New Product Development Strategies and Performance of Multinational Banks in Kenya

Abstract

To survive and get a competitive advantage over their industry competitors, firms need a variety of new product development strategies which can be defined as a sequence of steps that includes the conceptualization, design, development and promotion and marketing of a new good or service. A product is created to satisfy consumer demand in a certain category. Given the dynamic nature of the operating environment, Companies must modify their strategy frequently to keep up with changing market demands and to stay ahead of the competition and attain the intended goals and align themselves with the changes being brought by new players in the sector. The adopted new product development strategy by a firm plays a role in determining its performance. The study thus sought to examine the effect of new product development strategies on performance of multinational banks operating in Kenya. The study was guided by two theories namely the Penrose’s theory of firm growth and the agency theory. Data collection was performed using self-administered questionnaires. A response of 31 questionnaires were returned yielding a response of 73.8 per cent. The data was analyzed using the SPSS software. The regression analysis findings revealed a statistically significant effect of new product development strategies on performance of multinational banks as shown by significance level of 0.000 which is <0.05. This affirms that the model is statistically fit as an estimator of performance of multinational banks. The coefficient of determination (R2) 0.689 value implied that 68.9% variation in performance of multinational banks is new product strategies. The study’s recommendations include need for banks to introduce products that are tailored for the low-end markets as most are established in towns targeting customers with large transactions ignoring the many customers in other settings with multiple transactions. Additionally, there’s need for banks in collaboration with each other and the regulators, to initiate capacity building programs outside the bank to sensitize the public about banking products through trade fares and exhibitions to publicize the bank’s products and the consideration to use risk detection systems and applications to prevent risks. Conducting frequent system audits with the help of experienced external audits may be appropriate in timely detection and arresting on internal fraud on time which may lead to irreversible losses and consequences if action is not taken.