The Extent to Which Market Segmentation Enhances Competitive
Abstract
The banking industry has remained relatively constant over the past several decades; however
liberalized domestic regulation, intensified internal competition, rapid innovations in new
financial instrument, the growth in information technology and a change in customer needs and
preferences has increased pressure on managers and workers to dramatically improve
productivity and financial services. The banks compete mainly on products and pricing. Superior
customer service coupled with product segmentation is deemed to createa competitive advantage
in which a product whose attributes differs significantly from rival products. The research used a
survey design of commercial banks in Kenya to establish the extent to which market
segmentation enhances competitive advantage of commercial banks in Kenya. The target
populations were the marketing managers of the various commercial banks. The data was
collected through questionnaires administered through drop and pick later method. Data
collected was analyzed and presented in the form of frequency distribution, percentage tables,
pie charts, bar graphs amongst others.
The research established that the banks in Kenya were mainly involved in money transfer,
deposit and payment facilitation and lending where they faced stiff competition from other
players like mobile banking and other financial institutions who offered similar services. The
study also found out that the majority of the clients for the banks were individuals account
holders and institutions with diverse financial needs. The researcher further revealed that banks
used market segmentation as a marketing strategy to enhance their competitive advantage. The
banks accrued various benefits derived from market segmentation, which included banks gaining
a competitive edge, achievement of customer satisfaction, customer retention and increased
profitability respectively.
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