The Effect of Marketing Mix Practices, Consumer Demographics and Attitudes on Usage of Credit Cards by Customers of Commercial Banks in Nairobi, Kenya

Abstract

The general objective of this study was to determine the influence of marketing mix practices, consumer demographics and attitudes on credit card usage of commercial bank customers in Nairobi, Kenya. The study had four objectives namely; to determine the effect of marketing mix practices on credit card usage, establish the extent to which consumer demographics influence the relationship between marketing mix practices and credit card usage, assess the extent to which consumer attitudes influence the relationship between marketing mix practices and credit card usage and to establish the joint effect of marketing mix practices, consumer demographics and attitudes on credit card usage. The study was a descriptive cross-sectional survey and the population comprised all persons in Nairobi who own at least one credit card. The sample size was 384 and stratified random sampling was used to pick respondents with a response rate of 361(94%).A structured questionnaire was used to get primary data and the unit of analysis was individual bank customers. To test reliability Cronbach’s alpha was used and all the constructs had an alpha coefficient above 0.7. A pilot study was done to determine content validity and thereafter necessary adjustments were made on the instrument. Descriptive and inferential statistics were used to analyze the data through various measures and tests. Simple and multiple linear regression and correlation analyses were used to test the hypotheses. The relationships between and the influences of the variables were determined, inferences made and conclusions drawn. The results indicated that marketing mix practices had a significant positive influence on credit card usage. It was also established that the relationship between marketing mix practices and credit card usage was significantly moderated by consumer demographics. However, the tests revealed that the relationship between marketing mix practices and credit card usage was not statistically mediated by consumer attitudes. Finally, it was established that the joint effect of marketing mix practices, consumer demographics and attitudes on credit card usage was statistically significant. The study has contributed to theory development and marketing practice by building on service marketing knowledge. This is by confirming that banks can apply the marketing mix elements to increase usage of their products and hence financial performance. The contribution to policy development is that the study may guide regulators of financial institutions to develop policies that encourage good marketing practice. It was recommended that banks should identify the elements in the marketing mix that are important to their customers and focus attention on them. The evidence that marketing has an effect on business performance can be used by practitioners to seek top management support. The results of the study imply that policy makers regulating the financial sector should develop policies that encourage and support appropriate marketing practice. The study had some limitations caused mainly by its scope. The focus was only on credit cards issued by banks, leaving out charge cards. While only credit card holders were sampled, involving also non credit card holders would have been more inclusive. However, the limitations did not have an adverse effect on the results. Future studies should address these limitations by adapting the sample to include non-credit card holders and credit card usage to capture all categories of credit cards.