COMPETITIVE STRATEGIES AND MARKET PENETRATION OF INSURANCE COMPANIES IN KENYA
Charles Mutembei - Masters of Business Administration, Kenyatta University, Kenya
Dr. Jane Wanjira Njuguna - Department of Business Administration, School of Business, Kenyatta University, Kenya
ABSTRACT
The Insurance industry in Kenya is very competitive, with the number of insurance companies as at December 2016 standing at 50. Despite this, the level of insurance penetration in the country is about 2.73%, a relatively lower rate than the average world rate of 6.28%. This investigated the influence of competitive strategies on insurance penetration in Kenya. The specific objectives included; investigating the influence of cost leadership, differentiation, focus strategy and critical success factors on insurance penetration in Kenya. The study was informed by sales maximization theory, Porter’s theory on generic strategies and Boston Consulting Group Matrix theory. A descriptive and explanatory research design was used. The study is cross-sectional, with the use of primary as well as secondary data. Questionnaires that had close ended questions were used to collect primary data. This data was sourced from head of marketing and head of business development departments as they hold key information. Before data collection, the questionnaire was tested for validity and reliability. The Cronbach alphas for all the variables were more than the critical value of 0.7 and hence the questionnaire was deemed to be reliable. The validity of the questionnaire was ascertained through expert opinion. Descriptive analysis, correlation analysis and regression analysis were used in analysis of data. The descriptive analysis involved calculation of the proportion of male and female respondents in management and also the proportion of respondents in various age categories. The descriptive statistics calculated involved standard deviation, mean, skewness and kurtosis of all the variables. The results of correlation analysis showed that competitive strategies were positively associated with market share. The regression analysis indicated that there was a positive and significant relationship between cost leadership strategy and insurance penetration. Also, company size had positive and significant influence on insurance penetration, implying that an increase in size had positive effects on insurance penetration. No evidence of moderation effect of critical success factors was found. Therefore, it was concluded that adoption of cost leadership strategy enhances insurance penetration. Additionally, an increase in size of insurance companies enhances their ability to penetrate the market. The study recommends that insurance companies should seek strategies for cost efficiency in order to penetrate the market. Also, the insurance companies should seek growth opportunities. The study provides empirical evidence on the impact of cost leadership on insurance penetration. Additionally, the study provides the managers with a basis for pursuing cost leadership and seeking growth opportunities.
