Determinants of Customers' Bank Selection Decision: The Case of Bank Customers in Dire Dawa City, Ethiopia

To plan a suitable marketing strategy, to keep existing customers and for attracting new customers, commercial banks need to identify the criteria by which customers determine their bank selection decision. This study, therefore, sought to explore the factors that determine customers’ bank selection decision in Dire Dawa City, Ethiopia. An explanatory research design was adopted for this study. Multi-stage sampling technique was employed. Data was obtained using self administered questionnaires from 410 customers of five banks in Dire Dawa City. Multinomial logistic regression was used to examine the relationship between demographic characteristics, advertising, branding, distance to bank location, innovative products and customers’ bank selection decision. The results revealed a significant relationship between customers’ choice of bank and the variables of interest including age, occupation, advertising, branding, distance to bank location and innovative products and services offered by banks. Therefore, the study recommends that, banks operating in Dire Dawa City should improve upon their brand image and reputation. Bank branches should be sited at areas such as business and market centers which have the propensity to attract potential and maintain existing customers. Banks should develop products that serve the needs of the average Ethiopian and also embark on intensive advertising campaign about the benefits of their current products and services to the general populace.