Assessing the implementation of market segmentation in retail financial services

Market segmentation is widely regarded as a panacea for a variety of marketing ailments. Yet research in the financial services market highlights a number of significant barriers to the implementation of segmentation schemes. These barriers range from weaknesses in customer data and inappropriate organisational structure, to lack of marketing orientation and difficulties in obtaining a fit within the existing distribution structure. While the marketing literature acknowledges that these difficulties exist, there has been little formal analysis to capture the characteristics of these barriers. This problem is compounded by the considerable size and diversity of the sector which make it difficult to generalise about the implementation problems. This means that the extent of any barriers may vary in different areas of the financial services market and even in different organisations and that this variation may feasibly translate into different levels of segmentation usage. This research uses four short financial services case studies to examine the application of segmentation and consider the implementation barriers. Although the case studies cover a range of financial services companies, the analysis focuses on the provision of charge/credit cards by these organisations. The growth rate and increasing importance of the charge/credit card business make this a particularly pertinent area to analyse and allow a comparison with retail banking services more generally. The findings support the notion that a range of barriers to segmentation exists and shows how the importance of these barriers varies in different organisations