FACTORS AFFECTING BRAND LOYALTY IN SUPERMARKETS IN NAIROBI
Chapter 1 Introduction
1.1 Background of the study
There are very many changes taking place around the world and in the marketing environment is not withstanding. (to be changed or added)
Retaining brand loyal customers is critical for survival in today’s highly competitive market (Evans 1997)
Keeping customers is often a better strategy than attracting new customers. (Rosenberg 1983)
Customers have become more confident and more demanding. They want products and services that satisfy them and have no time for those products and services which do not. For this reason, they demand quality that is sustained. Customers are now more tougher, more informed and sensitive to poor services in that they often walk away from bad services and never come back. To make it worse a dissatisfied customer will tell 9 out of 10 people.
Customers are well informed and widely aware of their greater power which raises their expectations on how companies should care for them.
Many marketing managers are concerned with a growing trend toward brand switching. Among reasons given for the decline in brand loyalty is customer dissatisfaction with products and services, the many new products appearing in the markets and consumers increased concern on the price at the expense of brand loyalty (schiffman, 1994). Today’s customers are also becoming more and more knowledgeable, their tastes, preferences and quality expectations continue to change and this exerts pressure on organizations which seek to meet these ever changing customer needs and build their success on a long-term customer relationship ( Ndeti, 2007)

1.1.1 Concept of Brand Loyalty
Brand loyalty is product specific. Consumers will be loyal to brands in one category and will have loyalty to brands in other categories. However brand loyal customers exhibit the same characteristics as those who are store loyal ( Wambugu 2002). A number of studies have demonstrated the benefits of customer loyalty : ( Gronross 1990) suggests that customer retention leads to lower sales and marketing costs compared to selling to new customers, and other authors argue that customer loyalty is a key determinant of the long term financial performance of firms ( Reichheld, 1993). As a result, an increasing amount of research has examined the drivers of customer loyalty.
Schiffman, (1994) suggest that small reductions in customer defections produce significant increases in profits because loyal customers buy more products, pay less attention to competitors advertising and are less price sensitive. They also spread positive word of mouth and refer other customers (Schiffman, 2004). The longer a customer stays with a company , the more the customer is worth (Reichheld, 1996). Reichheld further explains that loyalty is important for profitable growth hence measuring and managing it to make good sense. Companies need to focus on factors which enhance loyalty as each company is different and level of brand loyalty varies.
In choosing between competing products, customers need to decide between different bundles of attributes offered by competing products, a process which sometimes involves difficult tradeoffs (Bettman et al, 1998)

1.1.2 Supermarkets in Kenya
The history of supermarkets dates back to the 1970s as only a few were set up in the 1960’s
Supermarkets started in upper income areas in large cities of Kenya (Nairobi and Mombasa ) and then spread into middle class and then to poor consumer markets, and from large cities to secondary cities to towns within Kenya.
Most supermarkets are owned by Asians of Kenyan origin and are run as family businesses ( Karemu, 1993)
This study focuses on the mainstream supermarkets. (Njenga, 2006) defines a mainstream supermarket as those supermarkets that employ more than fifty employees in their day to day operations. Kenya is the second advanced country in terms of presence of supermarkets after South Africa. Kenya has over 206 supermarkets and 18 hypermarkets ( Economic survey ,2009)
There are atleast six big Kenyan owned supermarkets, which are: Nakumatt( which is the largest), Uchumi , Tuskys, Naivas and Ukwala which is the smallest of them all (Njenga 2006)
Advancement in supermarkets is evedent from the fact that its top five cities (Nairobi, Mombasa, Nakuru, Eldoret and Kisumu) have at least 165 supermarkets and 13 hypermarkets (Economic Survey 2009)
With the market being small, Kenyan supermarkets are looking beyond borders and have exported their wars to neighbouring countries including Uganda, Tanzania, Rwanda and Burundi.
The vision 2030 for wholesale and retail trade is tom raise earnings by giving our large informal sector opportunities to transform itself to part of the formal sector that is efficient , diversified in product range and innovative. This will be realized through: training and access to credit and markets; improving efficiency by reducing the number of players between the producer and consumer; creating formal market outlets for small scale operators who will then graduate from the informal sector; encouraging more investment in retail trade; developing an outreach programmes to expand retail trade and developing training programmes to improve retail skills and the simplification of business regulation and licensing will continue to create a more enabling business environment for trading activity.