Response strategies of banks to competition in the credit card sector in Kenya
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.