EFFECT OF MARKETING CONCEPT ON COMMERCIAL BANKS PERFORMANCE (A STUDY OF ECO BANK AND FIRST BANK)

ABSTRACT

This project investigates the effect of marketing concepts on the performance of commercial banks, focusing on Eco Bank and First Bank Nigeria Plc. The study's primary objective is to explore how marketing strategies influence bank performance, customer retention, and satisfaction. Employing a descriptive cross-sectional research design, the study encompasses the entire commercial banking sector, with a sample size of 90 staff members selected from the two banks. Data collection involved primary sources through questionnaires and secondary data from bank reports, analyzed using profit regression models and correlation coefficients.

The findings reveal that the marketing concept is not extensively applied within the banks, highlighting a need for increased orientation on its benefits. The analysis showed that marketing strategies significantly affect customer retention, with a pseudo R-square value of 0.55, indicating that effective marketing practices can account for 55% of the variations in customer retention. Furthermore, a strong positive correlation (0.897) exists between marketing concepts and bank performance, suggesting that well-implemented marketing strategies can substantially enhance overall performance. Customer satisfaction is also positively influenced by marketing efforts, with a pseudo R-square value of 0.681, indicating that 68% of customer satisfaction variations can be attributed to marketing practices.

The study concludes that the long-term success of commercial banks heavily relies on the effective implementation of marketing concepts. The marketing concept, which emphasizes total customer satisfaction, is crucial for developing beneficial relationships between banks and their customers. The findings underscore the importance of customer retention and satisfaction in achieving corporate performance goals. To remain competitive, banks must innovate and anticipate customer needs by offering new services, ensuring that customer satisfaction remains central to their operations. The study recommends a shift in focus from internal perspectives to customer viewpoints, better coordination of marketing programs with other business activities, and a profit-oriented approach centered on customer satisfaction.

Overall, the project provides valuable insights into the significant role of marketing concepts in enhancing the performance of commercial banks, suggesting that strategic marketing practices are essential for sustainable growth and competitiveness in the banking industry.

TABLE OF CONTENTS

CHAPTER ONE

INTRODUCTION

1.1   Background to the Study

1.2   Statement of the Problem

1.3   Objective of the Study

1.4   Research Questions

1.5   Hypotheses

1.6   Significance of Study

CHAPTER TWO

REVIEW OF RELATED LITERATURE

2.1   Conceptual Framework

2.1.1 Application of the Marketing Concept in Financial Institution

2.1.2 The Marketing Concept as a Survival Strategy in Banking Industry

2.2   Theoretical Framework

2.2.1 Market Focus Theory

2.3   Empirical Framework

2.4   The History of Selected Banks

CHAPTER THREE

RESEARCH METHODOLOGY

3.1 Research Design

3.2 Area of the Study

3.3 Population of the Study

3.4 Determination of Sample Size

3.5 Method of data Collection

3.5.1 Validity of Research Instrument

3.5.2 Reliability of Research Instrument

3.6 Sampling Techniques

3.7 Method of Data Analysis

3.8 Model Specification

CHAPTER FOUR

PRESENTATION AND ANALYSIS OF DATA

4.1   To Ascertain the Extent to Which Marketing Concept is Applied by the

Commercial Banks

4.2   Effect of Marketing Concept on Customer Retention

4.4   Effect of Marketing Concept on Customer Satisfaction

CHAPTER FIVE

SUMMARY, CONCLUSION, RECOMMENDATION

5.1   Summaries of Findings:

5.2   Conclusions

5.3   Recommendations

REFERENCES

APPENDIX: QUESTIONAIRE

CHAPTER ONE

INTRODUCTION

1.1     Background to the Study

Marketing has become increasingly a vital ingredient for business success. Marketing virtually affects our day-to-day lives, it is embedded in everything we do (Kotler, 2006) Marketing practices are continually being refined and reformed in virtually all industries to increase the chances of success. Marketing is very important in an organization, that one could equate it with finance. While finance may be considered as the life wire of business, especially startup capital, marketing is the only thing needed so that the capital invested could be recouped and for the business to continue to exist. There is no business that exists except there is market for such business. While market may be viewed as a point where exchanges takes place, marketing is considered as a set of human activities directed at facilitating and consummating mutually satisfying exchange relationship between the marketer and the market (Linus, 1997). This definition justifies the dependence of business on marketing. Marketing being the bedrock for business survival is commonly believed to have progressed through five distinct phases of evolution since the beginning of the time.

A brief history of marketing in Nigerian banking, shows how economic, political and social environment have influenced the marketing of financial services in Nigeria. Although conventional banking began in Nigeria in 1891 with the establishment of the African Banking Corporation which later became Bank Of British West Africa, little has been done in marketing because the banks were established mainly to serve the foreigners (that is the British) commercial interests that existed then in the Nigerian colony; so they were not interested in developing new banks or clients (Abdullahi, 2012).

Studies have shown that Nigeria has the second largest financial services sector in Sub-Saharan Africa, after South Africa and it is fast growing and expanding internationally (Becker, 2008). Marketing in years past has played a significant role in the banking system of any country and Nigeria is not an exception. Marketing is the most useful and prime tool for the banking sector and it aims at satisfying customers and bankers since the products of banks have to be marketed in order to tap the potential customers. Due to the level of globalization which has turned the world into a global village, the Nigerian banking system is facing tough competition from global banks. In this situation it is a must to have a functional marketing department and appropriate marketing strategy. In the current scenario, marketing is a very useful tool for the banking sector in attracting customers for their various products. The old days are gone for banking wherein the customer had to walk into his bank and ask for services, due to increased competition, it has become imperative for banks to use marketing practices to increase their market share by providing awareness of their products to their prospective customers. Banks have to provide knowledge of their products to their customers and create enlightenment of their products among the prospective customer and for that marketing has become an important tool which connects the customers and products offered by the bank. Banks need to break their shell and design new avenues for reaching their target group. The emergence of new generation banks and other foreign players have also increased the competition amongst banks thus a clear alignment of the needs and wants of the target group and the marketing strategies of banks is the key to revenue generation and also the solution necessary to attain growth and survival (Mohan, 2009).

The importance of marketing is viewed to the extent that financial success is said to depend on marketing ability. Finance, operation, accounting and other business functions will not really matter if there is not sufficient demand for products and service so the company can make a profit.

According to Kofo (2006), marketing provides the necessary cash and credit to produce, transport, and store, promote, sell, and buy products. The foregoing are however achieve through revenue generated from sales. The traditional business focus is to produce and sell to the market (customer), whereas, a firm can never be sure that customers will want to buy its product. Therefore, the modern marketing idea emphasizes the identification and understanding the needs and wants of customer in the market, and adapting the operation of the organization to deliver the right goods and services more effectively and efficiently than its competitors for their satisfaction and mutual benefit.

According to Paul (1995), satisfying the customer is what marketing concept is basically all about. Marketing fuels competition and better deals for consumers, it encourages innovation in an attempt to satisfy customers better. The basic premise of the marketing concept is that its adoption will improve business performance. Marketing is an acid test of the effect that its use has key corporate indices such as profitability and market share. In line with this, banks today are operating in a highly competitive and rapidly changing environment. In the changing economic scenario, a professional approach to business development is essential and the survival of a banking institution depends on its ability to take up challenges coming up in the environment. Developing business through marketing of bank’s services is one of the crucial areas which need attention of the bankers to ensure profitable survival. Bank marketing like any other marketing philosophy, in any context, refer to the need satisfaction of the institution clients. The basic step involves identifying the needs of the customers and developing products to suit their needs or modifying the existing products accordingly. It also requires the need for foreseeing wants of the customers in future and developing suitable products of their requirements.

1.2     Statement of the Problem

The Nigerian banking industry displays one of the highest level of marketing resource utilization but when investigated exhibits a high degree of marketing myopia in their activities (Osakwe, 2003). This heightened level of poor marketing concept application and knowledge in the sector is said to partially account for the low quality of service delivery Cravens (2001); Robinson (2014); Kotter (2004); and Gronros, (2000).

Research shows that unethical marketing behavior impacts consumer’s behavior in the market place. Nigerian banks are mostly found of this behavior which resulted to poor handling of customer complaints. Lack of courtesy, failed promises, the pain and stress which customers of certain banks are made to go through in a single transaction can be highly frustrating and devastating. The long queues and huge crowds in the banking halls can also be discouraging most time, especially when the weekend is near. Most times, these long queues are as a result of the cashier pushing duty to one another, as to who is to attend to the customer or not. The issue of money transfer in banks is one major problem that customers of certain banks have been made to experience. In most cases, the customer hardly receives the payment of the money transferred in his account immediately. Apparently, it may be concluded that the impact of marketing concept particularly as it relates to implementation among these is statement implementation gap need to be investigated and in the instance, Zenith bank Plc Umuahia Branch is used as a case study.

1.3   Objective of the Study

The broad objective of the study is to investigate the effect of marketing concept on the performance of selected banks in Abia State, Nigeria. Other Subsidiary objectives are to:

     I.         Examine the effect of marketing concept on customer retention.

   II.         Ascertain the relationship that exist between marketing concept and bank performance

 III.         Examine the effect of marketing concept on customer’s  satisfaction

1.4 Research Questions

The following research questions are:

     I.         How does marketing concept affect customers retention

   II.         How is marketing concept related to banks performance

 III.         What marketers concept influence customers satisfaction

1.5 Hypotheses

The formulated hypotheses are stated in their null forms:

HO₁: marketing concept does not influence customers retention.

HO₂: There is no significant relationship between marketing concept and banks performance

HO₃: There are no marketing concepts and customer’s satisfaction.

1.6     Significance of Study

The importance and relevance of marketing concept in Banks in Nigeria cannot be over emphasized or under-estimated, been that marketing orientation use to enhance profitability. There will be serious implications in many ways. For example the following are likely essential benefit from this study.

Customers: the customers will benefit as the service render to them by the bank will be satisfactory

Banks: the core of the marketing concept is to help organization to achieve their objectives and also to understand your customer and their importance to your business. Banks benefits profitably. It would lead to customer satisfaction and retention.

Academia: the study would be helpful to any researcher carrying out a research of this nature. It could serve as a resource material

Economically: it will help in establishing a functional marketing department in banks there by creating more employment opportunities for our marketing graduates and others.

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