First Journal Review: Target Market

Journal Title:

Benefit Segmentation by factor analysis: an improved method of targeting
customers for financial services

Authors: Raj Singh Minhas, Everett M. Jacobs (1996)


Journal: International Journal of Bank Marketing, Issue 3, Volume 14, Page 3-13


Review and Comments

As we know that, market segmentation could be done by three ways which are geographic, demographic, socio-economic and psychographic characteristics in order to reach the target market. However in this research, it stated that these ways are very poor to predict the future buying behavior especially in marketing financial services. So, this paper used benefit segmentation to reach their target market.


Before we go further, let me introduce some definitions of these traditional segmentation methods that given in this paper.
(a) Geographic segmentation
Definition: Dividing the market into different geographical units such as local town,
region or country as a whole. (Raj Singh Minhas et al., 1996)


(b) Demographic and socio-economic segmentation
Definition: Based on age, sex, marital status, income, occupation, education, religion,
social class. (Raj Singh Minhas et al., 1996)


(c) Psychographic segmentation
Definition: Based on social class, lifestyle, or personality variables. (Raj Singh Minhas et al., 1996)


Due to the increasingly uses of new technology in marketing, market segmentation for the banks should not only depends on the traditional segmentation methods (Anderson et al., 1976). So, Haley (1968) has introduced “benefit segmentation”, which segments the customers according to the benefits they seek when purchasing a product or service. According to Raj Singh Minhas et al. (1996), “these factors have a causal relationship to future purchase behavior” (pg.4). In a nutshell, benefit segmentation is said to be a form of behavioral segmentation.


Benefit segmentation is used because the benefit that people seek is the basic reason for purchase and then form the proper basis for market segmentation (Assael, 1995; Haley, 1968). I agree to this because I personally buy a product/service because of the benefit it could give. However, we should understand the real benefit that consumer looking for to avoid failure in market segmentation.


Besides, benefit segmentation is used for four (4) main purposes as follow:
(a) to develop new products;
(b) to reposition old products;
(c) to discontinue old products
(d) to facilitate two-way communication process between consumes and the company


In order to implement this segmentation, Raj Singh Minhas et al. have identified eight (8) benefits that are usually seeking by financial service customer.
1. Accessible Cash function
2. Money Management function
3. Personal Services function
4. Cash Card function
5. Full Banking Service function
6. Advice function
7. Investment function
8. Limited Banking Service function


Questionnaires are given to respondents and result showed that financial service customer usually looking for the third benefit which is the “Personal Service” function. Besides, benefit 7 and 8, which are “Investment” function and “Limited Banking Service” function also some of the benefit that customer looking for.


So, banks for financial institutions should concentrate on developing these functions in order to segment and reach their target market.


I think that researchers still have a lot of chances to research in different categories of products/services by using benefit segmentation method. This is because different categories of products/services have different benefits that customers seeking. In my opinion, the benefit that we are looking for in a particular product/service is the need of customers. So, benefit segmentation would lead us to understand about customers’ need and thus these benefits would be the proper appeals to the customers.