Factors in Choice of Retail Bank in Kenya

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CRITICAL FACTORS CONSIDERED BY THE SMALL AND MEDIUM-SIZED ENTERPRISES IN THE CHOICE OF A SUITABLE RETAIL BANK : A CASE STUDY OF NAIROBI REGION, KENYA.

By
MWANIKI DANIEL KAMAKIA
D53/0L/14070/05

A RESEARCH PROPOSAL SUBMITTED TO
KENYATTA UNIVERSITY IN PARTIAL FULFILLMENT OF THE REQUIREMENTS OF MASTERS OF BUSINESS ADMINISTRATION

2008

ABSTRACT
Retailing is traditionally defined in terms of the retailers’ place in the distribution of tangible products. However, the retail function may be more widely defined where the retailer concerned is involved not only in the provision of product distribution services but also in the management and provision of financial services. Retailers are rediscovering the impact financial services may have on organizational success. That is, they are increasingly recognizing the direct contribution that financial services may make to profit margins and the indirect benefits which may accrue through increased customer loyalty.

This paper attempts to analyze the factors that affect the choice of customers of a suitable retail bank. The study involves a survey of 1000 bank customers using questionnaire as the research instrument, augmented with informal interviews of the customers and also makes thorough use of the information available on the internet. In the study, the authors have tried to identify various factors and also analyzed as to which of these factors exert the greatest, moderate and relatively lower influence as choice criteria. It is an attempt to study the consumer behavior with respect to the people’s choice of retail banks. Efforts are made to dwell deep in the psychology by talking to the customers surveyed, wherever possible. The 15 different factors that could be identified, approximately in the order of their importance, are (1) Safety of Deposits, (2) Size and Strength, (3) Accuracy, (4) General Service Quality, (5) Speed of Delivery, (6) Proximity, (7) Security of Environment, (8) Cordiality of Staff, (9) Price and Service Charges, (10) Product Packaging, (11) General Public Impression, (12) Peer Group Impression, (13) Face Lift (Structural), (14) Friendship with Staff and (15) Advertisement and Publicity. According to the findings, based on the empirical study, the first six factors exert the greatest influence, next four have moderate importance, and the rest five have relatively lower influence. Thus, retail banks must reorganize their activities to achieve their corporate mission through customer orientation. In the competitive and capitalistic markets consumer is sovereign and therefore the bankers must reengineer their view and recognize the predilection and tang of the retail customers.

As the Kenyan retail banks customers become more sophisticated it is now very important that retail banks determine the factors that are important and relevant to the customers’ retail bank choice decisions. By using a survey of retail bank customers, this study evaluates the relative importance attached to retail banks’ choice criteria used by male and female customers in Kenya. The results show that there are some differences in choice factors used by male and female customers in selecting a retail bank for patronage. The recommendation is that bank managers should take both female and male market segments into consideration when making retail bank strategic planning in order to become competitive. The findings can assist retail bank managers in refining their marketing strategies as a means of overcoming the intense competition that exists in the Kenyan banking system.

This paper presents an analysis of trends in the relative importance of choice criteria in respect of selecting a retail bank. In particular, it isolates those criteria which have become significantly more important in motivating choice over time and those which have become significantly less important. A quantitative methodology, using responses given by 100...
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