Entry and sustenance strategies of dairy processing firms into supermarkets in Nairobi City County, Kenya

Abstract

The growth of dairy processing firms is highly dependent on doing business with supermarkets as supermarkets are powerful actors in the dairy product value chain. This paper therefore, examines the entry and sustenance strategies used by dairy processing firms into supermarkets in Nairobi, Kenya. By way of methodology, this is a case study that conducted two rounds of sampling on a population of eleven dairy processing firms. The first round was a census to verify existence and sizes of predetermined dairy processing firms. In the second round, stratified random sampling technique was conducted to create three categories and thereafter, select dairy processing firms for inclusion in the sampling frame. Data was analyzed through thematic analysis. Findings indicate that New Product Development, distribution chains, diversification, packaging, Mergers and Acquisitions, food safety strategies, market and marketing, and products serve as important entry strategies into the supermarket chains. Organizational structure and slotting allowance were crucial sustenance strategies. Dairy processing firms experience challenges such as safety and health standards, dairy product imports, export markets, trade credit, product promotion, legal certification, supermarket private standards, supermarket own labels and market challenges. Small, medium and large dairy processing firms apply different entry and sustenance strategies and experience different challenges while doing business with supermarkets. This paper, to the best of my knowledge, is the first to explore the different entry and sustenance strategies utilised by small, medium and large dairy processing firms for purposes of gaining access and sustaining their products into supermarkets in Nairobi, Kenya.