The extent to which market segmentation enhances competitive
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.