Product Differentiation Strategy and Perceived Financial Performance of Commercial Banks in Uganda

Abstract

The banking landscape in Uganda is such that there is a section of commercial banks that has consistently posted impressive performance figures, particularly over the last five years, while the performance of the others leaves a lot to be desired. This study’s purpose was to examine the effect of differentiation strategy on the financial performance of commercial banks in Uganda. The study employed a cross-sectional design characterized by a quantitative approach. The target population in this study constituted 210 Senior Managers and Chief Executives of 10 selected commercial banks in Uganda that have been rated as the best performing commercial banks in the five years (2015-2019). A sample of 144 individuals was calculated for this study using Yamane’s (1967) formula, and the probability sampling technique of stratified proportionate random sampling was used in selecting Senior Managers of the selected commercial banks, and these were surveyed using a structured self-completion questionnaire. Quantitative data were analyzed descriptively using statistics such as frequencies, percentages, means, and standard deviations; and inferentially using partial least squares structural equation modelling (PLS-SEM). The findings showed a positive and statistically significant relationship between product differentiation strategy and financial performance in terms of ROI (β = 0.5841, ρ<0.05). The study concluded that product differentiation strategy is an important factor in the financial performance of commercial banks in Uganda particularly in terms of ROI.

Differentiation strategies and tourism performance interplay

“…Pieces of literature have shown that indeed differentiation is a good predictor of performance, regardless of the approach used; qualitative or quantitative. However, as the results are mixed, with both positive, mediation, and negative correlations, this implies that the differentiation-performance nexus is far from clear (Wambaka & Adegbuyi, 2021). Therefore, it is only further analysis by other studies, that can help in understanding and clarifying the debate.…”

“…For example, Wambaka and Adegbuyi (2021) explored product differentiation's impact on performance in the banking sector. A cross-sectional design (focusing on quantitative data) was adopted, where 144 chief executives and senior managers from 10 commercial banks participated in the study.…”

Komparasi Efektivitas Strategi Pemasaran Pedagang Kaki Lima Pasar Tradisional

“…Dengan melakukan diferensiasi produk, bisnis dapat menawarkan nilai tambah yang berbeda dan menarik bagi masing-masing segmen pasar. Secara umum teori diferensiasi produk menekankan pentingnya menciptakan keunikan pada produk atau jasa yang ditawarkan (Wambaka & Adegbuyi, 2021). Dalam pasar tradisional, pedagang tetap memiliki keunggulan dalam diferensiasi produk karena keberadaan lapak tetap mereka.…”

The Effect of Product Differentiation Strategy on The Performance of Commercial Banks in Kenya.

“…In the financial market, product differentiation involves the creation of unique financial products and services that set a financial institution apart from its competitors. Because of personalizing offerings to meet specific and specific customer needs and preferences, financial institutions can attract more customers, increase customer loyalty, and ultimately improve the quality of their services (Wambaka, 2021). Product differentiation allows financial institutions to offer a wide variety of products and services that go beyond traditional banking.…”