Market entry strategies adopted by insurance companies in Kenya

Abstract

Overtime businesses diversify into different areas, perhaps they develop a new type of product or move into a number of different geographical areas. Market entry requires carefully crafting of strategies for a company’s penetration of new markets either locally or internationally.Organizations may enter new markets by considering three major decisions; where to enter, when to enter and how to enter various markets. Strategies that companies use to enter new markets include joint ventures, management contracting, development of new products, pricing strategies and franchising.The research objectives were to determine market entry strategies pursued by insurance companies and Kenya and challenges the insurers face when entering new markets.The study adopted a descriptive survey design with the population of the study being a census of all the 49 duly licensed and operational insurance companies in Kenya.Primary data was collected by use of questionnaires with one respondent picked from each company. The respondents were forty nine (49) senior managers from the marketing or business development department as they were deemed to be in possession of the required information for this study. After data was obtained through questionnaires, it was be prepared in readiness for analysis usingthe statistical package for social sciences (SPSS) computer software.The statistics generated descriptive statistics and inferential statistics. Microsoft excel was used to complement SPSS especially in production of diagrams and tables.The study reveals that franchising is a rarely used strategy especially if the companies do not have a strong brand that is brand recognition in the product or service it sales. Further,the findings indicate that joint ventures, pricing and franchising are the least used methods of entry into markets by insurance firms in Kenya. Management contracts and new product development are the most used strategies by insurance firms in Kenya. Results indicate that cultural misunderstanding, political and economic instability and changes in exchange rates caused by the currency differences within countries are some of the challenges that affect market entry decisions. The study provides one key recommendation to insurance companies and other institutions that decisions on mode of entry should be carefully analyzed and planned to ensure companies do not end up making losses from the choice of market entry.Companies considering franchising and joint ventures as an entry mode are recommended to have enough resources for greater financial investment so as to attract prospects for support and management. Pricing strategy is a good entry mode for companies in industries whose products prices are not strictly regulated by the governing body.