Effect of retail distribution strategies on the market performance of Liquefied Petroleum Gas companies in Nairobi County, Kenya

Abstract

The use of Liquefied Petroleum Gas (LPG) is expanding as a clean cooking fuel in Kenya. However, LPG companies face performance challenges stemming from fragmented distribution networks, limited retail access, and widespread non-compliance with regulatory standards. Despite efforts by regulators and marketers to improve supply chains and safety, existing studies have not sufficiently addressed how the structure and efficiency of retail distribution influence market performance in the Kenyan LPG sector. Therefore, the main objective of this study was to examine the effect of retail distribution strategies on the market performance of LPG companies in Nairobi County, Kenya. The specific objectives focused on examining the effects of distribution channel structure, retail accessibility, pricing strategy and distribution compliance on the market performance of LPG companies. This study was guided by the Resource-Based View and Dynamic Capabilities Theory. A descriptive cross-sectional design was used, with primary survey data collected from a sample census of 77 licensed LPG brand owners operating in Nairobi County, yielding 202 valid responses from the 231 targeted managerial respondents (88% response rate). The findings revealed a strong and positive relationship between distribution channel structure and market performance. Additionally, distribution channel structure emerged as the most influential predictor in the regression analysis. This finding suggests that well-coordinated and formally structured distribution systems significantly enhance market performance. Regarding the effect of retail accessibility, the results demonstrated a strong positive association with market performance as well as a significant predictor, thus, confirming that wider retail presence and improved accessibility contribute substantially to improved firm outcomes. With respect to pricing strategy, the results showed a strong positive relationship with market performance and ranked among the key predictors in the regression model, hence, highlighting the importance of competitive pricing and effective promotional strategies. The findings also demonstrated that distribution compliance had a significant positive effect on market performance. This result underscored the role of regulatory adherence and ethical conduct in supporting firm competitiveness and overall performance. Based on the study findings, policy interventions should prioritize strengthening formal retail distribution structures and expanding access to licensed LPG outlets. Additionally, regulatory frameworks should encourage transparent pricing and responsible promotional practices that emphasize safety and quality. Strengthening compliance monitoring and standardizing distributor audits would further reinforce ethical conduct and safety adherence. Managers of licensed LPG companies should focus on strengthening internal retail distribution capabilities as a strategic priority. Managers should also refine pricing and promotion strategies to balance affordability and profitability while clearly communicating product safety and quality to consumers. Since distribution compliance was found to significantly influence performance, firms should institutionalize regular compliance audits, distributor training, and ethical oversight mechanisms.