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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.
This project has been submitted for examination with my approval as the University
Supervisor.
Dr Raymond Musyoka
School of Business
University of Nairobi
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DEDICATION
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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
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
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
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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
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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
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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
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LIST OF TABLES
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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.
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CHAPTER ONE
INRODUCTION
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
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
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
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
increase member retention and the benefits that comes along with retaining loyal
members, Insurance firms implement member retention strategies, or plans to get their
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
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
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,
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
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
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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
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
fulfilling and keeping clients because they form the companies’ association wealth.
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
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
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
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
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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
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
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
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.
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
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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
This study is guided by a general objective that is to establish the impact of marketing
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
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
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
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other researchers to venture into the implications of relationship marketing practices on
customer retention that have not been studied in the African context.
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CHAPTER TWO
LITERATURE REVIEW
2.1 Introduction
The chapter covers work that other researchers and scholars have done concerning
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
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
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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
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
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
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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
(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
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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
organizations usually do an evaluation of their reward - cost ratio. Costs and rewards
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;
interpersonal contact required to produce services, that might act as a disincentive for a
According to Baker and Hart (2012), the main aim of the coming up with an
build, defend and adapt marketing mix elements to forces in the environment.
There are eight levels involved in developing a new product, we begin with idea
generation. Organizations get ideas for new product development from marketing
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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
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
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
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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
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
initial cost as profit margin its referred to as the Cost based (Kotler, 2011).
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
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sales promotions aim to encourage sales surge. They take form of buy one to get another
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).
the organization meet and any visible components that facilitate the service performance
of marketing mix as they make it easier for the customers to evaluate firms. service
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marketing mix which makes it easy for the customer to evaluate a firm. The intangibility
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.
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
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
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.
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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
Metrics such as customer share and customer retention rated in consumer relationship
management has Increased interest in customer relationship in recent past has brought
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).
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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
sales, and contributes significantly to the growth of market share in competitive markets
strategies play a significant role in enhancing the performance, for instance, Taiwo(2010)
promotion and place based strategies and established that the impact of marketing
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
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Region. The study come to a conclusion that various marketing mix and techniques were
animation, place, pricing ,content localization and the techniques were found to enhance
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
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CHAPTER THREE
RESEARCH METHODOLOGY
3.1 Introduction
This chapter looked into the proposed research design, target population, data collection
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
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
Kenya and thus, data was obtained from the marketing manager of each health insurers.
Secondary and primary data was collected in this study. Primary data was collected using
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service managers. The questionnaire contained two sections; the first section covered
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
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.
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CHAPTER FOUR
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
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
companies.
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Table 4.1 Gender of the Respondents
Female 17 68%
Male 8 32%
TOTAL 25 100%
The above table shows that 32 percent of the respondents were male, while 68 percent of
11yrs-15 years 0 0%
16 and above 0 0%
TOTAL 25 100%
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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.
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
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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
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.
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
reported a mean score of 2.5,while using the price discrimination according to the market
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.
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
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
intensive and very few big insurance companies have that capability.
in media; sponsoring special events that include seminars, sport charities and encouraging
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
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.
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
to the customer experience differences resulting from when different personnel serve the
same customers.
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
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.
are in the service industry. Service compared to physical products present a new set of
cannot be seen, smelt or tasted. Inseparability-that is, of the service provider and
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
business process measures of the balance scorecard, health insurers implement 24-hour
service availability, pay claims on time and introduce new products for improved
use of clients’ feedback in order to improve service as well as encourage clients to use
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
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
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
32
CHAPTER FIVE
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
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,
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
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
media such as the internet, magazines, television, newspapers and even fewer sponsor
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
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
Deducting from the findings, marketing strategies have a relationship with customer
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
innovation and learn, Insurance firms engage client’s feedback so as to improve service
measures, health insurance firms mostly price service based on a predetermined rate that
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
light of the external environment which is made up of elements that are uncontrollable to
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
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
in Kenya.
36
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41
APPENDICES
APPENDIX I:LETTER OF INTRODUCTION
Date 30/09/2016
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
Jane Muturi
School Of Business
43
APPENDIX 11: QUESTIONNAIRE
Instructions
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
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:
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:
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:
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:
1 2 3 4 5
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:
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:
51
Appendix III:List of Registered Health Insurance Companies 2013
52
15. Madison Insurance Company Kenya Limited
53
APPENDIX IV:DATA COLLECTION LETTER
54