THE EFFECT OF MARKET POSITIONING ON ORGANIZATIONAL PERFORMANCE IN THE AIRLINES INDUSTRY IN KENYA; CASE OF KENYA AIRWAYS

Abstract

Market positioning has long been recognized as a vital tool to confront competitive pressures and  improve organizational  performance.  Firms which  position  themselves  within a particular market place relative to competitors,  earn higher rates of return. Competition and profitability pressures mean that firms must  be responsive to the market conditions.  The study  sought  to determine the effects of market positioning strategies on organizational performance in the airlines industry in Kenya using Kenya Airways (KQ) as a case. The study covered  215 respondents  drawn  from a population of 1230  (staff and customers). Questionnaire was used to collect data. Content  analysis, descriptive and  Pearson’s Product Moment of Correlation were used  to analyze  data.  The  results revealed that variations in organizational performance are explained by pricing strategies with a confidence level of 95%. The results indicated a P-value of less than 0.005 against all the study variables. Pricing strategies had a significant effect on cost strategies, perceived service quality, differentiated benefits, innovation and organizational performance. The study revealed a positive correlation between pricing strategies and perceived service quality with a correlation coefficient of 0.574; an average and positive correlation between pricing  strategies and  innovation with a correlation coefficient of 0.464. There also existed a positive correlation between  pricing  strategies and  differentiated  benefits with a correlation coefficient of 0.650. Moreover, the correlation efficient between pricing strategies and performance was also positive, meaning that as a firm charges fair prices, compared to its competitors, performance is improved as supported by Kimes and Wirtz (2002). Pricing strategies had a coefficient value of 0.170 against organizational performance. The study concluded that positioning is firmly placed within the general segmentation-targeting-positioning framework and plays a pivotal role in marketing strategy.  Market positioning strategies have yielded to improved performance. The study recommends that KQ and indeed other airlines should continue positioning themselves favorably within the global market to enable them earn high profits. They should plan the product mix for a combination of elements such as physical product, product services, brand and package desired by the target consumers.  Further,  they  should  continue  their  focus on  high  quality service to customers and markets in order to build customer royalty.