Chapter 14: Market Segmentation and Buying Behaviour in the Islamic Financial Services Industry
Rusnah Muhamad, T.C. Melewar and Sharifah Faridah Syed Alwi INTRODUCTION The Islamic method of banking and financing has become a global phenomenon and has successfully developed into an established industry known as the Islamic financial services industry (IFSI). The industry has generated renewed interest among the players in the financial world amid the recent sub-prime and financial crisis. More importantly, IFSI has emerged as a viable alternative to the conventional interest-based financial services industry (CFSI), and has expanded rapidly over the last two decades with diverse clientele in both Muslim and non-Muslim countries. It is attracting growing interest from global players who are taking increasingly major roles in this industry (Aslam, 2006). For the past 30 years of its existence, the IFSI has been successful in providing an array of financial products (IDB et al., 2007). However, what is lacking at present is a detailed and classified understanding of consumers’ segmentation for the industry, thereby making the strategic positioning and marketing of IFS globally unclear and problematic. Traditionally, consumer segmentation by banks was largely limited to categories of corporate and retail consumers (Machauer and Morgner, 2001). Corporate consumers are distinguished by their geographic range of activities (regional versus international) or by their sector affiliation. In personal retail banking, externally observed demographic or economic criteria such as profession, age, income or wealth (known as the ‘a priori’ approach) are often used as dimensions for segmentation (Machauer and Morgner, 2001; Harrison, 1994; Meidan, 1984). Consumers could also be segmented based on a...
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