Abstract
The changing nature of retail financial services, brought about by regulatory and economic forces, has prompted financial institutions to take a renewed interest in the technique of market segmentation in an endeavour to compete successfully. Traditionally employed segmentation studies in the area of financial services have tended to be simple, relying largely on demographic information. This has resulted in segment descriptors rather than segment predictors being identified. This paper argues that the lack of a behavioural element in traditional studies has been the reason for this problem and contemporary research in this area should be concerned with explaining financial services behaviour and identifying segment predictors. An approach is suggested which is quantitative and works towards the establishment of a multidimensional model for segmentation of the retail financial services market. The paper focuses primarily on two sets of variables to be contained in the model and their justification for selection, The first set of variables deals with individual cognitive factors such as perceived knowledge of financial services, level of involvement and attitudes. The second set relates to demographic, geodemographic and socio economic information.
Work at this stage is only preliminary. The next stage, using statistical dependence methods, such as multiple discriminant and regression analysis, will attempt to develop a model which will explain and predict financial services behaviour.