Product Differentiation Strategy and Competitive Advantage of Safaricom PLC in Kenya

Abstract

The telecommunication industry in Kenya is quite competitive, with Safaricom Plc dominating the industry, while other firms have been affected by stagnated growth, leading to poor service quality and slow growth in the industry. The purpose of the study was to examine the impact of product differentiation techniques on competitive advantage at Safaricom Plc by comparing product differentiation and competitive advantage strategies. The objectives of the study were to: identify the product differentiation strategies being used by Safaricom Plc, assess the level of competitive advantage enjoyed by Safaricom Plc in the telecommunication industry, and establish the effect of product differentiation strategies on the competitive advantage of Safaricom Plc. The main theories used in the study include the Three Horizons Theory, Porter’s Generic Strategy, and the Resource-based theory. The study used a mixed-methods research design. Data was collected using a questionnaire adopted from various scholars in line with the study objectives. Questionnaires were distributed using online platforms. The Study used stratified sampling with a target population of 4,854 Safaricom permanent employees and a sample size of 357 employees. Data was analysed using both descriptive and inferential analysis, specifically a regression model, in outlining the relationship between the variables. The results showed that pricing had the strongest effect of competitive advantage (β = 0.0842, p < 0.05), followed by design (β = 0.0682, p < 0.05) and product features (β = 0.0582, p < 0.05). However, the analysis shows that branding has no significant impact on the quality of competitive advantage. The study recommends that telecom companies in Kenya invest in quality-based differentiation, innovation, and value-based branding to enhance their competitive advantage, noting that Safaricom has successfully leveraged these strategies through initiatives like M-Pesa and Fuliza. Future research should explore how specific innovations tied to differentiation strategies contribute to sustaining Safaricom’s competitive edge