ROLE OF MARKETING MIX ON PERFORMANCE OF MICRO FINANCE INSTITUTIONS IN KENYA

Abstract

Marketing mix play a key role in the performance of any institution. The purpose of this study was to assess the role of marketing mix on performance of MFIs. The objectives of the study were to establish the effect of promotion on the performance of microfinance institutions and to find out the extent to which pricing affects performance of microfinance institutions. The study adopted a descriptive design. The target population of this study was derived from the five selected microfinance institutions. The target population considered was the marketing managers who are based in head office in each of five institutions and the business development officers who are involved in marketing and selling of products on daily basis. A sample size of 13 marketing managers was selected purposively while 60 business development officers were selected randomly from the population. The study used questionnaire to collect the primary data. Piloting was carried out to test the validity and reliability of the instruments. Data was then coded, entered into a computer and was subjected to SPSS 19.0 for analysis. The study found out that majority of the respondents rated their institutions good or average in profitability. Sales promotion had the highest influence on performance of MFI followed by publicity; the third element of promotion mix which influenced the performance of MFIs was advertisement. Public relation did not strongly association with performance of MFIs. Other factors that had significant influence though with weaker level of association were personal selling and display of products. Pearson correlation analysis between the pricing strategies used and the MFI performance indicated that, the pricing strategies had negative relationship with the profitability, pricing strategies had a weak negative relationship with the number of clientele served, similarly a positive correlation exists between pricing strategy and market share. Poor pricing strategies result to inflated interest rates that turn away potential clients and reduce the amount of loan demanded. This study therefore recommended to MFIs to have well articulated, marketing mix incorporated in their marketing plans as a way of enhancing their performance. It also recommended that for MFIs to achieve better results in building the clientele base, amount of loan sold and improved profitability, they can leverage on the current developments in the banking industry especially adoption of mobile banking and agency banking.