Strategies adopted by Islamic banks to attract non-muslim customers
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.
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