MIDLANDS STATE UNIVERSITY

FACULTY OF COMMERCE

DEPARTMENT OF MARKETING MANAGEMENT

AN EVALUATION OF THE IMPACT OF COMPETITION ON COMPANY

PERFORMANCE; A CASE OF KWEKWE BREWERY

BY

CHARLES NHAPATA
 R0434677

SUBMITTED IN PARTIAL FULFILMENT OF THE BACHELOR OF

COMMERCE HONOURS DEGREE IN MARKETING MANAGEMENT

JUNE 2008

MIDLANDS STATE UNIVERSITY

FACULTY OF COMMERCE

DEPARTMENT OF MARKETING MANAGEMENT

RESEARCH SUPERVISION ACKNOWLEDGEMENT FORM

Name of student Charles Nhapata

Reg. Number R0434677

Name of Supervisor Mrs Mupemhi

Research Topic:

An evaluation of the impact of competition on company performance; a case of Kwekwe

Brewery
I, the undersigned do/do not acknowledge that the above student has consulted me for
supervision on his /her research project/ dissertation until completion. I therefore do/do
not advise the student to submit his/ her work for assessment.

Signed………………………… Date ………………………………..

DEDICATION

To my family

With Love
 ACKNOWLEDGEMENTS

Firstly I would like to thank the Almighty Lord for making me what I am today, and
reaching this far, as far as academics is concerned. I want to express my appreciation to
the staff of Kwekwe brewery for assisting me throughout this research. I would want to
give special thanks to Mr Chapangura, the marketing manager and Mr Mukandapi, for
giving me more insight on my project, which contributed much to the success of this
research.

To my family, I am very grateful for all their support and love. My friend Flora, and
friends Lawson and Molyster and Cousin Nelson and also those who participated in the
research, thank you for your cooperation.

I would like to acknowledge my special thanks to my supervisor, Mrs Mupemhi, who

showed her patience all the way, comments and encouragements are appreciated most.
 ABSTRACT

The study sought to evaluate the impact of competition on company performance, a case
of Kwekwe brewery. The beer manufacturing industry is characterised by intense
dominance of beer brands and individual company competitive efforts in the market. It is
against this background to establish the forcers that influence competition, its effect on
company performance, identifying the activities that affect competition and evaluate the
marketing strategies currently implemented by Kwekwe brewery.

In this research the literature from various sources on the forces driving industry
competition, activities influencing competition and strategies to offset competition were
selected and discussed. In this research a sample of 20 trade customers, 100 individual
customers, 20 employees and 5 managers were used as research subjects. Questionnaires,
interviews, and observations were used as research instruments. Bar charts, pie charts and
tables were used to present the findings

The study revealed that competition in the brewery industry is mainly influenced by
rivalry among the existing firms. It was evidenced that the availability of diverse brands
influences the degree of competition since buyers have more alternatives to choose from.
This level, of competition, therefore influences the sales performance in the industry
negatively.

The research recommended that Kwekwe brewery may become involved in the
community by offering litter bins in public places in a campaign for cleanliness, thereby
creating a positive image. It may also add flair to the store layout of the stockists of their
brand by offering point of sale purchase material, such as posters, racks and merchandise
signs. The firm may develop new distribution channels to carter for markets beyond the
reach of major rival brands, thereby creating niche markets. The company may also
engage in intensive advertising promotions, by increasing on its advertising and
promotion expenditures.

TABLE OF CONTENTS

Supervisor’s acknowledgement form

Dedication
Acknowledgements
Abstract
Table of contents
List of tables
List of figutres
List of appendices

Chapter 1
1.0 Chapter introduction
1.1 background to the problem
1.2 statement of the problem
1.3objectives of the study
1.4 Research Questions
1.5 Significance of the study
1.6 Delimitations
1.7 Limitations
1.8 Assumptions
1.9 Definition of terms
1.10 Chapter Summary
Chapter 2
2.0
Chapter 3 Methodology
3.0 Chapter Introduction
3.1 Research design
3.1.1 Descriptive Design
3.1.2 Population
3.2 Sampling
3.2.1 Sample Size
3.2.2 Probability Sampling
3.2.3 Non Probability Sampling
3.3 Data Sources
3.4 Resaerch Instruments
3.5 Data collection procedures
3.6 Data analysis procedures
3.7 Chapter Summary
Chapter 4 Data Presentation and Analysis
Chapter 5 Conclusion and Recommendations
5.0 Chapter Introduction
5.1 Summary of findings
5.2 conclusions
5.3 Recommendations
References
 LIST OF TABLES

Table1. 1: Sales Volumes Analysis

Table 4:1 Questionnaires Response Rate
Figure 4.1 Responses on forces that influence competition
 LIST OF FIGURES

Fig 1.1; Source: Sales Performance Summary; depicted from the Sales Analysis and Planning
Book- Compilation from Delivery Route Returns (DRR) and Debriefs.
Figure 2.1: Source: www.12manage.com Figure 4.2 The Economic Impact of
Advertising
LIST OF APPENDICES
 CHAPTER 1

1.0 CHAPTER INTRODUCTION

This chapter provides the background to the research relevant to the study. It also
indicates the statement of the problem, and provides the objectives of the research study,
research questions, the importance of the study, delimitations and limitations of the study,
and lastly the definition of key terms

1.2 BACKGROUND TO THE STUDY

Kwekwe Brewery is an opaque beer manufacturing company which started its operations
in June 1996. The beer manufacturer is situated in the City of Kwekwe, Light Industrial
Site, (LIS), where it is headquartered. The Kwekwe City Council wholly owns Kwekwe
Brewery, after taking over from private ownership in early 2000. The company is
involved in the production and own distribution of Opaque Beer. Its offerings are solely
opaque beer in bulk form and in 2 litre brown containers branded SIMBA.
Its mission statement reads, ‘To be the biggest producer and marketer of Opaque Beer in
the Midlands Region.’ Kwekwe Brewery‘s prime targeted markets are the low and
middle income earners from both urban and rural areas.

Kwekwe Brewery recently de-merged from Dandaro Marketing, which consisted of eight
beer outlets established in the confines of Kwekwe urban. Its geographical markets
consist of Kwekwe urban, Harare, Kadoma urban, Kadoma rural, Gokwe, Silobela and
Zhombe East. Amongst these geographical locations, it has beer collection depots in
Harare and Gokwe, where these are utilised as points of distribution of the product to
intermediaries and individual customers. The company currently consists of a total staff
compliment of 65, encompassed from the sales and marketing, finance, production and
engineering departments.

The opaque beer manufacturing industry and market is characterised by intense

dominance of diverse beer brands. Such brands include Chibuku and Rufaro Mhamba
from Delta Beverages, Go Beer from Go Beer Breweries based in Gweru, Ingwebu,
Thabani, Indlovu and Calabash from Ingwebu Breweries, a Bulawayo based beer
manufacturer. On the other hand, the existence of clear beer manufacturing, which is in
the form of lagers and wines has been found widening up the availability of choices and
hence the substitution effect. Delta beverages is one company that produces and supplies
larger beer which comprises of Lion, Pilsner, Zambezi, Zambezi light, Eagle, Castle,
Castle Milk Stout and Carling Black label. Winery producers such as African Distillers
(AFDIS) produces and /or supplies wines such as Gold Blend, Chateau, Heritage, Cape to
Rio, Skippers, Viceroy, Bolls Brandy, Amarula, Boots, Nikolai and Inzimbe. Cairns
Winery and Mukuyu Winery also produces and supplies Rose Wine and Sabister;
Meadows Estate and Bin 16 respectively. These companies serve the very same markets
targeted by opaque beer suppliers. This diversity of beer brands creates greater room for
intense rivalry in the beer industry.

The industry has become of concern as far as competitiveness is concerned. Over the
years, there has been a lot of aggressive actions taken by various players in the respective
industry, in an effort to building and maintaining their brand image, reputation and
customer loyalty. They had been striving for market dominance hence a better
positioning, resulting in a viable proportion of the market share. Some leading companies
like Delta Beverages and Ingwebu Breweries had been pace setters as far as
competitiveness is concerned in terms of their product availability, quality and
innovativeness, pricing strategies, promotional activities and support services.

Kwekwe Brewery is a market challenger in the industry. It is amongst companies which

are striving for competitiveness towards a better market positioning. Since the inception
of the brewery from private ownership into the hands of the City Council, the company’s
sales and marketing department has been strategising and implementing various
competitive strategies meant for the survival and growth of the company.

However, in making an analysis of the company sales volumes, it was established that
Kwekwe Brewery is experiencing a persistent decline in beer sales volumes from the
period 2003 to 2007. The sales volumes are presented in the table: 1.1 below.

Table1. 1: Sales Volumes Analysis

Year Sales Volumes Percentage
2003 9 623 821 35
2004 8 461 132 29
2005 5 321 445 18
2006 3 601 849 12
2007 1 985 762 6
Total 28 994 209 100

The sales volumes are graphically illustrated below in figure 1.1 below.
 Year
Fig 1.1; Source: Sales Performance Summary; depicted from the Sales Analysis and Planning
Book- Compilation from Delivery Route Returns (DRR) and Debriefs.

The company is failing to breakeven in terms of its sales volumes, which is resulting in a
gradual loss of its market share to rivals, and its growth being negatively affected.

It is for this reason that a study has to be carried out to avail the underlying causes of this
persistent decline in the company sales volumes.

1.2 STATEMENT OF THE PROBLEM

Due to the intense dominance of beer brands and individual company competitive efforts
in the market, there is the need to evaluate on the impact of competition on the company
sales performance.

1.3 OBJECTIVES OF THE RESEARCH

 To establish the forces that influence competition among firms in the brewery
industry
 To establish the effect of competition on company sales performance
 To identify the activities that affect competition
  To evaluate the marketing strategies that are currently being implemented in an effort
to enhance competitiveness.

1.4 RESEARCH QUESTIONS

 What are the forces that influence competition in the brewery industry?
 Which strategies can be implemented to counter these forces?
 What other activities that can influence the level of competition in an industry?
 How does competition impact on company sales performance?

1.5 SIGNIFICANCE OF THE STUDY

The study is of importance to the researcher as it helps the student to test the relevance of
theory learnt at college and link theory to practice.

The research study also enhanced the researcher’s research skills as it gave exposure in
gathering information from various sources such as from the industry, the market,
literature sources, each requiring its own gathering techniques.

The research study, also aid the company to better understand their industry rival
competitiveness, customers’ preferences, so that they may find ways to outperform their
competitors and satisfy customer expectations thereby achieving high levels of profits.
The results of the research can be generalised and help managers and originations
formulate strategies that enhances competitiveness and company performance.

It is also of significance to consumers as their views, opinions and suggestions are

expressed and communicated to the company. It also gives room for them to enjoy and
benefit from company’s improvements and innovativeness towards their satisfaction.

1.6 DELIMITATIONS OF THE STUDY

 The research study has a limited time frame from the year 2003 to 2007. This is
the time when the company has experienced a persistent decline in sales volumes.
 The research is centred and limited to Kwekwe urban only.
  The research is also focused on respondents comprising of management and staff
of Kwekwe Brewery from the marketing department, engineering, production and
finance; trade customers who are stockists of Simba and rival brands such, as
wholesales, retailers, bottle stores, liquor markets and beer halls, and individual
customers who consume opaque beer.
 The research was confined to literature based on the forces that shape industry
competition such as industry rivalry, power of buyers and suppliers, and the threat
of substitute products and new entrants. It is also confined to literature based on
promotional tools which includes sales promotions and advertising cited as factors
that affect creation of competitive advantage of a firm.

1.7 LIMITATIONS OF THE STUDY

 The financial problems and time constraint may hinder the full exploration of this
study.
 Kwekwe urban being studied may not be fully representative of the whole
industry.
 Some information requested was regarded as highly confidential and private,
hence little or no response for security reasons

1.8 ASSUMPTIONS
 The researcher assumed that uncontrollable market variables shaping level of
competition remained the same and that if they happen to change, that did not
negatively affect the outcome of the research.
 The sample population considered in the study was a full representation of
the whole population.
 The researcher also assumed full cooperation of respondents and those are
system in carrying out the study.
 There was free of bias from the data provided by respondents and accuracy to
the best of their knowledge.

1.9 DEFINITION OF TERMS

  Delivery Route Return (DRR) - This is a detailed summary of all daily sales
transactions
 Debriefs - These are feedback reports prepared by sales clerks from the routes
 Collection Depot - This serves as a branch of the company, which acts as
receiving and dispatch point serving smaller markets within its periphery.
 Route - This is the name given to the markets served by the company according
to geographical location
 Bulk - This refers to beer which is supplied unpacked

1.10 CHAPTER SUMMARY

This chapter provided the background to the study, and also the statement of the
problem. Objectives of the research are outlined preceding the research questions. It
also provided with the importance of the study to the researcher, company and
consumers. It also outlined the delimitation, limitations and lastly the definition of
key terms.

CHAPTER 2

LITERATURE REVIEW

2.0 CHAPTER INTRODUCTION

This chapter provides a demonstration of the researchers’ knowledge about the topic of
research. The literature is based on collectively of opinions of authors in the field
concerning the research questions. With this in mind this chapter will analyse the related
literature mainly on the forces that shape industry competition such as industry rivalry,
power of buyers and suppliers, and the threat of substitute products and new entrants,
promotional tools which includes sales promotions and advertising as factors that affect
creation of competitive advantage.

2.1 COMPETITION
Competition is said by Kotler (2003, p14), to include all the actual and potential rival
offerings and substitutes that a buyer might consider. From an organization perspective
Andreason and Kotler (2003, p53), simply viewed it as “other organizations like us.”
They also went to view it from the customers’ perspective that in, “competition rarely
becomes whatever the customer thinks it is” (p53)

2.2 FORCES DRIVING INDUSTRY COMPETITION

The industry in which an organisation operates in is influenced by forces which govern
competition. These forces rather influence an organisation in its performance.

2.2.1 Porter’s Five Forces

From an economists’ point of concept of substitutability, Porter (1979, p25) views an
industry as ‘the group of firms producing products that are close substitutes for each
other’ He distinguishes the five basic forces which govern competition in an industry as
diagrammatically illustrated in Fig. 2.1 This Five Forces Model is described by
www.12manage.com, as ‘an outside-in-business unit strategy tool that is used to make an
analysis of the attractiveness (value) of an industry structure’

This implies that an organisation seeking an edge over its rivals can use this typical
model to better understand the industry so as to create and enhance its competitiveness.
The flowing is a diagrammatic model of forces shaping competition.

Porter’s Five Forces Model

Entrants
Potential

Threat of New Entrants

Bargaining power Bargaining Power of

of Suppliers Industry Buyers
Competitors

Suppliers Buyers
Rivalry
Among Existing
Firms
 Threat of Substitutes
Products

Substitutes

Figure 2.1: Source: www.12manage.com

2.2.1.1 Rivalry among existing firms

Rivalry among existing firms has a serious influence on the intensity of industry
competition. Porter (1980, p17) cited that “rivalry occurs because one or more
competitors either feels the pressure or sees the opportunity to, improve position.” He
went on to cite that ‘rivalry among existing competitors take the form of ‘jockeying for
position’- using tactics like price competitions, advertising battles, product introductions,
and increased customer service or warranties.’ This is complimented by Kotler (2003,
p274) when he mentioned that ‘as important as competitive orientation is today in global
markets, companies should not overdo the emphasis on competitors’

This implies that competition among rival firms can have serious implications on the
level competition in an industry having a serious implication on an organisation’s
performance.

Porter (1980, p18-21) discussed a number of interacting structural factors that influence
the intensity of rivalry and some of them are discussed as follows.

2.2.1.1.1 Factors that influence the intensity of Rivalry

 Numerous or equally balanced competitors
 This is when firms may habitually believe they can make moves without being
noticed. Even where there are relatively few firms, if they are relatively balanced
in terms of size and perceived resources, it creates instability because they may be
prone to fight each other and have the resources for sustained and vigorous
retaliation.

According to www.quickmba.com the same sentiments were expressed when it

was cited that a large number of firms increases rivalry because more firms will
be competing for the same customers and resources, and if firms have similar
market share they struggle for market leadership, then rivalry intensifies.

 Diverse competitors
Porter cited that a diversity of competitors in an industry has an impact on the
intensity of rivalry. Competitors’ diverse strategies, origins, personalities, and
relationships to their parent companies have differing goals and differing
strategies for how to compete, and may continually run head on into each other in
the process. This is also supported in www.quickmba.com, where it is argued that,
there are greater possibilities of misjudging rival’s moves because of cultures,
histories and philosophies.

This therefore implies that rivalry will intensify because of the likelihood of
failure to read each other’s intentions accurately as Porter asserted.

 Lack of differentiation or switching costs

This is where the product or service is perceived as a commodity or near
commodity, and the choice by the buyer is largely based on price and service. The
pressures for intense price and service competition will result. Porter went on to
view product differentiation as one which can create layers of insulation against
competitive warfare since buyers have preferences and loyalties to particular
sellers. On the other hand, low switching costs can increase rivalry as customers
 can freely switch from one product to another, resulting in a greater struggle to
capture customers, thereby increasing rivalry. (www.quickmba.com)

2.2.1.2 Threat of Substitute Products

In Porter’s model, substitute products refer to products in other industries. Porter, quoted
by McCarthy (1978, p7) identified substitute products as ‘a matter of searching for other
products that can perform the same function as the product of the industry.’

The availability of substitute products poses a serous threat to a firm’s products. This
mean to say, the ability of customers to switch for substitute products can impact the
performance of a company as far as its sales performance is concerned.

The following are some of the pressures from substitute products to an industry, as
discussed in www.12manage.com.

2.2.1.2.1 Factors that influence the threat of substitutes

 Is a substitute a better product
 Buyer’s willingness to substitute
 The relative price and performance of substitutes
 The cost of switching to substitutes, that is, is it easy to change to another
product?

However, cited earlier, in www.quickmba.com, that a threat of substitute exists when a

product’s demand is affected by the price change of a substitute product, a product’s
price elasticity is affected by substitute products as more substitutes become available,
the demand becomes more elastic since customers have more alternatives.

Kotler (2003, p242), argued the same that substitutes place a limit on prices and profits.
Porter (1980, p23), then cited the implication of his price ceiling, that it actually limit the
potential returns on an industry.
This therefore means profits will fall and competition can increase in an effort to retain
the lost market share.

2.2.1.3 Threat of New Entrants

According to Porter (1980, p7), ‘new entrants to an industry bring new capacity, the
desire to gain market share, and often substantial resources can intensify competition.’

However according in www.quickmba.com, this Porter’s line of thinking was

complimented when they emphasised an argument that additional rivals can be inhibited
from entering the market by creating barriers, thus protecting the high levels of firms in
the market. Porter (p7) clearly then outlined conditions of the degree of threat of entry
into an industry that it depends on the present barriers to entry, coupled with reactions
from existing competitor that the entrant can expect. If high barriers are high and/or the
newcomer can expect sharp retaliation from entrenched competitors, the threat of entry
will be low.

This implies that if few firms exist in the industry, it means more profits are realised due
to the experience of high sales volumes since there will more customers buying from few
companies.

The barriers to entry were said to arrive from several sources, as discussed below.
(www.quickmba.com)

2.2.1.3.1 Sources of Barriers to Entry

 Government
Despite the principal role of the government to preserve competition through antitrust
actions, it also restricts competition through granting of monopolies and through
imposition of regulations.
 Patents and proprietary knowledge serving to restrict entry into and industry
 Ideas and knowledge that provide competitive advantages are treated as private
property when patented, preventing others from using the knowledge and thus
creating a barrier to entry.

In addition to the above mentioned sources of barriers to entry, in Porter’s outlined six
sources of barriers to entry (p9-10), he also cited product differentiation and access to
distribution channels, which he discussed as follows.

 Product differentiation
This means that the established firms have brand identification and customer
loyalties, which stem from past advertising, customer service, product differences,
or by simply being first into the industry. This creates a barrier to entry by forcing
entrants to spend heavily to overcome existing customer loyalty.

 Access to distribution channels

This can be created by the new entrant’s need to secure distribution for its
product. To the extent that logical distribution channels for the product have
already been served by established firms, the new firm would need to persuade
the channels to accept its products though price breaks, cooperative advertising
allowances, which reduces profits.

2.2.1.4 Bargaining Power of Buyers

The power of buyers is ‘the impact that customers have on a producing industry’
(www.quickmba.com)

Buyers can influence the industry by forcing down prices for higher quality or more
services and playing competitors against each other- all at the expense of industry
profitability. (Porter- p24)

According to Porter (p24-26) and www.quickmba.com, outlined the similar factors that
determine buyer’s power and weaknesses as follows
Buyers are powerful if;
 They are concentrated, this implies when there are a few buyers with a significant
market share
 They purchase a significant proportion of output
 They posses a credible backward integration threat

Buyers are weak if;

 Producers threaten forward integration
 Producers supply critical portions of buyers input
 Significant buyer switching costs are high; this implies products are not
standardised and buyer cannot easily switch to another product.

2.2.1.5 Bargaining Power of Suppliers

According to Porter (1980, p27), suppliers can exert bargaining power over participants
and industry by threatening to raise prices or reduce the quality of purchased goods and
services. Similar sentiments were put across in view of www.quickmba.com, when it was
asserted that ‘suppliers, if powerful can exert an influence on the producing industry,
such as selling raw materials at high prices to capture some of the industry profits.’ Porter
also purported that the conditions making suppliers powerful tend to mirror those making
buyers powerful, and he outlined the following factors that determine supplier power, in
which www.12manage.com viewed the same.
 Concentration of suppliers; that is, is there many buyers and few dominant
suppliers.
 Branding; is the brand of the supplier strong
 Profitability of suppliers; are suppliers forced to raise prices
 Switching costs; is it easy for suppliers to find new customers
 Suppliers threaten to integrate forward into the industry
 Buyers do not threaten to integrate backwards into supply
However Michael Porter identified three generic strategies that he propounded and
suggested that they can be implemented at the business level to create a competitive
advantage. This implies that a proper strategy will position the firm to leverage its
strengths and defend against the adverse effects of the industry forces.

2.2.2 Porter’s Generic Business Strategies

A strategy was simply viewed by Allen and Helm (2006, p436), as ‘an essential part of
any effective business plan.’ They quoted Porter (1985), when he asserted that, ‘there are
basic business strategies; differentiation, cost leadership and focus; and that a company
performs best by choosing one strategy on which to concentrate on.’ He went on to
outline that in ensuring long term profitability, the firm must make a choice between one
of the generic strategies rather than end up being stuck in the middle.

This assertion implied that, the strategies, if one strategy can be effectively implemented,
they can yield competitive advantage, and enhance the sales performance, profitability
and growth of a firm.

Allen and Helm (2006, p434-436) discussed these Generic Strategies propounded by
Porter as follows;

2.2.2.1 Differentiation Strategy

This is when a company focuses its efforts on providing a unique product or service. This
strategy provides high customer loyalty since the product or service is unique. It fulfils a
customer need and involves tailoring the product or service o the customer’s
requirements. It is effectively implemented when business provides unique or superior
value to the customer through product quality, or after sale service support.

This means a firm builds its image by establishing itself in the consumers’ minds,
creating a bond that creates an edge over rivals, meaning its sales performance is
enhanced.
Above all, Porter (1980, p38) outlined the key issues on differentiation strategy that
provides an insulation against competitive rivalry. Because of brand loyalty by customers
and resulting lower sensitively to price, the resulting customer loyalty and the need for a
competitor to overcome uniqueness provide entry to barriers.

2.2.2.1.1 Key concepts for establishing differentiation

 Becoming involved in the community
 Offering extra services that competitors does n lot offer
 Adding flair and drama to the store layout
 Quality customers service
 Training employees with in-depth product and service knowledge

2.2.2.2 Cost Leadership Strategy

This strategy focuses on gaining competitive advantage by having the lowest cost in the
industry. The business works hard to achieve the lowest production and distribution costs
so that it can price lower than its competitors and win a larger market share (Kotler-2003,
p203). Allen and helm even cited that a firm must be willing to discontinue any activities
in which it does not have a cost advantage and should consider outsourcing activities to
other organisations with the lowest cost advantages.

Porter (p36) expressed the same view as outlined by Allen and Helm. He cited that a low-
cost position can defend the firm against powerful buyers because buyers can exert power
only to drive down prices to the level of the next most efficient competitor. It is also the
same with powerful suppliers, by providing more flexibility to cope with input cost
increases, as far as substitutes are concerned relative to competitors in he industry.

This means that being a low cost producer, it can effectively cope with price competitive
moves in the industry and the costs of production, sales and profits will not be affected
much.

2.2.2.3 Focus Strategy

In this strategy, a firm targets specific segments, of the market (Kotler -2003, p106). A
firm can choose to focus on a selective customer group, product range, geographical area,
or service line. It aims at growing market share through operating in a niche market, or in
markets either not attractive, or overlooked by, larger competitors (Allen and Helm)

A succeful focus strategy depends upon an industry segment large enough to have good
growth potential but not of key importance to other major competitors. Market
penetration or market development can be an important focus segment for a firm
employing this typical strategy (Allen and Helm)

2.2.2.4 A Combination Strategy

Allen and Helm argued that, an organisation may choose a combination strategy by
combining the above mentioned generic strategies. A firm may choose to have focused
differentiation strategy, having unique products offered to a targeted market segment. It
may also choose a focused cost-leadership strategy. In this respect, an organisation would
use a cost leadership strategy targeted to a specific market segment

However Porter (Argures and Mcgaha-2002), quoted by Allen and Helm (2006, p437)
commented that ‘lower cost and differentiation strategies are directly connected with
profitability.’ This would mean that a firm’s sales performance can improve, if this
typically strategy is used.

2.3 ACTIVITIES THAT AFFECT COMPETITION

2.3.1 Sales Promotions
Sales promotion is described by Cole (1996, p271) as ‘a form of indirect advertising
designed to stimulate sales mainly by the use of incentives.’ In 1988, the American
Marketing Association (AMA), as quoted by Wells etal (1995, p587) offered a new
definition of sales promotions as ‘media and non media marketing pressure applied for a
predetermined limited period of time in order to stimulate trial and increase consumer
demand, or improve product quality’
In a definition of sales promotion by (AMA 1990, p442), there are two major roles of
sales promotions provided with. These are the stimulation of consumer purchasing and
enhancing dealer effectiveness. Wells etal (1995, p593), provided three broad objectives
or roles of sales promotions with two of them similar to those provided by AMA, but
added to assert that, sales promotions can supplement and coordinate advertising
activities, personal selling and public relations.

2.3.2. The role of Sales Promotions in Marketing

Sales promotions can enhance an immediate inducement to customers to buy a product
by simply making a product more valuable. Those consumers knowing nothing about a
product can be persuaded to try it and convinced to buy it again. This automatically
results in improved sales performance of a firm.

There are three broad objectives or roles of sales promotions in marketing provided by
Wells etal (1995, p593), that emanate from the definition of sales promotions. These are;
 Stimulating demand by users or consumers
 Improving the marketing performance of resellers
 Supplementing advertising, personal selling and public relations activities

2.3.3 Types of Sales Promotions

2.3.3.1 Consumer sales promotions
These are specifically directed at the ultimate user of the good or service (Wells 1995,
p597)

Belch and Belch (2004, p522-524), cited some of the major objectives of consumer sales
promotions, in which it is clearly outlined the significance of undertaking such
promotions. Generally it induces trial and repurchase, defend current customers and at the
same time increase the consumption of the product.

Objectives of consumer sales promotions

 Obtaining trial and repurchase
 They encourage consumers to try a product and induce them to buy it again. If a
product lacks promotional support which is enough to encourage trial and repurchase,
it may fail in the market, thereby having an impact on the company’s sales
performances.
 Increased consumption of an established brand
Intensive cumulative advertising can raise awareness of an established brand and
increase its consumption. This results in favourable sales performance than that of
rivals. Sales promotions can generate some new interest in the exiting brand helping
increased sales and defending market share against competitors
 Defending current customers
Firms are tuning to hold and maintain present customers and defending their market
share to ensure stability and improvement in sales performance. This can be done
using premonition activities such as special price promotions, coupons, or bonus
packs which can encourage customers to stock upon the brand. This then reduce the
likelihood that there will be switching of bands as a result from competitors
promotional efforts.

Consumer sales promotions activities, if implemented effectively are of significance to

sales performance of a firm in a highly competitive environment.

2.3.3.2 Reseller (Trade) Sales Promotions

Trade sales promotions are mainly directed towards the middlemen and usually are
sponsored by manufactures (Wells- 1995, p606)

Wells et al (1995, p606) cited four major goals that trade sales promotions intend to
accomplish
 Simulating in store merchandising or other trade support
 Manipulating levels of inventory held by wholesalers and retailers
 Expanding distribution to new geographic areas
In his view, the main thrust of trade sales promotions is to entice channel members to
stock a producing firm’s products. A strong supplier –seller relationship is created and
can even discourage the stocking of competing rival’s brands. If the channel relationship
is strengthened, the product can move swiftly to the final consumer thereby by recording
positive sales volumes.

Russ and Kirkpatrick (1982, p445-447), outlined the following objectives of trade sales
promotions which are a key result or of significant for implementing trade sales
promotion activities.

Objectives of trade sales promotions

 Getting manufactures to, participate in the manufacture’s promotions by offering
gifts called dealer loads to middlemen, they encourage them to stock their brand
and help in promoting it. The brand can also receive special display in retail
adverts or circulars through the payment of merchandising allowances to retailers
from the producer

 Inducing middlemen to buy in greater quantities

Retailers can get to order more of the producer’s product if activities such as price
reductions are offered. Retailers can also be induced when manufacturers can offer to
sponsor contests for wholesalers, retailers or their respective sales people

Enis (1980, p464), provided with activities that a firm can undertake in consumer and
trade sales promotions he said an organisation can undertake, in its competitive efforts.

2.3.4 Typical activities of sales promotions

Consumer Promotions
 Product samples- this is giving away a product for free to induce trial
 Coupons- this is a certificate that reduces price of a product
 Cents of promotions- reduction in regular price a product
 Competition- these are in the form of sweepstakes and contests
  Brochures and leaflets

Trade Promotions
 Bonus- this is an extra cash payment for sales
 Consignment- this is when the manufacture finance distributor inventories
 Contests- the manufacture offers prices to best sales effort in a given period
 Cooperative advertising- the manufacture and distributor share cost of advertising
 Dealer listed promotions- these are manufacturers adverts that list distributor
 Point of Sale displays- counter top racks, posters and merchandised signs

2.3.5 Advertising
Advertising is viewed by Arens (1996, p6) as “the non-personal communication of
information usually paid for and persuasive in nature, about products (goods and
services) or ideas by identified sponsors through various media.”

Advertising is one of the promotional tools which play an important role in influencing
the attainment of a competitive advantage of a firm because of the resultant effects. It
basically influences consumer preferences and provides important information which
leads to sales. Advertising is usually aimed at a specific population. Arens (1996, p9-10)
classified advertising in two of its main types of targeted audiences, which they viewed
as follows.

 Consumer Advertising.
These are mainly directed at consumers and the advert is sponsored by the producer of
the product. Much of the advertising is done in the mass media such as TV, Radio,
Newspapers and magazines

 Business Advertising
It is directed to those who buy the product for business use. The advert tends to appear in
specialized publications or professional journals, direct mail pieces sent to business or in
trade shows.
2.3.5.1 Objectives of Advertising
Vander Walt etal (1996, p331), outlined some examples of advertising themes as
objectives of advertising which are, to remind the target audience to buy, stimulate
consumers, create brand awareness, create favorable image, and rectify incorrect and
perceptions of information.

However Cundiff (1980, p368) clearly outlined the objectives of advertising in which
some were summarized by Vander Walt. These are:
 To do the entire selling job
 To induce middlemen to handle the product which is a pull strategy
 To remind users to buy the product, which is a retentive strategy
 To compact or neutralize competitor advertising

2.3.6 The Economic Impact of Advertising

Based on a psychologist known as the Father of Motivational Research- Ernest Dichter-
Arens (1996, p30) argued that “a products image, produced partially by advertising and
promotion is an inherent feature of the product itself.” The went on to mention that, “
while an advert may not speak directly about a product’s quality, the positive image
conveyed advertising may imply quality, make the product desirable to consumers, and
there by add value to the product.”

In this view, it implies that a mere advert can appeal and portray certain desirable
qualities in consumers’ minds, and be able to be convinced to buy. This therefore means
that advertising plays a significant role in adding value to a product in the consumers
mind, creating a competitive edge over rival players.

Arens portrayed the economic effect of advertising like “the opening break shots in
billards” as illustrated in Fig 2.2.

Communicators Customers Organisations Individuals

Stakehol-
ders
 Manuf-
actures

Retailer
s Director

Consumers Whole- s
salers
Adverising Media Competi- Manager
tion
s
Trade Suppliers
Customer
s
Distributor
s Employ
-ees
Resource
s

Figure 4.2 The Economic Impact of Advertising

This implied that the moment the company begins to advertise a chain reaction of
economic events takes place. Arens further elaborated specifically on the economic effect
of advertising on competition and consumer choice.

2.3.6.1 Economic Effect of Advertising on Competition

In industries characterized by heavy advertising expenditures, advertising can inhibit the
entry of new competitors. This is because new firms would require large resources than
the expected to counter those already in the industry, for them to snatch a reasonable
proportion of the market share and improve on its performance. (Arens)

2.3.6.2 Effect of Advertising on Consumer Choice

In this respect Arens mentioned that the freedom to advertise encourages business to
create new brands and improving old ones. He also cited that if one brand reaches market
dominance, smaller brands may disappear for some time. The moment a better product
comes along and is advertised skillfully, the dominant brand loses to those rivals taking
advertising seriously thereby affecting its overall performance.

2. 3.7 Service Quality

According to Boon and Kurtz (1998), service quality is the expected and perceived
quality of a service offering. Service plays a crucial role in customer satisfaction, creation
of brand loyalty and perceived competitiveness.

Delivering high level of service quality is an important organizational capability. This

means that firms that provide great service quality typically enjoy a strong competitive
advantage in the market place and make it difficult both for other firms to compete for the
same customers and to switch to competitor sales organizations, often despite price
advantages competitors may have.

Boon and Kurtz also briefly outlined the dimensions of quality which some are discussed
below.

 Reliability; delivering a promise

 Responsiveness; being wiling to help
 Assurance; inspiring trust and confidence
 Empathy; treating customers as individuals

This implies that firms that effectively monitor and control their service quality standards
stand a greater chance to attain a great competitive advantage over rival players in the
industry.
2.3.8 Physical Distribution
Physical distribution involves planning, implementing, and controlling the physical flows
of materials and final goods from points of origin to points of use to meet customer
requirements at a profit (Kotler-1996, p585). Malcolm and McDonald (2002, p40) simply
viewed it as “that function of a firm which provides the lace and time dimensions”

Rosenbloom (2004, p16), outlined key considerations that make intermediaries crucial in
physical distribution. He cited two basic factors which are specialization/ division of
labor and contractual efficiency. He again cited that, the use of more additional
intermediaries will often increase the level of contractual efficiency, which is the level of
negotiation effort between sellers and buyers relative to achieving distribution objectives.

Kelly and Hyde (2002, p57) argued that cooperation and involvement with the whole
supply chain end up creating relationships with customers. They outlined two important
factors that need to be considered by producers.

 It is important to understand the roles that members of your channel distribution

play
 It is important to keep up communications with all distributors.

This implies that the level of distribution of the product and channel relationships affects
competition levels in the industry. Firms compete to induce intermediaries to give the
most attention to their products and encourage stocking them.

2.4 STRATEGIES TO OFFSET COMPETITION

The intensity of competition in an industry has basically over the years made managers to
consider models military warfare to help with market strategy formulation to attain
competitive advantage over rivalry (Vander Walt-1990, p567)
Kotler (2003, p264), asserted that market challengers can attack the leader and other
competitors in an aggressive bid to for further market share. Czinkota and Kotabe (2001,
p79), also cited in favor of Kotler that market followers ‘s strategy is fiercely competitive
and they aim to grab the largest possible piece of the existing pie.

However there are several alternative attacking strategies discussed by authors, which are
available for firms (market challengers) wishing to improve their position.

2.4.1 Market Challenger Strategies

Kotler (2003, p265), provided options for a market challenger, to decide whom to attack
after having first defined its strategic objective for it to be successful. The following
options were provided with.

 It can attack the market leader

Kotler argued this as high risk move, but cited that it is a potentially high –pay off
strategy and makes good sense if the leader is not serving the market well.
 It can attack firms of its own size that are not doing the job and undefined
The firm might be charging excessive prices and customers not satisfied in other
ways
 It can also attack small local and regional firms.

Before choosing a general attack strategy, a firm must have clear understanding of
opponents and their objectives.

2.4.2 Alternative Strategies

 Frontal Attack
With this respective strategy, the challenger takes on the market leader in its own
territory and attacks the opponent’s strengths rather than its weaknesses (Czinkota
and Kotabe-2001, p79). Kotler (2003, p265), outlined key issues for a successful
frontal attack, which is the attacker must match its opponent’s product price and
distribution.
 Flank Attack
This is a strategy for identifying shifts in market segments which are causing gaps to
develop and rushing in to fill the gaps and develop them into segments (Kotler -1996,
399). Czinkota and Kotabe (2001) and Kotler (2003), outlined how best to archive a
flanking attack which are geographical attack and segment attack.
Geographical attack is when the challenger spots areas where the opponent is
underperforming, and segmental attack, is when a serve uncovered market needs.

 Encirclement Attack
This was defined as pivoting on a market need neglected by competitors (Kotler-
1996, 339). In 2003 Kotler again viewed this strategy as an attempt to capture a wide
slice of the enemy’s territory through a blitz.

 Bypass Attack
The challenger mainly targets the enemy’s easier markets to broaden one’s resource
base. This can be achieved by diversifying into unrelated products, new geographical
markets.
 Guerrilla Warfare
This consists of waging small, inteminent attacks to harass and demoralizes the
opponent and eventually secure permanent footholds. These include selective price
cuts, intense promotional blitz, and occasional legal actions.

2.4.3 Choosing a Specific Attack Strategy

 Price Discount
The challenger can offer a comparable product at a lower price such as offering
discounts to retailers
 Lower Price Goods
The challenger can offer an average or lower- quality product at a much lower price
 Product Proliferation
 The challenger can attack the leader by launching a larger product variety, thus
giving buyers’ choice
 Improved Services
The challengers can offer new or better services to customers
 Distribution Innovation
The challenger might develop a new channel of distribution
 Intensive Adverting Promotions
This done by increasing on advertising and promotion expenditures
 Manufacturing Costs Reduction
The challenger might archive lower manufacturing costs than its competitors through
more efficient purchasing, lower labor costs and more modern production equipment.

2.5 CHAPTER SUMMARY

The chapter looked at the 5 forces model and its influence on competition, and the
strategies to counter these forces. It also looked at the activities that affect competition
such as sales promotion, advertising, service quality and distribution. Finally the chapter
looked at various strategies to offset competition.

CHAPTER 3

METHODOLOGY

3.0 CHAPTER INTRODUCTION

This chapter represents the methods used for data collection and how it as actually carried
out by the researcher. These methods used were also analysed respectively. This chapter
is divided into sections which involve the research design, sampling, the research
instruments, data collection procedures and finally the data analysis procedures.

3.1 RESEARCH DESIGN

The research design is ‘a master plan that specifically identifies the techniques and
procedures that will be used to collect and analyse data relevant to the research problem’
(Zikmund and d’Amico-1996; p153)

The rational of using research designs is for the researcher to plan one’s work so that the
validity of the research is enhanced. This helped the researcher to have an in-depth
analysis and understand various research strategies prior implementation. This increased
efficiency and flexibility of the research out comes.

3.1.1 Descriptive design

The research was carried out using the descriptive research design approach. Van der
Walt (1996; p149) viewed it as a research design that ‘attempts to obtain a complete and
accurate description of the situation.’ Kumar et al (1999; p73) also cited that, ‘descriptive
research embraces a large proportion of marketing research, and the purpose is to provide
an accurate snapshot of some aspect of the market environment.’

The suitability of using descriptive research design is that it allowed the researcher to
collect data qualitatively using research instruments such as personal interviews,
questionnaires and observations. This implies that, the researcher was able to collect data
based on opinions, perceptions and attitudes from customers, about Kwekwe Brewery’s
competitiveness in the industry. This design also enabled the researcher to present and
analyse quantitatively through the use of tables, graphs and charts. The intent of
descriptive research design was to maximise accuracy and minimise systematic error.

3.1.2 POPULATION
Coollican (1990; p49) defines research population as ‘a group of individuals that have
one or more relationships in common that are of interest to the researcher.’

The researcher considered employees of Kwekwe brewery who were composed of 5

managers from all departments which are marketing, finance, sales and distribution,
production and engineering departments; and also a total of 60 shop floor workers from
across the organisation. This particular population was believed to provide the necessary
information pertaining the industry competitiveness, its impact to the company
performance and the efforts made to counter this impact.

The researcher also considered local customers who are in the confines of Kwekwe urban
only. This population was categorised into two, where 80 trade customers and 100
individual customers were considered. This particular population was considered based
on the company’s customer database which depicts lists of trade customers, and also the
Sales and Planning Book which depicts the estimated sales per customer. The researcher
also believed that these categories of customers would provide the necessary information
and that would allow the researcher to deduce and make an evaluation on how
competition is influencing the company performance as well as its competitiveness.

3.2 SAMPLING
Sampling is “the process of selecting a few (a sample) from a bigger group (the sampling
population) to become the basis for estimating or predicting a fact, situation or outcome e
regarding the bigger group.” (Kumar – 1999, p148)

In coming up with the sample size, selected from the targeted population, the researcher
used both probability and non-probability sampling methods, which are discussed as
follows.

3.2.1 Probability Sampling

Sudman and Blair (1998, p34) defined probability sampling as, “a random process to
select population elements for the sample and gives every population element a known,
nonzero chance of selection.” They also defined non-probability sampling as, “that which
do not use a random process; instead, elements are selected by judgement or
convenience.” (p 348)
In selecting employees and customers, the researcher used a stratified random sampling
technique, a probability sampling method, which is “a process by which the sample is
constrained to include element s from the segments” (Cooper and Schindler- 2003, p193)

In terms of employees, they were sub grouped into two, which are management and shop
floor workers. Customers were also sub grouped into trade customers and individual
customers. This was done because of the differing characteristics; thereby this aided the
researcher in increasing his sample’s data efficiency and effectiveness. This sub grouping
also enabled the researcher to apply respective methods and procedures in each stratum.

In terms of employees, after sub grouping, a simple random sampling method was then
used in selecting shop floor workers. The researcher made use of the company
employees’ database, where employees were listed randomly, denoted by numbers on
each name. The numbers were then placed in a sizable box and one employee at a time
was picked after every 3 using these denoting numbers. Those with numbers denoting
their names picked automatically became part of the respondents.

In terms of customers, after sub grouping them into 2 stratums, a simple random
sampling method, which is a probability sampling method, in selecting trade customers
was used. The researcher selected a sample of trade customers by listing each population
member on a slip of paper, and mixed in a sizable box. The researcher hen had to draw
slips of papers one at a time, shuffling each time a slip was picked.

This gave an equal probability of selection to all population members that appear in the
frame, since each trade customer had an equal chance to provide viable information
pertaining Kwekwe Brewery’s competitiveness and other industry activities from
different players. These trade customers were so necessary since they are stockists of
Simba beer and other competing brands.

3.2.2 Non Probability Sampling

Convenience sampling, which is a non-probability sampling method, was also used in
selecting a sample size of individual customers. This method was used because of the
similarities in characteristics of customers, their accessibility as they could be easily
identified or accessed at beer selling outlets. The researcher made use of Barmen as
research assistants for the matter of convenience. The researcher had to first consider beer
outlets o drinking places and each barman was asked for his full cooperation. Applying
judgemental technique, each research assistant had to identify and judge customers as
they were coming in to buy beer and their state of soberness.

This ensured a sample size of individual customers who will were in a sober state and
avoided those in a state of excessive drunkenness to an extent that biased information was
likely to be provided with and also minimising the risk of loosing out research
instruments.

3.3 SAMPLE SIZE

“This involves the number of sampling units that are included in the investigation”,
(Vander Walt – 1996, p155).

A sample of 20 employees from a total population of 60 employees was selected, which

is a 33% representative of the population of employees. This comprised of 5 managers
composed from all departments and 15 shop floor workers out of a population of 60. This
sample size of employees was believed to provide a true representation of the whole
population of employees at Kwekwe Brewery.

The researcher selected a sample of 20 trade customers out of a population of 80, with a
25% representative of the total population of trade customers, and also a sample of 100
individual customers out of a population of 300, with a 30 % representation of the
population. These specific sample sizes were also believed to provide a true
representation of the total population of customers, and information provided was also
representative of the whole population.
3.4 DATA SOURCES
There are two types of data sources used in the research, and these are primary and
secondary data.

 Primary Data
This is information collected or generated by the researcher for the purpose of the project
immediately at hand. (Shao-1999, p72) This was used because of its greater control over
data accuracy and relevance to the problem. The data collected was therefore relevant and
valid for this particular research because it was up to date and gave a balanced view on
the subject of study.

 Secondary Data
This is data that has been collected by other researchers for other purposes but related to
this particular study. (Shao-1999, 72) Such sources included, company records, literature
reviews from textbooks and the Internet. Secondary data proved to be authentic, reliable
and well accepted in the academic circles, thus the researcher found it useful.

3.5 RESEARCH INSTRUMENTS

An instrument of data collection is any measuring device adopted for the purpose of data
collection such as interviews, questionnaires and observations.

3.5.1 INTERVIEWS
According to Khan and Cannel (1957), an interview is “a powerful discussion between
two or more people”.

The researcher conducted face-to-face interviews for the purpose of gathering primary
data, in particular with management that is the marketing manager, accounting manager,
sales and distribution manager, production and engineering supervisor. Face-to- face
interviews were also conducted with employees of the company.
The use of interview guides allowed the researcher to be guided on the series of questions
to ask, thereby reducing he risk of asking questions out of the context of the study. The
interviews enabled the researcher to gather in-depth information by redefining issues in-
order to come up with comprehensive data, due to the instrument’s flexibility. They
enabled the researcher to attain immediate responses from management and shop floor
employees and at the same time, the researcher was able to elicit for further clarification
about industry competitiveness has affected the company.

3.5.2 QUESTIONNAIRES
Sanders et al (1997:106) defined a questionnaire as “a term that includes all techniques of
data collection in which each person is asked to respond to the same set of questions in a
predetermined order”.

This instrument was used to gather data from trade customers and individual customers.
This allowed the researcher to collect data from a relatively large number of respondents
while maintaining uniform responses. This instrument enabled the researcher to gather
data qualitatively from trade customers. These questionnaires included both open and
close ended questions were used. Open ended questions were meant to encourage trade
customers to widen up their own responses thereby providing greater room for opinions
in the spaces provided. Close ended questions provided a basis for respondents to choose
a category that matched their views.

This instrument enabled trade customers and individual customers to give well thought
out responses since the researcher gave them a period of one week to complete the
questionnaire. More objective responses with greater uniformity ere elicited with the way
questions were asked. This allowed for easier comparability of data obtained.

There was also a high degree in attaining true and unbiased information or facts as the
researcher had to ask respondents not to disclose their identity and promised to treat the
information confidential and only used for the purpose of this study. This reduced the
fearing of disclosure of some information deemed confidential which could also
contribute much to this research study.

3.4.3 OBSERVATIONS
Shajahan (2005:79) defined observation as “the process of recognizing and noting people
and occurrences rather than asking for information”.

The aim of the observational method was to discover significant mutual relationships
between spontaneously occurring events, thereby pin-pointing the crucial facts of the
situation. This method allowed the researcher to observe and note the general trends in
the market, as far as advertising campaigns from various players in the industry, their
competitive efforts directly influencing the market and purchasing behaviour of
customers is concerned. There was no need for the researcher to ask questions but simply
to observe.

3.5 DATA VALIDITY AND RELIABILTY

Pilot Testing
The questionnaire was tested before it was distributed to the rest of the respondent in the
sample five questionnaire were handed out to the respondent were handed out to the
questionaire the respondent were interviewed about the clarity of the questions as well as
the ambiguity inoder to refine the quality of questionnaire. This exercise provided
assurances of reliable responses since respondent are accepted to understand the
questions and respond correctly.

3.5 DATA COLLECTION PROCEDURES

These are basically the steps taken, used by the researcher in administering instruments
and the collection of data from the respondents.

Prior to conducting interviews with management of Kwekwe brewery, an interview guide

was constructed with all the necessary questions pertaining the study. The researcher then
made appointments through the use of a telephone with management, well before the
interview date, and copies of the interview guides were also sent to the marketing
manager, sales and distribution manager, accounting manager, production manager and
engineering supervisor. This was done using a fax, and a follow up through the phone
was done to make sure that these guides had reached the intended respondents. This was
done to enable respective respondents enough time to prepare and familiarise with the
questions so that unbiased information would not be provided with, thereby increasing
the reliability of data.

An interview guide was also conducted prior conducting face-to-face interviews with the
company’s shop floor workers. The specific intended respondents were informed of these
interviews before conducting them. This was done a week before interview dates, by
placing a notice with names of respondents and asking for their full participation and
cooperation. This enabled employees to be well prepared for these interviews so as to
increase the viability of information and also to reduce the risk of un-preparedness and
un-cooperation.

The researcher distributed 20 questionnaires to trade customers in which they were

required to fill in their desired responses. These questionnaires were first designed and
then distributed to the respective trade customers in person. These instruments were again
retrieved in person after a period of one week. This was all done to make sure that these
instruments were in the correct hands intended by the researcher and ensuring maximum
retrieval of the instruments.

A total of 100 questionnaires were also distributed to individual customers in whom they
were asked to fill in their desired responses. The researcher identified beer outlets, which
he then gave the responsibility for the distribution of questionnaires upon his full
cooperation. Each research assistant was instructed on the basis of distribution, on which
he first had to judge each respondent’s ability o take part in the study. The research
assistants also requested, upon issuing questionnaires to return to that specific point of
collection. This was an effort to effectively administer each and every instrument because
of the complexity of the nature of respondents dealt with.

The researcher also had an opportunity to observe occurrences in the market such as
various advertising campaigns from various players in the industry, their competitive
efforts and responses to these activities. This enabled the researcher to come up with
relationships in events, thereby deducing facts of situations.

3.6 DATA ANALYSIS PROCEDURES

This highlights the overall procedures in organising, describing and analysing data
collected pertaining to this subject of study.

Data was analysed using quantitative and qualitative analysis techniques like, tables,
graphs and qualitative methods. Quantitative research information from respondents were
used to determine relationships and establish the gaps which needs to be filled by the
research, to allow for conclusions and recommendations.

3.7 CHAPTER CONCLUSION

In this chapter, the researcher focused on research design citing the different designs
which were used. The target population was identified, and the different methods of
sampling explained. These sampling methods were the basis to come up with the sample
size as cited. Different sources of data were also highlighted in this chapter. Also, the
research instruments used are explained and justified, as well as how they were
administered. The next chapter focuses on the presentation of data, description and
analysis. It will also focus on the discussion of the findings.
CHAPTER 4

DATA PRESNTATION ANALYSIS AND DISCUSSION OF FINDINGS

4.0 CHAPTER INTRODUCTION

This chapter presents the data obtained analysed and interpreted. Simple tables graphs
and pie charts were used for easy understanding and interpretation. The data was
presented in chronological order of the objectives.

4.1 RESPONSE RATE

A total of 120 questionnaires were distributed to customers, that is trade and individual
customers. The table below shows the actual number of questionnaires administered,
those that were returned and the response rate of each respondent.
Table 4:1 Questionnaires Response Rate

Respondents Questionnaires Questionnaires Response Rate (%)

Administered Returned
Trade Customers 20 18 90
Individual customers 100 84 84
Total 120 102 85

As shown from the above table, the overall response rate was 85%. The table shows that
90% from trade customers and 84% from individual customers. Generally the response
rate was good enough to render the result on the research valid and representative though
the researcher anticipated a 100% from all customers.

The interviews conducted with management were successful there by obtaining a 100%
response rate.

4.2 Forces that influence competition among firms the Brewery Industry
From the information obtained from management, employees, trade customers and
individual customers, the responses pertaining the forces that influence competition are
shown as follows in figure 4.1.

Figure 4.1 Responses on forces that influence competition

Of the 122 respondents, 36 % of the respondents said competition among firms in the
industry results in increased levels of competition. 32% said buyers have influence on
companies to their expectations. Another 32% of the respondents said the availability of
diverse brands from the winery industry also influence competition.

 Industry Rivalry
Of the responses obtained 40% of management and 33% of employees said that the
industry is characterised by firms relatively balanced in terms of size an d resources, and
this has increased the level of competition. 39% of trade customers said that the diversity
of beer brands is forcing the respective producers to come up with diverse strategies for
their survival, thereby increasing competition. 36% of individual customers said that their
disposable income makes them switch to other brands. Their consumption is determined
by the relative price of the product, affordability and/ willingness.

 Bargaining Power of Buyers

40% of Management and also 40% of employees said that buyers mainly influence the
level of competition in the industry because of the large volumes they purchase, because
of the demand of the product. 39 % of trade customers said that if producers do not offer
good incentives and the terms of trade, they would not be willing to stock their brands.
30% of individual customers said that consumption pattern is mainly determined by the
price of the product that a company is offering.

 Threat Substitutes
20% of management and 20% of employees said that the existence of substitute products
from the winery industry has influenced competition in opaque beer industry. Firms are
forced to fight competitively against the threat s posed by those substitutes since
customers may easily decide to switch to those products. 20% of trade customers an d 34
% of individual customers said that, the major reason n to the shift to those products is
the price if the substitute relative to their level of affordability.

4.3 Effect of competition on company performance

Figure 4.2 Effect of competition on company performance

Of the responses obtained 40% of management and 40% from employees said that
competition among the existing firms has influenced the company’s sales volumes. 40 %
of management and 27 % also said that its competitiveness in the industry has also been
heavily influenced because of the diverse strategies adopted by rival firms such as price
competitions, advertising and promotional battles for better market share. 20% of
management and 33% of employees said that their production levels have also been
affected be cause of the low sales levels recorded. They are forced to reduce their
production capacity because of the level of production of the product in the market.

4.4 Activities influencing competition

The responses of activities affecting competition are presented as follows in Figure 4.3

Figure 4.3 Activities affecting competition

Of the above responses 40% of management and 35% of employees said promotions
mainly directed to trade customers has heavily affected competition, since they are trying
to motivate them to stock their product relative to rival brands. 34% of trade customers
said that producer firms arte promoting their products directed to both stockists and
individual customers they are offered with point of sale promotional materials and other
facilities such returning of flat beer.

22% of trade customers also said that advertising campaigns undertaken by producer
firms influences the consumption of a particular brand. 20% of management and 13 %
of employees said advertising creates tension among rival players in the industry since
they are meant to raise awardees and induce products consumption. 20% of management
and 22% of trade customers said that quality of service offered by the producer farms
strengthen relationships with the producer and intermediaries, they also said that once the
bond is created it will be difficult for a rival to operate effectively with that intermediary.

22% of individual; customers 20% of management and 22% of employees said that
product distribution influences competition among firms. The ability to cover a wider
market in terms of distribution coverage enhances competitiveness of the firm.

4.5 Marketing strategies currently implemented by the company in an effort to

enhance competitiveness

Figure 4.3 Strategies implemented by the company

60% of management and 53% of employees said that they are mainly utilising price to
fight for market share. They said that they set their price relative to that of industry
leaders that is setting a lower price than that of the leader.
40% of management and 42% of employees said that the company also undertakes
advertising using billboards, local newspapers and use of signposts mainly at bearing
selling outlets bearing the company’s brand.

4.6 CHAPTER SUMMARY

This chapter has discussed the results, interpreted them and outlined the major of findings
of the study. The next chapter answers the research objectives and questions aligning
with the findings.

CHAPTER 5

SUMMARY, CONCLUSION AND RECOMMENDATIONS

5.0 CHAPTER INTRODUCTION

The main focus of this chapter is to establish whether the collected data answered the
research questions and assumptions in the study. A summary of findings, conclusions and
recommendations are provided in this chapter.

5.1 SUMMARY OF FINDINGS

The study aim s to evaluate the impact of competition on company performance. It has
bee found out that Kwekwe brewery’s performance has been affected negatively as far as
its sales volumes is concerned.

Of the 122 respondents, it was established that 36 % of the respondents said competition
among firms in the industry results in increased levels of competition. 32% said buyers
have influence on companies to their expectations. Another 32% of the respondents said
the availability of diverse brands from the winery industry also influence competition.

It was also established that 40% of management and 33% of employees said that the
industry is characterised by firms relatively balanced in terms of size and resources, and
this has increased the level of competition. 39% of trade customers said that the diversity
of beer brands is forcing the respective producers to come up with diverse strategies for
their survival, thereby increasing competition. 36% of individual customers said that their
disposable income makes them switch to other brand

It was again established that 40% of Management and 40% of employees said that buyers
mainly influence the level of competition in the industry because of the large volumes
they purchase, because of the demand of the product. 39 % of trade customers said that if
producers do not offer good incentives and the terms of trade, they would not be willing
to stock their brands. 30% of individual customers said that consumption pattern is
mainly determined by the price of the product that a company is offering.

The study also established that 20% of management and 20% of employees said that the
existence of substitute products from the winery industry has influenced competition in
opaque beer industry. Firms are forced to fight competitively against the threat s posed by
those substitutes since customers may easily decide to switch to those products. 20% of
trade customers an d 34 % of individual customers said that, the major reason n to the
shift to those products is the price if the substitute relative to their level

It was also established that 40% of management and 40% from employees said that
competition among the existing firms has influenced the company’s sales volumes. 40 %
of management and 27 % also said that its competitiveness in the industry has also been
heavily influenced because of the diverse strategies adopted by rival firms such as price
competitions, advertising and promotional battles for better market share. 20% of
management and 33% of employees said that their production levels have also been
affected be cause of the low sales levels recorded. They are forced to reduce their
production capacity because of the level of production of the product in the market.

The study also established that 40% of management and 35% of employees said
promotions mainly directed to trade customers has heavily affected competition, since
they are trying to motivate them to stock their product relative to rival brands. 34% of
trade customers said that producer firms are promoting their products directed to both
stockists and individual customers they are offered with point of sale promotional
materials and other facilities such returning of flat beer.

22% of trade customers also said that advertising campaigns undertaken by producer
firms influences the consumption of a particular brand. 20% of management and 13 %
of employees said advertising creates tension among rival players in the industry since
they are meant to raise awardees and induce products consumption. 20% of management
and 22% of trade customers said that quality of service offered by the producer farms
strengthen relationships with the producer and intermediaries, they also said that once the
bond is created it will be difficult for a rival to operate effectively with that intermediary.
22% of individual; customers 20% of management and 22% of employees said that
product distribution influences competition among firms. The ability to cover a wider
market in terms of distribution coverage enhances competitiveness of the firm.

Lastly it was established that 60% of management and 53% of employees said that they
are mainly utilising price to fight for market share. They said that they set their price
relative to that of industry leaders that is setting a lower price than that of the leader.

40% of management and 42% of employees said that the company also undertakes
advertising using billboards, local newspapers and use of signposts mainly at bearing
selling outlets bearing the company’s brand.

5.2 CONCLUSIONS
In this view of the findings, it was concluded that competition has a negative impact on
the company’s sales performance. The forces that shape industry competition influences
the company’s sales performance negatively since the company’s competitive efforts are
not effective enough to counter rivalry.

5.3 RECOMMENDATIONS
In view of the findings and conclusions drawn in this study, Kwekwe brewery must
competitively fight against the industry rivals for it to ensure increased levels of sales
performance. The company may make use of the following recommendations in an effort
to enhance its competitiveness and improved sales levels.

 The company may become involved in the community

This can be done by offering litter bins in public places in a campaign for cleanliness,
thereby creating a positive image

 The company may also add flair to the store layout of the stockists of their brand by
offering point of sale purchase material, such as posters, racks and merchandise signs
 The firm may develop new distribution channels to carter for markets beyond the
reach of major rival brands, thereby creating niche markets.

 The company may also engage in intensive advertising promotions, by increasing on

its advertising and promotion expenditures.

REFERENCES
1. Porter E.M (1979); How Competitive Forces Shape Strategy
Harvard Business, Review, March-April 197
2. Internet; http; // www.qeuckmba.com/strategy/porter.
3. Internet;http://www.12manage.com/methods-porter price forces.html
4. Kotler P (1972), Marketing Management, 2nd Edition
Eaglewood Cliffs, NJ Prentice Hall.
5. McCarthy (1978), Basic Marketing, Managerial Approach, 6th Edition
Homewood, Irwin
6. Allen S.R and Helm M.M (2006), Linking Strategic practices, Volume 12, No. 4;
Earl Group Publishing Limited.
7. Porter, M (1985), Competitive Advantage Creating and Maintaining Superior
Performance, Free, New York, NY
8. Porter, M (1980) Competitive Strategy
Free Press, New York (NY)
9. Argures, N and McGaha AM (2002)” An Interview with Michael Porter Academy of
Management Executive, Volume 16 No.2
10. Enis B.M (1980) Marketing Principles, 3rd Edition
Goodyear Publishing company, Santa Monica , California USA
11.Wells W et al (1995), Adverting Principle and Practice, 3rd Edition Prentice Hall,
USA
12. Cole g (1996), Management theory and practice, 5th Edition Ashford Color Press,
Englewood Cliff, New Jersey, London.
13 Belch EC and Belch MA (2004), Advertising and Promotion, An Integrated Marketing
Communications Perspective, 6th Edition McGraw Hill Company . inc
14. Russ W.F and Kirkpatrick CA (1982) marketing Little Brown and Company Boston,
15. Arens W.E (1996), Contemporary Advertising, 6th Edition Library of Congress
Cataloging-in-Publication Data , USA
16. Cundiff W.E et al, (1990), Fundamentals of Modern Marketing 3rd Edition, Prentice
Hall, New Jersey.
17. Coolocan H (1990) Mesearch methods and Statistics in Psychology Hodder and
Strength London.
18. Zikmund WG and D’Amico M(1996) marketing ;5th Edition Juta and company Ltd
19. Vander Walt et al ;( 1996) Marketing mangememnt; 3rd Edition
Juta and Company Ltd
20. Kumar V et al ;( 1999) Essentials of Marketing Research John Wiley,Inc .New York
21 Kumar R (1999), Research Methodology, A step-by-step Guide for beginners, sage
Publications
22. Spencer D,(1999), Stage Two and Three in Economic Development
23. Sudman S and Blair E (1998) Marketing Research , A problem solving approach ,
McGraw Hill Intervention Edition
24. Shao T. (1999), Marketing Research, An Aid to Decision Making.
25. Porter E. (1980) Competitive Strategy,
Free Press Publishers.
 APENDICE A

PERSONAL INTERVIEW GUIDE FOR MANAGEMENT

1. For how long have you been in the beer manufacturing industry?
2. Who are your targeted markets?
3. Who are other players in this respective industry, and can you name brands offered by
each player?
4. How do you relate these rival players and their brands as far as competition is
concerned in the industry?
5. How do you think suppliers have influenced the industry level of competition?
6. How has buyers contributed to shaping this industry level of competition?
7. To what extent have substitute products contributed to industry competition? How?
8. How has this competition influenced the sales performance of the company?
9. What activities directed to individual consumers has the company been undertaking
since the year 2003 to ensure increased volumes of product consumption?
10. What efforts directed to intermediaries has the company been undertaking to ensure
adequate support in selling the product?
11. What efforts has the also been made to create awareness and remind consumers of he
existence of the product in the market?
12. Have these efforts been effective enough to counter industry rivalry, substitute threats
and buyers influences towards the company?
13. How often had / do you practice/d these activities?
 APENDICE B

PERSONAL INTERVIEW GUIDE FOR EMPLOYEES

1. For how long have you been working for Kwekwe Brewery?
2. From which department do you work under?
3. Are you aware of the company’s vision, mission, and its targeted market?
4. Can you state other players which you know in the brewery industry, and the brands
they offer?
5. How do you view the competitiveness of these brands as far as competition is
concerned in the industry?
6. How do you think buyers contributed to shaping this industry level of competition?
7. To what extent do you think substitute products contributed to industry competition?
How?
8. How has this competition affected the sales performance of the company?
9. What efforts has the company been made to create awareness and remind consumers of
the existence of the product in the market?
10. How often had / are these activities practiced?
 APENDICE C

QUESTINNAIRE FOR TRADE CUSTOMERS

PREAMBLE
My name is Charles Nhapata, a final year Marketing Management student at the
Midlands State University. I am conducting a research that aims to evaluate the impact of
competition on the company performance; a case of Kwekwe Brewery. May you please
kindly fill in this questionnaire? Your responses will be treated with confidentiality and
used for the purpose of this study only.

Instructions
 Fill in the required information on the spaces provided below.
 Where choices are available, please tick one applicable answer.

1. For how long have you been in this trade?

1- 2 year 3- 4 years

4- 5 years Over 6 years

2. Which range of beer products do you stock?

Clear Opaque Both

3. Do you select specific beer brands to stock? Yes No

4. Which supplier(s) do you deal/ intend to deal with?

Currently dealt with ……………………………………..
Intend to deal with ……………………………………..

5. Which supplier(s) do you favor most and why?

Suppliers (s) 1………………………..2…………………… 3………………………
Reason (s) Why?...............................................................................................................
…………………………………………………………………………………………..
…………………………………………………………………………………………..

6. For how have you been selling Simba beer?

1- 2 year 3- 4 years

4- 5 years Over 6 years

7. How frequently do you reorder Simba beer?

Once a week Two times a week

Other (specify)……………………………

8. Is it still the same frequency compared to the past years reorders? Yes No
If no, what could be he possible reasons to this change?
Brand performance
Price of the product
Other (specify)……………………………………………………………………………

9. Are there any incentives that you are receiving from suppliers? Yes No
If yes, state the supplier(s) and incentives?
Supplier(s)……………………………………..
Incentives (s) …………………………………………………………………………
………………………………………………………………………...

10. Are there any significant changes in terms of incentives, from what the company used
to offer since you started selling Simba beer? Yes No
If yes, can you state them?
i. ………………………………………………………………………………..
ii. ………………………………………………………………………………..
iii. ……………………………………………………………………………….

11. How do you rate the following company’s efforts?

Excellent Good Average Poor
1 2 3 4
Advertising
Sales promotions

12. Have these marketing efforts been effective enough to you compared with what other
companies are doing?.....................................................................................................
…………………………………………………………………………………………..
…………………………………………………………………………………………
……………………………………………………………..……………………………
13. What do you think is the best way to promote Simba in an effort to enhance brand
competitiveness in the market?
…………………………………………………………………………………………..
…………………………………………………………………………………………..
…………………………………………………………………………………………..
 APENDICE

QUESTIONNAIRE FOR INDIVIDUAL CUSTOMERS

PREAMBLE
My name is Charles Nhapata, a final year Marketing Management student at the
Midlands State University. I am conducting a research that aims to evaluate the impact of
competition on the company performance; a case of Kwekwe Brewery. May you please
kindly fill in this questionnaire? Your responses will be treated with confidentiality and
used for the purpose of this study only.

Instructions
 Fill in the required information on the spaces provided below.
 Where choices are available, please tick one applicable answer.

1. Can you please indicate if you are employed? Yes No

If yes, Do you enjoy it? Yes No

2. Do you enjoy drinking beer? Yes No

3. For how long have you been drinking beer?

1- 2 year 3- 4 years

4- 5 years Over 6 years

4. Which brand(s) do you favor most and why?

Brand (s) i)…………………………ii)………………………iii)…………………….
Why?...................................................................................................................................
…………………………………………………………………………………………..
…………………………………………………………………………………………..
5. How often do you/ sometimes buy Simba beer? …………………………

6. In what quantities would you buy? …………………………

7. Is the beer brand (Simba) conveniently available in outlets at or near your locations?
Yes No

8. How did you get to know about Simba beer?

TV Newspapers
Billboards Friends

9. What activities do you frequently witness, done by the company in promoting Simba?
………………………………………………………………………………………….
…………………………………………………………………………………………..
10. Can you make a comment about these activities in comparison with what other
companies are doing?........................................................................................................... .
……….
…………………………………………………………………………………………..
………………………………………………………………………………………………
……………………………………………………………………………………..
11. How much do you know about the company’s offerings and activities?
Much Little None

12. Can you rate the following company’s offerings in relation to competitors?
Excellent Good Average Poor
1 2 3 4
Quality Product
Quality of service
Availability of product

13. If a new beer brand is placed in the market would you buy it?
Yes No

14. If yes, on what conditions?

………………………………………………………………………………………………
………………………………………………………………………………………………
………………………………………………………………………………………………

14. What do you think the company should do that also benefits you as a customer?
………………………………………………………………………………………………
………………………………………………………………………………………………
………………………………………………………………………………………………
…............................................................................................................................................

Thank you