Intensive growth strategies adopted by Total Kenya Limited in response to competition in the oil industry in Kenya

Abstract

The purpose of this study was to determine how the Ansoff intensive growth strategies of market penetration, market development and product development, have been applied by Total Kenya Limited. The objectives of this research were to determine the extent to which Total Kenya Limited has pursued intensive growth strategies, to establish factors that have influenced the choice of such strategies and to determine the influence of these strategies on the firm's market share. This study was modeled on a case study design. The organisation of interest was Total Kenya Limited. The research instrument was an interview guide consisting of open ended questions. The guides were administered to 5 managers in Total Kenya Limited who were deliberately chosen to ensure that only those at the strategy development and implementation level were selected as they had the information required. The primary data collected was analysed using content analysis. With regard to market penetration, key strategies used were encouraging frequent purchases employing price reductions/discounts, value added services, promotions to encourage switching, merchandising and customer care and developing new usage for existing products. Factors that stimulated the firm to employ market penetration strategies included increased competition, higher sales targets, increased market share, decreasing fuel margins and changing customer needs. Key market development strategies involved operating view distribution channels and developing new customer segments through targeting non-users using sales promotions, product innovations targeting new needs and usage demonstrations. Factors that motivated the use of market development strategies included new customer needs and requirements, the need to achieve economies of scale and lower unit costs as well as the drive for increased market share. Product development strategies entailed improved quality offerings, innovative packaging and branding. Factors that motivated the need to differentiate included the competition, customer needs, market segmentation, the risk of losing business to alternative solutions, health, safety, quality and environmental considerations. Others include technology and government regulations.

The study recommended that Total Kenya make intensive but strategic use of the three Ansoff growth opportunities. It was possible for the firm to increase its market presence in Kenya through market penetration that may entail increasing market coverage in growth areas locally and in the region. This would reduce the cost of fuel in these areas and increase access. Market development can also be intensified regionally, given the many opportunities present, especially with oil discoveries in Uganda and Southern Sudan. Opportunities for product development do exist as Total could borrow ideas from its parent company and have the advantage of low introduction cost