Effect of Market Penetration on Sugar Firms' Performance in Western Region of Kenya

Abstract

Ansoff's strategic success paradigm and principles for use by various industries have proven empirically to increase the firm's probability of strategic success and outstanding firm performance. The general objective of this study was to determine the effect of Ansoff's strategies on industry performance of sugar milling industry in the western region of Kenya. The specific objectives of the study were to determine the effect of market penetration, product development, market development, diversification on the performance of the sugar industry. The study adopted a cross-sectional survey research design. The target population for this research study was 40 managers working in the 12 sugar cane milling factories and the 28 established farmers out grower societies within the western region of Kenya. Questionnaires were used as the main data collection tool, and its reliability test was done using the Cronbach alpha coefficient. The researcher used descriptive statistics and regression analysis in data analysis and presentation. The study established that market penetration strategy is a statistically significant predictor for it explains 22% of the variation in the performance of sugar industry performance in western Kenya (R= 0.469, R² = 0.22, p = 0.004). This study contributes to the existing literature dealing with Ansoff's strategies and its effect on industry performance. The results are in agreement with other studies that the use of Ansoff's strategies, which include market penetration, market development, product development, and diversification, has proven impact positively on the industry performance. The study, therefore, recommends that sugar milling industries and out-growers societies should adopt and implement Ansoff's strategies effectively to increase industry performance. The findings also recommend the government of Kenya to develop appropriate policies and regulations and enforce them to ensure healthy competition among the sugar milling industries. Further research is necessary to undertake a comparative study to capture other factors and the applicability of market penetration on performance in other milling industries, such as tea and coffee.