Influence of cost leadership as a generic competitive strategy on Microfinance institutions’ customer satisfaction in Meru, Kenya.

Abstract

Microfinance Institutions are special financial institutions which have both a social nature and a for-profit nature. Little is known about the influence of generic competitive strategies on customers' satisfaction in relation to MFIs. Thus, the current study seeks to provide empirical data on the extent to which generic competitive strategies used by MFIs influence customers satisfaction. Aim of the study seek to determine the influence of cost leadership and focus as generic competitive strategies on MFIs' customer satisfaction. This study was guided by the Cue Utilization Theory, Negative theory and the Assimilation Theory. The study adopted a descriptive design. The target population for this study was 12,920 customers. The sample size was 370 respondents. Simple random sampling was used to sample at least 2.8 percent of the target population from each MFI. Data was collected using structured questionnaires. The study obtained a reliability coefficient of 0.76 which was deemed reliable. Quantitative data was analyzed using Statistical Package for Social Sciences (SPSS 22.0). The study established that most of the MFI customers were satisfied with products/services offered by the MFIs. The results were supported by correlation analysis which indicated that cost leadership strategy does not statistically influence customer satisfaction. Correlation analysis indicated that focus strategy significantly influences satisfaction of MFI customers. It was thus conclude that differentiation strategy and cost leadership strategy do not significantly influence customer satisfaction. It was also concluded that focus strategy significantly influence customer satisfaction.