Академический Документы
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2, 2008
Rovvy Ocktora2
ABSTRACT
Islamic banking industry in Indonesia has developed quite rapidly in last decade. Nowadays,
the Islamic bank only used differentiation strategy in order to compete with conventional
bank, that is free of riba. To be able to compete between Islamic banks, they need to have
appropriate segmentation strategy. There are two segmentation strategy that can be use by
Islamic bank, benefit segmentation and demographic segmentation.
This research is used Wedel and Kamakura (1998) segmentation based. The demographic
segmentation is included in observable product specific based. And the benefit segmentation
is included in unobservable product specific based.
The objective of this research is to observe the relationship between demographic and benefit
of Islamic bank costumer. Before that, the desire consumer benefit must be found. Factor
analysis and cluster analysis are used to make the benefit segmentation. Then chi square test
are used to find the relationship between these two variables. This research is conducted in
Yogyakarta, Indonesia. The result is only age and occupation that have relation with the
benefit segmentation.
1
This paper was published in Journal of Islamic Business and Economics (JIBE), Laboratory of Islamic
Business and Economics (LIEB), Faculty of Economics and Business, Gadjah Mada University in December
2008. This paper originally in Bahasa Indonesia, and then translated into English with minor revision.
2
Researcher in Syariah Center P2EB, Faculty of Economics and Business, Gadjah Mada University. Address
correspondence to rofi.ocktora@gmail.com
1
The developments of Islamic banking in Indonesia are cannot be separate from the
appearance of the first Islamic bank, Bank Muamalat. This Bank Muamalat is existed
from 1991. The existence of this Islamic based bank is initiated by Majelis Ulama
Indonesia (MUI) and supported by Ikatan Cendekiawan Muslim Indonesia (ICMI).
The upcoming of Islamic bank in Indonesia actually too late if compared in other
countries in Middle East. But, the existence of Islamic bank gives an alternate choice
on Indonesian banking industry. That because Islamic banks are using profit and
loss sharing rather than the conventional banks are still using interest based.
In their first appearance, public are still skeptic with this Islamic bank. When
economic crisis strike Indonesia in 1998, a lot of national bank got the effect. So many
bank must be liquidated and merge with another bank in order to survive from high
inflation rate. But, bank Muamalat, the Islamic bank is survive from this economic
crisis. One of the reasons why these banks survive is not using interest system that
very fragile to inflation.
Some of bank practitioners are try to develop Islamic bank after they are successfully
again the crisis. Some of conventional bank started to open Islamic Banking Unit.
The government are begin to acknowledge this Islamic banking industry. In 1998,
the law no.10 year 1998 are obtained as replacement of law no.7 year 1992. With that
law, Islamic bank have a gold opportunity to grow bigger. The conventional bank
can also open a branch office with Islamic based system.
Based on Islamic banking statistic, if in year 1992-1998, there is only one Islamic
bank, and then on March 2007 there are twenty four Islamic banks. There are
consists of three Islamic Commercial Bank and twenty one Islamic Banking Unit.
Besides that, the number of Islamic Rural Bank reached 105 units in the same period.
The developments of Islamic bank can be seeing on table 1 and graphic 1.
2
Watching this development of Islamic banking industry, there are good business
strategy needs to be applied. Even though Islamic banking market share is still less
than 5% from overall national bank, but the growth are increasing year by year. This
fact is very important and needs to be done by Islamic banking practitioners in order
to get costumer as much as possible.
Problem Identification
According to the facts above, the purpose of this research to make an alternative
segmentation that can be applied in Islamic banking industry in Indonesia. This
research is trying to do segmentation on Islamic bank customers with some
variables. There are two kind classifications of segmentation based that used, that is
demographic and benefit (Wedel and Kamakura ,1998). This research also tries to
find the relationship between those two variables.
Segmentation
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preference, attributable to the desire of consumer for more precise satisfaction of
their varying wants”. Based on the other definition of expert, its can generally
explain that segmentation appear because of heterogeneity of needs and desire of the
consumer.
There are many researches about segmenting the financial institution. To facilitate a
brief analysis of the most pertinent to the financial service sector, the author follow
Frank et al. (1972) and Wedel and Kamakura (1998). They suggest classifying those
segmentation variables according to whether they are “product specific” or
“general” (i.e. independent products or service), and also by the extent to which each
variable might be deemed observable. For more clear can see table2.
General Product-specific
Observable Demographic, geographic User status, usage rate,
and socio-economics loyalty, stage of adoption
variables
Unobservable Psychographic, values, Benefit, perception,
personality and lifestyle preference, intention
Source: Wedel and Kamakura (1998)
Demographic Segmentation
Benefit Segmentation
Benefit segmentation watching how the consumer satisfied from a product. Change
in a life style plays an important role in product benefit for consumer. This also gives
marketer a chance to create product and service. Main power of this benefit
segmentation is benefit has causal relationship with behavior in the future
(Schiffman, 2004).
Benefit is something that able to make someone to fell satisfied with their needs or
wants. Someone will choose one from many option because of the benefit from they
choose. Just like bank customers, they just hoping the benefit from the bank they
choose. There are many kind of benefit that they get from the bank they choose.
With many kind of benefit, that can be categorized into each segment.
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Theoretical Framework
This research replied from Alfansi and Sargeant (2004) research. The title of the
research is “Market Segmentation in the Indonesian Banking Sector: the Relationship
Between Demographic and Desired Consumer Benefit”. On that research said those
general observable based variables are close to segment criteria such as
identifiability, sustainability, accessibility, and stability, but weak at actionability,
and responsiveness. At unobservable product-specific based variables are close to
actionability and responsiveness, but this variable weak to the other criteria.
That will be interesting if there is any relationship between those general observable
based and unobservable product-specific based variable. If there is a relationship can
be found, there will be an interesting potential segment. As the conclusion of that
research is, there only one demographic variable that have relation with benefit
segment, and that is occupation.
This research want to know the relationship between general observable based and
unobservable product-specific based variable as Wedel and Kamakura’s
segmentation criteria, if there will be different between conventional banking and
Islamic banking customers segment. This research tries to do segmentation based on
benefit from Islamic bank customer. And then if there is a significant correlation
demographic segmentation, such as age, gender, marital status, monthly income,
education, and occupation with those benefit segmentation.
Methodology
This research is use survey method, where the population is Islamic bank in
Yogyakarta. There are 300 questionnaires distributed as a sample, and only 275 are
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obtained. Sampling method that used are convenient sampling and stratified
sampling. Stratified sampling is used to get heterogeneity and balancing the sample.
There are two kind of strata that used, place and occupation.
This research is using primary data. There are two kinds of data that will be collect,
demographic variables and benefit variables. The demographic variables that used
are just like mentioned before. The result of respondent demographic data can be
seen at appendix 1.
There are three instrumental tests that used in this research. The first one, factor
analysis, is used to derive the factors that construct the benefit variable. The item
that construct benefit variable is from the benefit item from questionnaire. The
second is cluster analysis, is used to create segment cluster of benefit variables from
the factors that created. And the last one is chi square test is used to know the
signification of relationship between demographic variables and benefit segment
variables.
Factor analysis is statistical method that used to explain variability among observed
variables into smaller variable called factor. In this study, factor analysis used to
classify and simplify the variables benefits received by customers of Islamic banks
into the factors that shape it, so that can know what are the factors that underlie the
benefits of Islamic bank customers.
Benefit Factor
In a validity test, KMO value of 0.896 is obtained so that the research is feasible to be
tested with factor analysis because its value is more than 0.05. KMO value
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approaching 1 indicates that factor analysis can be used in the data. The method
used in the test reliability is Cronbach Alpha coefficient (α). According Sekaran
(2000) the instrument is considered reliable if the alpha value greater than or equal to
0.7, the measured variables and items can be trusted or relied upon. While the alpha
value greater than or equal to 0.6 is considered fairly reliable (Hair et al., 1998). In
this study the Cronbach Alpha reliability of the test is 0.961. Thus, existing data are
considered highly reliable.
Based on the data grouping score coefficient matrix that has the greatest value, there
are 11 grouping factors. Benefits of grouping factors can be seen in appendix 3. All of
these factors can be named respectively as follows:
1. Factor 1 = appearance
2. Factor 2 = ATM
3. Factor 3 = cost
4. Factor 4 = service
5. Factor 5 = various products
6. Factor 6 = sharia compliance
7. Factor 7 = branch office
8. Factor 8 = employee
9. Factor 9 = location
10. Factor 10 = reputation
11. Factor 11 = extra facility
Thus, all of factors that underlie all of the benefit variables of Islamic bank customer
can already be known.
Benefit Segmentation
F ratio values and significance levels are used to compare the differences between
the mean clusters. Giving a label or name on the cluster done accurately describe the
nature of these clusters. This study used three clusters as analysis. Results from the
cluster analysis can be see in appendix 4.
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From the table note that the level of significance of the table shows that the level of
significance of the table shows that the ten variables were significantly different with
sig <0.05 except sharia variables with significance level 0.105. Thus can be concluded
that each variable in the cluster do not have a relationship.
From the mean value can be seen that cluster 1 is more skewed in the ATM variables,
cost and sharia compliance. ATM usage, transaction costs are low showing members
of this segment tend to be sensitive to the cost. Thus, this cluster can be named with
the cost cluster.
In cluster 3 more inclined to the variables of employees, locations and extra facilities.
The existence of employees who can help, strategic location, and extra facilities will
facilitate the bank's customers to do banking transactions. Thus, this cluster can be
called easiness.
From the three clusters are formed, the second cluster has many members of the
segment, which is 191 members. Then the first cluster has a member of 72 members,
and then the third cluster have a member of as many as 12 members.
Chi Square test is used to test the differences in proportions of the characteristics of
each cluster or segment. In this study, chi square test used to determine whether
there are correlations between segments of the demographic variables with the
variable segments of benefits.
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Table3. Signification Test
Variables Chi Square Df. Sig.
Gender 5.316 2 0.070
Age 23.936 8 0.002
Monthly income 8.082 6 0.002
Occupation 15.082 6 0.232
Marital status 8.8839 4 0.065
Last education 4.553 8 0.804
From Table 3 it can be seen that the value of 0.05 significance demographic variables
significantly related to the variable benefit with significance value <0.05 was the age
variables with significance level 0.02 and variable occupation with significance level
0.020. Only of these two demographic variables that have a relationship with
variable benefits in the segmentation of Islamic banks customer.
The other demographic variables such as sex has a significance level of 0.070,
monthly income as sex has a significance level 0.232, marital status has significant
level of 0.065, and the last education has 0.804. All of significance level was not
significantly related to the variable benefit because the significance value> 0.05.
Discussion of Results
In this research can be concluded that age differences can be categorized into the
benefit segmentation that created. In a different age level, customers will tend to be
associated with one of the benefits offered by Islamic banks, whether its cost
advantages, the major product benefits, convenience or profit.
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Managerial Implication
The results of this study concluded that demographic segmentation variables that
have a relationship with the benefits segmentation variables are the age variables
and occupation variables. This is considered quite disappointing because it was still
less able to benefit segmentation targeting the consumer to do targeting based on age
and employment, especially if the Islamic banks would like to offer specific benefits
to the clients.
Although only age and occupation variables that can be targeted to offer the benefits
of Islamic banking, Islamic banking practitioners can still get a lot of customers if
they can make the most of the intended target market. By knowing the benefits that
can be offered and the right target market demographic, the marketing focus will be
more to produce than on mass marketing (Kotler, 2003). Islamic banking
practitioners can perform combinations to focus on the benefits offered or
demographic target market.
Viewing of the three segments that form, namely the cost segment, the main
products, and convenience, the practitioners of Islamic banking can take advantage
of the benefits sought by the character of the community by focusing on one segment
of those profits. At the focus of these segments, Islamic banking marketers can do
concentrated segmentation with segment targeting certain advantages with a specific
target market demographics, whether based on age or occupation.
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Suggestion
For further research on the same topic should be able to consider the suggestions as
follows:
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Appendix 1. Respondent Demographic Data
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Appendix 2. Benefit items that used
No Items Source
1 Bank reputation 1, 4, 6
2 Sharia compliance 7, 8
3 Free of riba 7, 8
4 Using profit and loss sharing system 8
5 Security of deposit 8
6 Fast and efficient service 4, 5, 6
7 Overall service 4, 6
8 Fast and accuracy transaction 2, 6
9 Financial counseling service provided 4
10 Bank employee wear an Islamic dress 8
11 Numbers of bank employee that ready to help 3
12 Knowledge of bank employee 3, 5
13 Friendliness of bank personnel 1, 4, 5, 6
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28 Availability of ATMs 5, 6
29 Numbers of ATM booths 5, 6
30 Join in Union ATM 8
31 Free charge at Union ATM 8
32 Interesting ATM card 8
33 Convenience location 1, 4, 5, 6
34 Bank location that near resident 8
35 ATM location that near resident 8
36 Internal appearance of the bank 5
37 External appearance of the bank 5
38 Interior layout of the bank 2
39 The availability of parking space 1, 4
40 Confidentiality of the bank 2
41 Interesting advertising 6
42 Much known by people 1, 4, 5, 6
43 Recommended by friend or family 1, 4, 5, 6
44 Complete and open information in the bank 3, 6
45 No information being hide 3, 6
Source: 1 = Anderson et al. (1976); 2 = LeBlanc dan Nguyen (1988); 3 = Lewis (1991);
4 = Kaynak et al. (1991); 5 = Kaynak dan Kucukemiroglu (1992); 6 = Zineldin (1996);
7 = research of Bank Indonesia (2007); 8 = interview result
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Appendix 3. Factor Grouping
Coefficient
Factor Variable
Matrix Score
Interesting ATM card 0.149
Internal appearance of the bank 0.274
External appearance of the bank 0.254
1 Interior layout of the bank 0.252
Confidentiality of the bank 0.139
Interesting advertising 0.144
Availability of ATMs 0.246
2 Numbers of ATM booths 0.269
Join in Union ATM 0.249
Free charge at Union ATM 0.244
High profit and loss sharing deposit margin 0.214
3 Lower charges of monthly deposit 0.291
Free drawing charges 0.298
Low charge in others service 0.309
Fast and efficient service 0.337
4 Overall service 0.315
Fast and accuracy transaction 0.334
Being able to pay bills 0.295
5 Wide range of service offered 0.295
mobile banking 0.367
internet banking 0.304
Sharia compliance 0.353
6 Free of riba 0.307
Using profit and loss sharing system 0.296
Bank employee wear an Islamic dress 0.282
Financial counseling service provided -0.125
Branch office facility 0.472
7 The numbers of branch office in the country 0.422
Size of branch office 0.160
Convenience location 0.190
Knowledge of bank employee 0.150
8 Friendliness of bank personnel 0.444
The respect and consideration that shows bank
0.562
employee
Security of deposit -0.272
Numbers of bank employee that ready to help 0.307
9 Long banking hour 0.321
Bank location that near resident 0.403
ATM location that near resident 0.299
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Bank reputation 0.299
10 Much known by people 0.360
Recommended by friend or family 0.461
Gift that offered -0.211
11 The availability of parking space 0.283
Complete and open information in the bank 0.551
No information being hide 0.392
Mean Score
Variable F Ratio Sig
1 2 3
appearance -.80816 .31498 -.16446 43.412 .000
ATM .33276 -.00554 -1.90842 31.617 .000
cost .46263 -.18511 .17060 12.052 .000
service -.26890 .13488 -.53341 6.281 .002
Various products -.65452 .27248 -.40981 28.188 .000
Sharia compliance .17903 -.04287 -.39188 2.272 .105
branch office .09174 .09963 -2.13620 35.931 .000
employee -.40444 .12559 .42759 8.987 .000
location -.48320 .13753 .71014 14.546 .000
reputation -.10569 .08699 -.75045 4.623 .011
Extra facility .32237 -.14272 .33739 6.631 .002
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