Assessment of Industry Competition and Marketing Productivity on the Performance of Hotel Firms in Kenya

Abstract

The principal objective of the study was to empirically assess the influence of industry competition (new entrants, substitute services, power of buyers, power of supplier and rivalry among firms) and marketing productivity (marketing activities and salesforce performance) on the performance of hotel firms in Kenya. The pertinent hypotheses were derived from the objectives. The study population comprised 209 hotel firms registered with the Kenya Association of Hotelkeepers and Caterers (KAHC) which is the principal umbrella body that brings together duly registered hotels, lodges, restaurants, membership clubs and camps operating in Kenya. A descriptive cross-sectional survey was used. The relevant primary data were collected from Chief Executives and Senior Managers using semi-structured questionnaire. Data were analyzed using descriptive statistics, inferential statistics and regression analysis.The results of the study revealed that both industry competition and marketing productivity significantly influences performance. The coefficient of determination (R2) showed that industry competition explained 18% of the variation in overall firm performance. Holding other factors constant, a unit increase in industry competition would cause a 0.426 increase in firm performance. A t-value of 4.344 was established at p=0.000 depicting that the relationship was statistically significant at 95% confidence level (p-value < .05). On the other hand the coefficient of determination (R2) depicted that marketing productivity accounted for 8% variations in the overall success in firm performance. Holding other factors constant, a unit increase in marketing productivity would cause a 0.238 increase in firm performance. A t-value of 8.181 was established at p=0.000 depicting that the relationship is statistically significant at 95% confidence level (p-value < .05).  The study has made contributions to theory, policy and practice in relation to marketing in general and specifically in industry competition, marketing productivity and firm performance in the hotel industry. Future research should include additional factors, use a longitudinal research design and test the model in different sectors of the economy.

Keywords: Industry Competition, Marketing Productivity, Firm Performance, Companies, Kenya