Market entry strategies adopted by insurance companies in Kenya
Abstract
Overtime businesses diversify into different areas, perhaps they develop a new type of
product or move into a number of different geographical areas. Market entry requires
carefully crafting of strategies for a company’s penetration of new markets either locally
or internationally.Organizations may enter new markets by considering three major
decisions; where to enter, when to enter and how to enter various markets. Strategies that
companies use to enter new markets include joint ventures, management contracting,
development of new products, pricing strategies and franchising.The research objectives
were to determine market entry strategies pursued by insurance companies and Kenya
and challenges the insurers face when entering new markets.The study adopted a
descriptive survey design with the population of the study being a census of all the 49
duly licensed and operational insurance companies in Kenya.Primary data was collected
by use of questionnaires with one respondent picked from each company. The
respondents were forty nine (49) senior managers from the marketing or business
development department as they were deemed to be in possession of the required
information for this study. After data was obtained through questionnaires, it was be
prepared in readiness for analysis usingthe statistical package for social sciences (SPSS)
computer software.The statistics generated descriptive statistics and inferential statistics.
Microsoft excel was used to complement SPSS especially in production of diagrams and
tables.The study reveals that franchising is a rarely used strategy especially if the
companies do not have a strong brand that is brand recognition in the product or service it
sales. Further,the findings indicate that joint ventures, pricing and franchising are the
least used methods of entry into markets by insurance firms in Kenya. Management
contracts and new product development are the most used strategies by insurance firms in
Kenya. Results indicate that cultural misunderstanding, political and economic instability
and changes in exchange rates caused by the currency differences within countries are
some of the challenges that affect market entry decisions. The study provides one key
recommendation to insurance companies and other institutions that decisions on mode of
entry should be carefully analyzed and planned to ensure companies do not end up
making losses from the choice of market entry.Companies considering franchising and
joint ventures as an entry mode are recommended to have enough resources for greater
financial investment so as to attract prospects for support and management. Pricing
strategy is a good entry mode for companies in industries whose products prices are not
strictly regulated by the governing body.
Citation
A research project submitted in partial fulfillment of the requirement for the award of master of business administration degree, school of business, University of NairobiPublisher
Business Administration, University of Nairobi