The Effectiveness of Brand Loyalty as a Customer Retention Strategy by East African Breweries Limited (EABL)

A Project Report Submitted to the Chandaria School of Business in Partial Fulfillment of the Requirement for the Degree of Masters in Business Administration (MBA)The general objective of this study was to establish whether customer’s brand loyalty can be adopted as a customer retention strategy by East African Breweries Limited (EABL). The study was driven to determine the impact of brand loyalty reward schemes on customer retention at EABL; to identify what strategies EABL is using to attract and retain customers; and to assess the extent of brand loyalty that EABL customers have on their brands in Kenya. The study adopted a descriptive research design. The study targeted customers of EABL in Nairobi County. Using stratified sampling technique, a sample size of 100 customers was selected. Questionnaires were used as instrument of data collection. Descriptive statistics was adopted in data analysis using means, standard deviation, frequency and percentages. Multiple regression analysis was used to determine the significance of the relationship. The analysis was presented in tables, graphs and explanations given in prose. The study findings revealed that EABL customers are loyal to the Company’s products. This has helped in customer retention as the customers consume EABL’s products frequently and regularly especially male consumers, those employed and who are in their 30s and above. EABLs has come up with a number of reward and loyalty programs that drives-up consumption of their products through branding by focusing on value propositions inherent in their products. Examples include selling their brand as a Kenyan product instilling the feeling of patriotism and positioning their products in the market as prestigious and of class. This has helped forestall brand switching. The study also showed that EABL takes its products through marketing mix whereby it focuses on the product, price, place, promotion, people, package and processes. The company has, to a large extent, sold its products using social interaction cycle like promotional games. Consumers, thus, get information about EABL brands from peers and friends. This has been helpful as consumers usually drink as a social function whereby they socialize and create both business and social network. Additionally, EABL advertises its products through TV, billboards and other print media. Materials and flyers are also utilized at points-of-sale. Owing to brand loyalty, consumption of beer products is price insensitive; EABL can increase its brand prices without a consequent effect on consumption and sales. The study showed that owing to brand loyalty and the satisfaction the consumers get in taking their favorite brands, EABL customers purchase more of their favorite brand, minimize and eliminate the consumption of competing brands, and spread the word or market their favorite brands to other consumers. EABL consumers have difficulties switching to other brands when they do not find their favorite brands. The study recommended that the organization needs to develop a well-designed loyalty programme and run it to improve a company’s performance, boost its revenue and customer retention rate. EABL must ‘know its customers’, and only reward them for behaving in a way that exhibits loyalty. Building relationships is crucially important but not always as straightforward as it might seem. The organization needs to ensure that the brand-customer relationship is based on positive feelings such as friendship, amusing, admiration or being part of the same community, and these cannot be conceptualized in terms of value propositions. The organization needs to increase market share as well as growth rate and profitability is through continuous innovations. The organization can also use market research techniques to continuously determine the levels of loyalty towards their brands and investigate which factors influence those loyalty levels. The information obtained from the market research could be used to determine the effectiveness of the existing marketing and brand loyalty strategies of each brand. The organization can also proactively develop and implement brand loyalty strategies to gain a competitive advantage