Customer loyalty towards brands within Botswana's petroleum industry

Abstract

The retail and distribution industry in Botswana's deregulated economy is one of the largest and most difficult sectors in which to operate, mainly because of levels of competition amongst Botswana companies and the global competitive industry, in general. Hill (2000:539) postulates that competition in free market economies generally tends to be tense depending on differences between distribution systems such as retail concentration, channel length and channel exclusivity. At the same time the retail industry grapples with other complex social and structural problems as they face ever increasing marketing problems that relate to attracting and maintaining customers (Luh, 2006:1). In view of the intense competition, it is more expensive to obtain a new customer than to retain and maintain an existing customer. Consequently, retailers should develop competitive and sustainable ways to maintain the customers that they have and should develop strategies to retain any new customers that the business acquires (Naylor and Frank, 2000:37).

Botswana practices a free market and a heavily deregulated economy, which causes an increase in competition (Luh, 2006:1) and creates greater expectations from customers in pursuit of satisfaction and value (Peter and Donnelly, 2007:179) for their money. In Botswana, petrol and diesel prices are regulated by government, there is therefore no competition between the rivals based on prices. The competition landscape therefore shifts to amongst others, namely; service provision, location of the petrol station, and fuel brand in general. Petrol and diesel retail outlets should focus on areas of operations that will give them a sustainable competitive advantage over their competitors without altering the price of products. Mehta, Lalwani and Li Han (2000:21) posit that increased competition between retail businesses forces rivals to focus on good customer service as the only critical factor in the operation of their business (Zairi, 2000: 332).

Customer loyalty is therefore, the most effective way to keep customers and to maintain profitability through repeated purchases (Luh, 2006:2). Loyalty is used to describe the behaviour of repeat customers, their ratings of the business, positive testimonials, and business from existing customers, as well as overall perception, about the business from the existing customers.

The study focuses on the petroleum industry in an environment where there are several competitors, relative .to the size of the country, offering goods and services that are close substitutes. The industry in Botswana is characterised by five competitors that offer heavily substitutable products (BP Report, 2006:1-4). These rivals are BP, Shell, Caltex, Engen and Total.