Exploring the Potential Segmentation Bases for The Islamic Banks: A Qualitative Content Analysis

Segmentation analysis is importance to the bank industry as it guides the company marketing strategy and resource allocation. However, previous studies show mixed result resulting confusion to the marketer in the banking industry on whether to partition the market into a segment or to treat it as the mass market. The study aims to explore the most potential segmentation type, especially between the demographic and psychographic segmentation. Using an exploratory research design, the study applied a qualitative content analysis approach. The data were collected via in-depth interviews to 30 participants. Participant were aged 21-59. Half of the participant had conventional bank account only, 14 of the participant had both conventional and Islamic banking account and one of the participants had Islamic bank only account. The analysis was first conducted based on the demographic data of the respondent to see whether segmentation based on the respondent demographic data is workable for the Islamic bank. Then, the segmentation analysis was conducted based on the psychographic variables which categorized respondent based on their religious, economic and ethical orientation. The study reconfirms the previous study on the importance of applying psychographic segmentation. The study implies that the religious conviction consumers might have all been captured by the Islamic banks. Therefore, the Islamic banks now should focus to target the economic rational segment which is large in number compared to the ethical observant customers. The study also shed the light on the positive and negative aspects of marketing mix factor from both the conventional and Islamic banks so that the Islamic banks can benchmark and improve their services.