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-targetingpositioning 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.