INFLUENCE OF DIFFERENTIATION STRATEGY ON PERFORMANCE OF THE INSURANCE COMPANIES IN KENYA
DOI:
https://doi.org/10.47941/jbsm.730Abstract
Purpose: Consistent high performance being their main objective, insurance companies are currently concentrating on development of strategies for ensuring enhanced sustainability and success. Differentiation strategy has recently received unprecedented attention as it enhances the capability of firms to expand, exploit emerging opportunities, manage threats and ultimately gain sustainable competitive advantage in today's highly dynamic market. In Kenya, the present operational set up of the insurance industry is a dynamic one characterized with intense competition due to the presence of numerous insurance organizations selling diverse products and services. Major challenges include similarities in insurance products, differences in product valuations, increased brokerage, poor products' perception and low quality of services provided by insurance firms. This study sought to establish the influence of differentiation strategy on performance of the insurance companies in Kenya. Specifically, the study aimed at determining the influence of strategy scope, products perception, value based services and market experience on insurance companies' performance, with the ultimate goal of providing tangible solutions to exiting differentiation challenges in the industry and beyond.
Methodology: Using semi-structured questionnaires, primary data was collected from 55 registered insurance companies in Kenya. Descriptive analysis was done using SPSS software, and inferential statistics including regression, correlation and ANOVA analysis were applied to establish the association between the dependent and the independent variables.
Findings: The study found out that over 85% of the insurance companies had adopted the differentiation strategy at different magnitudes, which enabled development of products and services offering more value and great market experience, and were since enjoying enhanced competitive advantage.
Unique Contributions to Theory, Practice and Policy: The study recommends that the insurance companies should scale up their differentiation by applying strong research and development skills, strong services and products engineering skills, strong creativity skills, good cooperation with distribution channels and strong marketing skills for remarkable performance.
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