Вы находитесь на странице: 1из 62

THE EFFECTS OF MARKETING STRATEGIES ON CUSTOMER

RETENTION; A CASE OF THE HEALTH INSURANCE IN KENYA

LILIAN KEMUNTO ONSONGO

A RESEARCH PROJECT SUBMITTED IN PARTIAL


FULFILLMENT FOR THE REQUIREMENTS OF THE AWARD
DEGREE OF MASTERS IN SCIENCE MARKETING.SCHOOL OF
BUSINESS, UNIVERSITY OF NAIROBI

NOVEMBER 2016
DECLARATION

This project is my original work and has not been presented for the award of a degree in
this University or any other Institution of higher learning for examination.

Signature ………………………………… Date ……………………….

Lilian Kemunto Onsongo


D65/68019/2013

This project has been submitted for examination with my approval as the University
Supervisor.

Signature ………………………………… Date ………………

Dr Raymond Musyoka
School of Business
University of Nairobi

ii
DEDICATION

This project is dedicated to my family members for support and encouragement.

iii
ACKNOWLEDGEMENT

I take this great opportunity to acknowledge God’s power, maker and source of

knowledge for guiding me to successful complete my MSC with true spirit. First and

foremost, I would like to recognize the support of my supervisor Dr.Raymond Musyoka,

without whose support and guidance this project could not have been completed on time.

Also immense gratitude goes to the University of Nairobi for giving me the chance to

learn and to all the lecturers who contributed in one way or another in quenching my

thirst for knowledge, I owe you my gratitude.

I also want to thank my family members for their unfailing moral support throughout the

entire time of study and for accepting and appreciating the demand of course work. To

my classmates, I can’t forget their positive influence as the source of motivation during

the entire study and for supporting me in looking for information and resources for this

project. To you all, may almighty God bless you abundantly.

iv
TABLE OF CONTENTS
DECLARATION ........................................................................................................ ii
DEDICATION .......................................................................................................... iii
ACKNOWLEDGEMENT ......................................................................................... iv
TABLE OF CONTENTS ........................................................................................... v
LIST OF TABLES ...................................................................................................viii
ABSTRACT ...............................................................................................................ix
CHAPTER ONE ........................................................................................................ 1
INRODUCTION ........................................................................................................ 1
1.1Background of the study ................................................................................................ 1
1.1 .1 The concept of marketing strategy .................................................................... 2
1.1.2 The Concept of Customer Retention .................................................................. 3
1.1.3 Health Insurance sector in Kenya Industry......................................................... 4
1.2 Research Problem ......................................................................................................... 6
1.3 Research Objectives ...................................................................................................... 7
1.4 Value of the Study ........................................................................................................ 7
CHAPTER TWO ....................................................................................................... 9
LITERATURE REVIEW .......................................................................................... 9
2.1 Introduction ................................................................................................................... 9
2.2 Theoretical Foundation of the study ............................................................................. 9
2.2.1 The Ansoff Growth Matrix ................................................................................. 9
2.2.2 Social Exchange Theory ................................................................................... 11
2.3 Marketing strategies .................................................................................................... 12
2.3.1 Product Strategy ............................................................................................... 12
2.3.2 Pricing Strategy ................................................................................................ 14
2.3.3 Promotional strategy ......................................................................................... 14
2.3.4 Distribution Strategy......................................................................................... 15
2.3.5 Physical evidence strategy ................................................................................ 15

v
2.3.6 Process Strategy................................................................................................ 16
2.3.7 People strategy.................................................................................................. 17
2.4 Customer Retention .................................................................................................... 18
2.5 Influence of Marketing Strategies on customer retention ........................................... 19
CHAPTER THREE ................................................................................................. 21
RESEARCH METHODOLOGY ............................................................................. 21
3.1 Introduction ................................................................................................................. 21
3.2 Research Design.......................................................................................................... 21
3.3 Target Population ........................................................................................................ 21
3.4 Data Collection ........................................................................................................... 21
3.5 Data Analysis .............................................................................................................. 22
CHAPTER FOUR .................................................................................................... 23
DATA ANALYSIS, FINDINGS AND DISCUSSION .............................................. 23
4.1 Introduction ................................................................................................................. 23
4.2 Respondent Characteristics ......................................................................................... 23
4.2.1 Gender of the respondents ................................................................................ 23
4.2.2 Experience of the Respondents......................................................................... 24
4.3 Marketing strategies and customer Retention ............................................................. 25
4.3.1 Product Strategy ............................................................................................... 27
4.3.2 Pricing Strategy ................................................................................................ 27
4.3.3 Distribution Strategy......................................................................................... 28
4.3.4 Promotional strategy ......................................................................................... 28
4.3.5 People Strategy ................................................................................................. 29
4.3.6 Process Strategy................................................................................................ 29
4.3.7 Physical Evidence Strategy .............................................................................. 30
4.4 Marketing strategies and customer retention .............................................................. 30
4.5 Discussion of the findings ........................................................................................... 31
CHAPTER FIVE...................................................................................................... 33
SUMMARY, CONCLUSION AND RECOMMENDATIONS ................................ 33

vi
5.1 Introduction ................................................................................................................. 33
5.2 Summary ..................................................................................................................... 33
5.3 Conclusions ................................................................................................................. 34
5.4 Limitations of the study .............................................................................................. 36
5.5 Recommendations for Further Research ..................................................................... 36
REFERENCES ................................................................................................................ 37
APPENDICES ................................................................................................................. 43
APPENDIX I:LETTER OF INTRODUCTION ........................................................................ 43
APPENDIX 11: QUESTIONNAIRE .................................................................................... 44
Appendix III:List of Registered Health Insurance Companies 2013 .............................. 52

vii
LIST OF TABLES

Table 4.1 Gender of the Respondents ........................................................................... 24

Table 4.2 Experience of Respondents ........................................................................... 24

Table 4.3 Marketing Strategies adopted by health insurance companies ..................... 26

viii
ABSTRACT
The research study was done to establish the association among marketing strategies and
customer retention in health insurance industry in Kenya. To achieve this information
was gathered by use of structured questionnaires; the questionnaires were distributed to
28 health insurance firms that are register with the Association of Kenya insurance using
the drop-and- pick technique. Analysis of information involved reducing accumulated
information to a convenient size, coming up with summary and looking for patterns
hence administering statistical techniques through descriptive statistics. Study established
that there is a link or association among marketing strategies and client retention in the
health insurance sector. Based on the conclusions the study recommended that health
insurance companies should start adapting principles of strategic marketing for those that
are reluctant or have not implemented marketing strategies. Marketing strategies should
be formulated in light of the external environment which is made up of elements that are
uncontrollable to an organization. The researcher further recommends that similar studies
be done on other spheres of insurance specialization such as life and general insurance.

ix
CHAPTER ONE

INRODUCTION

1.1Background of the study


According to (Kim, 2004) Marketing strategy is viewed as the rule an organization uses

for resources allocation hence organized in generating profit from clients who are, in

aggregate, part of the market, with reasonably clear parameters about size and

mechanism. Aaker (2009) also defines marketing strategy as that which can entail a series

of useful area strategies which entail positioning, pricing, distribution, and global

strategies. According to (Darani, 2010) the concept about marketing mix will help

determine the firm’s performance direction through use of controlling variables in paths

where it contains a lot of uncontrollable factors for instance market. Also according to the

research of (Taylor, 2004) he says that loyalty from the client is a result of favorable

marketing activities which involves the surrounding impacts and affairs within the market

which automatically will influence the behavior of most clients. Chaudhuri & Holbrook,

(2001) from their research work they say that loyalty from a different perspective will

cause repurchase which will expand the market commodity share hence providing

situations which cause high prices.

Marketing Strategies is among the significant factors associated with the desirable

business results in a competitive market place. It is the most essential factor that is

required to product sustainability in a competitive market place (Alvdary, 2007).

Customer retention is an activity undertaken in reducing client defections. It’s about

1
attracting and retaining the best client, making clients to purchase in higher quantities and

often retain additional clientele (Anderson & Narus, 1998). Retaining clients can be seen

as the mirror image of customer defection. (Leverin & Liljander, 2006) urges that

customer retention is the company’s ability to provide value with its service or products

for customers to keep them coming.

With minimal differentiation between product offerings, it is challenging for health

insurers to retain customers, and this result in low level loyalty and increased costs (AKI

report June 2015). Furthermore, recruiting new customers cost five times more that the

cost of retaining and satisfying current customers (kotler&Keller,2009). In order to

increase member retention and the benefits that comes along with retaining loyal

members, Insurance firms implement member retention strategies, or plans to get their

members to renew their membership year after year (Levin,2007).

1.1 .1 The concept of marketing strategy


Marketing strategy can be viewed as a way which focuses on bringing forth strategic

performance of a firm by use of sub-strategies which include growth of latest segments

and/or customers, the development of new products, expert delivery preparations market

forecasting, services after sales advances and market-share examination (West, Ford and

Ibrahim, 2010).

According Varadarajan and Jayachandran (2000) from their finding they conclude that

strategy exists only at several levels within the organization: trade, functional and

corporate. Organizations overall direction is described by corporate strategy in particular

2
attitude towards management of particular business and commodity lines in order to

attain balanced portfolio of commodities and services also know as competitive edge. At

the divisional stage business strategy is developed that emphasize growth of competitive

position of the firm’s commodities and services in a particular industry or the market

segment served. Functional departments for instance marketing, research and

development, finance and finally production come up with strategies to work together in

different and similar activities in order to improve productivity due to constraints within

among them.

Mintezerberg et al. (2010) came up with five P’s of strategy which vies strategy as a ploy,

a plan, a pattern, a perspective as well as a position. Hence this can be considered as a

matrix of business. The concept about marketing reflect a client belief which states that

that companies integrates marketing activities and identify customer needs with other

functional departments within the firm in attaining business goals by fulfilling wants

(Spillan and Parnell, 2006). Industrial customers of this current times are attracted by

marketing practices that are like; brand consistency, creative product placement, internet

promotional tools, digital media and brand consistency. Insurance industry cannot

generate revenue by selling in the same old market and selling the same old products in

the same old way. Therefore that is why this study will examine marketing strategy and

client retention in health insurance sector in Kenya.

1.1.2 The Concept of Customer Retention


Customer retention is defined as the activities the firm takes in reducing number of client

defections (Kotler, 2011). One of the major purpose of client retention is assisting

organizations retain a lot of clients as they can by use of brand and customer. According

3
to (Spillan and Parne, 2006) from their research work they conclude by saying the key

major step towards client retention starts with first contact the client within the firm and

goes on throughout the whole lifetime of the association.

With increase in customer acquisition costs, businesses need to assume a proactive role in

retaining customers and innovation (Tseng, 2007).While specific strategies may vary,

retention starts from the first day a member interacts with the service provider.

Reinchheld and Sasser (1990) concluded that profits in service industries increases in

direct proportion to customer’s relationship. Reasons for this are that loyal customers

tend to spend more as the relationship progresses, costs less to serve them, become more

willing to pay full prices as trust is gained and recommend new customers .According to

Kotler (2003),in recent times many organizations are recognizing significance of

fulfilling and keeping clients because they form the companies’ association wealth.

1.1.3 Health Insurance sector in Kenya Industry


Major partners in insurance sector at large are insurance firms, insurance brokers,

reinsurance firms, insurance agents, and the risk managers. This sector is regulated by the

insurance Act, laws of Kenya, chapter 487. Commissioner’s office was created under the

provision in order to toughen government laws under finance ministry. The Insurance

Institute of Kenya (IIK) is the certified body in this sector, which concerns mainly

professional education and teaching. The body is mandated to regulate the insurance

industry players to supervise them.

4
From the Regulatory Authority’s 2015 Industry Report it shows that most health insurers

jointly experienced a claim ratio of about 77% with 50% of health insurers not generating

underwriting earnings. From the report above, most health insurers have raised a

premium rate which has made the market to be highly sensitive with the price. A lot of

the analysis shows that the sector is at a very crucial point hence despite of a lot of signs

the picture is not gloomy. This sector is at the doorstep of heading to a very stronger and

enhanced founded health insurance industry. Majority of the players should focus on re-

evaluating the whole business structure model from top management, commodities

offered, threats, claims and fraud. Every person both within and outside the organization

need to work hand in hand with each other plus other players in order to provide and

maintain a positive surrounding for expansion of the health insurance coverage , growth

and improving the sectors contribution to the entire economy.

General challenges facing the health insurance industry in Kenya include: structural

weaknesses, (Kubania, 2011); fraud by both clients and employees, (Kuria and Moronge,

2013), high claims, delays in claim settlement, delayed premium collection, lack of

liquidity leading to collapse of some firms, low economic growth, (Ogolla, 2005), poor

governance and industry saturation, (Kamiri, 2007).The major environmental challenges

facing the industry include; customer demand, political uncertainty, insecurity and money

laundering ,terrorism and insurance perception. Others include industry competition and

customer awareness, cost of compliance, ICT skills and competencies and cultural

barriers (AKI report 2015).

5
1.2 Research Problem

According to (Hunt, S.D. & Derozier, C, 2004) from their research study they concluded

that marketing strategy entails marketing surrounding and the effect it has on

organization or commodity or service hence most of the prominence are on in detail

thoughtful of market surrounding, in this case clients and competitors. A given company

may offer a number of service or products within the marketplace, creating frequent and

from time to time entirely unrelated industries. Therefore, a plan is of importance to

successfully manage such goods (Aswani, 2014).

According to the insurance industry, report 2015 from AKI, The penetration ratio reveals

existing coverage and growth challenges for health insurance market in a given country.

It is evident that the changes witnessed in the industry coupled with the jockeying of

position by industry players would drive the health insurers towards adopting customer-

based structures. Central to this move is the adoption of marketing strategies to enable the

insurance companies retains already acquired customers for long-term survival

Numerous studies have been done on various aspects of marketing in Kenya. Kuria

(1999) looked at the state of relationship marketing strategy in the Kenyan banking

sector. The study established that though awareness of the relationship marketing strategy

by bank market marketers was high, its implementation was rather low and unilateral.

While Nzyoka (1993) focused on market segmentation among insurance industry in

Kenya.On the other hand, Aswani (2010) focused on the effects of the marketing

strategies on the insurance companies in Kenya. Muro, Magutu, and Getembe (2013)

discussed about the benefits and challenges faced by implementing customer relationship

6
management practices in the insurances industries in Kenya. In their study, they stressed

about various marketing strategies, and recommended further study on the effect of these

practices on customer retention. This study therefore aims to address: Do marketing

strategies influence customer retention in the health insurance industry in Kenya?

1.3 Research Objective

This study is guided by a general objective that is to establish the impact of marketing

strategies on client retention in the health insurance sector in Kenya.

1.4 Value of the Study

This research poses great help to players in the insurance industry like the insurance

companies, brokers, agents, motor assessors, Insurance buyers, so they can learn on

marketing strategies to adopt for customer retention, hence the firms will be better

positioned to compare performance and make improvements where necessary so as to

boost their market performance. The management will be well positioned in decision

making process based on the understanding of what customer retention strategies they

need to adopt for their business to effectively deliver value to its policy holders.

This study will increase the level of literature available in understanding how health

insurers go about implementing marketing strategies. It will also increase literature

available on insurance firms in Kenya, which may be used by all the stakeholders.

Academicians will also benefit by broadening of their syllabus with respect to marketing

management practices hence providing a wider understanding. The findings will attract

7
other researchers to venture into the implications of relationship marketing practices on

customer retention that have not been studied in the African context.

8
CHAPTER TWO

LITERATURE REVIEW

2.1 Introduction

The chapter covers work that other researchers and scholars have done concerning

marketing strategies and customer retention.

2.2 Theoretical Foundation of the study

A Theory according to Krishnaswamy, (2009) comprised of universal asserted

propositions written out in a set of universal sentences which are derived from empirical

evidence and observation capable of corroboration and agreement. This section reviews

two theories: Ansoff Growth matrix that majorly dwells on marketing strategies and the

social exchange theory that touches on customer loyalty and retention.

2.2.1 The Ansoff Growth Matrix


The Ansoff matrix has quite a number of alternatives of marketing strategy-That is:

market penetration, diversification of products, market development and product

development. Market penetration covers existing market and products that are in

existence .The risk involved here is small since the products are already known to

customers in already existing market and there is likely further exploitation of the

products without the need to change the product or the elements of the product. Market

penetration can be increased by use of promotional methods, using various pricing

9
policies to attract more clientele, increasing product usage or by making extensive

distribution.

Product development growth strategy introduces a new set of products into existing

market or rather it involves modifying an existing product. This modification of the

product changes its presentation and increases the product’s performance or quality,

which can appeal to the already existing market. Market development or market

extension strategy concerns the firm selling existing company offers to new markets

through further segmentation that aids in bringing to board a new clientele base by using

different approaches such as e-commerce, new product covering and different policies on

pricing so at to attract new segments of the market. Development of the market is riskier

strategy when compared to penetration in the as it has an assumption that markets in

existence have been exploited fully hence the want to test new markets..

Diversification growth strategy involves selling and marketing latest products to newly

tapped markets at the same moment. This strategy I is the riskiest among the others as it

brings on board two unknown that is, new products created and a firm being unaware of

development problems that might occur as well as the knowledge of a new market being

targeted. Related diversification and unrelated diversification are the two diversification

growth strategies related diversification means the firm remains in the same industry it is

familiar, while in unrelated diversification there is usually no industry relations or market

experience (Kotler, 2011).

10
2.2.2 Social Exchange Theory
The theory of social exchange denotes the nature of ties between, loyalty, service quality,

satisfaction and the value perceived. The theoretical models utilized in this research study

were borrowed from the theory of social exchange (Homans, 1958), according to this

theory all ties that exist between humans are developed through the utilization of cost-

benefit analysis these theory states that all human relationships are formed by the use of

comparison of alternatives and the use of cost-benefit analysis. According to Homans

(1958) a person will choose to cut ties when he or she perceives that the cost of the ties is

far bigger and outweighs the benefits the person accrues from such relationship. This

theory of social exchange further explains that people who are given much by the other

party in the relationship are under pressure to replicate by giving much too, and that

human beings strive to give much to others so as to in turn get much from them. Through

a series of mutual exchanges that develop a pattern of reciprocal duties to the parties a

social exchange between the parties involved in the relationship is developed. The theory

of social exchange indicates that because of the expectations that being in relationships is

rewarding many human beings are willing to maintain these relationships. The

Individuals are ready to provide benefits to the other parties in the relationship as they

expect to get more gains in the future thus they tend to sacrifice their own self-interest

voluntarily.

For this study the researcher found this theory to be appropriate, this is basically because

encounters that arise while offering services can be seen as social exchanges, as they

involve the interaction between the person providing the service and the person or client

who is buying the service, being a very important of provision of a valid reason to

11
continue with the relationship and satisfaction (Barnes, 2007). This theory tries to

account for the dissolution of social attempts to account for the development, growth and

even dissolution, growth and development of business as well as social relationships.

When deciding whether to cut ties or whether to maintain a relationship people or

organizations usually do an evaluation of their reward - cost ratio. Costs and rewards

have had definitions’ in situational factors such as aspects of the psychological

environment such as friendship which is formed with the aim of achieving a goal, in

personal factors such as; personality, ego and gratification and in interpersonal terms like;

familiarity, influence and liking. There is a range of financial, relational and

psychological considerations in the service context, consideration of the amount of

interpersonal contact required to produce services, that might act as a disincentive for a

hypothetic change of service providers.

2.3 Marketing strategies

According to Baker and Hart (2012), the main aim of the coming up with an

organization’s marketing strategy is to maintain its competitive advantage, establish,

build, defend and adapt marketing mix elements to forces in the environment.

2.3.1 Product Strategy


Diversification of services is achieved through new products of service development.

There are eight levels involved in developing a new product, we begin with idea

generation. Organizations get ideas for new product development from marketing

research, consultants, employees, competitors, distributors, customers and suppliers. The

12
second stage of idea screening entails shifting through the idea generated and selecting

ideas that are practical to develop. The third level involves testing and concept

development. The organization may have encountered an idea which is feasible, but such

an idea however needs to the audience being targeted. Considering that this is just a

concept and not a working prototype the idea is first taken to the intended market first.

The fourth stage involves developing the marketing strategy. This stage addresses how

the service/product idea will be brought forth in the market. The marketing mix strategy

of the product will contain the layout of the proposed marketing strategy i.e te targeting,

the segmentation and the positioning strategy and marketing and sales forecasting. The

firth stage involved conducting an analysis. This stage focuses immensely into the cash

flow that may be generated by the product, the level of the share of the market the

product will bring fourth as well as the products expected life.

The sixth stage involves development of new product. At this level a prototype is

generated. The prototype will pass through a series of tests and then presented to a

selection portion of people made up of the target market segment so as to see if any

modifications need to be made. The seventh level involves market testing. Thus, the

product is given for trial within a specified geographic area, modification is done if

needed and then its closely monitored before national launch. The eighth and last stage

involves commercialization. Here the product is launched in a national scale. Decisions

regarding launching nationally include: how the product will be given out, whether there

will be a roll out, the timing of the launch and whether it will be region by region (Baker

and Hart, 2012).

13
2.3.2 Pricing Strategy
The product or service should at all times be viewed as fostering value for money. By this

it doesn’t mean that the product should be the cheapest one in the available in the market,

that customers are ready usually happy to pay extra for a product that really satisfy their

needs is among the major principal of the concept of marketing. There are several pricing

strategies available to marketers: Penetration pricing is where the firm price their

products lowly so as to have a larger market share, after securing a large market they may

then start increasing their prices. When a firm first quotes a high price for their products

and after some time they start reducing their prices to make the commodity readily

available in the country, it is referred to as price skimming. The goal of a firm in

skimming is to layer by layer skim market profits. By setting by comparing with rivals is

referred to as competitive pricing. When prices are set to symbolize the uniqueness of the

commodity it is called premium pricing. When an organization adds a percentage to the

initial cost as profit margin its referred to as the Cost based (Kotler, 2011).

2.3.3 Promotional strategy


Promotion strategy is the voice element of the marketing mix. The choice of the portfolio

of activities relays heavily on the company’s budget allocation as well as marketing and

sales strategies. Advertising is a promotion tool that is paid for. Such media like TV

radio, posters, internet, magazines, billboards, mail, and posters are the usual messages

carriers. Positive talk of a firm brand in leading media outlets by sponsors and public

relations also help. A small set of important users via mails, customized letters, text

messages and telemarketing are targeted by direct marketing. Short term strategies like
14
sales promotions aim to encourage sales surge. They take form of buy one to get another

free, seasonal discounts or coupons with expiry dates, (kotler,2011).

2.3.4 Distribution Strategy


Services such as air travel, insurance and banking often involve distribution channels.

The provider of the service renders it to the end users as compared to producing it like a

physical product and moving it through marketing intermediaries to the end user.

Because of these the networks of distribution of service differ somewhat from those of

goods .Services are normally renders when needed be rather than being placed into

inventory. Likewise, services may not be transported although the provider of the service

may go to the user’s location to render the service. Storage and Processing are normally

not involved with services. Repair and servicing functions may not apply to many

functions. Other functions that apply to both goods and services include: sales promotion,

financing, advertising, buying and selling, and communications. Service channel levels

are of two levels, first is the service provider directly to the end user channel and

secondly is service provider through agent/broker and then to the end user channel level

(cravens &Piecy,2012).

2.3.5 Physical evidence strategy


This strategy entails the place where the delivery of a service was done, where clients and

the organization meet and any visible components that facilitate the service performance

(Zeithaml and Bitner,2009). The environment is said to be Physical when it entails

landscaping physical structure appearance, furnishings, printed material, signs and

vehicles provide service quality evidences. Physical evidence is therefore, a component

of marketing mix as they make it easier for the customers to evaluate firms. service

15
marketing mix which makes it easy for the customer to evaluate a firm. The intangibility

element of service provides hindrances’ for clients to analyze offerings of services

especially the value for money and quality, just before a purchase is made. This

intangibility element makes it seem impossible for marketers to position new service

product offerings.

According to Lovelock (2011) physical evidence is useful to organizations as the helps in

retaining an image which is coherent about the firm and sending messages of the firm.

Palmer (2011) The critical role of providing touchable as important features of service of

firms was focused on by Palmer (2011). Lovelock (2011) contended that physical proof is

a fundamental part of the 7ps of the services administration worldview by which the

organization can give unmistakable items to clients amid the administration conveyance

handle and substantial analogies utilized as a part of such interchanges as publicizing,

images and trademarks.

2.3.6 Process Strategy


Activities that are direct are indirect are inclusive of processes. As clients feel the service

experience direct activities add value at the clients interface. Back office activities also

known as indirect activities support many services like supporting services before, after

and even during the consumption of a service. Marketing having a number of processes

like television marketing, and marketing on the internet is another perspective that the

marketing process has a variety of activities that are integrated to develop an new

marketing process. Marketing processes being used in the market mix like processes

16
involved in measuring the achievement of the goals of marketing is another view. All the

above views are not usually customer focused but they are understandable. Process helps

in seeing that consumers experiences offerings of the firm, process is viewed best as a

thing that clients of firms at different times participate (Kotler,2011)

2.3.7 People strategy


Through research organizations and other institutions are enabled to know whether the

areas of the market they are targeting has enough people who are able and willing to buy

some specific services and products. Whether the people employed run the customer

service desk, copywriters, support desk and programmers it easier and significant to train

and hire the best and appropriate people 9to deliver services to clients that are of greater

value.

It his highly possible that employed personnel are going to perform to the best of their

abilities if an organization gets to find people who are sincere and passionate to be

involved with products made by an organization. More so, they’ll always invite true

feedbacks of their work and they’ll work with passion and dedication which can go a

long way in growing and developing the firm. This is a form of competitive advantage

which is internal to a firm and can go a long way in impacting the position of a firm in

the market.

17
2.4 Customer Retention

Behavioral and attitudinal factors can best describe Customer retention (Ranaweera and

Prabhu, 2003). Thus one has to look at both the behavioral and attitudinal effects of any

marketing effort interventions when exploring the concept. Customer response, client

contracts, transactional data, client complaints and marketing efforts are behavioral on

the other hand relates to customer satisfaction.

Metrics such as customer share and customer retention rated in consumer relationship

management has Increased interest in customer relationship in recent past has brought

about research focusing on metrics (Reichheld,1996).The context and philosophy of a

firm can lead to the manner in which firms retain their customers and the firms employ

the use of some specific tactics once it knows who their customers are (Zeithalm and

Bitner, 1996). The levels of commitment between the organization and the clients will

impact the decision of who will be retained. An organization does not need to spend

much in retention when the client is so much committed as they will not be influenced by

the competitors. If the clients have not yet committed to the firms products, a firm needs

to spend heavily on the retention tactics. Most firms choose to first focus on the newly

acquired customers. As in the majority cases this new customer’s posse’s greater future

potential than the customers who have been at the organization for the long-run. In the

event that defections can be avoided in the early phases of a relationship, there will be a

an increase in future income streams as the longer it takes the higher the costs

(Reichheld,1996).

18
Research in service failure is another reason that calls for concentrating on as of newly

gained clients. At the point when clients encounter disappointment, they might be

permissive on the off chance that they have a background marked by great administration

with the administration supplier; clients who have been as of late obtained and

disillusioned will probably abscond or lessen their spending than customers who have a

palatable history with the providers (Bolton,1998).

2.5 Influence of Marketing Strategies on customer retention

Marketing strategy is a major issue in innovation and business performance with

significant influence on business strategies. Good marketing supports expansions and

sales, and contributes significantly to the growth of market share in competitive markets

(Marjanova and Stojanavski, 2012).Previous Studies have established that marketing

strategies play a significant role in enhancing the performance, for instance, Taiwo(2010)

found that strategic marketing has significant impact on customer retention.

Manijeh et al (2013) investigated innovative marketing methods based on price; product,

promotion and place based strategies and established that the impact of marketing

strategies on innovation is through entrepreneurial orientation, which affects the

performance. Strategic marketing strategies were found to be drivers of firms positioning

in a changing environment, which helps improve the development of service products for

existing markets.

Oloko et al. (2014) researched on the marketing strategies utilized by Safaricom in Kenya

so as to grow its market share and profits in both Kenya and the entire East Africa

19
Region. The study come to a conclusion that various marketing mix and techniques were

employed by Safaricom, which included new product creation, auditory marketing,

animation, place, pricing ,content localization and the techniques were found to enhance

the uptake of safaricom’s product, resulting to growth in revenue that leads to

profitability. Kimani (2014) explored the effectiveness of the various marketing

strategies, which are undertaken at the Kenya Revenue Authority, the success and impact

of marketing on the operations of the authority. The study found that marketing has

greatly affected the amount of revenue collection by KRA.

20
CHAPTER THREE

RESEARCH METHODOLOGY
3.1 Introduction

This chapter looked into the proposed research design, target population, data collection

and finally, data analysis that were employed.

3.2 Research Design

This research was descriptive, cross sectional on marketing strategies and customer

retention in the health insurance industry in Kenya. This design was preferred because

large samples are well seen, making results significant statistical even when analyzing

quiet a number variables.

3.3 Target Population

The target population comprised of all health insurers in Kenya. There are an estimated

28 health insurance service providers in Kenya. These companies are registered members

of The Association of Kenya insurance companies. Specifically the study analyzed the

effects of marketing strategies on customer retention in the health insurance industry in

Kenya and thus, data was obtained from the marketing manager of each health insurers.

3.4 Data Collection

Secondary and primary data was collected in this study. Primary data was collected using

a questionnaire. The research questionnaire was administered to the marketing and

21
service managers. The questionnaire contained two sections; the first section covered

demographic information on respondents while the second covered the research

questions. The drop and pick method of questionnaire distribution was used to administer

the research. This method offers respondents the privacy and time to fill in the

questionnaire at their convenience. Secondary data was collected from reports of the

health insurance firms.

3.5 Data Analysis

In this research, data was coded according to the variables. The data was then classified,

tabulated and summarized in the SPSS statistical software. The report writing was done

in Microsoft word format. The quantitative data was analyzed through descriptive

statistics that is, by measure of central tendency and measure of spread. The analyzed

data was then presented in the Microsoft word and frequency tables.

22
CHAPTER FOUR

DATA ANALYSIS, FINDINGS AND DISCUSSION

4.1 Introduction
This chapter entails data analysis, presentations and discussions. The purpose of this

study was to investigate the link between marketing strategies and customer retention in

the health insurance industry.

4.2 Respondent Characteristics


This section presents the research findings on the respondent organizations in terms of

response rate by gender and respondents years of experience. The researcher targeted 28

health insurance companies that are registered by the association of Kenyan Insurance

companies. It is organized into two parts. Part one presents the demographic of the

respondents while the other part contains the research results on marketing strategies and

customer retention of health insurance companies. The research findings are based on

25(89%) respondents out of the original target population of 28 health insurance

companies.

4.2.1 Gender of the respondents


This section presents the research findings on respondent’s gender. The findings are

contained in Table 4.1

23
Table 4.1 Gender of the Respondents

GENDER FREQUENCY PERCENTAGE

Female 17 68%

Male 8 32%

TOTAL 25 100%

Source: Researcher (2016)

The above table shows that 32 percent of the respondents were male, while 68 percent of

the respondents were male.

4.2.2 Experience of the Respondents


This section presents the research findings on the response rate based on respondents

gender. Research Findings are contained in Table 4.2

Table 4.2 Experience of Respondents

YEARS OF SERVICE FREQUENCY PERCENT

5 yrs and below 15 60%

6-10 years 10 40%

11yrs-15 years 0 0%

16 and above 0 0%

TOTAL 25 100%

Source: Researcher (2016)

24
The results above shows that 60 percent of the respondents have worked at their

respective organizations for a period of 5 years and below, while 40 percent worked for a

between 6 to 10 years. No respondents have worked for more than 11 years and above.

4.3 Marketing strategies and customer Retention


This section presents the results on marketing strategies adopted by health insurance

companies. Respondents were required to indicate levels of agreement by using a 5-point

liker scale marking from 5=strongly agree to 1=strongly disagree. Descriptive statistics

was used to analyze responses mainly percentages, standard deviation and mean scores.

The findings are contained in Table 4.3 which contains the mean and standard deviation

from the 7p’s that were measured. Each element has three sub-strategies. The mean

scores show the level of agreement by the respondents. A mean score of above 3.2 shows

that respondents agree with the statement. On the other hand, a mean score of between

2.9 to 3.2 shows that respondents neither agree nor disagree, that is they are neutral to the

statement. Lastly, a mean score of up to 2.8 shows that respondents disagree with the

statement.

25
Table 4.3 Marketing Strategies adopted by health insurance companies

PRODUCT STRATEGY MEAN STANDARD


DEVIATION
Introduces new insurance products 3.5 1.29
Offers considerable range of insurance products 3.4 1.29
Uses customer service as a key element in the 4 1
insurance s strategy service
PRICING STRATEGY
Price discrimination according to the market segment 2 1
we serve
Pricing strategy according to the competition 2.5 1.29
A pre-determined rate that our insurance is looking for 2.5 1.29
DISTRIBUTION STRATEGY
Our insurance branches to service access are located in 3 1.581
different geographical areas.
24/hours service available 3.5 1.29
A distinctive distribution capability to open new 3 1.581
branches
PROMOTION STRATEGY
Advertising in media including television. Newspaper 3 1.581
and magazines
Sponsoring special events such as seminars charities 3.5 1.29
and sports.
Encouraging members to use word of mouth to 4 1
communication
PEOPLE STRATEGY
Our customers are satisfied with responsiveness in 4 1
service delivery
Our customers are satisfied with the provider of the 4 1
insurance service
Our customers are satisfied with staff knowledge and 4 1
explanation of insurance.
PROCESS STRATEGY
Minimal waiting period of not more than an hour 3 1
Customers feedback in order to improve service 4 1
Claims payment on time 4.5 0.707
PHYICLA EVIDENCE STRATEGY
A comfortable environment with good directional signs 4 1
Up-to date and well maintained place 4 1
Easily accessible at anytime of the day 4.5 0.707
Source: Researcher (2016)

26
4.3.1 Product Strategy
Product strategy measured three product element strategies, namely the introduction of

new insurance products; the offering of considerable range of insurance products and the

use of customer service as a key element in the insurance strategy service. According to

the findings, the use of customer service as an important element in the insurance service

strategy recorded the highest mean of 4.The introduction of new insurance products

recorded 3.5, while offering a considerable range of insurance products recorded a mean

of 3.4.According to Scott (1999),a mean score above 3.2 shows that respondents agree

with the three statements under product strategy. In the service industry, customer service

is critical for customer retention because it costs more to attract new customers than it

costs to retain existing customers. Introduction of new insurance products adds

economies of scope to an organization, thus a service firm can attract many customers

who are seeking different service offerings from firms in the market place.

4.3.2 Pricing Strategy


Pricing Strategy measured three pricing element strategies, namely; price discrimination

according to the market segment served, pricing according to the competitors and pre-

determining rate that the insurance firm is looking for. According to the findings both

pricing according to competitors and pricing based on a predetermined rate of return

reported a mean score of 2.5,while using the price discrimination according to the market

segments served reported a mean score of 2.According to Scott(1999),A mean score of

up to 2.8 shows that respondents disagree with the three statements. It is evident then

27
than health insurance companies rise their premiums in according to the class of

insurance purchased the higher the risk the higher the premiums paid and vice verse.

4.3.3 Distribution Strategy


Distribution strategy measured three distribution element strategies, namely: easy access

to branches at distinct geographical areas; 24 hours service availability and the distinctive

capability to open a new branch. According to the findings,24 hours service availability

reported the highest score of 3.5, while both making insurance service available in

different geographical areas and having a distinctive capability to open new branches

reported a mean score of 3.According to Scott (1999) a mean score of above 3.2 shows

that respondents agree with making insurance service available on a 24 hr basis as

opposed to a mean score of 3 for geographical spread and capability to open new branch.

A mean score of 2.9 to 3.2 shows that respondents neither agree nor

disagree(neutral).Geographical spread and the capability to open new branches is capital

intensive and very few big insurance companies have that capability.

4.3.4 Promotional strategy


Promotional strategy measured three promotional element strategies, namely: advertising

in media; sponsoring special events that include seminars, sport charities and encouraging

members to use positive communication when recommending health insurance services

to new customers. According to the findings, encouraging clients to use word of mouth

advertising recorded the highest mean of 4.Sponsoring of sports events and charities

recorded a mean of 3.5, while the use of advertising in various media recorded a mean of

3.According to Scott (1999) a mean score of 3.2 shows that respondents agree with both

sub-strategies of sponsoring sports and charities and encouraging clients to use word of

28
mouth advertising. However, a mean score of between 2.9 to 3.2 shows that respondents

are neutral in regards to advertising in various media. In service marketing word of

mouth advertising is more effective than advertising in various media and various health

insurance companies do not advertise heavily as fast moving consumer goods companies

do.

4.3.5 People Strategy


People strategy measured three people element strategies, namely: customer’s satisfaction

with responsiveness in service delivery; customer’s satisfaction with the provider of the

insurance service and customer’s satisfaction with the staff knowledge and explanation of

insurance services. According to the research findings, all the three of the above sub-

strategies recorded a mean of 4.According to Scott(1999) a mean sore of above 3.2 shows

that respondents agreed to the use of the three people sub strategies in their attempt to

improve performance at their insurance companies. The viability and inseparability

characteristics of service present challenges to marketing practitioners. Variability refers

to the customer experience differences resulting from when different personnel serve the

same customers.

4.3.6 Process Strategy


Process strategy measured three process element strategies, namely: minimal waiting

period of less than an hour; customer’s feedback so as to improve insurance services and

claims payment on time. According to the findings, respondents agreed that both claims

29
payment and attending to customer complaints is of great importance as both scored 4

and 4.5 means respectively.

4.3.7 Physical Evidence Strategy


Physical evidence strategy measured three physical evidence element placements strategy

namely: a comfortable environment with good directional signs: up to date and well

maintained services; and easily accessible place at any time of the day. According to the

findings, respondents agreed with all the above sub-strategies with a mean of 4, 4 and 4.5

respectively. According to Scott (1999) mean score of above 3.2 shows that respondents

agree.

4.4 Marketing strategies and customer retention


Customer retention is one of the most critical issues in the field of organizational theory

(Steers,2010;Zammuto,2010).Deducting from the findings, since health insurance firms

are in the service industry. Service compared to physical products present a new set of

challenges to markets due to the unique characteristics of services. These characteristics

include perishability-that is services cannot be stored. Intangibility-that is, services

cannot be seen, smelt or tasted. Inseparability-that is, of the service provider and

customer; and heterogeneity or variability-that is, different customer experiences from

different service providers (Kottler,2011).

From among the 7P’s, pricing is the only revenue generator; the other 6P’s are overhead

expenditure. However, the findings show that respondents disagree that pricing of the

health insurance products is gotten on either price discrimination to the market segment

30
served nor pricing according to the competition, nor pricing based on a predetermined

rate of return in order to improve performance and increase the customer base and profits.

Therefore most health insurance companies get into contracts with health care providers

hence premiums are based on the cost of the service provider. This is the reason then

when health care service providers increase rates, insurance premiums increase as well.

In regard to customer perspective of the balance score card, health insurers make use of

customer service as the central element in service strategy; they also strive to ensure that

clients are satisfied with the staff knowledge and customer satisfaction with their

responsiveness in service delivery in the attempt to retain customers. In regard to internal

business process measures of the balance scorecard, health insurers implement 24-hour

service availability, pay claims on time and introduce new products for improved

business performance. Finally, In regard to organizational growth, health insurers make

use of clients’ feedback in order to improve service as well as encourage clients to use

word of mouth advertising so as to increase customer retention.

4.5 Discussion of the findings


Majority of those sampled were female 68% and had five years and above experience in

their current work place. This then implies that most of the respondents were mature

enough. From the research it was deducted that health insurance firms attempt to improve

performance and retain customers more importance when pricing is based on a

predetermined rate rather than price discrimination according to the segment served and

31
lastly as a pricing strategy according to competition, which is more prevalent among the

smaller and newly established firms.

It was also found that under people or personnel strategy the most prevalent strategy was

ensuring that clients are satisfied with the provider of the insurance service followed by

making sure clients are satisfied with the staff knowledge and explanation of conditions.

Last but not least by ensuring that clients are satisfied with responsiveness in service

delivery in order to improve the retention ratios. So as to continually improve and create

value through innovation and learn the researcher found out that, insurance firms engage

client’s feedback to improve service as well as offering a considerable range of services.

32
CHAPTER FIVE

SUMMARY, CONCLUSION AND RECOMMENDATIONS

5.1 Introduction
This chapter entails the findings of the research a summary is written therein and

conclusions drawn. This chapter also includes sections on recommendations of the study

for further research.

5.2 Summary
The study found out that there is a link between marketing strategies and customer

retention. Twenty eight health insurance companies were surveyed. The insurance

companies are diverged in terms of their history or origins, locations within Nairobi

county, number of staff, the caliber of personnel they attract for employment,

diversification of services, development of partnerships, brand perception in the

marketplace as well as which marketing strategies get implemented. Under pricing

strategy where pricing is the only revenue generator among the seven service marketing

mix elements, insurance firms attempt to improve performance and retain customers

more importance when pricing is based on a predetermined rate rather than the insurance

looking for followed by price discrimination according to the segment served and lastly

as a pricing strategy according to competition, which is more prevalent among the

smaller and newly established firms.

Under distribution strategy in an attempt to retain more customers, the findings indicated

that 24hours service availability was the most prevalent strategy followed by having

33
insurance branches in different geographic areas to access service and the least prevalent

was having the capability to come up with a new branch of the firm. Opening a new

branch is capital intensive and this capability is limited to the bigger, well established

insurance firms. The findings also indicated under promotional strategy, the most

prevalent strategy was insurance firms encouraging clients speak out about service

received so as to recommend to other prospects. Few health insurance firms advertise in

media such as the internet, magazines, television, newspapers and even fewer sponsor

special events such as seminars, sports, and charities.

The findings under people or personnel strategy indicated that the most prevalent strategy

was ensuring that clients are fully comfortable with the provider of the insurance

followed by making sure clients are satisfied with the staff knowledge and explanation of

conditions. Last but not least by ensuring that clients are satisfied with responsiveness in

service delivery in order to improve the retention ratios. Under process the most prevalent

strategy from the finding is ensuring claims are paid on time and customer information is

kept confidently. Under physical evidence the most prevalent strategy implemented is

having a comfortable environment with good directional signs followed by having up to

date and well maintained and easily accessible at any time.

5.3 Conclusions
Marketing of services involves the managing and manipulation of the marketing mix

elements namely: product, price, place, promotion, physical evidence, people, process

.From among the three variables incorporated in this study under product strategy, it was

established from the data collected in an effort to retain more customers, health insurance

34
firms place more importance in using customer as a key element in the strategy service

followed by the firms strategizing to offer a considerable range of services and lastly by

making an effort to introduce new products in the marketplace.

Deducting from the findings, marketing strategies have a relationship with customer

retention. The balance scorecard supplements traditional financial measures as well as

meeting several managerial needs. Customer’s perspective has been taken into

consideration when health insurance firms use customer service as a key element in the

insurance strategy service while others include encouraging clients to speak out about the

service and to recommend to prospect clients, client satisfaction with the service provider

and ensuring clients are satisfied with the staff knowledge and explanation of condition

therein. Secondly, from the internal business perspective of the balanced scorecard, firms

engaged in availing 24hours insurance service, assuring claim payment on time and

confidentiality. Thirdly in order to continually improve and create value through

innovation and learn, Insurance firms engage client’s feedback so as to improve service

as well as offering a considerable range of services. Finally when it comes to financial

measures, health insurance firms mostly price service based on a predetermined rate that

the firm is looking for.

Based on the conclusions the study recommends that health insurance firms should start

adapting principles of strategic marketing for those that are reluctant or have not

implemented their marketing strategies. Marketing strategies should be formulated in

light of the external environment which is made up of elements that are uncontrollable to

an organization. The external environment, technology, social-cultural and ecological

factors.

35
5.4 Limitations of the study
The major limitation was difficulty in knowing the average time it would take a

respondent to complete filling a questionnaire even though the researcher tried as much

as possible to limit the number of entries so as to capture the main interest of the

research. This required a lot of patience since the goal of the researcher was to try as

much as possible to get a 100 percent response rate. Out of the 28 health insurance firms,

only three did not respond to the questionnaire presented since most respondents had

commitments. Financial constraint also proved to be an issue due to the size of the county

and the geographical spread of the firms within the country.

5.5 Recommendations for Further Research


The researcher recommends the use of a case by case study to help bring out some of the

unique findings about specific health insurance company because such studies are in-

depth and hence very detailed. This will also increase the chances of getting qualitative

data which was not captured during this study. The study also recommends that studies

on other dimensions of relationship marketing be carried out in the insurance companies

in Kenya.

36
REFERENCES
Achrol, R. S., & Kotler, P. (1999), Marketing In the Network Economy. The Journal of
Marketing, 146-163.
Aswani, K. M. (2010), Effects of marketing strategies on the performance of
insurancecompanies in Kenya (Doctoral dissertation).
Borden, N.H. (1964), The concept of the marketing mix, Journal of
AdvertisingResearch, pp. 2-7.
Brady, J. and Davis, I. (1993), Marketing’s mid-life crisis, McKinsey Quarterly, Vol. 2,
pp. 17-28.
Brodie, R.J., Brookes, R.W. and Coviello, N.E. (2000), Relationship marketing in
consumer markets, in Blois, K. (Ed.), The Oxford Textbook on Marketing, Oxford
University Press, Oxford, pp. 517-33.
Doyle, P. (1995), marketing in the new millennium, European Journal of Marketing,
Vol. 29 No. 13, pp. 24-31.
Doyle, P. (2000), Value-Based Marketing: Marketing Strategies for Corporate
Growthand Shareholder Value, Wiley, Chichester.
Egan, J. (2001), Relationship Marketing: Exploring Relational Strategies in
Marketing, Financial Times/Prentice Hall, Harlow.
Gichuru, C. N. (2010), Challenges faced by life insurance companies in implemention of
marketing strategies to gain competitive advantage inkenya (Doctoraldissertation,
University of Nairobi).
Gold, A.H., Malhotra, A. and Segars, A.H. (2001), “Knowledge management: an
organizational capabilities perspective”, Journal of Management Information
Systems, Vol. 18 No. 1, pp. 185-214.

Gordon, I. (1998), Relationship Marketing: New Strategies, Techniques and


Technologies to Win the Customers You Want and Keep Them Forever, Wiley,
Toronto.
Gro¨nroos, C. (1994), From marketing mix to relationship marketing: towards a
paradigm shift in marketing, Management Decision, Vol. 32 No. 2, pp. 4-20.

37
Gro¨nroos, C. (2000), Service Management and Marketing: A Customer Relationship
Management Approach, Wiley & Sons, Inc., New York, NY.
Gummesson, E. (1994), Making Relationship Marketing Operational. International
Journal of Service Industry Management, Vol. 5 No. 5, pp. 5-20.
Heskett, J.L. (1994), comment made in The Lifetime Value of Customers: People,
Service, Success, A video production of the Harvard Business School
Management Productions, Boston, MA.
Hunt, S.D. (2000), A General Theory of Competition, Sage, Thousand Oaks, CA.
Hunt, S.D. and Derozier, C. (2004), The normative imperatives of business and
marketing strategy: grounding strategy in resource-advantage theory, Journal of
Business & Industrial Marketing, Vol. 19 No. 1, pp. 5-22.
Hunt, S.D. and Morgan, R.M. (1994), Relationship marketing in the era of network
competition, Marketing Management, Vol. 3 No. 1, pp. 18-28.
Hunt, S.D. and Morgan, R.M. (1995), The comparative advantage theory of
competition, Journal of Marketing, Vol. 59, April, pp. 1-15.
Jacada, (2008), Insurance Providers: Improving Customer Retention through the Contact
Center. UK, White Paper Publication, pp. 1-6.
Kamau, S. (2007), Strategic responses to changes in the external environment: the case
of Kenya Re-insurance Corporation (Doctoral dissertation).
Kamiri, J. K. (2007), A Survey Of Creation And Application Of Brand Equity
ByInsurance Companies In Kenya (Doctoral dissertation).
Kiruthi J. N. (2001), The State of strategic Management practices in non-for
profitorganizations. The case of public membership clubs in Nairobi.
(UnpublishedMBA Dissertation). University of Nairobi.

Kotler, P. (1991), Philip Kotler explores the new marketing paradigm, Marketing
Sciences Institute Review, pp. 1-5.
Kotler, P. (2001), A Framework for Marketing Management, Prentice Hall, Upper Saddle
River, NJ.
Kotler, P. (2003), Marketing Management, Pearson Education, Upper Saddle River, NJ.
Kubania, B. K. (2011). External environmental challenges affecting the performance of

38
health insurance sub sector in Kenya (Doctoral dissertation).
Kumar, N., Stern, L.W. and Achrol, R.S. (1992), Assessing retailer performance from the
perspective of the supplier, Journal of Marketing Research, Vol. 29 No. 2, pp.
238-53.
Kuria, J. T., & Moronge, D. M. (2013), Effect of Fraud Control Mechanisms on the
Growth of Insurance Companies in Kenya.
Massey, A. P., Montoya-Weiss, M. M., & Holcom, K. (2001), Re-engineering the
customer relationship: leveraging knowledge assets at IBM. Decision
SupportSystems, 32(2), 155-170.
Morgan, R.M. and Hunt, S.D. (1994), “The commitment trust theory of relationship
marketing”, Journal of Marketing, Vol. 58 No. 3, pp. 20-38.
Muro, M. B., Magutu, P. O., & Getembe, K. N. (2013), The strategic benefits and
challenges in the use of customer relationship management systems among
insurance industry in Kenya. European Scientific Journal, 9(13).
Ogolla, M. A. (2005), Application of porter's generic strategies by insurance companies
in Kenya (Doctoral dissertation).
Palmatier, R. W., Dant, R. P., Grewal, D., & Evans, K. R. (2006), Factors influencing the
effectiveness of relationship marketing: a meta-analysis. Journal of
marketing,70(4), 136-153.
Peng, L. Y., & Wang, Q. (2006), Impact of Relationship Marketing Tactics (RMTs) on
Switchers and Stayers in a Competitive Service Industry. Journal of
MarketingManagement, V.22, pp.25-59.
Reed, R. and DeFillippi, R.J. (1990), Causal ambiguity, barriers to imitation, and
sustainable competitive advantage, Academy of Management Review, Vol. 15
No.1,
Reichheld, F.F. (1996), The Loyalty Effect: The Hidden Force Behind Growth,
Profits,and Lasting Value, Harvard Business School Press, Boston, MA.
Sheth, J.N. & Parvatiyar, A. (1995), The Evolution of Relationship Marketing.
International Business Review, Vol. 4 No. 4, pp. 397-418.
Sheth, J.N. (1988), Changing demographics and the future of graduate
management education, Selections, pp. 22-7.

39
Sheth, J.N. (1994), The domain of relationship marketing, Hand-out at the 2ndResearch
Conference on Relationship Marketing, Center of RelationshipMarketing, Emory
University, Atlanta, GA, June 9-11.
Siddiqui, M. H., & Sharma, T. G. (2010), Measuring the customer perceived service
quality for life insurance services: an empirical investigation.
InternationalBusiness Research, 3(3), p171.
Storbacka, K. (2000), “Customer profitability: analysis and design issues”, in Sheth, J.N.
and Parvatiyar, A. (Eds), Handbook of Relationship Marketing, Sage, Thousand
Oaks, CA.
Tam, J. L., & Wong, Y. H. (2001), Interactive Selling: A Dynamic Framework for
Services.Journal of Services Marketing, 15(5), 379-396.
Tapscott, R. & Caston, A. (1993), Paradigm Shift: The New Promise of
InformationTechnology, McGraw-Hill, New York, NY.
Thibaut, J.W. and Kelley, H.H. (1959), The Social Psychology of Groups, John Wiley &
Sons, Inc., New York, NY.
Thorelli, H.S. (1986), “Networks: between markets and hierarchies”,
StrategicManagement Journal, Vol. 7 No. 1, pp. 37-51.
Thuo John Kuria, (1999), “An Investigation ofthe State Of Relationship Marketing
Strategy In The Kenyan Banking Sector”. Unpublished MBA Project University
of Nairobi
Troy, L.C., Szymanski, D.M. and Varadarajan, P.R. (2001), “Generating new product
ideas: an initial investigation of the role of marketing information and
organizational characteristics”, Journal of the Academy of Marketing Science,
Vol. 29 No. 1, pp. 89-101.
Tseng, Y. M. (2007), The Impacts of Relationship Marketing Tactics on
RelationshipQuality in Service Industry. The Business Review, Cambridge;
Summer 2007, 7(2), pp.310-314.
Turnbull, P.W., Cunningham, M. and Ford, D. (1996), “Interaction, relationships and
networks in business markets: an evolving perspective”, Journal of Business
andIndustrial Marketing, Vol. 131 Nos 3/4, pp. 44-62.
Weber, J.A. (2000), Partnering with distributors to stimulate sales: a case study,

40
Journal of Business & Industrial Marketing, Vol. 15 Nos 2/3, pp. 154-62.
Webster, F.E. (1992), The changing role of marketing competition, Journal
ofMarketing, Vol. 56, pp. 1-17.

41
APPENDICES
APPENDIX I:LETTER OF INTRODUCTION

Date 30/09/2016

TO WHOM IT MAY CONCERN

The bearer of this letter LILIAN KEMUNTO ONSONGO Registration

No.D65/68019/2013 is a bonafide student in the masters of Science in Marketing(MSc.

Marketing) degree program in this university.

She is required to submit as part of her coursework assessment a research project on

marketing problems. We would like the student to do their projects on real problems

affecting firms in Kenya. Your organization has been identified for the study and we

would, therefore appreciate your assistance to enable her collect data in your reputable

organization.

The results of the report will be used solely for academic purposes and a copy of the

same will be availed to the interviewed organization on request

Jane Muturi

MSc Marketing Administrator

School Of Business

43
APPENDIX 11: QUESTIONNAIRE

RESEARCH STUDY ON THE EFFECTS OF MARKETING STRATEGIES ON


CUSTOMER RETENION IN THE HEALTH INSURANCE INDUSTRY IN
KENYA

Instructions

Please Tick as Appropriate.

Section A: DEMOGRAPHICCHARACTERISTICS OF RESPONDENT

1. Name of insurance company______________________________________________

2. Gender: Female male

3. Years of Service 5 years and below 6-10 years

11-15 years 16 years and above

4. What is your position in the company?

Top level management []


Middle level management []
Low level management []

44
SECTION B: MARKETING STRATEGIES AND CUSTOMER RETENTION

QUESTION 1:To what extent do you agree with the following statements on product
strategy and customer retention ,On a scale of 1 to 5,where 1=Strongly
Disagree,2=Disagree,3=Neither agree Nor Disagree;4=Agree;5=Strongly agree

Strongly Disagree Neither Agree Strongly


disagree Disagree Agree
Nor Agree
1 2 3 4 5
1 Introduces New
Insurance products

2 Offers considerable
range of insurance
products

3 Uses customer
service as a central
element in the
insurance service
strategy.

45
QUESTION 2:To what extent do you agree with the following statements on pricing
strategy and customer retention ,On a scale of 1 to 5,where 1=Strongly
Disagree,2=Disagree,3=Neither agree Nor Disagree;4=Agree;5=Strongly agree
PRICING STRATEGY
In order to improve the insurances performance and increase customer retention, we price
our services based on:

Strongly Disagree Neither Agree Strongly


Disagree Agree or Agree
Disagree

1 2 3 4 5
1 Price discrimination
according to the
market segments we
serve
2 Pricing strategy
according to the
competition.

3 A pre-determined
rate that our
insurance is looking
for.

46
QUESTION 3:To what extent do you agree with the following statements on distribution
strategy and customer retention ,On a scale of 1 to 5,where 1=Strongly
Disagree,2=Disagree,3=Neither agree Nor Disagree;4=Agree;5=Strongly agree
DISTRIBUTION STRATEGY
In order to improve the insurance performance and in developing our distribution (access)
strategy an internal business measure, our insurance uses:

Strongly Disagree Neither Agree Strongly


Disagree Agree Agree
Nor
Disagree
1 2 4 5
3
1 Our Insurance
branches to
access our
services are
located in
different
geographical
areas.
2 24; hours
service
available.
3 A distinctive
distribution
capability to
open new
branches

47
QUESTION 4:To what extent do you agree with the following statements on promotion
strategy and customer retention ,On a scale of 1 to 5,where 1=Strongly
Disagree,2=Disagree,3=Neither agree Nor Disagree;4=Agree;5=Strongly agree

PROMOTION STRATEGY
In order to improve the insurance performance and increase the customer base, we
develop our promotional strategy by:

Strongly Disagree Neither Agree Strongly


Disagree Agree Or Agree
Disagree
1 2 3 4 5

1 Advertising in
media such as
television,
newspaper and
magazines
2 Sponsoring special
events such as
sports, charities and
seminars
3 Encouraging
members to use
word of mouth to
communication.

48
QUESTION 5:To what extent do you agree with the following statements on people
strategy and customer retention ,On a scale of 1 to 5,where 1=Strongly
Disagree,2=Disagree,3=Neither agree Nor Disagree;4=Agree;5=Strongly agree
PEOPLE STRATEGY
In order to improve the insurance performance and to develop an effective people
personnel strategy for customer retention our insurance company concentrates on:

Strongly Disagree Neither Agree Strongly


Disagree Agree nor Agree
Disagree

1 2 3 4 5

1 Our customers are


satisfied with our
responsiveness in
service delivery

2 Our customers are


satisfied with the
provider of the
insurance service
3 Our customers are
satisfied with the
staff’s knowledge
and explanation of
insurance

49
QUESTION 6:To what extent do you agree with the following statements on process
strategy and customer retention ,On a scale of 1 to 5,where 1=Strongly
Disagree,2=Disagree,3=Neither agree Nor Disagree;4=Agree;5=Strongly agree
PROCESS STRATEGY
In order to improve the insurance performance and retain customers an effective process
strategy for customer satisfaction, our insurance uses:

Strongly Disagree Neither Agree Strongly


Disagree Agree Nor Agree
Disagree

1 2 3 4 5

1 A short waiting
time of not more
than an hour
2 Customers
feedback in order
to improve
insurance services
3 Claims payment on
time.

50
QUESTION 7:To what extent do you agree with the following statements on physical
evidence strategy and customer retention ,On a scale of 1 to 5,where 1=Strongly
Disagree,2=Disagree,3=Neither agree Nor Disagree;4=Agree;5=Strongly agree
PHYSICAL EVIDENCE STRATEGY
In order to improve the insurance performance and retain customers an effective physical
evidence strategy, our insurance uses:

Strongly Disagree Neither Agree Strongly


Disagree Agree nor Agree
Disagree
1 2 3 4 5
1 A comfortable
environment with
good directional
signs
2 Up-to –date and
well maintained
equipment
3 Easily accessible at
anytime of the day

51
Appendix III:List of Registered Health Insurance Companies 2013

1. AAR Insurance Kenya Limited

2. APA Insurance Limited

3. Africa Merchant Assurance Company Limited

4. AIG Kenya Insurance Company Limited

5. British-American Insurance Company (Kenya) Limited

6. Cannon Assurance Limited

7. CFC Life Assurance Limited

8. CIC General Insurance Limited

9. CIC Life Assurance Limited

10. First Assurance Company Limited

11. G A Insurance Limited

12. Geminia Insurance Company Limited

13. ICEA LION General Insurance Company Limited

14. Kenindia Assurance Company Limited

52
15. Madison Insurance Company Kenya Limited

16.Mayfair Insurance Company Limited

17. Mercantile Insurance Company Limited

18. Metropolitan Life Insurance Kenya Limited

19. Occidental Insurance Company Limited

20.Old Mutual Life Assurance Company Limited

21.Pacis Insurance Company Limited

22.Pan Africa Life Assurance Limited

23.Resolution Insurance Company Limited

24.Tausi Assurance Company Limited

25.The Jubilee Insurance Company of Kenya Limited

26. The Monarch Insurance Company Limited

27.UAP Insurance Company Limited

28. Xplico Insurance Company Limited

Source: Insurance Regulatory Authority

53
APPENDIX IV:DATA COLLECTION LETTER

54

Вам также может понравиться