Relationship Between Target Market And Investment Returns Of Tier Two Banks In Nairobi, Kenya

Abstract

Banks employ a range of customer oriented marketing strategies, one amongst them target marketing as a way of maximizing the investments made. In this study the general objective was to determine the relationship between target market and investment returns amongst tier two commercial banks in Nairobi Kenya. The study targeted the 16 tier two commercial banks in Kenya as at August, 2016 as the target population. A descriptive cross-sectional survey because it cuts across all the tier two commercial banks in Kenya and it applied stratified random sampling technique to select 67 respondents from 368 respondents in all the 16 Tier two commercial banks in Kenya. The research instrument was a questionnaire which contained both open and closed ended questions to collect primary data. The collected research data was edited then coded, categorized and keyed into Statistical Package for Social Sciences (SPSS) for final data analysis. Descriptive measures including frequencies, means and percentages were computed. The study also conducted a regression analysis to establish the relationship between the independent and dependent variables. The study found out that banks had a large portfolio of large multinational customers and government enterprises and a great proportion of their profits came from corporate customers, SME customers had contributed to a large proportion of banks revenue and that SME market had improved the market expansion in the industry, individual market was composed of high volume low value transactions and offered a variety of financial services to individual customers at competitive prices and banks provided financial services to the rural and urban poor who are self-employed, individuals and institutions that traditionally lacked access to and provides loans of very small amounts to allow low income individuals access credit to help them become self-employed. The study concluded that corporate markets form a substantive source of returns to tier two banks. Further, the study concludes that, involvement of the tier two Kenyan banks in the SME segment had grown significantly and that SME market had improved the market expansion in the industry, the competitiveness of the banks, the loan book. On retail target market, the study found out that this segment leads to sustainable competitive advantage for the banks. The study recommended that, in pursuance of higher returns, tier two banks in Kenya should invest more in supporting the corporate segment of the market. Banks should invest more on the SME sector which has a nascent growth. Finally, the study recommends that tier two banks create partnerships with growing SMEs and existing corporate institutions to intake all their employees as clients to build on retail base.