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

This study assessed the use and impact of market segmentation patterns and practices on the
performance of selected banks in Colombia, post consolidation period of 2012 to date. The methods
applied were both primary and secondary while the design was mainly exploratory, relating basic
market segmentation variables like market share, geographical location and pricing to bank
performance. Statistical test using Herfindal Hirchman Index (HHI) was designed to test for market
concentration against bank’s performance.
Objective: The idea behind this research was to assist managers, business students, and banking
workers to understand the concept and impacts of marketing segmentation patterns and practices on
banks performance.
Results: Findings from the study indicate that, segmentation practices have immensely impacted on
the performance of the selected banks in Colombia. The study exposed that the banks have used
segmentation practices to lower their overall operation unit cost, expand their market shares, retain
their customers, better their communications, increase profitability and focus on their company. They
are well positioned in capital strength and they are the best capitalized banks in Colombia, thanks to
their segmentation strategy called data-informed strategy.
Conclusion: The study however concluded that there is a threshold point (37.2%) in which any
further commitment of funds into market segmentation practice can lead to negative result.
Recommendation: It was recommended that less dominated banks can adopt acceptable corporate
image, simple and flexible account opening formalities, just-in-time service delivery, employeecustomer
management, and effective and efficient use of referrals to win customer loyalty which tend
to retain old customers and win new customers as well.