Effects of competitive strategies on market share for commercial banks in Kenya
Date
2015
Authors
Kasurah, Sarah Siimoi
Journal Title
Journal ISSN
Volume Title
Publisher
Strathmore University
Abstract
A major development in today’s world is the increased interest in management of customers
so as to maintain and improve market share. Current problem is that banks have many
competitive strategies but there is need to understand if strategies deployed, are the most
effective, sustainable, and competitive. This understanding, will ensure full optimization of
resources hence avoid unnecessary losses. Poorly deployed competitive strategies in a market
have led to companies losing or reducing market share since strategies deployed, do not
address key customer needs. This research therefore, sought to bridge the existing knowledge
gap by carrying out a study on effects of competitive strategies on market share for
commercial banks in Kenya.
Key focus was on agency banking, bancassurance and mobile banking. The research design
used in this research was descriptive survey. The population that was targeted in this study
constituted of 44 commercial banks that have been licensed in Kenya, hence 44 respondents.
The Primary and Secondary data was deployed where survey questionnaires, were handed to
all operation managers of the Kenyan commercial banks. The quantitative data that was
collected in this study was evaluated by means of SPSS (Statistical Package for Social
Sciences) software. These results were presented via standard deviations, means, frequencies,
and percentages. The results were also displayed via pie and bar charts, prose-form and
graphs. This involved tallying of responses received, calculating variation percentages on
responses received and decoding data as per required study objectives through SPSS. Testing
of qualitative or open ended data was done through use of content analysis.
To achieve the relative implication of the three variables (agency banking, bancassurance and
mobile banking) regarding market share, the multivariate regression model was used. This
research study established a positive relationship between agency banking as shown by a
coefficient of (0.474), positive relationship between bancassurance and market share for
commercial banks in Kenya as shown by a coefficient of (0.281) and positive relationship
between mobile banking and market share for commercial banks in Kenya as shown by a
coefficient of (0.376). The study recommended that banking institutions ought to invest more on agency banking
compared to other competitive strategies researched in this study. It was found to be more
positively related to the acquisition of new market for commercial banks. The study
recommended that banking institutions ought to consider intensifying on mobile banking.
This is because it would increase accessibility of services to the customers and thus
improving institutions’ financial performance and market share. Due to the increased
competition, Kenyan commercial banks ought to embrace bancassurance as a competitive
strategy. This is because the banks would also benefit from bancassurance by increasing
sales, market share and improving its operations but to a minimal extent if compared to
agency banking and mobile banking. The study also highlighted and recommended the need
to analyze effects of other competitive strategies not mentioned in this study for continuous
knowledge that would guarantee business sustainability for banks.
Description
Submitted in partial fulfillment of the requirements for the Degree of Masters in Business Administration
Keywords
Banking, Commercial banks, Kenya, Market share