DETERMINANTS OF CONSUMER CHOICE OF COMMERCIAL BANKS

A CASE OF KENYA COMMERCIAL BANK IN NAKURU TOWN

BY
■WIV^SIIYO^
*«uru U S R A R ^

"ttRQQl

DAVID K3PNGETICHJCHEPKANGOR
k

RESEARCH PROJECT REPORT SUBMITTED IN PARTIAL FULFILLMENT OF THE

REQUIREMENT FOR THE AWARD OF THE DEGREE OF MASTERS OF ARTS IN
PROJECT PLANNING AND MANAGEMENT, OF THE UNIVERSITY OF NAIROBI.

2012

University of NAIROBI Library

 DECLARATION

This research report is my original work and has not been presented to any university or any
other institution of higher learning for any award.

Signature. Date. 2*1* Xo

David Kipngetich Chepkangor

L50/61643/2011

This report has been presented for examination with my approval as the University supervisor.

S i g n a t u r e . . ^ ^ D a te .3 .® ^
Dr. Stephen Wanyonyi Luketero
Senior Lecturer, School of Mathematics, University of Nairobi

v
11
 DEDICATION
This project report is dedicated to my beloved wife Judy, daughter Michelle and son Alvin who
endured all the difficulties encountered while I was preparing this project. To my father Mr. Henry
Cherogony and mother Mrs. Christine Chepkangor I say thank you a lot

V iii
 ACKNOWLEDGEMENT
My foremost acknowledgement goes to the almighty God who has provided me with the strength to
contemplate aspects of this project as well as go through my studies. Secondly I wish to express my
heartfelt appreciation to Dr. Stephen Luketero (PhD), who has taken me through the task of
carrying out this proposal with lots of patience. Thanks also goes to lecturers who took me through this
course with special regards for Mr. Mungai whose administrative powers and humor has kept us going.
Indeed all the lectures who took me through this course demonstrated commendable commitment thus
making this course lively and leaving me with the confidence that it was relevant to my aspirations.

I also wish to acknowledge my very supportive colleagues in the MA Project Planning Management class
(2011-2012) at the University of Nairobi’s Nakuru Extra Mural centre. Further appreciation goes to work
mates at KCB Nakuru led by my kind boss Mr. Albert Cherono for the moral support they gave me
right from the time I expressed intend to dhibark on these studies.

IV
 TABLE OF CONTENT
d e c l a r a t io n ............................................................................ _ii
d e d ic a t io n ................................................................................ ,.iii
a c k n o w l e g e m e n t ................................................................ ..iv
TABLE OF CONTENT.................................................................. ..v
l is t o f f ig u r e s ......................................................................... viii
l is t o f t a b l e s ................ ......................................................... ..ix
a b b r e v ia t io n s a n d a c r o n y m s ....................................... ..x
ABSTRACT................................... .'.MV.SBSJ T.V. .xi
CHAPTER ONE.................................. £ 2 * ............................... ..... 1

INTRODUCTION.................................... ^ !3 .9 M .................... ..... 1

1.1 Background of the study............................................ ..... 1

1.2 Statement of the problem.......... I .............................. ..... 3
1.3 Purpose of the study................................................... ..... 4
1.4 Objectives................................................................... ..... 4
1.5 Research questions..................................................... ..... 4
1.6 Significance of the study.............. .............................. ..... 4
1.7 Limitations of the study............................................. ..... 5
1.8 Delimitations of the study.......................................... .....5
1.9 Basic assumptions...................................................... .....5
1.10 Definitions of significant terms as used in the Study, .....6
1.11. Organization of the study......................................... .....6
CHAPTER TWO........................................................................ .....7

LITERATURE REVIEW......................... ................................. .....7

2.1 Introduction............................................................................... .....7

2.2 The banking sector............................... .................................... .....7
2.3. Review of Past studies............................................................ ....10
2.4. Theoretical Framework -The Consumer Behavior Theory.... ....11
2.5 Empirical review..................................................................... ....14
2.5.1 Cultural factors and Customer choice of Commercial Banks ....14

v
 2.5.2 Social factors and consumer choice of a commercial bank........................................ 16
2.5.3 Personal factors and Consumer choice of a commercial bank................................... 17
2.5.4 Product and service factors and their Influence on Customer choice of a bank.........18
2.6 Types of buying decision behavior................................................................................ 21
2.7 Conceptual Framework......................... 24
2.8 Summary of literature review........................................................................................ 25
CHAPTER THREE....................................................................................................................... 26

RESEARCH METHODOLOGY.................................................................................................. 26

3.1 Introduction.................................................................................................................... 26
3.2 Research design.............................................................................................................. 26
3.3 Target population of the study....................................................................................... 27
3.4. Sample size selection and sampling procedures.......................................................... 27
3.4.1. Sample size selection............... 4 ................................................................................ 27
3.4.2 Sampling procedures................................................................................................. 28
3.5 Research Instrument.......... ................................ 28
3.5.1 Pilot testing................................................................................................................. 29
3.5.2 Administration of the Questionnaire........................................................................... 29
3.6 Validity and Reliability of Instruments...................... *..................................................29
3.6.1 Research Validity........................................................................................................ 30
3.6.2 Research Reliability.................................................................................................... 30
3.7 Data Analysis Techniques............. 31
3.8 Ethical Considerations................................................................................................... 31
3.9 Operational Definition of Variables............................................................................... 32
3.10 Chapter Summary........................................................................................................ 34
CHAPTER FOUR......................................................................................................................... 35

DATA ANALYSIS, PRESENTATION, INTERPRETATION AND DISCUSSION.................35

4.1 Introduction.................................................................................................................... 35
4.2 Response Rate........................................................................................................... 35
4.3 General Characteristics of the respondents.................................................................... 36
4.3.1 Distribution of respondents by age group................................................................. 36

vi
 4.3.2 Marital Status of the respondents............................................................................... 37
4.3.3 Occupational level of the respondents........................................................................ 37
4.3.4 Highest level of education of the respondents............................................................ 38
4.4 Presentation of the findings.......................................................................................... 38
4.5 How the Respondents Got To Know About Kenya Commercial Bank.........................39
4.6 Factors influencing Consumer Choice of a Bank.......................................................... 41
4.6.1 Cultural Factors........................................................................................................... 41
4.6.2 Social Factors.............................................................................................................. 43
4.6.3 Personal Factors.......................................................................................................... 45
4.6.4 Product/services factors.............................................................................................. 48
CHAPTER FIVE............................................................................................................................53

SUMMARY OF THE FINDINGS, DISCUSSIONS, CONCLUSIONS AND

RECOMMENDATIONS......................... 53

5.1 Introduction.................................................................................................................... 53
5.2 Summary of the study findings...................................................................................... 53
5.3 Discussion of the study findings.................................................................................... 55
5.4 Conclusions.................................................................................................................... 58
5.5 Recommendations.......................................................................................................... 59
5.5.1 To the Bank................................................................................................................. 59
5.5.2 To Other Researches............................. 59
REFERENCES.............................................................................................................................. 62

APPENDIX: I KCB CUSTOMER SHARE GRAPH................................................................... 65

APPENDIX: II WORK PLAN...................................................................................................... 66

APPENDEX: III BUDGET........................................................................................................... 67

APPENDIX: IV REQUEST FOR ACADEMIC SURVEY RESEARCH....................................68

APPENDIX: V LETTER OF RESEARCH AUTHORIZATION................................................. 69

APPENDEX: VI RESEARCH QUESTIONNAIRE..................................................................... 70

Vll
 LIST OF FIGURES

Page
Hgim 1. The model of consumer behavior
...13 •
Figure 2. Conceptual Framework..............
.24

viii
 LIST OF TABLES
Page

Table 3.1 KCB, Nakuru Branch category of clients/Customers........ ....27

Table 3.2 Operational Definition of Variables................................... ...32

Table 4.1: Response Rate ................................................................ ....35

Table 4.2: Age Group........................................................................ ...36

Table 4.3: Marital Status................................................................. ....37

Table 4.4: Occupation....................................................................... ....37

Table 4.5: Highest level of education................................................ ...38

Table 4.6: Source of Information about Kenya Commercial Bank . ....39

Table 4.7: Accounts owned by respondents...................................... ....39

Table 4.8: Level of Income.............................. „ ............................. .... 40

Table 4.9: Culture............................................................................. ....41

Table 4.10: Sub Culture.................................................................... ...41

Table 4.11: Social class.................................................................... .....42

Table 4.12: Groups............................................................................ .....43

Table 4.13: Family............................................................................ .....43

Table 4.14: Role and Status............................................................... ...44

Table 4.15: Age and Lifecycle Stage................................................ .....45

Table 4.16: Occupation..................................................................... .....45

Table 4.17: Economic Situation........................................................ ..... 46

Table 4.18: Lifestyle.......................................................................... .....47

Table 4.19: Personality...................................................................... ....47

Table 4.20: Easy Account opening procedures................................ ....48

Table 4.21: Bank opening Hours...................................................... ....49

Table 4.22: Interest Rates Offered..................................................... ..... 49

Table 4.23: Operating balances of an account.................................. ..... 50

Table 4.24: The ATM efficiency / technology................................. ....51

Table 4.25: Other Factors Influencing Consumer Choice of a Bank ..... 51

Table 5.1 Contribution to knowledge............................................... ..... 59

IX
 ABBREVIATIONS AND ACRONYMS
ATM Automated Teller Machine
BBK Barclays Bank of Kenya
CBD central business district
CBK central bank of Kenya
KBA Kenya Bankers
KCB Kenya Commercial Bank
Ms Excel Microsoft Excel
MFI Microfinance Institutions
NBK National Bank of Kenya
SPSS Statistical Package for Social Scientists

x
 ABSTRACT
Customer choice of bank is an important element of banking strategy in today’s increasingly
competitive environment. Bank management must identify and improve upon factors that can
increase customer retention. There are factors that influence customer choice of banks as
customer still shift from one bank to another and since these factors are several and varied, there
is need to investigate the factors influencing consumer choice of commercial banks in Nakuru
Municipality. Nakuru municipality currently has an establishment of over twenty four banks;
these banks have and continue to rely on the attrition of customers from other existing banks and
also sourcing for new ones in the market. This calls for a need to improve customer retention
techniques by establishing the factors that influence a consumer choice of bank in the banks to
avoid the existing customers from switching to competiticn. The research relied on the case of
Kenya Commercial Bank in Nakuru municipe.ity. This branch was chosen based on the fact that
it has been in existence in Nakuru market for a period of over twenty years and now has a large
customer base. The objectives of the study were; how cultural, social, personal, and bank product
factors assist in determination of consumers’ choice of a commercial bank. In order to collect the
required data the population of the study comprised of 396 respondents on whom questionnaires
were administered. Systematic random sampling was employed where by each of the tenth
customer on the queue was given a questionnaire to complete and return. The Questionnaire was
piloted so as to improve its validity. The collected data was coded and analyzed by the aid of
Statistical Package for Social Scientists and Microsoft excels computer software and presented in
tables and a narrative summary. From the findings, consumer choice of a bank is very highly
affected by economic factors. The amount of income of an individual determines the amount he
or she has to save in a bank. Age and lifecycle stage, role and status and social class have a high
effect on consumer choice of a bank. Easy account opening procedures, operating balance of an
account and the ATM efficiency/technology also has high effects on consumer choice of a bank.
Culture, sub culture, and group’s influences consumer choice of a bank with a low effect.
Personality, lifestyle and family have a very lew effect on consumer choice of a bank. Customer
service, availability of loan and convenience also affect consumers’ choice. The study
recommends the bank embraces customers of 17 years and below and also adopt marketing
policy to take care of competition.

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 CHAPTER ONE

INTRODUCTION

1.1 Background of the study

A feature of the banking industry across the globe is that it is increasingly becoming turbulent
and competitive, characterized by an increasing trend towards globalization, mergers, takeovers
and consolidation of the banking industry. Moreover, a number of non-banking companies have
entered the banking industry by offering financial products and services (Seetanah, 2007). For
example Safaricom’s MPesa services and Zain’s Zap services that both offer mobile banking
services.
This gave a myriad of options to customers in choosing banking services. As a response and that
was aided by technological developments, banks attempted to build customer satisfaction by
providing better products and services and at the same time reducing its operating costs. In the
developing countries, the banking sector has gained greater importance in the last decade.
Consequently, the growing competition in the sector forced the banks to launch new products
and services more frequently. The development and modification of these products constituted to
one of the most important tasks of a bank manager (Padachi , 2007). Understanding the needs,
motivations and priorities of the consumers and analyzing how they select suppliers and products
as the first crucial steps towards the improvement of consumer satisfaction. (Rojid, 2007).
To match with the competition in the banking industry, marketers needed to understand
consumer behavior of both their current and prospective customers. Marketers spent a great deal
of time thinking about customers and their buying behavior. They needed to know who their
customers are, what they think and how they feel and why they will choose a particular bank and
not just any other. Consumer behavior refers to the buying behavior of final consumers-
individuals and households who buy goods and services for personal consumption. Consumer
behavior involves all those psychological, social and physical mannerisms of potential customers
as they become aware of products, evaluates purchase, consume and tell others about the product
(Kotler, 2006).

1
It is therefore, this behavior consumer’s display when searching for, when purchasing, using,
evaluating, disposing the product or the idea that they may have for the commodity and if it will
satisfy their need. Consumers around the world vary tremendously in age, income, education
level, and tastes. They will also buy an incredible variety of goods and services. How these
diverse consumers connect with each other and with other elements of the world around them
impact their choices among various products, services and companies (Gilbert A. 1995).
However, penetrating the consumer’s black box (mind) was not an easy task. Often, consumers
themselves may not know exactly what might influence their purchases. “Ninety-five percent of
the thought, emotion, and learning (that may often drive our purchases) occur in the unconscious
mind-that is, without our awareness,” notes one consumer behavior expert. The central question
for marketers is: How will consumers respond to various marketing efforts the company might
use (Armstrong, 2006). \
Consumer behavior is affected by a variety of factors. These factors include; cultural factors,
social factors, personal factors, and psychological factors. All these factors influence consumers’
characteristics such as motivation, perception, learning, personality, and attitude (Jr.J. Paul,
1995).
In Kenya, the history of KCB dates back to 1896 when its predecessor, the National Bank of
India opened an outlet in Mombasa. Eight years later in 1904, the Bank extended its operations
to Nairobi, which had become the Headquarters of the expanding railway line to Uganda. The
next major change in the Bank’s history came in 1958. Grindlays Bank merged with the National
Bank of India to form the National and Grindlays Bank. (CBK,2010)
Upon independence the Government of Kenya acquired 60% shareholding in National &
Grindlays Bank in an effort to bring banking closer to the majority of Kenyans. In 1970, the
Government acquired 100% of the shares to take full control of the largest commercial bank in
Kenya. National and Grindlays Bank was renamed Kenya Commercial Bank. Whatever your
banking needs, KCB has the answer. The bank has over two hundred and twenty two (222)
branches in Kenya and East African region, ie. Uganda, Tanzania, Sudan, Rwanda and Burundi
(and still growing), KCB take out the hassle of your day to day banking by bringing our financial
services closer to you. KCB's wide range of Personal products includes savings accounts, current
accounts and credit facilities. (KCB report, 2011)

2
In each of our branches you will find a Personal Banker ready to assist you with your banking
needs, by giving you the personalized attention you need.Kenya Commercial Bank has majored
in recognizing that many citizens, particularly the low-income earners; lack access to affordable
banking services, the Bank operates Mobile village Banking services which takes services closer
to the people. Presently, Kenya Commercial Bank has a large number of village Banking centers
widely known as “KCB Mtaani”. The Bank has a research and development program whose
principle objective is to find ways and means of providing the best financial services to
everyone. It has therefore build up a training Centre “KCB leadership Centre” for training its
employees. The research unit helps the Bank to achieve its business model of being market-led
(Market Intelligence Bank Survey, 2006).

1.2 Statement of the problem ^

The banking industry has grown over the past years in Kenya and the world at large. As a
country becomes more developed there is greater need for banking services to facilitate the
people’s monetary transactions. The state of insecurity has posed an opportunity for expansion in
banking industry and hence leading to stiff competition in the industry. Kenya Commercial Bank
is among other banks such as Barclays Bank, Co-operative bank, Standard Chartered Bank,
Equity Bank, CFC Stanbic bank; Family bank commands the largest market share. There has
been a lot of customers shifting from the tradional banks like KCB, Barclays and Stamchat to the
then emerging banks in the early 2000 like Equity Bank and Family bank and again, there has
been a shift of customers back to this banks in the last three years (Market Intelligence Bank
Survey, 2009). Customers have changed banks by shifting for the last three years as shown in
appendix I [graph 1 and 2] .(report by KCB market survey 2011) Co-operative and KCB has
been increasing while Family and Stamchat Banks has been losing its market shares. Equity
however has remained almost constant. There’s limited literature on why customers of banks in
Kenya would shift from one bank to another and then reshift to the original bank again. Banks
have continuously competed by redesigned its products and services and some have even
launched huge marketing campaigns in a bid to retain these customers, but still they shift. It is
against this background that this research seeks to investigate the factors that influence the
customer’s choice of banks among KCB customers in Nakuru Municipality.

3
 1.3 Purpose of the study

The purpose of this study was to investigate the factors that influence consumer choice of
commercial banks in Nakuru Municipality.

1.4 Objectives

The study was guided by the following objectives:

i. To what extend do cultural factors influence the manner in which consumers choose a
bank.
ii. To determine how social factors influence consumers’ choice of commercial bank.
iii. To what extend do personal factors influence consumers’ choice of a bank.
iv. To determine how product and services offered by Commercial banks influence
consumers while choosing a bank.

1.5 Research questions

The following research questions guided the study;

i. How do cultural factors influence the manner in which consumers choose a bank?
ii. How do social factors influence consumers’ choice of commercial bank?
iii. How do personal factors influence on consumer choice of banks?
iv. How do product and services offered by Commercial banks influence consumer choice of
banks?

1.6 Significance of the study

This study is important to various stakeholders as described under: The findings of this study
will benefit to various banks in that they got to liaise with the consumers in order to establish
their needs, and also look for the best ways of meeting these needs better than their competitors.
The consumers will also have a heightened awareness in regard to what factors to consider when
^choosing a bank. The banks’ top management will use the study findings in decision making to
enable them to improve their services and expand their customer base.

4
New entrants in the banking industry will also benefit from the findings on what the consumers
look for in a bank. It will serve as an industry analysis to enable them to know how consumers
make their choices for banks. Researchers and academicians will use these findings as a basis for
future research.

1.7 Limitations of the study

The researcher encountered a problem of confidentiality since he was expected to do a lot of

research in such a limited time in an organization that upholds confidentiality in their clients and
the organization. This possibly limited full disclosure. The researcher being a student was faced
with a problem of inadequate funds to finance the study all by himself. Some of the respondents
I
were not willing to sacrifice their time to fill in the questionnaires administered by the researcher
due to their busy schedule in that frequent interruptions are expected, from telephone calls, to
meetings, to clients and this limited the amount of concentration and flow of information.

1.8 Delimitations of the study

The study was carried out within Nakuru municipality in the KCB Nakuru banking hall. Bank
customers on the queue were interviewed. The bank customers helped provide information
related to their levels of satisfaction on retention aspects as concerns personal, product packages,
and physical factors. This information was easily obtainable since the person carrying out the
research is an employee of one of the banks and interacts with other bank employees and bank
customers as part of his duties.

1.9 Basic assumptions

Assumptions made on this research are that; respondents from the banks answered questions
truthfully and the bank in the case study opened its doors and was willing to have the researcher
administer the questionnaires to their staff and customers without a problem. Also the results
gotten from the sampled 396 customers will be a good representation of the entire banking sector
Nakuru municipality.

5
1.10 Definitions of significant terms as used in the Study.

Customer retention: refers to the percentage of customer relationships that, once

established, a bank is able to maintain on a long-term basis
Non-Financial factors: factors that do not have monetary values in this context are;
Personal, Product mix and Physical factors.
Personal factors: Personality and Self-Concept of a customer that influences his/ her
bank retention rate
Product packaging factors: the way in which banks tailor and present their products to
prospective and existing customers.
Physical factors: Non-living factors in banks\hat affect customer retention
Customer satisfaction: is an individual’s feeling of pleasure or disappointment resulting
from comparing a product’s perceived performance (or outcome) in relation to his or her
expectations.

1.11. Organization of the study

Chapter one covered background of the study, statement of the problem, purpose of the study,
research objectives, research questions, significance of the study, limitation and delimitation of
the study, basic assumptions of the study, definition of significant terms used in the proposal, and
organization of the study. Chapter two covered literature review, which will be organized under
history of the banking sector, banking environment, customer retention, customer behavior
theory, empirical review, cultural, social, personal products and service factors that influence
consumer choice of commercial banks. Types of buying decisions, conceptual framework
summary of literature review. Chapter three covered research methodology with the following
topics; introduction, research design, target population, sample size selection and sampling
procedure, data collection methods, data analysis, data presentation, operational definition of
variables. Chapter four covered data analysis, presentation, interpretation and discussion with the
following topics; response rate , presentation of the findings, general characteristics of the
J^spondents, factors influencing consumer choice of a bank; cultural factors, social factors,
personal factors and product/services factors. Chapter five covered summary of the findings,
discussions, conclusions and commendations.

6
 CHAPTER TWO

LITERATURE REVIEW

2.1 Introduction

This chapter focuses on literature by different authors on factors influencing consumer behavior
on the global perspective, Africa in general and Kenya in particular, with a view to
understanding the various approaches as well as stimulating new ideas about the study area. The
review covers several arguments and views postulated by various researchers across the world
regarding the theoretical approach of the concepts of consumer behavior by different authors.
N

2.2 The banking sector

In Kenya the banking industry is regulated by the Central Bank of Kenya Act, Banking Act, and
the Companies Act among other guidelines issued by the Central Bank of Kenya (CBK).
Banking industry in Kenya was liberalized back in 1995 and exchange controls revoked. The
banking system comprised 46 commercial banks, 15 micro-finance institutions (MFIS) and 109
forex bureaus at the end of December 2008. (CBK, 2008)
The banks have come together under the Kenya Bankers Association (KBA), which works as
lobby for the Banking industry in Kenya. KBA also serves as a forum to address issues affecting
the banking sector in Kenya. The banking sector in Kenya has over the past few years enjoyed
exponential growth in deposits, assets, profitability and products offering, mainly attributed to
automation of services and branch network expansion both locally and regionally. This growth
has brought about increasing competition among players and new entrants into the banking
sector. Thanks to the stiff competition, banks are now focusing on the diverse customer needs
rather than traditional banking products such as over the counter cash deposit and withdrawal.
Top banks in Kenya include Barclays, KCB, Equity, Standard Chartered, Cooperative, Diamond
Trust, Citibank Europe, I &M, CBA and National Bank.(KBA,2009)
The banking environment in Kenya has, for the past decade, undergone many regulatory and
^nancial reforms. These reforms have brought about many structural changes in the sector and
have also encouraged foreign banks to enter and expand their operations in the country (Kamau,

7
2009). Kenya’s financial sector is largely bank based as the capital market is still considered
narrow and shallow (Ngugi, 2006).
Banks dominate the financial sector in Kenya and as such the process of financial intermediation
in the country depends heavily on commercial banks (Kamau, 2009). In fact Oloo (2009)
describes the banking sector in Kenya as the bond that holds the country’s economy together.
Sectors such as the agricultural and manufacturing virtually depend on the banking sector for
their very survival and growth. The performance of the banking industry in Kenya has improved
tremendously over the last ten years, as only two banks have been put under CBK statutory
/
management during this period compared to 37 bank-failures between 1986 and 1998 (Mwega,
2009).
The overall profitability of the banking sector in Kenya has improved tremendously over the last
10 years. However despite the overall good picture a critical analysis indicates that, not all banks
are profitable. For example the small and medium financial institutions which constitute about 57
% of the banking sector posted a combined loss before tax, of Ksh 0.09 billion in 2009 compared
to a profit before tax of Ksh 49.01 billion posted by the big financial institutions .The huge
profitability enjoyed by the large banks vis-a-avis the small and a medium bank indicates that
there are some significant factors that influence the profitability of commercial banks (CBK,
2009).
Several studies have shown that bank profitability is influenced by bank-specific factors and
industry specific factors. However, these studies were based on data from other countries and
their findings may not be applied to the local banking sector. Locally, to the researcher’s
knowledge, no studies have been done to determine the key factors that influence the
profitability of commercial bank. (Flamini, 2009)
The competitiveness in the banking industry has increased significantly in recent years due to
deregulation and globalization. Since the products and services offered by banks can often be
easily duplicated, banks are not only competing with each other but also with other non-banks
financial institutions. When banks provide nearly identical services, they can only distinguish
themselves on the basis of price and quality. (Hull, 2002).
Globally, the banking industry has reached saturation and has become commoditized since banks
offer nearly identical products. Such evidence suggests that banks have reached the maturity
phase of the product lifecycle. This carries the danger of creating a downward spiral of perpetual

8
discounting - fighting for customer share Thus, it is essential for bank management to try their
best to retain as many customers as possible in order to remain competitive. (Mendzela, 1999).

From a cost perspective, retaining an existing bank customer costs less than creating a new one.
The cost of creating a new customer has been estimated to be five times more than that of
retaining an existing customer .Banks seek to achieve a zero defection rate of profitable
customers, to minimize the customer chum; the acquisition and subsequent loss of customers .In
addition, longer-term customers buy more and, if satisfied, may generate positive word-of-mouth
promotion for the banks (Reichheld & Kenny, 1990).
As a consequence, retaining customers becomes a priority and there are compelling arguments
for bank managers to carefully consider the factors that might increase customer retention rates.
Furthermore, long-term customers also take less of the bank's time and are less sensitive to price
(Healy, 1999).
Previous researches have also shown that longevity does not automatically lead to profitability.
A bank cannot claim to have loyal clients, unless customers express their future commitment to
use the bank’s services and their willingness to consider the bank’s new financial strategies and
services. In addition, loyal clients will also show their resistance to competitors’ enticements and
be willing to give their current bank both solicited and unsolicited referrals. (Colgate, Stewart,
and Kinsella, 1996)

Customer retention has focused narrowly on customer loyalty and customer satisfaction without
attempting to link them in a model to further explore or explain customer retention. If retention
aspects are not well managed, customers may still leave their banks, regardless of how hard
bankers try to retain them. Some of the following link factors impact customer retention in
banks; The links between customer satisfaction, customer value and bank image, The links
between competitive advantage, customer satisfaction, customer value, bank image and the
switching barriers with regard to consumers’ behavioral intentions and customer loyalty, and
also The links between consumers’ behavioral intentions and customer loyalty with regard to
customer retention. (Farquhar, 2004).
In general, higher levels of customer satisfaction do not necessary lead to customer loyalty and
retention hence Customers can be highly satisfied but still leave their current banks. It is assumed

9
that when the customer is completely satisfied, then loyalty towards the bank is strengthened but
it is not guaranteed that he or she will stay in that bank forever. (Reichheld, 1996).

2.3. Review of Past studies

Previous research suggests that an individual’s bank choice decision is influenced by products,
delivery channels and customer relations. Although consumer bank choice process continues to
be a research problem of considerable academic and applied interest, a very limited number of
conjoint studies have focused on this subject. Me Kechnie (1992) surveys a variety of studies of
buying behavior for personal and corporate financial services. Moutinho (1992) examines the
*
customer satisfaction with Automatic Teller Machines. File and Prince (1992) discuss the
relations among customer satisfaction, loyalty and word-of mouth. Lewis (1993) examines the
recent developments in financial service quality.
McDougall and Levesque (1994) investigate the importance of the major dimensions of service
quality and other product offerings in retail banking.

Avkiran (1999) measured the dimensions of bank service quality and came up with four
discriminating factors, namely staff conduct, credibility, communication and access to teller
services. Staff conduct refers to responsiveness, civilized conduct and professional image of
branch staff, while credibility refers to rectifying mistakes, and keeping customers informed.
Communication includes giving financial advice, serving timely notices and access to teller
services refers to the adequacy of number of staff serving customers throughout business hours
and during peak hours.
Boyd. (1994) also studied selection criteria of banks and how these differ according to
customers’ behavioral and demographic characteristics, such as marital status, size and income
of household, occupation of household head. The researchers managed to identify five most
important factors in explaining how customers choose banks: reputation, interest on savings
accounts, interest charged on loans, quick service and location in the city. Moreover, the
researchers found that the relative importance of these criteria varied between groups of
respondents with different demographic characteristics, with the exception of reputation, which
as selected by all household categories except divorced people.

10
 A number of studies have devoted part of their analysis to the importance of selection factors
relative to age of customers. For example, in part of their study, Boyd (1994) investigated the
importance of bank selection criteria in terms of the age of the head of the household. They
found that for the age group under 21 years, a bank's reputation plays a major role in determining
their bank selection, followed by location, hours of operation, interest on savings accounts and
the provision of convenient and quick services. The least important factors for this age group
were found to be the friendliness of bank employees and the modem nature of their facilities.
Speed and Smith (1991), studying United Kingdom retail financial services companies, found
that managers perceived the key to success as a balance between competing for customers and
managing the costs that the, customers impose. It is therefore of critical importance to know
customers and costs. Segmentation, and careful design of products to satisfy these segments,
ensures greater take-up of product offers and limits the impact of these new products outside the
target group, hence limiting the cost of providing them.
The competitive situation makes it necessary for the banks to choose superior strategies and
tactics in order to succeed. It is, however, not so easy for them to organize. In the first place, the
principles and assumptions of a market economy are quite new to managers, so there may be less
than perfect results from initial attempts to change the way business is done, especially during
transition when different sectors of the economy are changing at different rates. Bank managers
and employees are likely to suffer, at least at the subconscious level, from the less than customer
responsive attitudes that typify command economies (Pritchard, 2005).
However, although such studies have contributed substantially to the literature on bank
selection, their findings may not be applicable to other countries, due to differences in cultural,
economic and legal environments. A set of determinant factors that have a significant role in
bank selection in one nation may prove to be insignificant in another (Smith. 1991).

2.4. Theoretical Framework -The Consumer Behavior Theory

Consumer behavior refers to the buying behavior of final consumers. It is the behavior that
consumers display when searching for, when purchasing, using, evaluating, disposing the
product or the idea that they have for the commodity and if it will satisfy their need. The study of
* Consumer behavior therefore seeks to understand how the consumers make decisions on how to
sPend their available resources in regard to purchase (Kotler, 2006).

11
 Consumer behavior is of importance to the marketers as it helps them understand why and how
individuals make decisions so that they can make better marketing decisions to have a great
competitive advantage at the market place (Armstrong, 2006).
Consumers make many buying decisions every day. Most large companies research consumer
buying decisions deeply with an aim to find answers to questions such as what consumers buy,
where they buy, how and how much they buy, when they buy, and why they buy and how they
dispose what they have bought and don't need . The central question for marketers is: How do
consumers respond to various marketing efforts the bank might use? The starting point is the
stimulus-response model of buyer behavior (Kotler, 2006).

This model shows that marketing and other stimuli enter the consumer’s mind and stimulate
certain responses. Therefore, marketers must figure out what is in the buyer’s black box (mind).
The black box model assumes that observable behavior is the only valid object of study and that
psychological constructs are part of an impenetrable box which should not be opened. Marketing
stimuli consist of the product, price, place, and promotion. Other stimuli include major forces
and events in the buyer’s environment such as economic, technological, political and socio­
cultural. All these inputs enter the buyer’s black box, where they are turned into a set of
observable buyer responses such as product choice, brand choice, dealer choice, purchase timing,
and purchase amount (Kotler, 2006). .
The marketer wants to understand how the stimuli are changed into responses inside the
consumer black box, which has two parts. The first part includes the buyers’ characteristics that
influence how he/she perceives and reacts to stimuli. The other part includes the buyers’ decision
process (Gary Armstrong, 2006).

12
The model of consumer behavior
Marketing and other stimuli
Marketing Other
Product Economic
Price Technological
Place Political
Promotion Cultural

t
Buyer’s black box
Buyer characteristics Buyer decision
process

Buyer responses
Product choice
Brand choice
Dealer choice
Purchase timing
Purchase amount

Source: (Kotler, 2006) Fig. 1.

The other models include economic view, passive view, cognitive view, and emotional view.
The economic view model is where consumer is seen as a rational decision maker. It’s the
classical economic model of how individuals make decisions.
The criticisms of the view are that: for one to be rational, he should have all the information on
the available products. Secondly one has to be capable of currently ranking each alternative
available (John C, 1995).
Passive view model depicts that consumers are basically submissive to the self interests and
promotional efforts of marketers. Consumers are perceived as impulsive and irrational
purchasers ready to yield to the arms of marketers (Schoof, 1995).

13
However, this view fails to recognize that the consumer plays an equal if not dominant role in
buying situations. Consumers sometimes seek information about product or service that satisfies
the mood or emotion of the moment. Also motivation, perception, and learning serves to support
that consumer are rarely objects of manipulation (Schoof, 1995).

Cognitive view model portrays a consumer as a thinking problem solver. Here consumers are
depicted as either receptive to or actively searching for products and services that fulfill their
needs and enrich their lives. It focuses on the process by which consumers seek and evaluate
information about selected brands in retail outlets. Consumers are also seen as information
processors who then form preferences and ultimately arrive at purchase intentions (John C,
1995).

Marketers often prefer to think of consumers in terms of either economic or passive models. In
reality, consumers relate deep feelings or emotions such as joy, fear, hope, and love with certain
purchases. For example a person who misplaces a favorite fountain pen may go to great lengths
to look for another despite the fact that he may have six others at hand. Consumer moods are also
important to decision making because impact of where, when and whether to shop along with
others (John C, 1995).

2.5 Empirical review

In this subsection, the study outlines the various factors that influence Customers choice of
commercial banks. Consumer purchases are influenced strongly by cultural, social, personal, and
bank product characteristics. These factors are explained as under:

2.5.1 Cultural factors and Customer choice of Commercial Banks

Cultural factors include the following: Culture is the most basic cause of a person’s wants and
behavior. Human behavior is largely learned. Every group or society has a culture, and cultural
influences on buying behavior may vary from one consumer to another depending on his/her
culture. Failure to adjust to these differences can result in ineffective marketing or embarrassing

14
mistakes. Marketers are always trying to spot cultural shifts in order to discover new products
that might be wanted (Kotler, 2006).
Each culture contains smaller subcultures, or groups of people with shared value systems based
on common life experiences and situations. Subcultures include nationalities, religions, racial
groups and geographic regions. Many subcultures make up important market segments, and
marketers in the banking industry need to design products and marketing programs tailored to
their needs (Kotler, 2006).
Social classes are society’s relatively permanent and ordered divisions whose members share
similar values, interests, and behaviors. Social class is not only determined by income but also
measured as a combination of occupation, income, education, wealth and other variables.
Marketers are interested in social class because people within a given social class tend to exhibit
similar buying behavior (Armstrong, 2006).
According to (Churchill, 1995), social scientists have identified the seven American social
classes as upper uppers, lower uppers, upper middles, middle class, working class, upper lowers,
and the lower lowers.
The upper uppers class includes the social elite who live on inherited wealth. They give large
sums to charity, own more than one home, and send their children to the finest schools. The
lower uppers class includes people who have earned high income or wealth through exceptional
ability. They are active in social and civic affairs and buy expensive homes, education, and cars.
(Churchill, 1995)
The upper middles class includes professionals, independent business persons, and corporate
managers who possess neither family status nor unusual wealth. They believe in education, are
joiners and highly civic minded, and want the better things in life. The middle class constitutes
the average-pay white-and blue-collar workers who live on the better side of town. They buy
popular products to keep up with trends. The working class includes those who lead a working-
class lifestyle. They depend heavily on relatives for economic and emotional support, for advice
°n purchases, and for assistance in times of trouble. (Churchill 1, 1995)
The upper lowers class consists of the working poor. Although their living standard is just above
Poverty, they strive toward a higher class. However, they often lack education and are poorly
paid for unskilled work. The lower lowers class is constituted of individuals that are visibly poor,

15
 often poorly educated unskilled laborers. They are often out of work and some depend on public
assistance. (Churchill 1, 1995)

2.5.2 Social factors and consumer choice of a commercial bank.

There are three social factors that may influence a consumer’s choice of a bank namely;
A person’s behavior is influenced by many small groups. Groups that have a direct influence and
to which a person belongs are called membership groups. In contrast, reference groups serve as
direct (face-to-face) or indirect points of comparison or reference in forming a person’s attitude
or behavior. Marketers try to identify the reference groups of their target markets. Reference
groups expose a person to new behaviors and lifestyles, influence the person’s attitudes and self-
concept, and create pressures to conform that may affect the person’s product and brand choices
(Kotler, 2006).
The importance of group influence tends to be strongest when the product is visible to others
whom the buyer respects. Manufacturers of products and brands subjected to strong group
influence must figure out how to reach opinion leaders that is, people within a reference group
who, because of special skills, knowledge, personality, or other characteristics, exert influence
on others. Consumers often are influenced by reference groups to which they do not belong. For
example, an inspirational group is one to which the individual wishes to belong (Churchill,
1995).
Family members can strongly influence buyer behavior. The family is the most important
consumer buying organization in society. Marketers are interested in the roles and influence of
the husband, wife, and children on the purchase of different products. Husband-wife involvement
varies widely by product category and by stage in the buying process. Children may also have
strong influence on family buying decisions. For example, children as young as six years may
influence the family car purchase decision (Churchill, 1995).
A person belongs to many groups - family, clubs, and organizations. The person’s position in
each group can be defined in terms of both role and status. A role consists of the activities people
are expected to perform according to the persons around them. Each role carries a status
reflecting the general esteem given to it by society. Consumers usually choose products
9 aPpropriate to their roles and status (Kotler, 2006).

16
2.5.3 Personal factors and Consumer choice of a commercial bank

People change the products they buy over their lifetimes. Tastes, clothes, furniture, and
recreation are often age related. Marketers often define their target markets in terms of life-cycle
stage and develop appropriate products and marketing plans for each stage. The life cycle stages
include unmarried couples, singles marrying later in life, childless couples, same sex couples,
single parents, extended parents (those with young adult children returning home) and others.
For instance in the banking industry, a bank account that best suit the youths or the elderly in the
market may be created (John, 1995).
A person's occupation affects the bank a consumer chooses. For instance blue collar workers
tend to buy more rugged work clothes, whereas executives buy more business suits. Therefore
marketers try to identify the occupational groups that have an above average interest in their
products. A bank can even create a bank account only appropriate for a given occupation group
(John, 1995).
A person’s economic situation will affect his/her decision of bank selection. Marketers of income
sensitive products watch trends in personal income, savings, and interest rates. For instance if
economic indicators point to a recession, marketers can take steps to redesign, reposition and re­
price their products closely. Banks need to follow closely the economic conditions so as to avoid
setting of rates that are too high above the average rates in the market. Having favorable rates
may in itself be a customer attraction technique (John, 1995).
People coming from the same subculture, social class and occupation may have quit different
lifestyles. Lifestyle is a person’s pattern of living as expressed in his/her activities, interests and
opinions. It involves measuring consumers’ major activities, interests, and opinions about
themselves, social issues, business and products (John, 1995).
Each person’s distinct personality influences his/her buying behavior. Personality refers to the
unique psychological characteristics that lead to relatively consistent and lasting responses to
one's own environment. Personality is usually described in terms of traits such as self-
confidence, dominance, sociability, autonomy, defensiveness, adaptability, and aggressiveness.
Brands have personalities, and consumers are likely to choose brands whose personalities match
their own. A brand personality is the specific mix of human traits that may be a particular brand
(John, 1995).

17
2.5.4 Product and service factors and their Influence on Customer choice of a bank.

Commercial banks' lending and deposit-taking business has declined in recent years.
Deregulation and new technology have eroded banks’ comparative advantages and made it easier
for nonbank competitors to enter these markets. In response, banks have shifted their sales mix
toward noninterest income — by selling ‘nonbank’ fee-based financial services such as mutual
funds; by charging explicit fees for services that used to be ‘bundled’ together with deposit or
loan products; and by adopting securitized lending practices which generate loan origination and
servicing fees and reduce the need for deposit financing by moving loans off the books. (Young
and Roland, 2009)
The conventional wisdom in the banking industry is that earnings from fee-based products are
more stable than loan-based earnings, and that fee-based activities reduce bank risk via
diversification. However, there are reasons to doubt this conventional wisdom. But in the same
line it is why the product packaging aspects of any particular bank has to come out strongly to
enable differentiation and enhance customer retention rates (John C, 1995).

Packaging and packaging design have become an important factor in marketing diverse
“consumer goods” and have a key role in communicating product benefits to the customer.
Product packaging is therefore also related to other variables in the marketing mix (Czinkota and
Ronkainen, 2007).
These are within the control of the company and are means of meeting changes within the
business environment However; packaging design is a complex set of influences from the
business environment. Among the main influences, new technology, service development,
logistic requirements, environmental issues, consumer preferences and marketing aspects all play
a key role for management decisions on marketing strategy (Packaging Federation, 2004).

The importance of the different variables varies among the actors through the supply chain, but is
also linked with consumer concerns and product safety. Hence packaging design can be used to
roeet new challenges within a supply chain. There are factors driving packaging design and
thereby derives suggestions for achieving competitive advantage within a rapidly changing and
complex banking sector. In order to reveal such complexity and focus on the role of packaging

18
design we have to understand issues regarding different driving forces within the “packaging
market” and also develop a framework for analyzing the interface between packaging and
driving forces within the banking sector. (Cateora & Ghauri, 2000).

The analytical problems are inherent in the “packaging market” since the latter can vary with the
packaging material. A change in packaging material at the retail level may be of minor
importance, but have a great influence in terms of substitute products or new entries on the
supply side of the packaging industry. A sudden change in attitudes among end consumers
influenced by the media, can therefore lead to a shift in the actual consumption of the different
banking products. It is obvious that packaging design and packaging development are subject to
dynamic influences originating from many sources and this creates threats but also opportunities
for strategic management decisions that may eventually affect customer retention in the banking
sector (Banks, 1990)

Packaging of consumer goods is an area where conditions are continuously changing as a result
of globalization and influencing factors in the supply and demand side of the banking industry.
There are several factors that determine the success of product packaging; the interface between
external driving forces and the ability to assess and transform them into attractive packaging
solutions. (Wansink, 1996)
There is little doubt that packaging design and developed packages is subject to dynamic
influences from the surrounding business environment. These influences originate from changes
in consumer values such as greater convenience and functionality, but also from environmental
issues. Packaging has become an important marketing tool for many consumer products in a
competitive business environment, relatively few studies and little interest has been directed
towards the theoretical work in the marketing literature. Some of the early research was done in
the area of general characteristics and role of packaging design and as a variable influencing
product evaluation (Schwartz. 1971).

Other packaging-related research includes studies of the communicative role (Nancarrow ., 1998;
Underwood ., 2001); ethical packaging matters (Bone and Corey, 20001; packaging as a profit
(Wills, 1990); packaging design with respect to the use of material (Lee, , Pi, Kwok, and

19
Huynh,2003); advertisement and package coordination (Garreston and Burton, 2005) and
packaging size and shape ( Raghubir and Greenleaf, 2006). The multi-function of packaging has
been investigated by Prendergast and Pitt (1996) and Rundh (2005). Despite these works, little is
known about packaging design and its relation to marketing strategy in the banking industry.

There are a number of demographic and lifestyle factors, documented by scholars and
companies, that have resulted in various changes in consumer behaviour The consequences of
demographic factors are an ageing population and an increasing number of people consuming
bank products. The environment also is an increasingly important issue for all areas in the
banking industry. A number of environmental problems have increased the interest of
governments, official institutions and international companies around the world in coming up
with ideas for solving these problems such as money laundering. (Hogg, 2003).

Many countries have also introduced legislation or regulations governing the packaging of
various bank products. We do also have international influences, these are consequences of
globalization. One important topic is the fact that international trade has increased and products
and services are in many senses becoming worldwide. Some international bank products and
their brands can be marketed in a standardized way, whereas most others need to be adapted to
local requirements, which also affect the packaging (Cateora ., 2000). Customers are also
bringing back ideas and influences from other market areas requesting new products or setting up
innovative banking businesses. Product Packaging is a vital factor contributing to product
differentiation which goes a long way in influencing customer retention in banks. (Dimitratos,
2003)

Changes in consumer demands and requirements of products and services in a specified way
have put pressure on the bankers to come up with new solutions (Hogg, 2003). This has also
been reinforced by strong competition in many product areas. Product and market managers in
retailing have pushed for new designs and higher quality of product features hence giving their
packages luxurious or prestigious appeal. We do also have new technology and technological
developments that create opportunities for many new packaging solutions within diverse
distribution systems (Sorensen, 2006; Widman, 2006).

20
Packaging design has also become an important factor for marketing various bank products in
consumer markets. The actual package can be considered as a part of the product since the
packaging can contribute to the product's benefits and in some cases be vital for the use of the
product. In some areas the package is the same as the product .For various products the shape of
the package has been an essential factor for success in the marketplace, whereas size and colour
are important ingredients in other product and market areas (Wansink, 1996; Raghubir and
Greenleaf, 2006).

Texture and graphics are also variables that can be modified and contribute to a successful
package. Another phenomenon contributing to the development of innovations is special
showrooms that suppliers of board, for instance, use to develop new packaging solutions in co­
operation with their customers. One innovation is the use of web design where customers can see
the suggested package on the computer presented, for example, a demonstration of how a certain
banking service i.e. account opening is offered to a client in a bank(George, 2005)..

2.6 Types of buying decision behavior

There are four types of buying behavior namely; Complex buying behavior, Dissonance-
Reducing buying behavior, Variety seeking buying behavior, and Habitual buying behavior.
Complex buying behavior is characterized by high consumer involvement in a purchase and
significant perceived differences among brands. Consumers may be highly involved when the
product is expensive, risky, purchased infrequently, and highly self-expressive. For example a
personal computer buyer may not know what attributes to consider in deciding the computer to
buy. Buyers of complex products will need to pass through a learning process, develop beliefs
about the product, then attitudes, and finally make a thoughtful purchase choice. Therefore
marketers of high-involvement products must understand the information-gathering and
evaluation behavior of high involvement consumers. Marketers also need to help buyers learn
about product-class attributes and their relative importance. Hence they need to differentiate their
brand’s features and also motivate store sales people to influence the final brand choice
(Armstrong, 2006).

21
Dissonance-Reducing buying behavior is characterized by high involvement but few perceived
differences among brands. It occurs when consumers are highly involved with an expensive,
infrequent, or risky purchase, but see little difference among brands. Under this buying behavior
consumers may respond primarily to a good price or to purchase convenience. For instance
consumers buying carpeting may face a high-involvement decision because carpeting is
expensive and self expressive. Yet buyers may consider most carpet brands in a given price
range to be the same. In this case, because perceived brand differences are not large, buyers may
shop around to leam what is available, but buy relatively quickly (Gary Armstrong, 2006).
After the purchase, consumers might experience post purchase dissonance (after-sale-discomfort)
when they notice certain disadvantages of brands purchased. In the case of banking industry
customers may notice certain unfavorable charges and other disadvantages such as poor quality
of customer service. To counter such dissonance, the marketer’s after-sale communications
should provide evidence and support to help consumers feel good about their brand choices
(Armstrong, 2006).
Habitual buying behavior is characterized by low consumer involvement and few significant
perceived brand differences. For example a brand like salt, consumers have little involvement in
this product category. They simply go to the store and reach for a brand. Here consumers buy as
a habit as they have been previously involved in the buying of the same brand over a period of
time. Consumers do not form strong attributes toward a brand; the select the brand because it is
familiar. In this case consumer behavior does not pass through the usual belief-attitude-behavior
sequence. Consumers do not search extensively for information about the brands, evaluate brand
characteristics, and make weighty decisions about the brands to buy (Gary Armstrong , 2006).
Instead they passively receive information as they watch television or read magazines. After the
purchase consumers may not even evaluate the choice as they are not highly involved with the
product. Because buyers are not highly committed to any brands, marketers of low-involvement
products with few brand differences mostly use price and sales promotions to stimulate the
product trial. Ad campaigns of such products should include high repetition of short-duration
messages (Armstrong, 2006).
Variety seeking buying behavior is characterized by low consumer involvement but significant
perceived brand differences. In such cases, consumers often do a lot of brand switching. Brand
switching occurs for the sake of variety rather than because if dissatisfaction. If consumers are

22
variety-seeking, they will keep on switching from one bank to another with an aim of trying
different banks without necessarily looking for any feature. Mostly consumers under this type of
buying behavior choose a bank without evaluation and then evaluate that bank as time goes by.
But next time, the consumer might choose another bank out of boredom or simply to try another
different bank (Kotler , 2006).
In such product categories, the marketing strategy may differ for the market leader and minor
brands. The market leader will try to encourage habitual buying behavior by dominating shelf
space, keeping shelves fully stocked, and running frequent reminder advertising. Challenger
firms will encourage variety seeking by offering lower prices, special deals coupons, free
samples and advertising that presents reasons for trying something new (Kotler , 2006).

23
2.7 Conceptual Framework

The study will be guided by the following conceptual variables;

Independent Variable Dependent Variable

Fig 2:

Figure 2 shows the relationship between the independent variables and dependent variables.
Social factors, cultural factors, Personal and Product/services factors all have an influence on the
depended variable; customer retention.
This conceptual framework hypothesizes that there is a relationship between the social factors i.e
Gender, Age, level of education, marital status and the level of customer choice of banks. Also it

24
shows that there is a certain percentage that product/service packaging factors i.e. Ease of
opening account, Range of working hours, Information on new products, Adequate feed back ;
influence the banks' customer retention. The third independent variable, personal factors i.e.
location, banking hall Space, corporate colour, and interior design; depicts the existence of a
relationship that the physical factors affect the customer retention.

2.8 Summary of literature review

From this literature customer choices are different and are bound to change from time to time.
Several factors do contribute to these changes. This then therefore directly affect the service
providers of which in this case do always compete to win these customers so as to maximize
their profits. These factor are therefore may be created by both the customers and the banks.

25
 CHAPTER THREE

RESEARCH METHODOLOGY

3.1 Introduction

This chapter covers the actual data collection and analysis process. It covers the research design,
the population, sampling frame and sampling design, data collection methods, and data analysis
and data presentation.

3.2 Research design

The research design used the descriptive study utilizing the survey design, aimed at determining
the factors influencing consumer choice of banks. The study used the descriptive case study
research design, employing both quantitative and qualitative approaches. According to Yin
(2003) descriptive case studies are used to describe an event/ process in its natural ambit and the
main objective is to answer how, who and what questions. The design is therefore suitable for
this study as it seeks to establish what factors are the determinants of consumer choice of
commercial banks. The research will also be cross sectional as it seeks to study a particular
phenomenon in this case the consumer choice of banks in Nakuru basing the Kenya Commercial
bank as the case study site. Case studies are used to investigate contemporary phenomena, do not
require control over the investigated behavioral element but seeks interpretations of those people
most knowledgeable for this case the consumers or users of the accounts in Kenya Commercial
Bank.
The descriptive case study design is appropriate for this research as it provides an opportunity to
obtain critical and practical understanding of the factors determining consumer choice of banks
in Kenya commercial bank in Nakuru town. Garson (2008) argues that in a case study research,
because only a few instances are normally studied, the case researcher can uncover more
variables relevant to the study.

26
3.3 Target population of the study

The population of interest for this study comprised of the customers of Kenya Commercial Bank
branches in the central business of Nakuru town. According to KCB (strategy and new business;
consumer shares survey, 2011), Kenya Commercial has a 15% of the banking market share in
Nakuru town. According to the same report KCB branch Nakuru has a customer base of thirty
four thousand five hundred (34,500) customers which forms a target for this study. They have
been categorized as follows.
Table 3.1 KCB, Nakuru Branch category of clients/Customers
Cooperate Salaried/white collar Small and micro enterprises Total
2,500 23,000 9,000 34,500
Source: KC13 strategy and new business - consumer shares survey, 2011.

3.4. Sample size selection and sampling procedures.

The study presents sample size selection and sampling procedure as used in the study.

3.4.1. Sample size selection.

Cooper and Schindler (2000) define a sampling frame as the list of elements from which the
sample is drawn. The population of this study comprised of all types of account holders in Kenya
Commercial banks in Nakuru Town whose sampling frame was obtained from the Flamingo
Branch that houses the KCB headquarters for Central Rift. Stratified random sampling was used
to select a representative sample from the three strata of the population namely Corporate,
Salaried and Small and Micro Enterprise.
In this section the study discusses sample size selection and sampling procedure.
According to Yohane (1967) the sample size is computed based on the following formula;

n =N/( ]+Ne2) Where N = Target Population = 34,500.

C = significance level =5%

n = 34,500/(1+34,500)

= 34,50/87.2

27
 = 396

3.4.2 Sampling procedures

Based on this and taking into account the possibility of non response from some respondents the
data shall collect from the entire sample population of 396. The target respondents were the
customers who represented the selection by KCB as a representative sample of KCB customer
base. The clients from the three strata were chosen based on their ability to understand the bank
accounts as products from KCB Nakuru branches.

Table 3.1 shows procedures for sample selection based on three categories of consumers. The
study allows proportional allocation based on.

n/ = (n/N) x N»
Where III = proportion in category i (where i = 1,2,3)

Where n is the sample size.

N i = Total number of respondents in category / (where i = 1,2,3)

N = Target population.
13i = (396/34,500) x 2,500 = 29

rb = (396/34,500) x 23,000 = 264

n 3 = (396/34,500) x 9,000 = 103

Total = 396

3.5 Research Instrument

The research involved the collection of data from respondents/clients by use of a questionnaire.
The use of the questionnaire is justified because it is an effective way of collecting information
from a large literate sample in a short period of time and at a reduced cost than other methods.
Additionally, questionnaires facilitate easier coding and analysis of data collected (Mugenda &
Agenda, 1999).

28
A structured questionnaire composed of closed ended items used to ensure that the respondents
are restricted to specific categories in their responses. Responses were ranked on a five-point
Likert Scale to give an indication of the degree of the aspect being measured. The Likert Scale
was used as it is simple to construct, easy to read and complete and likely to produce highly
reliable data.

The first section of the questionnaire gathered the background information of the respondents
pertinent to the study. Section two and three section of the questionnaire collected data related
major factors influencing the customer choice of banks with specific reference KCB Nakuru
Branch. The last section targeted information of likely measures to enhance customer satisfaction
in Kenya Commercial bank Nakuru town.

3.5.1 Pilot testing

The questionnaire was pilot tested with a representative sample of KCB Flamingo Branch in
Nakuru Town, which have relatively similar characteristics in setting and operating under just
like Kenya Commercial Bank in Nakuru town. The results of the pilot study helped to identify
necessary changes that should be effected in the questionnaire to improve the instrument prior
to its administration.

3.5.2 Administration of the Questionnaire

The questionnaire was self- administered. The researcher personally delivered the instrument to
the target respondent and later picks the filled up questionnaire from the clients immediately
after the customers have filled the questionnaire. The method of administration is appropriate for
this study because of the distribution of the population, cost effectiveness and the resulting
higher response rate. A letter introducing the purpose of the research accompanied the
questionnaires to the customers of Kenya Commercial Bank in Nakuru Town.

3-6 Validity and Reliability of Instruments

This section explains the validity and reliability of research instruments that ensured the research
is valid and reliable.
3.6.1 Research Validity

Saunders (2000) contend that research is valid only if it actually studies what it set out to study
and only if the findings are verifiable. In this study validity was ensured through examination of
existing literature to identify conceptual dimensions and appraisal of the instrument by a panel of
Customer Service Supervisors and research experts including my supervisor. Construct validity
describes whether the case study gives support to the intended interpretation of the variables and
in this study it will be increased through multiple sources of evidence as well as key informants
reviewing the research instrument to avoid misunderstandings.

3.6.2 Research Reliability

Reliability indicates the stability and consistency with which the data collection instrument
measures the concept (Zikmund, 2000). In this study, the reliability of the research instrument
were improved through the use of the split-half reliability procedure where the researcher
administered the entire instrument to a sample of respondents during the pilot testing and were
calculated using the total score for each randomly divided half i.e. odd and even numbered items
of the questionnaire. A reliability coefficient between the two total scores was calculated using
the Spearman-Brown prophecy tool. According to Fraenkel & Wallen (2000) if the results
produce a reliability coefficient >= 0.7 the instrument will be considered reliable. The formula
for reliability is as shown below:

re = 2r
1+ r
Where:
re - Reliability
2r - correlation coefficient of lsl half
^+ r- correlation coefficient of 2nd half
If the results yield a reliability coefficient of 0.698 therefore the instrument will be considered
reliable.

30
3.7 Data Analysis Techniques

In order to facilitate data analysis the filled up questionnaires were checked for completeness,
consistency and clarity. The responses were coded by assigning a numerical value to each to
make them quantitative that made it possible for the data to be entered in to the computer using
the SPSS for Windows Version 10 for analysis. In order to clean up the data averages like mean
and median as well as distributions like standard deviations were performed on the data sets in
order to discover any anomalies and appropriate corrections. Descriptive statistics such as
frequencies, percentages, median and mode was used for quantitative analysis of the data.

In order to establish the customer's choice of banks, descriptive statistics of frequencies,

percentages, median and mode was used to summarize opinions of the respondents. Since the
study is expected to establish the factors influencing choice of customer's bank, descriptive
measures of frequencies, percentages, median and mode were used. In order to arrive at the most
significant measures determinants of customer's choice of banks, descriptive statistics of
frequency, percentages, median and mode were used to summarize the respondents’ opinions.
Skewness test to establish the nature of distribution indicated the data was not normally
distributed, and since the data were in ordinal scale the spearman rho, a non parametric test
were used to explain the association between data use and each of the independent variables.

3.8 Ethical Considerations

The researcher obtained permission from KCB Nakuru Branch before data collection. Research
clearance was also obtained from the National Council of Science and technology as well as
letter of authorization from the University of Nairobi. The respondents were assured of
confidentiality and no promises were made or incentives offered to coerce them to provide
feedback. Due to sensitivity of some information collected, the researcher held a moral
obligation to treat the information with utmost propriety. The researcher ensured that the report
produced is general without specific reference to any organizations or individual client as this
roay be used unethically by other people to degrade a particular client. The researcher, seek to
Maintain client confidentiality by acknowledging that clients' accounts contain sensitive data.

31
 3.9 Operational Definition of Variables

Mugenda & Mugenda, (2003), says that Operationalising or operationally defining a concept to make
it measurable is done by looking at the behavioural dimensions, indicators and properties denoted by
the concept to make it measurable and observable. The measures make it possible to construct a
meaningful data collection instrument. The variables are seen as operational as they fall in the range
of intervals and ratios scales.

TABLE 3.2
Objectives Operational Definition of Variables
Variables Indicators Measure Scale Data Tools of
Collection Analysis
Tools
Toevaluate the extent to Dependent Gender Male or nominal Questionnaire Mode,
which personal factors Variable female Interview Median and
influence customer Customer Percentages
choice of a bank. choice of Age Age bracket interval Questionnaire Mode,
banks Interview Median and
Percentages
Independent Level of Highest nominal Questionnaire Mode,
Variable education/ level Interview Median and
Occupation attained Percentages
Personal Marital status Married or nominal Questionnaire Mode,
factors single Interview Median and
Percentages
Influence of Rate of Ordinal Questionnaire Mode,
associates i.e. influence Interview Median and
friends, family Percentages
members,
workmates

32
^Tstablish the extent Dependent ease of Procedures Ordinal Questionnaire Mode,
which product/service Variable account and Interview Median and
factors offered by banks Customer opening requirements Percentages
,nflu e n c e customer choice of Range of Convenient Ordinal Questionnaire Mode,
choice of commercial banks opening hours time Interview Median and
bank Percentages
Independent Information Access of Ordinal Questionnaire Mode,
Variable availed on information Interview Median and
products on new and Percentages
Product/ser existing
vice factors products
Adequate feed Conclusive Ordinal Questionnaire Mode,
back advise i.e. Interview Median and
statement Percentages
with
requested
details.
Toestablish the extent Dependent Subculture Ordinal Questionnaire Mode,
iowhich cultural factors Variable Tastes/prefer Interview Median and
influence customer Customer ences Percentages
choice of a bank. choice Social class Congestion Ordinal Questionnaire Mode,
level Interview Median and
Independent Percentages
Variable Attraction Ordinal Questionnaire Mode,
level Interview Median and
Cultural Percentages
factors Social class Comfort- Ordinal Questionnaire Mode,
ability Interview Median and
Percentages
3lT1ine the extent to ordinal Questionnair
Dependent Groups Group e Interview Mode,

33
pJhiclT social factors variable identity Median and
Customer
influence customer Percentages
choice of
choice of a bank bank Family history ordinal Questionnair Mode,
e Interview Median and
Independent
Percentages
variable
Role & status Level of ordinal Questionnair Mode,
Social
income e Interview Median and
factors
Percentages
Lifestyle Level of ordinal Questionnair Mode,
income e Interview Median and
Percentages
Personality Values/tast ordinal Questionnair Mode,
es e Interview Median and
Percentages

3.10 Chapter Summary

The chapter covers the methodology that was used to conduct the research on determinants of
customer choice of commercial bank. A descriptive case study design wase adopted for this
study. The population of the study has been identified as 329 clients the three KCB banks in
Nakuru town represented by the three strata's of KCB clients. Sampling procedure has been
explained but the data was collect from the entire sample. Self administered questionnaires have
been used as the data collection instruments. Quantitative methods of data analysis have been
used and discussed. Ethical issues involved in the research have also been explained.

34
 CHAPTER FOUR

DATA ANALYSIS, PRESENTATION, INTERPRETATION AND DISCUSSION

4.1 Introduction

This chapter presents the findings of the study. The study sought to establish the factors that
influence consumer choice of banks, and to assess the extent to which social factors influence
consumers' choice of commercial bank, cultural factors influence the manner in which
consumers choose a bank, personal factors influence on consumer choice of banks, and finally
product and services offered by the Bank influence consumer choice of banks. To achieve this,
data was collected from the Kenya Commercial bank Nakuru CBD.

4.2 Response Rate

To collect the necessary data the study administered 396 questionnaires to the respondents in the
following categories; 29 Cooperate consumers, 264 Salaried/white collar and 103 Small and
micro enterprise consumers. The following table shows the response rate.

Table 4.1: Response Rate

Category of No. of questionnaire Target no. of Response Rate/
Respondents Returned Questionnaires Percentage
Cooperate 27 29 93.1

Salaiied/white collar 239 264 90.5

Small and micro enterprise 84 103 81.6

Total 350 396 88.4

^0 questionnaires were filled in and returned; hence the response rate was 88.4%. According to
^ ay, 1981), ten percent of the accessible population is enough for a descriptive survey and
therefore, these response return rates of 93.1% for the cooperate consumers, 90.5% for the
o* .
aned/white collar consumers, 81.6% for Ihe Small and micro enterprise consumers, and an

* oU So.tr
g S0 ,r, 7
' ’*< *08,
overall response rate of 88.4% are good and thus, have helped increase the reliability of the
study. There was a high response rate from Cooperate and Salaried/white collar consumers; this
was attributed to the great support and mobilization skills received from the bank staff. However
the low response from the Small and micro enterprise was majorly based on their unwillingness
to spare some time to fill these questionnaires, most of them viewed it as a waste of their time.

4.3 General Characteristics of the respondents

The study sought to determine the demographic characteristics’ of the respondent based on Age,
Marital Status, Occupational level, and Education level and the findings are presented as follows;

4.3.1 Distribution of respondents by age group

The study wanted to establish if the age group of the respondents could affect the consumer
choice of Kenya Commercial bank as his or her choice of commercial bank and therefore he
came up with the following table.

Table 4.2: Age Group

AGE GROUP FREQUENCY PERCENTAGE (%)
Oto 17 0 0 .0
18 to 30 46 13.1
31 to 45 171 48.9
46 and above 133 38.0
TOTAL 350 100.0

from the above table, the study established that there were no respondents aged between 0 and
17 years, respondents aged between 18 and 30 years were 13.1%, respondents aged between 31
and 45 years were 48.9% and those that were aged 46 years and above were 38%. A majority of
the respondents ranged between 18 and 30 years. This is because of the major campaigns the
hank has been having on the youth i.e. Bankika accounts for the youth which has attracted a
good number of this category of consumers.

36
4.3.2 Marital Status of the respondents

The study wanted to establish if the marital status of the respondent could affect the consumer
choice of Kenya Commercial bank. The results are given in table below;

Table 4.3: Marital Status

Marital Status FREQUENCY PERCENTAGE (%)
Single 153 43.7
Married 197 56.3

TOTAL 350 100.0

From the table above, the data established that single respondents were 43.7% while the married
respondents were 56.3%. The findings show that the majority of the respondents were married.
This has been contributed by the fact that for one to qualify to operate an account he / she must
over 18 years with a National id. At this age most people are almost getting married.

4.3.3 Occupational level of the respondents

The study wanted to establish if the occupation of the respondents could affect the consumer
choice of Kenya Commercial bank. The results are given in table below;

Table 4.4: Occupation

OCCUPATION FREQUENCY PERCENTAGE (%)
Students 105 30
Employed 112 32
Self employed 133 38
TOTAL 350 100

From the above table, the research established that the respondents who were employed
instituted 32%, the self employed respondents were 38% and the students constituted 30%. The
researcher concluded that the majority respondents were self employed. This high percent of the

37
self employed was contributed by the fact that Nakuru is a fast growing town with rapidly
increasing population and without adequate job opportunities.

4.3.4 Highest level of education of the respondents

The study wanted to establish the highest level of education of the respondents and find out if it
could affect the consumer choice of Kenya Commercial bank. The results are given in table
below;

Table 4.5: Highest level of education

OCCUPATION FREQUENCY PERCENTAGE (%)
Primary 24 6.9
Secondary 112 32.0
Certificate 64 18.3
Diploma 54 15.4
Degree 96 27.4
TOTAL 350 100.0

From the above table, the data established that the respondents who had a secondary education as
the highest constituted 32%, those with a degree constituted 27.4%, those with a certificate
constituted 18.3%, diploma constituted 15.4% and those of primary level constituted 6.9%. The
study concluded that the majority respondents were of secondary level. This was contributed by
the fact that majority of the consumers were also self employed therefore basic education were
sufficient to run their businesses.

4.4 Presentation of the findings

In this section the researcher presents the findings arising from the data analysis that interrogated
the extent to which social, cultural, personal, product and services offered by the Bank influence
consumer choice of banks. General information about respondents and the findings about the
niain factors that influence consumer choice of a bank shall be analyzed. The research
objectives; to what extend do cultural factors influence the manner in which consumers choose a

38
bank, to determine how social factors influence consumers’ choice of commercial bank, to what
extend do personal factors influence consumers’ choice of a bank, to determine how product and
services offered by Commercial banks influence consumers while choosing a bank shall be the
key factors.

4.5 How the Respondents Got To Know About Kenya Commercial Bank

The study wanted to establish the various means by which the respondents came to know Kenya
Commercial Bank and find out if it could affect the consumer choice of Kenya Commercial
bank. The results are given in table below;

Table 4.6: Source of Information about Kenya Commercial Bank

SOURCE OF INFORMATION FREQUENCY PERCENTAGE (%)
Through a friend 108 30.9
Through media 77 22.0
Through a family friend 98 28.0
Through a bank employee 39 11.1
Other 28 8.0
TOTAL 350 100.0

From the table above, the study established that 31% of the respondents got to know the bank
through a friend, 22% got to know the bank through the media, 28% got to know the bank
through family friends, 11% got to know the bank through the bank employee and 8% got to
know the bank through other means. Therefore a majority of the respondents got to know Kenya
Commercial Bank through a friend. Family friends also had high influence possibly as referrals
to the bank.

The study also sought to establish the various accounts operated by the respondents and find out
how it could affect the consumer choice of Kenya Commercial bank. The results are given in
table below;

39
Table 4.7: Accounts owned by respondents
Account Type FREQUENCY PERCENTAGE(%)
Current 35 10
Fixed 81 23
Savings 157 45
Joint 77 22
TOTAL 350 100

From the table above, the data established that 45% of the respondents owned a savings account,
23% owned a fixed account, 22% owned a joint account, and 10% owned a current account. The
data concluded that a majority of the respondents owned a savings account. Savings account has
been perceived by most of the respondents as cheap and convenient as compared to all the other
accounts hence the high influence as recorded.

The study further sought to establish the level of income of the respondents and find out if it
could affect the consumer choice of Kenya Commercial bank. The results are given in the table
below;

Table 4.8: Level of Income

Amount in Ksh. FREQUENCY PERCENTAGE (%)
Less than 10,000 127 36.3
10,001 -20,000 110 31.4
20,001 -40,000 76 21.7
40,001 and above 37 10.6
TOTAL 350 100.0

From the table above, the researcher established that the respondents who earned less than Kshs.
10,000 were 36.3%, 31.4% earned between Kshs. 10,001 and 20,000, 21.7% earned between
Kshs. 20,001 and 40,000 while those that earned Kshs. 40,001 and above were 10.6%. The
researcher concluded that a majority of the respondents earned less than Kshs. 10,000. This is
Justified by the research findings that the respondents who were employed constituted only 32%,
lhe self employed respondents were 38% and the students constituted 30%. Also from the

40
sample size a 29% constituted Small and micro enterprises whose incomes are quite low.
Generally majority of the respondents were low income earners.

4.6 Factors influencing Consumer Choice of a Bank

The study sought to determine the various effects culture, social, personal and bank
product/services influence consumers in their choice of a bank and the findings are presented as
follows;

4.6.1 Cultural Factors

The study sought to find out the extend that cultural factors influence the manner in which
consumers choose a bank based on culture, subculture that one learns from his/her current
environment and the social class one interacts with.

Under culture, the study wanted to establish the level of effect culture has on consumer choice of
a bank and therefore he came up with the following table.

Table 4.9: Culture

RANKING FREQUENCY PERCENTAGE (%)
No effect 0 0.0
Very Low effect 105 30.0
low effect 201 57.5
High effect 0 0.0
Very high effect 0 0.0
Not Ranked 44 12.5
to ta l 350 100.0

from the table above, the data established that the percentage of the respondents who felt that
culture has a low effect on consumer choice of banks was 57.5%, those that felt that it has a very
l°w effect constituted 30%, while 12.5% of the respondents did not rank this effect. Therefore
data showed that culture has low effect on consumer choice of a bank.

41
The study wanted to establish the effect of sub culture on consumer choice of a bank and
therefore he came up with the following table.

Table 4.10: Sub Culture

RANKING FREQUENCY PERCENTAGE (%)
No effect 0 0.0
Very Low effect 70 20.0
low effect 232 66.2
High effect 0 0.0
Very high effect 0 0.0
Not Ranked 48 13.8
TOTAL 350 100.0

From the above table, the data established that the percentage of the respondents who felt that
sub culture has a low effect on consumer choice of banks was 66.2%, those that felt that it has a
very low effect constituted 20%, while 13.8% of the respondents did not rank this effect. In
conclusion, the researcher found out that sub culture has low effect on consumer choice of a
bank. Each culture contains smaller subcultures, or groups of people with shared value systems
based on common life experiences and situations. Subcultures include nationalities, religions,
racial groups and geographic regions. Many subcultures make up important market segments,
and marketers in the banking industry need to design products and marketing programs tailored
to their needs (Kotler, 2006).

Effect of social class on consumer choice of a bank was sought from the study and the findings
are presented in the following table.

42
Table 4.11: Social class
RANKING FREQUENCY PERCENTAGE (%)
No effect 0 0.0
Very Low effect 0 0.0
low effect 85 24.3
High effect 177 50.6
Very high effect 33 9.4
Not Ranked 55 15.7
TOTAL 350 100.0

From the table above, the data established that the percentage of the respondents who felt that
social class has low effect on consumer choice of a bank constituted 24.3%, those who felt that it
has a high effect constituted 50.6%, those who felt that it has a very high effect constituted 9.4%
while 15.7% of the respondents did not rank this effect. Therefore the study concluded that a
majority of the respondents felt that social class has a high effect on consumer choice of a bank.

4.6.2 Social Factors

The study sought to find out the extend that Social factors influence the manner in which
consumers choose a bank based on groups, family, role and status and the findings are as
presented.

The study wanted to establish the level of effect of groups on consumer choice of a bank and
therefore he came up with the following table.

Table 4.12: Groups

JUNKING FREQUENCY PERCENTAGE (%)
No effect 15 4.4
^ery Low effect 140 40.0
Low effect 195 55.6
High effect 0 0.0
Very high effect 0 0.0
Hot Ranked 0 0.0
total 350 100.0

43
From the table above, the data established that the percentage of the respondents who felt that
groups have no effect on consumer choice of banks was 4.4%, those that felt that it has a very
low effect constituted 40% and those that felt that it has a low effect constituted 55.6%. The data
concluded that a majority of the respondents felt that groups have low effect on consumer choice
of a bank.

The study also wanted to establish the effect of family on consumer choice of a bank and
therefore he came up with the following table.

Table 4.13: Family

RANKING FREQUENCY PERCENTAGE (%)
No effect 15 4.4
Very Low effect 125 35.6
low effect 210 60.0
High effect 0 0.0
Very high effect 0 0.0
Not Ranked 0 0.0
TOTAL 350 100.0

From the above table, the researcher established that the percentage of the respondents who felt
that family has no effect on consumer choice of banks was 4.4%, those that felt that it has a very
low effect constituted 35.6% and those that felt that it has a low effect constituted 60%. The
researcher concluded that family has a low effect on consumer choice of a bank. This agrees to
Kotlef s argument that a person belongs to many groups - family, clubs, and organizations.

Effect of role and status of the respondent on consumer choice of a bank was sought from the
study and the findings are presented in the following table.

44
Table 4.14: Role and Status
RANKING FREQUENCY PERCENTAGE(%)
No effect 0 0.0
Very Low effect 33 9.4
low effect 116 33.1
High effect 201 57.5
Very high effect 0 0.0
Not Ranked 0 0.0
TOTAL 350 100.0

From the above table, the study established that the percentage of the respondents who felt that
role and status has a very low effect on consumer choice of a bank constituted 9.4%, those that
felt that it has a low effect constituted 33.1% and those that felt it has a high effect constituted
57.5%. The study concluded that role and status has a high effect on consumer choice of a bank.

4.6.3 Personal Factors

The study sought to find out the extend that personal factors influence the manner in which
consumers choose a bank based on age and lifecycle stage, occupation, economic situation,
lifestyle and personality and the findings are as presented.

The study wanted to establish the effect of age and lifecycle stage on consumer choice of a bank
and therefore he came up with the following table.

Table 4.15: Age and Lifecycle Stage

RANKING FREQUENCY PERCENTAGE (%)
No effect 0 0.0
Very Low effect 0 0.0
low effect 23 6.3
High effect 260 74.3
Very high effect 68 19.4
Hot Ranked 0 0.0
total 350 100.0
From the above table, the data established that the percentage of the respondents who felt that
age and lifecycle stage has a low effect on consumer choice of a bank constituted 6.3%, those
that felt it has a high effect constituted 74.3% and those that felt it has a very high effect
constituted 19.4%. Therefore the data generally indicates that age and lifecycle stage has a high
effect on consumer choice of a bank. This agrees to the argument that people change the
products they buy over their lifetimes. Tastes, clothes, furniture, and recreation are often age
related (John, 1995).

The study wanted to establish the effect of occupation on consumer choice of a bank and
therefore he came up with the following table.

Table 4.16: Occupation

RANKING FREQUENCY PERCENTAGE (%)
No effect 0 0.0
Very Low effect 0 0.0
low effect 0 0.0
High effect 166 47.5
Very high effect 184 52.5
Not Ranked 0 0.0
TOTAL 350 100.0

From the above table, the data established that the percentage of the respondents who felt that
occupation has a high effect on consumer choice of a bank constituted 47.5% and those that felt
it has a very high effect constituted 52.5%. Therefore the data indicated that occupation has a
very high effect on consumer choice of a bank.

The study wanted to establish the effect of economic situation on consumer choice of a bank and
therefore he came up with the following table.

46
Table 4.17: Economic Situation
RANKING FREQUENCY PERCENTAGE(%)
No effect 0 0.0
Very Low effect 0 0.0
low effect 0 0.0
High effect 144 41.2
Very high effect 206 58.8
Not Ranked 0 0.0
TOTAL 350 100.0

From the above table, the data established that the percentage of the respondents who felt that
economic situation has a high effect on consumer choice of a bank constituted 41.2% and those
that felt it has a very high effect constituted 58.8%. Therefore the data concluded that economic
situation has a very high effect on consumer choice of a bank. This agrees to the fact that a
person’s economic situation will affect his/her decision of bank selection. (John, 1995).

The study wanted to establish the effect of lifestyle on consumer choice of a bank and therefore
he came up with the following table.

Table 4.18: Lifestyle

RANKING FREQUENCY PERCENTAGE (%)
No effect 0 0.0
Very Low effect 90 25.6
low effect 245 70.0
High effect 0 0.0
Very high effect 0 0.0
Not Ranked 15 4.4
to ta l 350 100.0

From the table above, the data established that the percentage of the respondents who felt that
lifestyle has a very low effect on consumer choice of a bank constituted 25.6%, those that felt
lhat it has a low effect constituted 70% while 4.4% of the respondents did not rank this effect.

47
Therefore the research findings came to a conclusion that lifestyle has a low effect on consumer
choice of a bank.

The study wanted to establish the effect of personality on consumer choice of a bank and
therefore he came up with the following table.

Table 4.19: Personality

RANKING FREQUENCY PERCENTAGE (%)
No effect 0 0.0
Very Low effect 273 78.1
low effect 70 20.0
High effect 0 0.0
Very high effect 0 0.0
Not Ranked 7 1.9
TOTAL 350 100.0

From the above table, the data established that the percentage of the respondents who felt that
personality has a very low effect on consumer choice of a bank constituted 78.1%, those that felt
that it has a low effect constituted 20% while 1.9% of the respondents did not rank this effect.
The data came to a conclusion that personality has a very low effect on consumer choice of a
bank. This contradicts the argument by John, (1995) that personality is usually described in terms
of traits such as self-confidence, dominance, sociability, autonomy, defensiveness, adaptability,
and aggressiveness.

4.6.4 Product/services factors

The study sought to find out the extend that personal factors influence the manner in which
consumers choose a bank based on easy account opening procedures, bank opening hours,
’nterest rates offered, operating balances of an account, the Atm efficiency / technology and
°ther factors and the findings are as presented.

study wanted to establish the effect of Account opening procedures on consumer choice of a
^ and therefore he came up with the following table.

48
Table 4.20: Easy Account opening procedures
RANKING FREQUENCY PERCENTAGE(%)
No effect 0 0.0
Very Low effect 0 0.0
low effect 9 2.5
High effect 277 79.0
Very high effect 64 18.5
Not Ranked 0 0.0
TOTAL 350 100.0

The percentage of the respondents who felt that easy account opening procedures has high effect
on consumer choice of banks was 79%, those that felt that it has a very high effect constituted
18.5% while 2.5% of the respondents felt that it has low effect. Hence the data concluded that
easy account opening procedures has high effect on consumer choice of a bank.

The study wanted to establish the effect of the bank opening hours on consumer choice of a bank
and therefore he came up with the following table.

Table 4.21: Bank opening Hours

RANKING FREQUENCY PERCENTAGE (%)
No effect 9 2.5
Very Low effect 142 40.6
low effect 184 52.5
High effect 15 4.4
Very high effect 0 0.0
Not Ranked 0 0.0
total 350 100.0

from the above table, the study established that the percentage of the respondents who felt that
Bank opening Hours has a very low effect constituted 40.6%, those that felt that it has a low

49
effect constituted 52.5%, and those that felt it has a high effect constituted 4.4% while 2.5% of
the respondents felt that it has no effect. Hence the study came to a conclusion that bank opening
hours have low effect on consumer choice of a bank.

The study wanted to establish the effect of Interest Rates Offered on consumer choice of a bank
and therefore he came up with the following table.

Table 4.22: Interest Rates Offered

RANKING FREQUENCY PERCENTAGE(%)
No effect 0 0.0
Very Low effect 0 0.0
low effect 9 2.5
High effect 54 15.5
Very high effect 287 82.0
Not Ranked 0 0.0
TOTAL 350 100.0

From the above table, the data established that the percentage of the respondents who felt that
Interest Rates Offered has very high effect on consumer choice of banks was 82%, those that felt
that it has a high effect constituted 15.5% while 2.5% of the respondents felt that it has low
effect. Therefore the study concluded that Interest Rates Offered has very high effect on
consumer choice of a bank.

The study wanted to establish the effect of Operating balances of an account on consumer choice
of a bank and therefore he came up with the following table.

50
Table 4.23: Operating balances of an account
RANKING FREQUENCY PERCENTAGE (%)
No effect 0 0.0
Very Low effect 13 3.7
low effect 44 12.5
High effect 234 66.9
Very high effect 59 16.9
Not Ranked 0 0.0
TOTAL 350 100.0

From the table above, the study established that the percentage of the respondents who felt that
Operating balances of an account have very high effect on consumer choice of banks was 16.9%,
those that felt that it has a high effect constituted 66.9%, those that felt that it has a low effect
constituted 12.5% while 3.7% of the respondents felt that it has very low effect. Therefore the
researcher concluded that Operating balances of an account have a high effect on consumer
choice of a bank.

The study wanted to establish the effect of the ATM efficiency / technology on consumer choice
of a bank and therefore he came up with the following table.

Table 4.24: The ATM efficiency / technology

RANKING FREQUENCY PERCENTAGE(%)
No effect “ o~ OO
Very Low effect 9 2.5
low effect 57 16.5
High effect 211 60.4
Very high effect 68 19.3
Not Ranked 5 1.3
total 350 100.0

51
From the table above, the study established that the percentage of the respondents who felt that
the ATM efficiency / technology have very low effect on consumer choice of banks was 2.5%,
those that felt that it has a low effect constituted 16.5%, those that felt that it has a high effect
constituted 60.4%, those that felt that it has a very high effect constituted 60.4% while 1.3% of
the respondents did not rank this effect. Therefore the researcher concluded that The ATM
efficiency / technology have a high effect on consumer choice of a bank.

The study sought to establish any other factors that influence consumer choice of a bank and
therefore he came up with the following table.

Table 4.25: Other Factors Influencing Consumer Choice of a Bank

Factors FREQUENCY PERCENTAGE
Customer service 115 32.7
Convenience 87 24.8
Size/network of the bank 35 10.1
Availability of loan funds 106 30.4
Not filled in 7 2.0
Total 350 100.0

From the above table, the researcher established that there are also other factors that influence
consumer choice of a bank which include the Customer service with a frequency of 32.7%,
Convenience with a frequency of 24.8%, Size/network of the bank with a frequency of 10.1%,
Availability of loan funds with a frequency of 30.4%, while 2% of the respondents did not add
any other factor. Hence the researcher concluded that the Customer service influenced consumer
choice of a bank with a frequency of 32.7%.

52
 CHAPTER FIVE

SUMMARY OF THE FINDINGS, DISCUSSIONS, CONCLUSIONS AND

RECOMMENDATIONS

5.1 Introduction

This chapter contains a summary of the findings, discussions and conclusions inferred from the
findings. This research was carried out with a main purpose of finding out the factors that
influence consumer choice of a bank. The study was guided by the following research objectives;
to what extend do cultural factors influence the manner in which consumers choose a bank, to
determine how social factors influence consumers5 choice of commercial bank, to what extend
do personal factors influence consumers’ choice of a bank, to determine how product and
services offered by Commercial banks influence consumers while choosing a bank. This chapter
also contains the summary of the findings, discussions, conclusions and recommendations made
at the end of the study.

5.2 Summary of the study findings

Under general characteristics’ of the respondent, the data indicated that, consumer choice of a
bank is very highly affected by economic situation with a frequency of 58.8% and also by
occupation with a frequency of 52.5%. This is because ones occupation determines his income
lifestyle and also status. The amount of income of an individual also determines the amount he or
she can save in a bank.

Culture and sub culture, and influences consumer choice of a bank with a low effect at a
frequency of 57.5% and 66.2%, respectively. Members of a particular Culture, sub culture, and
Cfoups will eventually influence each other to bank with the same rate. Social class has a high
effect on consumer choice of a bank at a frequency of 50.6%, this can be attributed to the fact
lhat people of the same age group will mostly be found to have similar tastes and preferences.
Also some people would only feel comfortable when they are in a bank that matches their status
class. Generally therefore culture has a low effect on consumer choice of a bank.

53
 Under Social factors, croups and family has low effects with frequencies of 55.6% and 35.6%
respectively. This is because people of the same age group will mostly be found to have similar
tastes and preferences. They will eventually influence each other to bank with the same rate.
Role and status has high influence with a frequency of 57.5%. Some people might have unique
personalities or lifestyle that will drive them to a particular bank and not just any bank to fit their
role and status. Also some people would only feel comfortable when they are in a bank that
matches their status and class

On personal factors. Age and lifecycle stage has a high effect on consumer choice of a bank with
a frequency of 74.3%, This is because people of the same age group will mostly be found to have
similar tastes and preferences. Personality and lifestyle have a very low effect on consumer
choice of a bank with frequencies of 78.1% and 25.6% and Some people might have unique
personalities or lifestyle that will drive them to a particular bank.

Bank products and services had had high effects on consumer choice of a bank. Easy account
opening procedures, operating balance of an account and the ATM efficiency/technology at a
frequency of 79%, 66.9% and 60.4% respectively also has high effects on consumer choice of a
I bank. This has a lot of convenience and saves time and money for consumers. Interest rates
offered also very highly affect consumers’ choice of a bank at a frequency of 82%, simply
because it determines the cost of servicing a loan and an account.

I Other factors from the findings from the study established that the customer service greatly
influences his or her bank choice. This factor was filled in by 32.7% of the respondents. The
| availability of loan funds closely followed having been filled in by 30.4% of the respondents.
These include such processes on processing a loan, and all its requirements. Convenience is
Mother factor which was filled in by 24.8% of the respondents. This includes such technology as
Automatic Teller Machines, mobile banking and shopping cards among others. Bank opening
^°Urs had a low effect with a frequency of 52.5%. The other factor is the size and network of the
that a consumer can access and this factor was filled in by 10.1% of the respondents. This
Fetor aimed at determining the accessibility of a bank to the consumers and hence the nearer the

54
different products. Husband-wife involvement varies widely by product category and by stage in
the buying process. Children may also have strong influence on family buying decisions. For
example, children as young as six years may influence the family car purchase decision
(Churchill, 1995). It also agrees to Kotler’s argument that a person belongs to many groups,
family, clubs, and organizations.
From the study role and status has a high effect on consumer choice of a bank. The person’s
position in each group can be defined in terms of both role and status. A role consists of the
activities people are expected to perform according to the persons around them. Each role carries
a status reflecting the general esteem given to it by society according to Kotler, Consumers
usually choose products appropriate to their roles and status (Kotler, 2006). Marketers try to
identify the reference groups of their target markets. Reference groups expose a person to new
behaviors and lifestyles, influence the person’s attitudes and self-concept, and create pressures to
conform that may affect the person’s product and brand choices (Kotler, 2006).
On personal factors the data generally indicates that age and lifecycle stage, economic situation
and occupation have a high effect on consumer choice of a bank. This agrees to the argument
that people change the products they buy over their lifetimes. Tastes, clothes, furniture, and
recreation are often age related. Marketers often define their target markets in terms of life-cycle
stage and develop appropriate products and marketing plans for each stage. The life cycle stages
include unmarried couples, singles marrying later in life, childless couples, same sex couples,
single parents, extended parents (those with young adult children returning home) and others. It
also agrees to the theory that person’s occupation affects the bank a consumer chooses. For
instance blue collar workers tend to buy more rugged work clothes, whereas executives buy
more business suits. Therefore marketers try to identify the occupational groups that have an
above average interest in their products. For instance in the banking industry, a bank account that
best suit the youths and also an account for the elderly may be created in the market (John,
1995).
This further strengthens the fact that a person’s economic situation will affect his/her decision of
bank selection. Marketers of income sensitive products watch trends in personal income, savings,
and interest rates. For instance if economic indicators point to a recession, marketers can take
steps to redesign, reposition and re-price their products closely. Banks need to follow closely the

56

N
economic conditions so as to avoid setting of rates that are too high above the average rates in
the market. Having favorable rates may in itself be a customer attraction technique (John, 1995).
The findings also indicated that lifestyle has a low effect on consumer choice of a bank. This
does not agree to the fact that that lifestyle has an effect on consumer choice of a bank despite
people coming from the same subculture, social class and occupation and may have quite
different lifestyles. Lifestyle is a person's pattern of living as expressed in his/her activities,
interests and opinions. It involves measuring consumers' major activities, interests, and opinions
about themselves, social issues, business and products (John, 1995).

On bank products, easy account opening procedures, Interest Rates Offered, Operating balances
of an account, and ATM efficiency / technology has high effect on consumer choice of a bank
from the data. It is worth noting that the choice of a customer’s bank is dependent to a larger
extent by how easy it is to opening an account agreeing to the theory of rationality of decisions in
consumer behaviour (Kotler, 2006). These can be attributed to the fact there is a new form of
automated technology that allows for the customer to access over the counter services from the
ATM, bank agents and from their mobile phones. This explains the low influence of the opening
hours that Consumer choice of a bank is influenced by the opening hours. (Kenya Bankers
Association report, 2008)
It is also the choice for every consumer to have cheaper credit hence the high effect that interest
rates have on a consumer choice of bank in Kenya. Most banks however have higher interest
rates and this continues to affect the consumer, (KBA, 2008). Most consumers appreciate that the
banks issue very small rates of return on their investment and wants to retain as little amount of
cash in their accounts as much as possible and have full access all their funds at any time as they
wish. This therefore explains the high effect that operating balances have on consumers’ choice
of bank (KBA, 2008). The ease of technology in accessing customer services is important in
reducing the amount of time the customer spends in a banking hall and hence the very high effect
this has on consumer choice of bank (Kotler, 2006). All consumers would want to save time to
spend doing other meaningful activities.

Other factors as shown from the data, indicates that Customer service, influenced consumer
choice of a bank. This agrees to Boyd,(1994) who investigated the importance of bank selection

57
criteria in terms of Customer service, Convenience, Size/network of the bank and availability of
loan funds as factors that plays a major role in determining their bank selection, followed by
location, hours of operation, interest on savings accounts and the provision of convenient and
quick services. -

5.4 Conclusions

Majority of the correspondences indicated that a cultural factor has low effect on consumer
choice of commercial banks. Despite this finding not agreeing with Kotler, (2006), the findings
have partly agreed to his reasoning that consumer behavior may vary from one consumer to
another depending on his/her culture. Therefore there is need for banks to seriously consider
culture as a factor the can help them gain or maintain its customers. However low the effect may
be, one needs to be conscious of its impact on its business in that this can contribute to making a
profit or a loss with the same level of effect.

Social factors have also generally been rated to have low effects on consumer choice of
commercial bank. This finding has agreed with Churchill, (1995) who had argued that consumers
often are influenced by reference groups to which they do not belong. Family members can also
strongly influence buyer behavior e.g. spouse or children. Banks therefore should consider
having products that can be influenced by social factors bearing in mind that this same low level
of effect on consumers’ choice can affect at the same rate its profit performance.

Personal factors largely strengthened by age and lifecycle stage, economic situation and
occupation have a high effects on consumer choice of a bank. This has agreed to the argument
that people change the products they buy over their lifetimes, and is largely determined by the
occupation and the economic situation at that given moment (John, 1995). Marketers therefore
should prioritize and develop appropriate products and marketing plans to fit these factors.

Bank products and services have a very high effect on the choice of consumers on commercial
banks. Consumers look for cheap and convenient products / services, and how easy they can be
access. Bank product designers should appreciate the kind of technology the world currently has,
and try to maximize it in satisfying its consumers. Marketers should also capitalize on the same,

58
and use it as a marketing tool to sell these products as long as it satisfies these needs of its
consumers.

5.5 Recommendations

Based on the findings, the researcher recommends the following to the bank and other
researchers.

5.5.1 To the Bank

Kenya Commercial Bank should be aware that other banks are striving day and night to outdo
them in terms of market share and therefore the management of Kenya Commercial Bank should
not just lay back to enjoy the profits but they should also look into ways of improving their
products, technology and customer service from time to time so as to remain competitive. For
instance the management of Kenya Commercial Bank Should lay down ways of investigating the
reasons as to why the Safaricom’s M-Pesa is doing very good because it offers almost similar
services with the bank.
Under age and lifecycle, the bank’s management should also try to accommodate consumers of
age group 0 - 1 7 years by introducing a juniors’ account where they can operate with only a birth
certificate. This will help tap the junior customers and grow with them to being corporate
customers in the future.

5.5.2 To Other Researches

To anyone interested in looking further into this topic, the researcher would suggest that a survey
of different banks in the country should be carried out instead of focusing on the branches of the
one bank. This will enable the other researchers to collect information from customers of
different banks.

59
Table 5.1 Contribution to knowledge
Objectives Contribution to knowledge
To what extend do cultural factors Culture, sub culture, croups and family, has low effects
influence the manner in which consumer choice of a bank. Members of a particular
consumers choose a bank. Culture, sub culture, croups and family will eventually
influence each other to bank with the same rate. Other
factors that influence consumer choice of a bank with
low effect are lifestyle which is closely linked to the
consumer’s culture.

To what extend do cultural factors Age and lifestyle stage, role and status and social class
influence the manner in which have low effects on consumer choice of a bank. This is
consumers choose a bank. because people of the same age group will mostly be
found to have similar tastes and preferences. Also
some people would only feel comfortable when they
are in a bank that matches their status and class
To what extend do personal factors Personality has a high effects on consumer choice of a
influence consumers’ choice of a bank. Some people might have unique personalities
bank. that will drive them to a particular bank and not just
any bank.
To determine how product and Customer service within a bank also greatly influences
services offered by Commercial with very high effects on his or her bank choice. The
banks influence consumers while availability of loan funds also determines the
choosing a bank. consumer’s choice of bank. These include such
processes on processing a loan, and all its
requirements. The consumer was also greatly
influenced by Convenience of the bank products
brought out by technology as the Automatic Teller
Machines, mobile banking and shopping cards among
others.
The other factor that influenced a consumer choice of

60
bank is the size and network of the bank that a
consumer can access .This factor aims at determining
the accessibility of a bank to the consumers and hence
it was found that the nearer the bank the more it is
convenient and vice versa. The size of a bank was
determined depending on whether the bank is small or
large in size.

61
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64
 APPENDIX: I KCB CUSTOMER SHARE GRAPH

Great Rift Consumer Shares by Bank

70

Equity Co-op KCB Family Barclays Stanchart

u 2009 a 2010 y 2011

Graph. 1.

Nakuru Consumer Shares

y2009 u 2010 y2011

I Graph. 2.

65
 APPENDIX: II WORK PLAN

Activities March April May Juae

Project writing

Questionnaire

Testing - pilot survey

Data collection

Data analysis

Report writing

Report submission

Defense

66
 APFENDEX: III BUDGET

ITEM COST NUMBER OF ITEMS TOTAL

1 ream of full scaps 150 6 900
Trip allowances 1,200 3 3,600
Printing 500 2 1,000
Data analysis 1,500 4 6,000
Report production 1,000 6 6,000
TOTAL 17,500

67
 APPENDIX: IV REQUEST FOR ACADEMIC SURVEY RESEARCH

DAVID K. CHEPKANGOR,
UNIVERSITY OF NAIROBI,
P.O. BOX 30197,
NAIROBI.
15lh JUNE, 2012.

THE BRANCH MANAGER,

KENYA COMMERCIAL BANK (NAKURU),
PO BOX 18,
NAKURU.

DEAR SIR/MADAM,

RE: REQUEST FOR ACADEMIC SURVEY RESEARCH

I am a student at the University of Nairobi undertaking a Master of Arts degree in Project
Planning and Management, having completed the course work and currently conducting the
Project research work as part of the fulfillment of the course.

I’m kindly requesting to conduct an Academic Survey research at your Institution. The survey
will involve collection of data on determinants of consumer choice of commercial banks; a case
of Kenya commercial bank in Nakuru town. The study will examine social factors, cultural
factors, personal factors, product and services offered and propose recommendations for
improvement. I assure you that all data collected will be solely used for Academic purposes and
not for any other use what so ever.

Your kindest assistance is highly appreciated.

Thank you.

Yours faithfully,

DAVID K. CHEPKANGOR.
f

68
 REPUBLIC OF KENYA

NATIONAL COUNCIL FOR SCIENCE AND TECHNOLOGY

Telephone: 254-020-2213471, 2241349
254-020-310571, 2213123, 2219420
P.O. Box 30623-00100
Fax: 254-020-318245, 318249
NAIROBI-KENYA
When replying please quote
Website: www.ncst.go.ke
secretary@ nest. go. ke

NCST/RCD/l 4/012/1003 23rd July, 2012

Our Ref: Date:

David Kipngetich Chepkangor

University of Nairobi
P.O.Box 30197-00100
Nairobi.

RE: RESEARCH AUTHORIZATION

Following your application for authority to carry out research on “D e te r m in a n ts of

c o n s u m e r c h o ic e o f c o m m e r c ia l b a n k s.A c a s e o f K e n y a C o m m e r c ia l B a n k in
N a k u r u T o w n ,” I am pleased to inform you that you have been authorized to
undertake research in Rift Valley Province for a period ending 30"' S e p te m b e r
2012.

You are advised to report to the Branch Manager,Kenya Commercial

Bank,Nakuru Branch before embarking on the research project.

On completion of the research, you are expected to submit two hard copies and
one soft copy in pdf of the research report/thesis to our office.

SAID HUSSEIN
FOR: SECRETARY/CEO

3opy to:

'he Branch Manager

'enya Commercial Bank
akuru Branch.
 APFENDEX: VI RESEARCH QUESTIONNAIRE
SECTION A. (Profile of the respondent)
1. Age: (please tick where appropriate)

Age Bracket (years) Tick

0 - 17
18 - 30
31 - 45
46 and above

2. Marital status: (please tick where appropriate)

SINGLE Married

3. Occupation: (please tick where appropriate)

Occupation
Student
Employed
Self employed / in business
4. Please tick your highest level of education.

Primary Secondary Certificate Diploma Degree

5. How did you get to know Kenya Commercial Bank? (Please tick where appropriate)

Ways of Knowing about the Bank

Through a friend
Through media
Through a family friend
Through a bank employee
Other ways

If other ways (Specify)

6. What type of an account are you currently operating? (Please tick where appropriate)

70
 Type of Account Tick
Current
Savings
Fixed
Joint

7. What is your level of income? (Please tick where appropriate: (Amount in Ksh)

SECTION B. (Information about factors affecting consumer’s choice of commercial bank)

8. Please give your opinion regarding the following factors on your choice of Kenya
Commercial Bank as your Bank. (Please tick the number that best describes your level of
the effects)
Key;
{1] - No Effect [2] - Very low effect [3] - Low Effect
[4] - High Effect [5] - Very High Effect [6] - Not applicable

Cultural Factors 1 2 3 4 5 6
Cultural factors e.g. traditions.
Sub-cultural factors e.g. values in ones clan
Social classes associated with
Groups / Religion you associate with.

Personal factors 1 2 3 4 5 6
Your family status.
Your role and status in the society.
Your Age & Life-cycle stage
Your occupation
Your Economic Situation
Your Lifestyle

71
 Your Personality

Product/services factors 1 2 3 4 5 6
Easy Account opening procedures
The Bank opening Hours
The Interest Rates Offered
Operating balances of an account
The ATM efficiency / technology

Social Factors 1 2 3 4 5 6

Groups
Family
Role and status

Other factors 1 2 3 4 5 6

Customer Service
The Convenience
The Size and the network of Bank
Availability of Loan Funds

72