An Assessmental Study on Use and Impact of Market Segmentation Practices on Bank Performance: With Special Reference to Commercial Banks in Colombia

This study examined the usage and effect of market segmentation trends and practises in the post-consolidation period of 2012 on the performance of selected banks in Colombia to date. Although the design was predominantly exploratory, the methods implemented were both primary and secondary, referring to basic market segmentation variables such as market share, geographical position and bank output pricing. The Herfindal Hirchman Index (HHI) statistical test was developed to test market concentration against the output of banks. Objective: The idea behind this study was to enable executives, business students, and banking employees to understand the definition and effect on bank results of marketing segmentation trends and practises. Results: Study findings show that segmentation activities have had a substantial effect on the performance of selected banks in Colombia. The study revealed that banks have used segmentation strategies to reduce their overall unit cost of service, grow their market shares, maintain their clients, strengthen their communications, increase profitability and concentrate on their industry. Thanks to their segmentation strategy called data-informed strategy, they are well-placed in capital strength and are the best capitalised banks in Colombia. Conclusion: However, the study concluded that there is a threshold point (37.2%) where any further contribution of funds to the practise of market segmentation will lead to a negative outcome. Recommendation: Less dominated banks were recommended to follow an acceptable corporate image, easy and flexible account opening formalities, just-in-time service delivery, management of employee customers, and efficient and effective use of referrals to achieve customer loyalty that helps to maintain old customers and also win new customers.

Author(s) Details

E. Asiedu
Servicio Nacional De Aprendizaje (SENA) Neiva, Huila, Colombia.

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