AN INVESTIGATION INTO THE FACTORS AFFECTING …



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

APPROVAL

This project has been submitted for examination with my approval as the University candidate supervisor

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

MR. KIWALA YUSUF

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.

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

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

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

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

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

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

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

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.

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 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 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.

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.

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.

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.

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.

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).

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 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.

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. 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.

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.

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.

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.

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 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.

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 |PERCENTAGES |

|below 18 |0 |0 |

|19-35 |8 |32 |

|36-55 |12 |48 |

|Above 55 |5 |20 |

|Total |25 |100 |

Source; Primary data

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.

[pic]

Figure 1: Responses on the level of competition experienced in offering the service

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.

[pic]

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. 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 % |

|Yes | 12 |48 |

|No | 13 |52 |

|Total | 25 |100 |

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 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 |

|Primary |0 |0 |

|Secondary |0 |0 |

|Certificate |5 |20 |

|Diploma |12 |48 |

|Degree |8 |32 |

|Total |25 |100 |

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 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

[pic]

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 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

[pic]

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

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

[pic]

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

The findings can be summarized in the figure below

Table 6: Response on how the service delivery is rated

|RESPONSE |NO OF RESPONDENTS |PERCENTAGE |

|Very poor |0 |0 |

|Poor |5 |20 |

|Good |15 |60 |

|Very good |5 |20 |

|Total |25 |100 |

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

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 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.

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.

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

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.

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? .....................................................................................

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) …………………………………….…………

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

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