Strategies adopted by Islamic banks to attract non-muslim customers
Abstract
The intensity of competition in an industry is not a matter of luck. Rather, competition is
rooted in underlying industry economics and goes well beyond the established
competitors. Not all industries have equal potential. They differ fundamentally in their
ultimate profit potential as the collective strength of the forces of competition differs; the
forces range from intense in industries like tires, paper and steel, where no firm earns
spectacular returns, to relatively mild in industries such as oil field equipment and
services, cosmetics and toiletries, where high returns are common. Building long-term
relationships with customers has become a critical strategy for most financial institutions
in today's competitive financial markets. The banking industry must develop profitable,
long-term relationships with its customers in order to survive in the competitive retail
banking environment. Banks want a zero customer defection rate of profitable customers
to reduce the churn rate and minimize the acquisition costs of new customers
The research design was a cross sectional descriptive study of the Islamic banks
operating in Kenya. The study was used to identify the strategies used by the Islamic
banks to attract non-Muslim customers. The data collection tool was an interview guide.
Content analysis was used to analyze the qualitative primary data which had been
collected by conducting interviews and secondary information from the organization.
The findings from the study were that the Islamic banks uses low cost, differentiation,
pricing and delivery and distribution strategies to attract Non-Muslim customers. The
usage of the strategies resulted to formulation of policies and procedures which enhance
the strategy, business plan formulated on low cost strategy, continuous innovation of new
customer friendly products, formation of group based microfinance products to attract
low income customers and outsourcing of services. The bank also creates unique
position, advertise the products, customer segmentation, analysis of competitor cost
structure to set the prices, opening of more branches and installation of more ATM
facilities, adoption of information technology and deployment of a combination of
marketing strategies.
Publisher
University of Nairobi
Rights
Attribution-NonCommercial-NoDerivs 3.0 United StatesUsage Rights
http://creativecommons.org/licenses/by-nc-nd/3.0/us/Collections
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