An Assessment of the Effect of Differentiation Strategy on Performance of Banking Industry in Rwanda: A Case Study of Equity Bank, Rwanda

Abstract

The purpose of this study was to establish the effects of differentiation strategy on performance of banks in Rwanda. The study was carried out in Equity bank in Kigali Rwanda. This study employed descriptive research design. Target population was 130 employees of the bank. A sample size of 99 employees was selected for the study. Stratified random sampling technique was used to select the samples. This research study used questionnaire as the data collection tool which was administered to the respondents by the researcher herself. The collected data was thoroughly examined and checked for completeness. The data was then be summarized, coded to enhance analysis using statistical package for social science (SPSS). Descriptive statistics for the study were frequency distribution and percentages which was generated through descriptive analysis. Inferential statistics for the study was Pearson correlation that was used to estimate the relationship between the study variables. Additionally, regression analysis was generated by regressing differentiation strategy against bank performance. Statistical Package for Social Science was used to generate both descriptive and inferential statistic.The study findings were presented in form of tables. Data presentation was done by the use of percentages and frequency distribution tables for easy of understanding and interpretations.  Content analysis was used to analyze the respondents' views and opinions on differentiation and banks performance. The study findings revealed that product differentiation (R=.352^**, P<0.01), physical differentiation (R=.598^**, P<0.01) and service differentiation (R=.227^*, P<0.05) statistically and significantly correlated with bank performance. Further the study showed that 36% of bank performance can be explained by differentiation strategy. The study concluded that increasing the extent to which the bank carries out product differentiation would result into increased bank performance. Maintain low interest rates, simplicity of accessing bank products and reliability of the products are features that would make bank products unique compared to competitors.