Effects of competitive strategies on market share for commercial banks in Kenya

Submitted in partial fulfillment of the requirements for the Degree of Masters in Business AdministrationA 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