Abdikadir, Abdi Farah2019-03-152019-03-152017-04http://ir-library.ku.ac.ke/handle/123456789/19105A Research Project Submitted to the School of Business in Partial Fulfillment of the Requirement for the Award of the Degree of Master of Business Administration of Kenyatta UniversityThis study aimed at analyzing the effect of competitive strategy and customer loyalty among retail business in Garissa Town. Under this objective, the study intended to examine the extent to which cost leadership strategy affects customer loyalty; to find out how the focus strategy influences customer interest; to assess the effect of differentiation strategy in retail business. The findings of this study will help the organisations to understand the relationship between the competitive strategies and customer loyalty. The study objectives included; determining the effects of cost leadership strategies on customer loyalty in retail business; to establish how focus strategy affects customer loyalty in retail business; to establish the differentiations strategies used by businesses to enhance customer loyalty in retail business in Garissa town. The study used descriptive research design in the collection of data. The target population was drawn from four hundred and fifty retail business in Garissa town. Through Stratified proportionate random Sampling technique a total of one hundred and thirty five respondents was obtained. This study concluded that cost leadership strategy, requires a continuous search for cost reductions in all aspects of the business. Differentiation is a viable strategy for earning above average returns in a specific business because the resulting brand loyalty lowers customers’ sensitivity to price. Differentiation creates a better entry barrier. Retail business in Garissa town use focus strategy on a particular buyer group, product segment, or geographical market. Focus strategy means achieving either a low cost advantage or differentiation in a narrow part of the market. This has creates a defendable position within that part of the market of retail business in Garissa town. The study recommended that retail business in Garissa town should ensure continued capital investment to maintain cost advantage through economies of scale and market share. Develop cheaper ways to produce existing products. Increase capital investment in new technology, which can lead to large market share in the long-run. achieving a successful strategy of differentiation usually requires strong marketing skills, Product innovation as opposed to process innovation, research and development, customer support, less emphasis on incentive based pay structure etc. Retail business in Garissa town can also do differentiation of their products through different design, brand image, number of features, new technology etc. Retail business in Garissa town should embrace a focus strategy in order to gain a competitive advantage by aiming at attending to specific small niches that require special features or prices. The retail business in Garissa town should use a focus strategy by selecting a segment or a group of segments within the industry for which a strategy is tailored and also have different segments in which it can focus on or represent the impossibility to go to the broader perspective, because these are facts creating tradeoffs and so barriers to imitation.enThesis