Response Strategies of Banks to Competition in the Credit Card Sector in Kenya
Abstract
Globalisation has led to increase in the number of credit card holders and users in Kenya.
With the current changes in technology and increase of E commerce firms have no choice
but to try and match the competition in the sector. Most of the credit cards offered have
similar features and therefore competition in the sector is very intense. Consumer
awareness has increased and organisations have to find ways of attracting new customers and retaining ones.
The study was designed with the objective of determining how banks have responded to
competition in the credit card sector. The data analysed was provided by mangers or the
equivalent in respective card centres. Out of sixteen credit card companies, all of which
were served with questionnaires only twelve responded by returning filled questionnaires.
This formed 75% response rate which the study considered suitable for analysis.
The study used a semi structured questionnaire. To achieve the study objective,
respondents were presented with statements describing various ways in credit card centres
have responded to competition. The major findings of the study were that competition has
had a great effection the sector and technological environment had contributed highly to
competition. According to the study all card centres have responded to a large extent to
competition in the sector. Differentiation and cost leadership were highly used as strategic
responses.
Based on the study product development is a strategy that all banks should use to be able to
increase their market shares. All banks that were interviewed offered credit cards with
similar features, with majority having three types of cards. This Clearly shows why
competition is very stiff in this sector. Most banks have also concentrated more in Nairobi
and therefore have not been able to penetrate other regions in the country which have a
very high potential. This implies that the banks needs to improve on their market
penetration and product development strategies in order to be able to increase their market
share in the sector. With globalisation a lot of growth is expected in the sector and more
banks and other firms are expected to introduce credit cards.
Citation
Degree of Master of Business Administration (MBA), University of NairobiPublisher
University of Nairobi School of Business
Description
A Management Research Project Report Submitted in Partial Fulfillment of
the Requirements for the Degree of Master of Business Administration
(MBA), School of Business, University of Nairobi