KIU Journal of Social Sciences 163 KIU Journal of Social Sciences Copyright©2021 Kampala International University ISSN: 2413-9580; 7(4): 163–168 Categorization of Customers’ Needs: Impact of Market Segmentation on Performance of Nigeria Banks MODUPE MOTUNRAYO FASANMI Nnamdi Azikwe University, Awka, Anambra State, Nigeria. SAMUEL SUNDAY FASANMI Federal University Gashua, Yobe State, Nigeria. Abstract. This study examines the impact of market segmentation on bank performance in Nigeria. Opinions of one hundred and eighty-four customers of Guarantee Trust Bank consisting of one hundred and three (103) males (56%) and eighty-one (81) females (44%) were accidentally sampled across five different locations in Lagos, Nigeria. Two hypotheses were generated and tested using an independent t- test. Results of the study revealed that age, occupation, gender, level of income, housing interest of the customers are suitable demographic segmentation parameters that could enhance banking effectiveness and performance in Nigeria. It was also found out that psychographic segmentation significantly impacts bank performance in Nigeria t (182) = 3.14; P < .05. Results also showed a significant impact of demographic segmentation on bank performance t (182) = 3.14; P < .05. It was recommended that Nigeria banks should make efforts to give their psychographic and demographic segmentation paradigms a human face. Like any other citizens of the developed world, Nigerians like comfort, especially when it can be bought. Since the outcome of this study has placed psychographic segmentation as a better profit spinning market strategy to gain a competitive advantage over other competitors than other segmentation synergies, putting customers first may make more sense for the bankers. Such a decision will boost customers’ loyalty and make their bank grow in cash assets. Keywords: Bank Performance, Psychographic Segmentation, Demographic Segmentation, Customers 1. Introduction Performance is the tripod stand on which the continuity of any organization stands. The recently widely publicized Millennium Development Goals in Nigeria emphasized effective performance in all sectors, especially in the banking industry, which is always referred to as the economy nerve of the nation. However, the twenty-five approved banks are in stiff competition to gain a competitive advantage. Thus, banks are using several paradigms and strategies at their arsenals to outwit one another in a competitive Nigeria market. Banks offer a wide range of financial services to personal and business customers; some of these services, such as bank account, import/export services, money transfers, credit cards, etc., are needed by numbers of customers. These services have to be brought to the attention of potential users, who then must be persuaded to use them. Not all services are aimed at every customer, and many have a "target" slice of the market. Banks today recognize that they cannot appeal to all buyers in the marketplace, or at least not to all buyers in the same way. Buyers are too numerous, widely scattered, and varied in their needs and buying practices. Moreover, the banks themselves vary widely in their ability to serve different market segments. Rather than trying to compete in an entire market, sometimes against superior competitors, each company must identify the parts of the market that it can serve best and most profitably. In their attempt to operationally define performance concerning bank operations, Peter and Sylvia (2008) believed that a bank is in good stead of performance