This paper examines the relationship between market differentiation and organizational performance in commercial bank of Ethiopia Bahir Dar city. A survey of five branches of commercial bank of Ethiopia in Bahir Dar city provides the basis for empirical investigation and simple random sampling method was used to select respondents from these selected branches. The data were collected from 120 employees and through interview to managers. The system of variables for employees consisted 22 items modeled by five point likert scale and four demographic items that were considered Five items were also prepared to interview managers. The data were analyzed quantitatively and qualitatively. For the quantitative part then, ordinary least square (OLS) multiple regression were performed to estimate the magnitude of the effect of market differentiation on organizational performance. All the finding shows that market differentiation contributes positively for organizational performance. Hence, the findings of this study develop a clear-sighted knowledge base in order to provide a practical guide to marketers.