Download an investigation into the factors affecting marketing of sacco products

AN INVESTIGATION INTO THE FACTORS AFFECTING
MARKETING OF SACCO PRODUCTS: A CASE OF THIKA TOWN
IN KENYA
BY
GATHURITHU ANTONY WAMBURU
REG. NO. 07/K/3163/EXT
A RESEARCH REPORT SUBMITTED IN PARTIAL
FULFILLMENT OF THE REQUIREMENTS FOR THE AWARD OF
A DEGREE OF BACHELOR OF COMMERCE OF MAKERERE
UNIVERSITY.
JUNE 2011
DECLARATION
I hereby declare that this project is my original work and it has not been submitted in this
form or any other form to this or any other institution for examination purposes. Any
quotation made has been referenced accordingly.
Author
Signature …………………………………
Date………. /…........./……….
GATHURITHU ANTONY WAMBURU
i
APPROVAL
This project has been submitted for examination with my approval as the University
candidate supervisor
Signature ………………………………………
MR. KIWALA YUSUF
ii
Date………/…..…../……….
DEDICATION
I wish to dedicate this project to my family members who have shown great concern
towards the fulfillment of this project. Finally to Makerere University and everybody
who would like to undertake the same course in future.
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ACKNOWLEDGEMENT
I thank the almighty God for sustaining my life and seeing me through this course at the
University. I am grateful for the concern by the people I have interacted with towards the
successful completion of this project
I extend my sincere gratitude to my supervisor Mr. Kiwala Yusuf for his high level of
devotion , patience, monitoring , guidance and critical comments without which this
work couldn’t be a success.
Special thanks go to my Dad Paul, Mum Anne, Brother Thomas and Sisters Florence,
Trizah and Julia the financial support, encouragement and assistance during the course.
I cannot forget to acknowledge the management and staffs of all Thika town SACCOs for
their cooperation during the field study.
Finally, I would like to extend my gratitude to Cecilia Wanjiku, Beth, Karanja, Kamah
Jemoh, Loiselei and all those other friends and relatives who supported me during the
course.
GOD BLESS YOU ALL
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TABLE OF CONTENTS
DECLARATION................................................................................................................ i
APPROVAL ...................................................................................................................... ii
DEDICATION.................................................................................................................. iii
ACKNOWLEDGEMENT ............................................................................................... iv
LIST OF TABLES ......................................................................................................... viii
LIST OF FIGURES ......................................................................................................... ix
LIST OF ABREVIATIONS ............................................................................................. x
ABSTRACT ...................................................................................................................... xi
CHAPTER ONE: INTRODUCTION ............................................................................. 1
1.1 Background to the Study............................................................................................... 1
1.2 Statement of the Problem .............................................................................................. 3
1.3 Research Objectives ...................................................................................................... 3
1.4 Research Questions ....................................................................................................... 4
1.5 Justification of the Study .............................................................................................. 4
1.6 Significance of the Study .............................................................................................. 4
1.7 Scope of the Study ........................................................................................................ 5
1.7.1 Geographical Scope ................................................................................................... 5
1.7.2 Content Scope ............................................................................................................ 5
1.7.3 Interpretation of the Variables ................................................................................... 5
1.7.3.1 Competition............................................................................................................. 5
1.7.3.2 Information Technology ......................................................................................... 5
1.7.3.3 Staff Qualification/Training. ................................................................................... 5
1.7.3.4 Consumer Attitude .................................................................................................. 6
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CHAPTER TWO: LITERATURE REVIEW ................................................................ 7
2.0 Introduction ................................................................................................................... 7
2.1 Competition as a Factor Affecting Growth of SACCOs .............................................. 7
2.2 Information Technology as a Factor Affecting Growth of SACCOs ........................... 8
2.3 Staff Qualification as a Factor Affecting Growth of SACCOs................................... 10
2.4 Consumer Behavior /Attitude as a Factor Affecting Growth of SACCOs ................. 12
2.5 Conclusion .................................................................................................................. 14
CHAPTER THREE: RESEARCH METHODOLOGY ............................................. 15
3.0 Introduction ................................................................................................................. 15
3.1 Research Design.......................................................................................................... 15
3.2 Target Population and Sample Frame ......................................................................... 15
3.3 Sampling Design ......................................................................................................... 15
3.4 Sample Size Determination......................................................................................... 16
3.5 Data Sources ............................................................................................................... 16
3.6 Instrumentation ........................................................................................................... 16
3.7 Data Collection Procedures......................................................................................... 16
3.8 Data Analysis Techniques........................................................................................... 17
3.9 Limitations to the Study .............................................................................................. 17
3.9.1 Anticipated Problems ............................................................................................... 17
CHAPTER FOUR: DATA ANALYSIS, PRESENTATIONAND
INTERPRETATION ...................................................................................................... 18
4.0 Introduction ................................................................................................................. 18
4.1 Presentation of Findings According to Research ........................................................ 18
4.2 Effect of Competition on Marketing of SACCO Products ......................................... 19
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4.3 Effect of Information Technology on Marketing of SACCO Products ...................... 21
4.4 Effect of Staff Qualification/Training on Marketing of SACCO Products ................ 22
4.5 Effect of Consumer Attitude on Marketing of SACCO Product ................................ 23
CHAPTER FIVE: CONCLUSION, RECOMMENDATIONS AND RESEARCH
LIMITATIONS ............................................................................................................... 27
5.0 Introduction ................................................................................................................. 27
5.1 Conclusion .................................................................................................................. 27
5.2 Recommendations ....................................................................................................... 28
5.3 Suggested Areas for Further Research ........................................................................ 29
5.4 Limitations to the Study .............................................................................................. 29
REFERENCES ................................................................................................................ 30
JOURNALS ..................................................................................................................... 31
Appendices: Questionnaire for Sacco Employees ............................................................ 32
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LIST OF TABLES
Table 1: Target population ................................................................................................ 15
Table 2: Sample Size ........................................................................................................ 16
Table 3: Respondents Distribution by Age ....................................................................... 18
Table 4: Response on whether the SACCO uses Automated Teller Machines ................ 21
Table 5: Level of Education of the Respondents .............................................................. 22
Table 6: Response on how the Service Delivery is Rated ................................................ 26
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LIST OF FIGURES
Figure 1: Responses on the Level of Competition Experienced in Offering the Service . 19
Figure 2: Responses on whether the SACCOs have ever Lost Clients to Competitors .... 20
Figure 3: Period of Service by the Sampled Respondents ................................................ 23
Figure 4: Response on how Customers Like the Products Offered by their SACCOs. .... 24
Figure 5: Response on how Popular SACCO Products are. ............................................. 25
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LIST OF ABREVIATIONS
LTD - Limited
SACCOs - Savings and Credit Cooperative Organizations
ACCOSCA - Association of SACCOs of South and Central Africa
NO - Number
ATM - Automated Teller Machine
IT - Information Technology
ICT - Information and Communication Technology
KWFT - Kenya Women Finance Trust
FOSA - Front Office Services Activity
BOSA - Back Office Services Activity
MUK – Makerere University Kampala
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ABSTRACT
Many marketing organizations and individual marketing professionals have come up with
different approaches about what marketing entails.
In an attempt to carry out this study, the researcher focused on finding out factors
affecting marketing of SACCO products under the following; if competition, information
technology, consumer attitude and staff training/qualification affect marketing of SACCO
products.
From the findings I have drawn conclusion that competition, information technology,
staff training and consumer attitude are some of the factors affecting marketing of
SACCO products that need to be addressed by the respective stakeholders. SACCOs need
to be more innovative in products development in order to appeal to customers who want
many products which satisfies their diversified needs.
In terms of recommendations I recommended that, market or customer oriented products
development strategy should be used by the SACCOs in order to retain their members
and attract new ones, that SACCOs must acquire and use the latest information
technology, that SACCOs should implement training for all staffs and that SACCOs
should advertise their products in order to be more popular to consumers which can make
them change their attitude.
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CHAPTER ONE
INTRODUCTION
1.1 Background to the study
Many marketing organizations and individual marketing professionals have come up with
different approaches about what marketing entails. The marketing concepts hold that the
key to achieving organizational goals lies in determining the needs and the wants of the
target market and delivery of the desired satisfaction more efficiently and effectively than
the competitor.
In a dynamic framework, banks compete for customers by setting lending conditions for
the loans they supply; also including other deposit products, taking into account the
capital adequacy requirements posed by the regulator. SACCOs are financial institutions
just like banks and also compete for the same customers with banks.
The increased popularity in the banking industry has led SACCOs to behave more
competitively. Competition varies with the number of competitors and the respective kind
of products offered in the market which forms the basis for this research. SACCOs need
to have a well recognized and visible symbol. A symbol is intended to identify the
products of either one seller or a group of sellers, and to differentiate those products from
those of competitors (Aaker 1991; Stanton 1994; Kotler 1996)
There are different types of SACCOs but can mainly be categorized into two; Urban
SACCOs and Rural SACCOs. Urban SACCOs are formed by members who are either
employed or get consistent monthly income. Rural SACCOs are formed by members who
actually get inconsistent incomes through farm produce. The main economic activity
commonly done by the members, form the common bond for the co-operative society.
The main objective of SACCOs is to promote thrift among its members by affording
them an opportunity for accumulating their savings, and to create thereby a source of
funds from which loans can be made available to them. Some SACCOs operate front
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office services (FOSA) as well as back office services (BOSA) thereby accepting
deposits from members. They operate savings accounts just like banks as well as loan
accounts which attract interest respectively.
SACCOs play a significant role in the provision of financial services to the poor (target
groups). They provide savings and credit and investment opportunities to individuals,
institutions and group members. This is emphasized by Magill (1994:140) thus; they
perform an active financial intermediation function, particularly mediating from urban
and semi-urban to rural areas, and between net savers and net borrowers while ensuring
that loan resources remain in the communities from which the savings were mobilized.
Most SACCOs have however diversified their services and products to target not only
members within its common bond but also to everyone with different economic activity
thereby opening the common bond. This has been caused by the current stiff competition
arising from other financial institutions that have come up with more friendly financial
products to the same members unlike there before. Despite the stiff competition SACCOs
are still operating due to consumers’ different perspectives. Indeed (Schiffman and
Kanuk et al 1996) contend that although two individuals may be subject to the same
stimuli under apparently the same conditions, the way they recognize them, select them,
organize them, and interpret them is a highly individual process based on each person’s
own needs, values and expectations.
However, SACCOs’ capacity to increase outreach in quest for greater impact creation in
the communities has been derailed, simply because, there are insufficient loanable funds
due to low levels of savings as borrowers require well over and above of what they save.
The products offered by SACCOs include Shares, Savings, Emergency loans, Loans, Life
and loan insurance, Fixed deposits, Christmas saving, Educational savings, Housing
loans, and Funeral insurance among others depending on the type of SACCO.
Equity bank was formed in 1984 as a building society and with time it was transformed to
microfinance institution up to its current status of commercial bank. The government
through the ministry of cooperative development and marketing is empowering the
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cooperative movement in Kenya and gets support by cooperative bank of Kenya. There
has been established a college to teach matters of cooperative movement (cooperative
college at Nairobi) due to this concern
by various stakeholders that SACCOs
(cooperative movements) started to be more competitive in their field of financial
institution since they contribute 30% of economic growth in the country.
1.2 Statement of the problem
Kenya continues to enjoy the fastest growing economy in East Africa, her service
industry performing better than any other sector in the economy. One sector of the
service industry is the financial sector whereby many commercial banks and other
financial institutions continue to grow day by day. Some banks have even crossed border
to offer services in the neighboring East African states. SACCOs are financial institutions
which offers similar products like banks and most of them were formed long time ago
but their growth in terms of customer base and market share as well as expansion level is
not something to be proud of compared to
commercial banks and other financial
institutions. Their performance and growth in those terms also varies among different
SACCOs. Hence the concern was; what is affecting the marketing of SACCO products?
1.3 Research Objectives
General Objective
The general objective of this study was to find out the factors affecting marketing of
SACCO products.
Specific Objectives
1. To determine the effect of competition on marketing of SACCO products.
2. To find out the effect of information technology on the marketing of SACCO
products.
3. To determine the extent to which staff qualification impact on marketing of
SACCO products.
4. To find out the extent to which consumer attitudes affect marketing of SACCO
products.
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1.4 Research questions
1. How does competition affect marketing of SACCO products?
2. How does information technology affect marketing of SACCO products?
3. How does qualification affect marketing of SACCO products?
4. How do consumer attitudes affect marketing of SACCO products?
1.5 Justification of the study
In any business or industry, marketing plays an important role for its good performance
and prevents business failure which results from declining sales. SACCOs too are in the
financial sector and currently there has been an increased growth in financial institutions,
some transforming from building societies to commercial banks and one factor that can
be explained by this growth is the increase in active customer base which results from
active marketing strategies
1.6 Significance of the study
The study was undertaken to find out the factors affecting marketing of SACCO
products. The study was to greatly benefit various stakeholders. They included one, the
researcher whose main purpose is to add the already existing knowledge in Makerere
University. Second, the management of the SACCOs in case they implement the
recommendations, which will improve on their products, service delivery and strategic
marketing. The third beneficiaries will be the employees of the SACCOs who will be
guaranteed of work continuity and even good remuneration after their business volume
increases due to strategic marketing. The final beneficiary will be SACCO competitors
who can use the information obtained to take advantage on the weak areas of the
SACCOs. They can also use the same to learn new skills and concepts at no cost and
implement them in their organizations.
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1.7 Scope of the study
1.7.1 Geographical scope
To carry out a study on factors affecting marketing of SACCO products, a case study of
Thika town which is a typical town in Kenya with various SACCOs in its location was
selected.
1.7.2 Content scope
The researcher was aiming at looking at factors affecting marketing of SACCO products
and the focus was to investigate the impact of competition, Information Technology, staff
qualification and consumer attitude on the marketing of SACCO products.
1.7.3 Interpretation of the variables
1.7.3.1 Competition
This refers to any activity in which persons compete (race, contest or examination).
Competition in any industry is healthy because it raises service standards and forces
organizations to become efficient service providers for the customers’ benefit.
1.7.3.2 Information Technology
Information technology used refers to the tools and facilities involved in the processing,
analyzing, storing and retrieving of information. Improving the ability of consumers to
choose between competing suppliers of products depends mostly on the technology
involved in service delivery. New information technology has brought about market
flexibility for consumers in service products.
1.7.3.3 Staff qualification/training.
Staff qualification does not exclusively result to good performance although many people
believe that staff qualification strongly contributes to employees’ performance and also
company’s improvement.
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1.7.3.4 Consumer Attitude
Through acting and learning, people acquire beliefs and attitudes. Attitude is a person’s
enduring favorable or unfavorable evaluations, emotional feeling, action and tendencies
towards some object or idea. Belief is a descriptive thought that a person holds about
something. Wrong beliefs about a product and brand images and people inhibit purchase.
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CHAPTER TWO
LITERATURE REVIEW
2.0 Introduction
This chapter covers a review of literature related to the topic of study. Literature is
reviewed with a view of establishing what exists in relation to the area of study and to
identify gaps that exist, hence justify the need to carry out the study so as to fill in the
knowledge gaps. It seeks to identify, evaluate and present all relevant information from
text books, government publications, reports from other researchers, journals and the
internet. It also tries to capture the mind of other researchers in relation to the variables.
2.1 Competition as a factor affecting growth of SACCOs
This refers to any activity in which persons compete (race, contest or examination).
Competition in any industry is healthy because it raises service standards and forces
organizations to become efficient service providers for the customers’ benefit.
A study by Rutherford et al (2002), reported that although commercial banks have
comparative advantage in terms of availability of resources, access to money and capital
markets, banking expertise, trained man power and diversification of financial risk, they
have nevertheless comparative disadvantage in rural financial markets due to their high
overhead and transaction costs, urban orientation for commercial banks to open up
branches in every village to provide bank access within a closer reach of the rural people.
This is an advantage to SACCOs which target rural people
Competitions in banks have been greatly explained by B.Resnahan (1982), Lau (1982),
Bikker (2003) and Uchida and Tsuitsui (2005). A strong conjectural variation implies that
a bank is highly aware of its independence (via the demand equation) with other banks in
terms of output and prices. An intriguing aspect of the market place is that the nature of
competition can change over time.
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According to William and Marian (1997), every alternative that a customer might
consider in place of one’s product is competition. It works the other way round as well.
One’s product provides competition for others who want to build relationships with the
same customers. The competitive environment includes all organizations offering product
alternatives to one’s target markets. It therefore indicates that SACCOs have competition
from banks since they can offer similar services.
2.2 Information Technology as a factor affecting growth of SACCOs
Information technology used refers to the tools and facilities involved in the processing,
analyzing, storing and retrieving of information. Improving the ability of consumers to
choose between competing suppliers of products depends mostly on the technology
involved in service delivery.
The investment on information technology (IT) in the service sector has been criticized
by economists Hackett (1990) and Roach (1991) for not showing a corresponding
improvement in productivity similar to that observed in manufacturing.
However, following the publication of the Hammer and Champy (1993) book on
reengineering and the extensive redesign of service processes that followed, using
information technology as the enabler, we feel it is time to revisit the debate on the
contribution of IT in the service sector. With the introduction of integrated software using
the Windows platform and personal computer networking, we expect to find a different
level and form of information technology use than that found in the late 1980s.
Zeithaml et al. (1990) viewed improvements in service as being critical elements of a
competitive edge in the 1990s, which in turn can be facilitated by improvements in
information technology. They point out that a marriage of “high tech” and “high touch” is
important, and that decisions regarding the types of technology to employ should not take
precedence over strategic considerations. It is generally believed that information
technology has a positive impact on a firm’s performance, though some caution has been
mentioned regarding replacing employees in favor of technology Urgo (1996).
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Furthermore, Rubenstein and Geisler (1990) note that to use information technology
effectively, one must invest in human resources as well as technology. Concerning the
effect of information technology on the operations of service firms, Heskett et al. (1990)
points out that the use of information technology will affect both the customer and the
provider of services. Studies concerning the effect of information technology on
management strategy and marketing have been conducted.
In a recent study, Mathe and Dagi (1996) found that the use of information technology
contributes to the success of the implementation of international strategies in service
industries. According to Martell (1988), information technology will accelerate changes
in how marketing conducts its activities. Specifically, it will enable firms to: (1) track
competitors’ pricing more efficiently and determine its own pricing structure; (2) conduct
market research more accurately; and (3) communicate and relay information more
efficiently to others.
Porter and Millar’s (1985) study asserts that utilization of information technology
changes the production process, reduces costs, widens the arena of competition, and
facilitates the creation of new business. Jackson (1990) holds a similar view, closely
relating information technology and competitive advantage and arguing that developed
nations should utilize information technology to compete effectively with low-priced
competitors from developing countries.
On the other hand, Bonk (1996) states that management of small and medium-sized firms
must utilize computer technology, information resources, and telecommunications in
operating their firms in order to survive in the era of globalization. To become effective
niche players, they must utilize such technology in differentiating their products,
improving quality, and providing superior services.
According to Courtland and John V. Thill (2001), Communication is the process of
sending and receiving messages. The essence of communication is sharing, that is
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providing data, information and insights in an exchange that benefits both one and the
people with whom one is communicating. This is very essential especially in service
providers like SACCOs.
Effective communication helps business in numerous ways. These benefits include;
stronger decision making and faster problem solving, earlier warning of potential
problems, increased productivity and steadier workflow, stronger business relationships,
clearer and more persuasive marketing messages, enhanced professional images for both
employers and companies, lower employee turnover and higher employee satisfaction,
and better financial results and higher return for investors. Effective communication
strengthens the connection between a company and all of its stakeholders, suppliers,
neighbors, the community, and the nation.
However taking advantage of technology requires time, energy, and frequent
improvement of skills. If the level of technical expertise does not keep up with that of
your colleagues and co-workers, the imbalance can put you at a disadvantage and
complicate the communication process.
The growth and development of information and communication technologies (I C T s)
have led to their wide diffusion and application, increasing their economic and social
impact. According to Gary and Philip Kotler (1998), through ICT since the early 1990s,
Bank of America executives have been letting employees order supplies from their
desktop computers, but they were using old-fashioned system that was expensive and
difficult to operate.
2.3 Staff qualification as a factor affecting growth of SACCOs
According to Bearden (2004) some manufacturers sponsor or pay for training programs
for customer employees. Marketers may also provide training on a number of other
topics, including retail and wholesale management procedures, safety issues, or current
technical developments in an industrial field.
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Training programs are expensive, and results are often hard to measure. To be effective,
training should be continual, or at least periodically reinforced, thus adding to the
expense. Even though it is expensive, training can build productive relationships with
customers. However there is little or non-existent training budgets in most of the
companies including SACCOs which has made most human resource department to
become dormant in ensuring their employees are taken through upgrading skills training
to take the technical expertise.
Companies have also failed in investing adequately on their employees leading to
poaching employees from other companies something that makes employees in a
company lose confidence in their job security. Lawler (1986) argued that a firm human
resource strategy should be centered on developing skills and ensuring motivation and
commitment. This is so especially when emotional labor is required.
Staffs and the organization should be one and the same. Training makes staff feel cared
for by the organization. When it comes to staff qualification this helps organizations to
have staffs that are aware of the tasks that should be done in the organization. Staffs are
developed within the organization and there is commitment on both sides (Lepak&Snell
(1999).
When organizations are on their way upward they need to adopt strategies that will make
their goals to be attained easily or with minimal obstacles. When service is more
important, high involvement strategies are preferred Lawler (1986). Those staffs who
work at FOSA should be trained very well on service delivery which will improve the
image of the organization. As employees are critical to service delivery there is a
requirement to have employment security, extensive training and decentralized decision
making (Pfeiffer (1998).
Many organization cut costs through minimizing employee training and employing staffs
that are not so highly qualified. One way that a service culture can be maintained in a cost
focused environment is by management fulfilling 2 different but complementary roles.
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One role is to focus on the tasks, with an emphasis on performance and efficiency, the
other role is to provide emotional support for the staff (Halpin &Winner (1957). These
roles can be assumed by a single heroic manager or they can be distributed across the
management team (Benne & Sheats (1948).
Organizations like banks are doing their best to make sure the staffs concentrate fully
during execution of tasks. There can be usage of technology to facilitate the physical
concentration of staff labor scheduling, staff monitoring and high productivity rate. The
negative consequences that follow this efficiency goal such as exhaustion stress and
turnover are regretted and cause deep concern to management
2.4 Consumer behavior /attitude as a factor affecting growth of SACCOs
According to Bearden (2004) consumer attitudes are learned predispositions to respond
favorably or unfavorably to a product or brand. Most of us take for granted our attitudes
toward our favorite restaurant or soft drink. However, attitudes are instrumental in
determining which alternative products and brands will be purchased and used.
According to Muturi (1986) members of the credit institution find it easier to save with
their co-operative societies than with commercial banks. On the other hand it becomes
easier to withdraw from commercial banks than credit society. This is because savings
are done through a system of purchase of shares of the institution. These institutions also
extend loans in favorable terms to the members.
An understanding of consumer attitudes has very basic implications for marketing, for
two reasons. Attitudes are based on beliefs consumers hold about the attributes or
features (price, level of service, quality) of the products they are evaluating. Also are
primary causes of behavior, which makes them very relevant to marketers who want to
understand why consumers buy or do not buy their products. These can be used by
SACCOs when marketing their products.
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Overall consumer attitude toward brands and consumption behavior have typically been
measured on a single evaluative semantic differential (SD0) scale. Osgood, Suci, and
Tannenbaum (1957) Markets decide on the degree to which they will adapt their products
and marketing programs to meet the unique cultures and needs of consumers in various
markets. People differ greatly in their readiness to try new products.
According to Maslow’s Hierarchy of needs model people are ‘wanting’ beings and
always want more than what they already have. He suggested that human needs are
arranged in a series of levels, a hierarchy of importance.
The hierarchy ranges through five levels from the lowest level which is physiological
followed by safety needs, love needs, esteem needs and finally self-actualization which is
at the highest level. Once a lower need has been satisfied it no longer acts as a strong
motivator. The needs of the next higher level in the hierarchy demand satisfaction and
become the motivating influence. Only unsatisfied needs motivate a person thus Maslow
asserts that “a satisfied need is no longer a motivator.”
The hierarchy may be shown as a series of steps, but is usually displayed in the form of a
pyramid. In addition to Maslow’s contribution to consumer attitude Foote, Cone and
Belding (1986) classified product categories on among others , a thinking/ feeling
dimension and suggests that while thinking products require more rational and
informative advertising , feeling products are advertised more effectively using emotional
and pleasure / sensory appeals.
The basis of Maslow’s theory is that when no needs are fulfilled the psychological needs
take precedent. Psychological needs are no more important than any other level since
each of us will be motivated only by the lowest unfulfilled need. The theory also implies
that what acts as a motivator for one individual can be totally different to another person.
Maslow viewed satisfaction as the main motivational outcome of consumer behavior.
Miller and Tesser (1986) showed that attitudes predict behaviors better when the
evaluative basis for those attitudes matches the purpose of the behavior itself.
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2.5 Conclusion
According to the above reviews much has not been touched though the factors have been
analyzed but in banks context. SACCO’s issues have been touched somehow but still
much has not been done, so if this research was to be carried out much more discoveries
were likely to be found.
According to Opio (2006), he found that the performance of SACCOs has a strong
relationship with the variables like deposits, savings, credit advance, operating self
sufficiency. But he did not find out how other factors affect the marketing of SACCO
products. So here the researcher was seeking to find out whether the above variables
affect marketing of SACCO products as discussed in relation to banks.
The previous studies also took place under different circumstances for instance there has
been recent improvements in service delivery through improved technology,
globalization and other factors which made it necessary to carry out this study.
Furthermore the economic conditions and environment may be different in the
geographical scope of this study.
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CHAPTER THREE
RESEARCH METHODOLOGY
3.0 Introduction
This chapter explains in details the research design, target population, the sample,
research instruments and the methods that were used in data analysis. Methodology is the
system of orderly procedures and rules applicable to research. The questionnaires were
used as the data collection instruments
3.1 Research Design
Exploratory design was used. This method of investigation allowed the researcher to
explore issues related to marketing of SACCO products to collect and analyze data in
order to describe some phenomenon in its current status.
3.2 Target population and sample frame
The target population was the employees of various SACCOs in Thika town. There are
15 SACCOs in Thika town employing about 10 employees each. The researcher however
based the study on 6 SACCOs which was a representation of all SACCOs in Thika town.
They were Muramati Sacco Ltd, Macadamia Sacco Bank, Kenya Canners Sacco, Thika
District Teachers Sacco, Metropolitan Teachers Sacco and Murata Sacco Ltd.
Table 1: Target population
Population category
Population size
Target population
Employees
150
60
Total
150
60
3.3 Sampling design
The simple random sampling design was used because the population in question is
homogeneous. Simple random sampling ensured that all units of population had an equal
chance of being selected and that the sample represented fairly the population.
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3.4 Sample size determination
The sampling frame had a target population of 60, from which a sample (n) equivalent to
50 percent (30 employees) was selected. These were divided into 5 employees per
SACCO. The sample was 50% of the target population
Table 2: Sample Size
Respondents
Target population
Sample size (n)
Sample
percentage%
Employees
60
30
50
3.5 Data Sources
The researcher used both primary and secondary data. Primary data was collected from
employees of SACCOs using questionnaires to obtain perceptions of the respondents.
This is because the type of data source is original and was collected specifically for the
study. Literature was reviewed using secondary data sources including other
dissertations, journals, reports, SACCO’s Act, internet, research projects and information
from MUK library.
3.6 Instrumentation
The researcher used self administered questionnaires as the instrument to collect data.
The questionnaires comprised of open and closed ended questions in order to give the
respondents room for airing well thought information adequate to base good judgment.
Questionnaires are instruments for data collection that are defined to elicit written
respondents from the subject in the study. The advantage of using the questionnaire is
that the data obtained is easy to process and analyze statistically.
3.7 Data collection procedures
Data collection is the act or process of capturing raw primary data from a single or
multiple sources. The primary sources were collected by issuing questionnaires to
respondents and then use the returned questionnaire to analyze the data. The secondary
16
sources will involve visiting to libraries such as MUK library for the analysis of
important documents in the search for topic issues. The information gathered from
secondary sources was very resourceful in preparing the study and giving the research a
more defined perspective.
3.8 Data Analysis techniques.
Data analysis is the process of systematically applying statistical and logical techniques
to describe, summarize and compare data. The collected data was used to analyze the
factors affecting marketing of Sacco products. The researcher checked the raw data for
legibility, consistency, completeness and uniformity of the answers given by the
respondents. Microsoft excel was used in data analysis since it allows the use of
statistical tools such as percentages, graphs etc
3.9 Limitations to the study
3.9.1 Anticipated Problems
1. Financial constrains. The study will be quite costly to the researcher as he has to
meet the costs himself.
2. Delay in response. Some respondents might take a lot of time filling the
questionnaires. The researcher will move around checking on the respondents.
3. Time. The study is time consuming as the researcher has a tight schedule, that is,
reading for his exams, attending lectures as well as carrying out research.
4. The busy schedule of the SACCO employees will make the researcher to
reschedule appointments now and again which may hinder the collection of data.
This will be overcome by making appointments within busy schedule.
17
CHAPTER FOUR
DATA ANALYSIS, PRESENTATIONAND INTERPRETATION
4.0 Introduction
This chapter analyses and interprets the data that was collected. Analysis was done based
on the objectives in chapter one. This included to find out if competition, consumer
attitude and staff training/qualification affects marketing of SACCO products. Findings
were interpreted and compiled to present results in a meaningful way.
4.1 Presentation of Findings according to Research
A total of 30 questionnaires were issued but only 25 were returned. From the data
collected the total actual response percentage was 83.33% the other 16.67% had not yet
returned their questionnaires either due to time factor or general failure.
The employees were asked their age bracket. The aim of this question was to determine
the distribution of the respondents’ age in order to have a fair representation across the
majority. Age would also help to determine the experience level.
20% of the respondents were those above 55years, 48% of the respondents were those
who range between 36 – 55 years and 32% of the respondents were those who range
between 19 – 35 years.
The findings can be summarized in the table below.
Table 3: Respondents distribution by Age
AGE BRACKETS
RESPONDENTS
Source; Primary data
18
PERCENTAGES
The findings imply that majority of the respondents were middle aged. It also implies that
they are experienced hence can work effectively.
All respondents said that they had almost similar banking products .e.g. businessmen a/c
and employed people’s accounts
4.2 Effect of competition on marketing of SACCO products
The employees were asked how they would rate the level of competition in offering their
services. The aim of the question was to know the level of competition in the banking
industry.
The data collected showed that SACCOs experience competition in service delivery. 52%
of the respondents said the level of competition was high, 20% of the respondents said
the level of competition was very high, 20% said it was low and 8% said it was very low.
The findings can be summarized in the figure below.
Responses on the level of competition experienced
in offering the service
Very low
8%
Very high
20%
Low
20%
Very low
Low
High
Very high
High
52%
Figure 1: Responses on the level of competition experienced in offering the service
19
The findings imply that competition exist in SACCOs. Competition has a negative effect
on the marketing of SACCO products hence an overall negative effect on the
performance of SACCOs.
The employees were asked whether they had lost customer to competitors and who the
competitors were. The aim of this question was to find out if SACCOs have ever lost
customers to competitors and who the competitors were
80% of the respondents said that the SACCOs had lost customers to competitors while
the remaining 20% disagreed that SACCOs had lost customers to competitors. The major
competitors mentioned were commercial banks, other SACCOs and microfinance
institutions like KWFT and Faulu Kenya.
The findings can be summarized in the figure below.
Responses on whether the SACCOs have ever lost
clients to competitors
90
80
Percentage
70
60
50
PERCENTAGE
40
30
20
10
0
Yes
No
Responses
Figure 2: Responses on whether the SACCOs have ever lost clients to competitors
The findings imply that competition exists in SACCOs and the main competitors are
commercial banks. It therefore affects marketing of SACCO products hence performance.
20
Related findings had been analyzed by Rutherford et al (2002) about competition in
commercial banks.
4.3 Effect of Information Technology on marketing of SACCO products
The employees were asked whether their SACCOs used ATMs. The aim of the question
was to determine whether IT has an impact on marketing of SACCO products.
There was almost equal response concerning the usage of ATMs. 52% said they don’t use
ATMs while the other 48% said they use ATMs. The reason that was given for lack of
ATMs was that their FOSA are not active and that most members had account with other
financial institutions especially commercial banks.
The findings can be summarized in the table below.
Table 4: Response on whether the SACCO uses Automated Teller Machines
Response
Frequency
Percentage %
Source; Primary data
The findings imply that SACCOs have not embraced the modern technology well hence
posing a weakness which the commercial banks take as an opportunity.
The employees were asked whether their SACCOs had interconnected network
throughout their branches. All respondents said they had installed it and those that do not
have branches used intranet.
When it came to mobile phone banking e.g. M-Kesho all respondents said they do not
offer the service and they believed that if it could be started it could improve their
21
performance greatly but at least they were on the right track because they had M-Pesa
services in their FOSA
4.4 Effect of Staff Qualification/Training on marketing of SACCO products
The employees were asked their level of education. The aim of the question was to know
the level of education of the sampled respondents in percentage. This would help the
researcher to ascertain the level of staff qualification.
The majority of the respondents (48%) were those with diploma level of education while
the second highest had Degree (32%) and then those with certificate level of education
(20%).
The findings can be summarized in the table below.
Table 5: Level of Education of the Respondents
LEVEL
NO OF RESPONDENTS
PERCENTAGES
Source; Primary data
The findings imply that the staff qualification was at a good level for better performance
of the organizations. However, with increased complexity in operations and need for
independent departments in organizations, SACCOs should start embracing highly
educated staffs like banks do.
The employees were asked the duration they had worked in the SACCO. The aim of this
question was to help the researcher to know the period of service taken by the sampled
22
respondents. This gave the researcher a chance to know if SACCOs had experienced
staff.
40% of the respondents had served for 11 years and above, 32 % had served between 3-5
years, 20% had served between 0-2 years while 8% had served between 6-10 years.
The findings can be summarized in the figure below
Period of service by the sampled respondents
45
Percentage of respondents
40
35
30
25
PERCENTAGE
20
15
10
5
0
0–2
3–5
6 – 10
11 and above
Years
Figure 3: Period of service by the sampled respondents
.This showed that SACCOs had a good number of experienced staffs who were expected
to be more innovative.
The employees were asked whether their SACCOs carried out employee training. All
respondents said that there was a unoccassional training of only the senior staff due to
recommendations by ACCOSCA. This indicated that this discriminatory training had an
impact on the marketing of the products of the SACCOs.
4.5 Effect of Consumer Attitude on marketing of SACCO product
The employees were asked which products they offered, the most marketable one and
how much they thought their customers liked their products basing on how often they
23
received complains from them. The aim of this question was to find out how and whether
the customers liked the products offered by their SACCOs.
72% of the respondents said that customers in average liked the products, 20% of the
respondents said customers like the products very much and the remaining 8% said that
the customers do not like the products.
The findings can be summarized in the figure below
Figure 4.4
Response on how customers like the products
offered by their SACCOs.
20%
8%
Not much
Average
Very much
72%
Figure 4: Response on how customers like the products offered by their SACCOs.
The findings imply that a good number of customers had a positive attitude towards the
SACCOs.
The employees were asked how popular they thought their SACCO products were basing
on the number of new customers they get per day. The aim of this question was to find
out how popular the Sacco products were. This question helped the researcher to know
the customer attitude
24
72% of the respondents said the products were popular, 20% of the respondents said the
products were very popular while 8% of the respondents said the products were not
popular
The findings can be summarized in the figure below
Response on how popular SACCO products are.
8%
20%
Not popular
Popular
Very popular
72%
Figure 5: Response on how popular SACCO products are.
The findings imply that customers did not have the tendency to complain but this should
not be used as a ground to prove that the products were perfect.
The employees were asked how they would rate the service delivery in their SACCOs
basing on the complaints received from customers. The aim of this question was to find
out how the respondents rated the service delivery of the SACCOs. This question also
helped the researcher to know the customer attitude.
Among those who responded 20% said that the service was poor, 60% said it was good
while 20 % said that it was very good
25
The findings can be summarized in the figure below
Table 6: Response on how the service delivery is rated
RESPONSE
NO OF RESPONDENTS
PERCENTAGE
Source; Primary data
The findings imply that the frequency with which SACCOs received complains from the
customers was low. These can be compared with past finding by Pfeiffer 1998. As
employees are critical to service delivery there is a requirement to have employment
security, extensive training and decentralized decision making (Pfeiffer (1998).
The most received complains are long time before dividends are paid, limited amount of
loan that can be granted and limited products
26
CHAPTER FIVE
CONCLUSION, RECOMMENDATIONS AND RESEARCH LIMITATIONS
5.0 Introduction
This chapter presents the summary of findings and conclusions made. In this chapter the
findings gathered are summarized and the conclusions made of the study done.
Recommendations are also laid out in this chapter.
5.1 Conclusion
SACCOs in Kenya have been rapidly increasing and significantly improving the
economic life of their members. The government has introduced the SACCOs’ Act with a
view to regulate and supervise the activities in SACCOs; since they are of great
importance to the financial sub-sector and attracts heavy deposits from their members
(majority Kenyans).
SACCOs therefore need to embrace adequate marketing skills and strategies in order to
survive the stiff competitive in the banking/financial industry. However, there are some
factors that have posed a threat to the marketing of Sacco products.
I have drawn conclusion that competition, information technology, staff training and
consumer attitude are some of the factors affecting marketing of SACCO products that
need to be addressed by the respective stakeholders. SACCOs need to be more innovative
in products development in order to appeal to customers who want many products which
satisfies their diversified needs.
IT systems have proved to be the cornerstone of growth of many modern organizations.
Those organizations that are not embracing the IT are finding themselves confronted by
numerous challenges.
Staff training/ qualification plays a major role in the growth of the organizations. Staffs
should have the necessary skills to tackle even the most complicated tasks that may arise
in the organizations and it’s upon the organizations to train staffs irrespective of the
27
position held which will be contrary to what ACCOSCA which advocates for senior staff
training stipulates.
Consumers’ attitude towards the SACCO products is still not very positive. Some relate
SACCOs with common bonds which hinder free joining. Others say that there are several
limitations and compulsory demands that distant them from any attractive product. Hence
SACCOs should hold nationwide education to enlighten the civilians about how to be a
member.
5.2 Recommendations
After carrying out the study I would wish to put down the following recommendations in
order to curb some of the factors affecting marketing of SACCO products:1. I recommended that, market or customer oriented products development strategy
should be used by the SACCOs in order to retain their members and attract new
ones. The prevailing stiff competition in the banking industry can easily wipe out
the existence of SACCOs.
2. I recommended that, SACCOs must acquire and use the latest information
technology in order to be ahead or be in touch with other financial institutions.
Any ignorance of IT can put SACCOs at a disadvantage and complicate the
service delivery system due to poor/ obsolete technology and infrastructure.
3. I recommended that SACCOs should implement training not only for top staffs
but also for junior staffs. To be effective and efficient in service delivery, staff
training should be continuous, or at least periodically reinforced.
4. I recommended that SACCOs should advertise their products in order to be more
popular to consumers which can make them change their attitude. SACCOs
should also use creative messages, corporate colors, branding and allocate good
amounts of funds to create or encourage positive attitude.
28
5.3 Suggested areas for further research
Due to limited resources, this research is not conclusive as such. It is therefore important
that further research be carried out on emerging/other factors affecting marketing of
SACCO products, risk management strategies in SACCOs and corporate governance in
SACCOs.
5.4 Limitations to the study
1. Some respondents didn’t give information since the study was on marketing since
it was sensitive and didn’t want to risk their exposure
2. Consumer attitude was studied from the view point of employees thus did not
reveal the exact consumer attitude.
3. The case study chosen might not have revealed all information concerning
SACCOs countrywide.
29
REFERENCES
Aaker, D.A;Kumar, and Day.G.S (1998), Marketing Research (New York: John Wiley &
sons,inc)
Armstrong (1989), Principles of Marketing, 10th Edition, Guernsey, Rock Dallas
University of Lewis, Illinois
Cateora,P (1996) international marketing (New Delhi: prentice-Hall of India)
Central bureau of statistics-economics survey 2007/2008
Gary and Philip Kotler, (1990), Marketing Principles, 6th Edition (New Delhi: prentice –
Hall of India)
Kotler , P and Armstrong (1998), Principles of Marketing, 12th Edition, Baltimore
International Maryland
Schiffman, L.G,Kanuk, L.L (1994), Consumer behavior, Prentice Hall,NJ.
William G. Nickels, Marian Burk Wood (1997), Marketing Relationships, quality, value
Prentice Hall,NJ.
William O. Bearden, Thomas N. Ingram and Raymond W. Lafarge (2004), Marketing
Principles and Perspectives, Fourth Edition Irwin McGraw-Hill Publishing Company,
New York
30
JOURNALS
Fournier, S. (1998), “consumers and their brands: developing relationship theory in
consumer research," journal of consumer research,Vol.24 no 4,pp343-73
Government (2008), Sacco Societies Regulatory Act
KIM (2009) “Staff training” management journal December – January, pg 27.
W. Bolt A. F. Tieman, Banking competition, risk and regulation, August 2009.
31
APPENDICES
MAKERERE UNIVERSITY
AN INVESTIGATION INTO THE FACTORS AFFECTING MARKETING OF
SACCO PRODUCTS: A CASE STUDY OF THIKA TOWN IN KENYA
QUESTIONNAIRE FOR SACCO EMPLOYEES
Dear respondents
I am carrying out a study that aims to investigate the factors that affect marketing of
SACCO products. Your institution has been selected as the respondent and as one of the
respondents, your opinions are very important to this study. This is an academic research
and the information provided is purely for academic purpose and will be treated with
utmost confidentiality.
The researcher requests you to spend a few minutes of your time and answer the
questions that are in this questionnaire. Your co-operation is highly appreciated.
Thank you very much for your co-operation and time in advance.
SECTION A: GENERAL INFORMATION (For this section, please circle the most
appropriate alternative and fill in the spaces where applicable)
1) Name of the SACCO…………………………………………………………
2) Gender
A
Male
B
Female
3) How old are you?
A Below 18 Years
B
19-35 Years
C
36-55 Years
D Above 55 Years
SECTION B: COMPETITION (For this section, please circle the most appropriate
alternative and fill in the spaces where applicable)
4) How would you rate the level of competition experienced in offering your services?
A Very low
B Low
C
High
D Very high
5) Have you ever lost customers to competitors?
A YES
B NO
If yes, who are the competitors? .....................................................................................
32
6) Which are the marketing strategies that you have adopted to overcome the
competition? .........................................................................................................................
SECTION C: INFORMATION TECHNOLOGY (For this section, please circle the
most appropriate alternative and fill in the spaces where applicable)
7) Do you use Automated Teller Machine (ATM)?
A YES
B NO
If no, please give a reason...............................................................................................
8) Do you have interconnected network throughout your branches?
A YES
B NO
If no, please give a reason...............................................................................................
9) How do you think the adoption of mobile money banking technology will improve the
performance of your SACCO? …………………...……………………………………
SECTION D: STAFF QUALIFICATION/TRAINING (For this section, please circle
the most appropriate alternative and fill in the spaces where applicable)
10) Does the SACCO carry out employee training?
A YES
B NO
If yes, how often is the employee training carried out?
A Not Often B Often C Very Often
If no, please state the reason...........................................................................................
11) What is the level of your level of education?
A Primary
B Secondary
C Certificate
D Diploma
E Degree
12) How long have you been working in the SACCO?
A 0-2 Years
B
3-5 Years
C
6-10 Years
D
Above 10 Years
SECTION E: CONSUMER ATTITUDE (For this section, please circle the most
appropriate alternative and fill in the spaces where applicable)
13) Which products does the SACCO offer?
A Loans B Advances C Saving Accounts D Mobile Banking E Electronic
Funds Transfer F Others (please specify) …………………………………….…………
33
14) Which ones are the most marketable?
A Loans B Advances C Saving Accounts D Mobile Banking E Electronic
Funds Transfer F Others (please specify) …………………………………….…………
15) Do you receive customer complains?
A YES
B NO
16) Basing on how often you receive complains from your customers, how much do you
think they like your products?
A Not Much
B
Average
C
Very Much
17) Basing on the number of new customers you get per day, how popular do you think
your SACCO products are?
A Not Popular
B Popular
C
Very Popular
18) Basing on how often you receive complains from the customers, how would you rate
the service delivery?
A Very Poor
B Poor
C
Good
D
Very good
19) Please name three most received complaints from the customers?
…………………………………..………………………………………………………….
………………………………………………………………………………………………
THANK YOU VERY MUCH FOR YOUR COOPERATION
34