hill Companies.

Manyuru, J.P. (2005).Corporate Governance and Organizational Performance. The Companies Quoted at the NSE. Unpublished MBA Project, School of Business. University of Nairobi.

Mayer, R. C., and Davis, J. H. (2013). The effect of the performance appraisal system on trust for management: A field quasi-experiment. Journal of Applied Psychology, 84(1), 123–136.

Martin-Alcazar, F., Romero-Fernandez, P., Sancez-Gardey, G., & Sanchez-Perez, J. (2009).

Team working with organizations: A theoretical approach drawing on the resource-based view of the firm. International Journal of Human Resource Development &Management, 9, 81-96.

Mugenda, O., & Mugenda, A. (2008).Research methods quantitative and qualitative

approaches. Nairobi: Acts Press

Murage, S. (2001) Competitive Strategies Adopted by Members of the Kenya Independent Petroleum Dealers Association.Unpublished Thesis, University of Nairobi.

Muturi, G. (2009). Effects of competitive strategies on organization performance in East African Breweries. Unpublished Thesis, University of Nairobi

Neuman, W. l. (2000) Social research methods Qualitative and Quantitative Approaches. 4th Edition, Allyn & Bacon, Needham Heights.

Nunnally, J. C., and Bernstein, I. H. (1994), “Psychometric theory”, (3rd ed.). New York: McGraw-Hill.

Nzioka, C. M. (2012). Adoption of new pharmaceutical products by wholesalers in Kenya. Unpublished MBA Project, University of Nairobi

Ogba,I.E., & Tan, Z. (2009) "Exploring the impact of brand image on customer loyalty and commitment in China", Journal of Technology Management in China, 4(2), pp.132 – 144

Oliver, C. (2013). The institutional embeddedness of economic activity, in Baum, J.A.C., Dutton, J. (Eds), Advances in Strategic Management, JAI Press, Greenwich, CT, 13 (5): 163-87.

Oliver, L. (2011), “Whence Customer Loyalty”, Journal of Marketing, Vol. 63, SpecialIssue, pp. 33-44.

Owiye, P. O. (2009). Why Kenyan Firms are Failing to Compete Effectively Within the Liberalized Trading Environment in Kenya: The Case of Government Owned Sugar Firms, Unpublished MBA Project, University of Nairobi.

Pan, Y., Sheng, S., & Xie, F. T. (2011). Antecedent of customer loyalty: An empirical synthesis and reexamination, Journal of retailing and customer services.

Pearce, J. and Robinson, R. (2007): Strategic Management: - Strategic Formulation and Implementation. Richard D. Irwin Inc. U.S.A., 3rd Edition.

Patterson, G., Johnson, W., & Spreng, A., 2008. Modeling the determinants of customer satisfaction for business-to-business professional services. Journal of the Academy of Marketing Science, 25,1, 4-17.

Peters, J., & Waterman, H., (1999). In Search of Excellence, Harper & Row: New York.

Porter, M. (1980).Competitive Strategy: Techniques for Analyzing Industries And Competitors, Free Press, New York

Porter M.E., (2010); Competitive Strategy: Techniques for Analyzing Industries and Competitors, Free Press, New York,

Porter, M.E. (1985), Competitive Advantage: Creating and Sustaining Superior Performance, Free Press, New York, NY.,

Porter M.E., (2010); Competitive Strategy: Techniques for Analyzing Industries and Competitors, Free Press, New York,

Porter, M.E., (2011): “Towards a dynamic theory of strategy”, Strategic Management Journal, 12(1), 95 - 117

Porter, M.E., (2008):” What is strategy?” Harvard Business Review, 74(6), 61 - 78

Porter, M.E (2010):” Strategy and the Internet”, Harvard Business Review, 62(2), 35 – 45

Prahalad C.K., & Hamel G., (2010):” Core Competency Concept”, Harvard Business Review, 59(3), 62 - 78

Prescott, J.E. (2011): The evolution of competitive intelligence, in Hussey, D.E. (Ed.), International Review of Strategic Management, Wiley, Chichester. NY

Prescott, J.E. & Bhardwaj, G. (2005):” Competitive intelligence practices: a survey”, Competitive Intelligence Review, 7(1), 41-48

Prescott, J.E. & Gibbons, P.T. (2006):”The seven seas of global competitive intelligence”, Competitive Intelligence Review, 62(1), 98-103

Punniyamoorthy, M., & Raj, M. P., 2007. An empirical model for brand loyalty measurement. Journal of Targeting, Measurement and Analysis for Marketing, 15, 4, 222-233.

Rainbird, M. (2010):” A framework for operations management: the value chain”, International Journal of Physical Distribution and Logistics Management, 34(2), 12-25

Rajput, N., Kesharwani, S., & Khanna, A. (2012). Consumers‟ Attitude towards Branded Apparels: Gender Perspective. International Journal of Marketing Studies, Vol. 4, No. 2. Settings. Journal of Retailing, 57(3), 25–48.

Rajecki, R. (2002), what’s your brand? Contracting Business, 59(3), 40

Rauyruen, P., & Miller, K.E. (2007).Relationship quality as a predictor of B2B customer loyalty. Journal of Business Research, 60: 21-31.

Rumelt D.,(200) Towards a Strategic Theory of the Firm.Alternative theories of the firm; (2)pp. 286-300,

Sable, J., (2013).What does a marketing mix consist in fashion?. Chron. Retrieved on December13, 2013, Available at http://smallbusiness.chron.com/marketing-mix-consist-fashion-24391.html

Salami, C., & Olannye, A. (2013). Customer perception about the service quality in selected banks in Asaba. Journal of research in International Business and Management, 3(3), pp. 119-127

Stone, F. (2013). The market for lemons: quality uncertainty and the market mechanism, Quarterly Journal of Economics, 89 (5) : 488–500.

Susan P., & Samuel C., (1989) "Evolution of Global Marketing Strategy: Scale, Scope and Synergy," Columbia Journal of World Business

Smith, A.D. (2011). Corporate social responsibility practices in the pharmaceutical industry. Business Strategy Series, Vol. 9 Iss: 6, pp 306-315.

Thiga, S. (2000). Competitive Strategies Employed by Commercial Banks, Unpublished MBA Project, University of Nairobi.

Toit, J. (2013). Customer loyalty: The sad reality for marketers. Leading Company Newsletter.

Thomas, B. &Tobe, J.2013.Anticipate: Knowing What Customers Need Before They Do.

Thomson. A., Strickland, A. J. & Gamble, J. A (2007); Crafting and Executing Strategy: The Quest for Competitive Advantage (Concepts and Cases). New York: McGraw.

Thompson, N. (2007). Crafting and Executing Strategy: Text and Readings, 15h edition, McGraw Hill Companies, New York

Troy, M. (2002), below the surface lays a discount core. DSN Retailing Today, 41(7), 57

Tuminello, R. (2002), the psychology of client selection. Northwest Construction, 5(2),an empirical analysis. Journal of Services Marketing, 14(2), 147–159.

Wanjere, S. (2014). Strategic development related to Europeanization of UK logistics and distribution service suppliers, European Business Review, 95 (5): 9-14.

Wernerfeldt, B. (1984). The resource-based view of the firm, Strategic Management Journal,5,171–180.

Venkatraman, S. & Ramanujam, N. (2006). Strategy as options in the future, Sloan Management Review, Vol. 40 No.3, pp.117–27.

Zineldin, M. (2006). The royalty of loyalty: CRM, quality and retention. Journal of Consumer Marketing, 23(7), 430-437.

DOI: http://dx.doi.org/10.46827/ejsss.v0i0.353

Copyright (c) 2018 Rhoda Wangui Gakuya, Dorris Mbugua

Creative Commons License
This work is licensed under a Creative Commons Attribution 4.0 International License.

The research works published in this journal are free to be accessed. They can be shared (copied and redistributed in any medium or format) and\or adapted (remixed, transformed, and built upon the material for any purpose, commercially and\or not commercially) under the following terms: attribution (appropriate credit must be given indicating original authors, research work name and publication name mentioning if changes were made) and without adding additional restrictions (without restricting others from doing anything the actual license permits). Authors retain the full copyright of their published research works and cannot revoke these freedoms as long as the license terms are followed.

Copyright © 2016 - 2023. European Journal Of Social Sciences Studies (ISSN 2501-8590) is a registered trademark of Open Access Publishing Group. All rights reserved.

This journal is a serial publication uniquely identified by an International Standard Serial Number (ISSN) serial number certificate issued by Romanian National Library. All the research works are uniquely identified by a CrossRef DOI digital object identifier supplied by indexing and repository platforms. All the research works published on this journal are meeting the Open Access Publishing requirements and standards formulated by Budapest Open Access Initiative (2002), the Bethesda Statement on Open Access Publishing (2003) and  Berlin Declaration on Open Access to Knowledge in the Sciences and Humanities (2003) and can be freely accessed, shared, modified, distributed and used in educational, commercial and non-commercial purposes under a Creative Commons Attribution 4.0 International License. Copyrights of the published research works are retained by authors.


Hit counter