Application of porter's generic strategies by insurance companies in Kenya

Abstract

The study sought to establish the application of Porter's Generic Strategies by Kenyan insurance companies and the challenges faced as they applied these strategies. To achieve these objectives, a survey research design was used and primary data was collected between the months of June and August 2005. Semi structured questionnaires were administered mainly by "drop and pick later" method. The respondents were marketing executives or senior officers in the marketing function. Out of 38 firms contacted, 29 responded, representing 76% response rate which is adequately representative of the population. Descriptive statistics was used to analyze the data which confirmed the application of Porter's generic strategies by insurance companies in Kenya. Differentiation broad focus was applied by about 21% of the companies and was the most popular, whereas the least popular was cost leadership narrow focus applied by none; however, about 14% of the companies were not particular about generic strategies. Some companies applied one generic strategy while others applied a combination of generic strategies. The main challenge faced was competition characterized by price cutting. There is need for more research in this area to validate these findings. In the light of the findings, recommendations for policy and practice have emphasized the need for revised legislation by the government and the adoption of differentiation strategies by the insurance industry through innovation to facilitate expansion not only nationally but also regionally.