Arthur, Theo Donavon2011-03-172011-03-172011-03-17http://hdl.handle.net/10539/9166MBA - WBSLimiting access to a company’s services or discouraging the demand coming from certain customers is not an uncommon practice. Suppliers of services and goods often select a target market that would provide a minimum expected value and exclude the rest. In the financial services sector the lower income segment have always been excluded on the basis that they do not provide this minimum expected value (Sharma, 2003). In South Africa, however there is a renewed interest in targeting this lower income sector. This renewed interest in targeting the lower income sector in post apartheid South Africa is not just because there is value and benefits to companies who target this market (Prahalad, 2004), or the recognition that financial service development causes growth and poverty alleviation (Porteous, 2004; Beck, 2004), but it is also in place to address the imbalances caused by an apartheid system. Although South African financial service providers find themselves with similar challenges of a developing economy, the South African environment is a unique one. Practices of exclusion have not just segmented on the basis of income, minimum value expectations, education and status but also on race. In reentering this market, many providers are finding themselves unprepared for the challenges of this once excluded sector. Whilst cost, accessibility, insufficient discretionary income and literacy have been identified as the key factors that hinder the consumption of financial services, the Financial Sector Charter of 2003 identified that the South African financial sector had failed to increase participation of the previously excluded and limited access to its services (Crotty, 2005; Prahalad, 2004; Barr, 2004; Sharma, 2003). By committing to the targets of the Charter many of these financial institutions, which include banks, long - term insurers, short - term insurers, re-insurers, collective investment schemes, investment managers, retirement funds and licensed exchanges, find themselves targeting a market which they previously excluded. A further challenge to financial service iii providers in South Africa is that little research has been conducted on the unique situational variables that impact the South African economy. The purpose of this study is therefore to identify and explore the challenges that the previously excluded market presents to financial service providers who wish to re-enter this market in South Africa. It also investigates the appropriateness of segmentation tools and assesses how best to target this market. The research methodology employed focussed on a literature review which aimed to identify the factors that influence financial service consumption. It then discusses the various segmentation models and the best strategy to target this market. Focus groups were used to gain insight and understanding of this market. Data was then collected and analysed. The findings and discussion highlight that it is imperative to understand the changing demographics, social and cultural influences and the impact of historical practices prior to providing financial services to a market that was previously excluded. Factors that are unique to South Africa i.e. self exclusion, crime, non traditional market instruments and costs were also identified. These factors are discussed in this study. It is hoped that this study will assist providers of financial services in formulating strategy that would increase consumption of its products and services and in so doing contribute to the growth of the economy whilst addressing the imbalances of the past.enFinancial servicesThesis