Segmenting financial services markets for customer relationships: A portfolio-based approach

Two principal issues in the process of market segmentation for financial services are the subject of this paper: firstly, the selection of criteria upon which market segments for retail banking will be built; and secondly, the evaluation and selection amongst market segments. The authors argue that segments should be evaluated and targeted using a portfolio-based approach, which identifies segments according to their value to the financial institution both in the present and over the medium-term future. Such an approach would recognise the varying value of relationships with different market segments and would build valuable relationships with chosen customer groups.