Abstract
ABSTRACT Segmentation for retail financial and banking services is important for marketing practitioners, researchers and theorists. Two principal issues are the subject of this paper: firstly, the selection of criteria upon which market segments for retail banking will be built; and secondly, the evaluation and selection amongst market segments. The authors argue that segments should be evaluated and targeted using a portfolio-based approach which identifies segments according to their value to the financial institution both in the present and over the medium-term future. Such an approach recognises the varying value of relationships with different market segments and builds valuable relationships with chosen customer groups. The outstanding critical issue is the operationalisation of the concept of “relationship value” through the development of an algorithm to estimate the value of customer segments. Such an algorithm is likely to be based on a generic structure while being variable to suit the custome...
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