Strategic positioning and performance of insurance firms in Kenya

Abstract

In the global market and developing economies like Kenya, competition among firms grows quickly while market share gets narrower by the day. In order to gain new markets and retain existing ones, firms strategize to gain superiority over their rivals by positioning their products, services and their brands aimed at consumer behaviour and perceptions. Positioning is therefore regarded as the development of the image of a product or service in the minds of clients directly against that offered by competitors. The objective of this study was to determine the relationship between strategic positioning and performance among insurance firms in Kenya. The study used cross sectional descriptive survey design. The population of the study was all the 41 registered insurance companies in Kenya. Positioning strategies have several benefits to the insurance companies key among them being; providing the framework upon which to build and coordinate the elements of the marketing mix, facilitate fine tuning of strategy due to experience gained by being close to the customers, helps the company to know where to confront competition from and where to avoid it and it also provides the company with a unique image in the market place. Additionally , companies competes for consumers‟ involvement in its daily operations, competes for the customers‟ willingness to deal with the technical complexity found in the corresponding need for services, competes for the customers‟ effort and time in the buying process, shift its positioning frequently and that they competes for the funds consumers are willing to spend in acquiring a service. The study also sought to establish from the insurance firms the importance attached to their positioning strategies in relation to their performance goals, 92% of the respondents indicated that the insurance firms attached high level of importance on strategic positioning while only 8% indicated that the firms attached a moderate level of importance to positioning. It further established that well positioned firms were perceived to be closely aligned to the needs of their target segments, both current and emerging. The effect of positioning strategies on performance is that it leads to improvement on market share, customer brand loyalty, customer satisfaction, profitability improvement and growth in customer base. Strategic positioning was also reported to influence customer‟s perceptions, the expectations, the benefits and the value which they are prepared to pay for. The study also sought to relate strategic positioning and performance and the results of the correlation analysis indicated that strategic positioning was positively related performance.