THE EFFECT OF PRODUCT DIFFERENTIATION STRATEGIES ON THE PERFORMANCE OF COMMERCIAL BANKS IN ZIMBABWE

Abstract

This study investigated the effect of product differentiation techniques on the performance of commercial banks in Zimbabwe. The study followed a quantitative research approach and a purposive random sampling method to select respondents. A 5-point Likert scale questionnaire was used to collect data from 130 managers and supervisors of 13 commercial banks in the Bulawayo Metropolitan Province. Data analysis followed Partial Least Squares SEM (PLS-SEM) to test the hypothesis. The findings indicated that all five product differentiation techniques, namely quality, service, pricing, features, and reputation, had a positive effect on the performance of commercial banks in Zimbabwe. Therefore, Zimbabwean commercial banks should adopt product differentiation strategies to meet the demands of customers who, in the 21st century, expect quality products and services. These strategies, will help managers and supervisors make precise strategic business decisions to counter hyperinflationary pressures, allocate resources, mitigate risk, withstand intense competitive rivalry, and, above all, cope with the strict regulations of the Reserve Bank of Zimbabwe.