ABSTRACT
This study was on the effect of physical environment on the service purchase behavior in the banking sector. The study was guided by the following objectives:to evaluate the effect of the socio-economic characteristics of the target respondent in customers choice of a bank, to determine the effect of image on the buyer behavior of customers in the banking sector, to determine the significance of color in retaining bank customers, to ascertain the effect of space in the number of bank customers. The study population was made up 150 people whose opinion generated data for the study and it includes 20 of ECOBANK management staff, 30 of the bank employees and 100 of the bank customers. 110 people were derived as the sample size using Taro Yamane’s scientific method. The study employed multiple regression and simple percentages in analyzing the data collected; and questionnaire was used to collect the primary data. Primary and secondary data sources were used. The study findings reveal that, physical evidence, layout, and the interior design of the bank has positive influence on the patronage of the bank customers; the annual income, in the form of salary to the bank employees serves as source of motivation to the employees’ performance; the employee performance, age of the employee and marketing experience all contribute to productivity of the employee and later to profitability of the bank; the image, colour and space of a bank influences customers’ patronage positively. However, the cost of equipment and maintenance as well as technology affected productivity negatively. The study therefore recommends that these areas including the image, colour and space of the bank should be developed in a way that it will not only influence customer patronage and satisfaction but also enhance customer loyalty and improve the employee performance. The bank management should also be recruiting people at their youthful age; and also there should be prompt payment of their salaries such will be morale booster and a motivational factor for employee performance and productivity. There should be good budget for the purchase and maintenance of equipment; with cost reduction techniques and provision for depreciation such will enhance adaptableness to existing technology that will enhance corporate performance.
TABLE
OF CONTENTS
Title page i
Declaration ii
Certification iii
Dedication iv
Acknowledgement v
Table of Contents vi
List of Tables ix
Abstract x
CHAPTER ONE
INTRODUCTION
1.1
Background of the
Study 1
1.2 Statement
of Problems 3
1.3
Objectives of the
Study 5
1.4 Research
Questions 6
1.5 Research
Hypotheses 6
1.6 Significance
of the Study 7
1.7
Limitation of the study 7
CHAPTER TWO
REVIEW OF RELATED LITERATURE
2.1
Conceptual framework 9
2.1.1
Service Defined 9
2.1.2
The Purpose Of Service Environment 9
2.1.3 Image, Positioning, and Differentiation 10
2.1.4
Facilitating the Service Encounter and Enhancing Productivity 12
2.2 Consumer Responses to Service Environments 13
2.2.1 Feelings
as a Key Driver of Customer Responses to Service
Environment 13
2.2.2 Behavioral Consequences of Affect 16
2.3 Theoretical Framework 17
2.3.1 Servicescape Theory 17
2.4
Empirical Framework 18
2.4.1 The Impact of
Ambient Conditions 18
2.4.2 Special Layout and Functionality 21
2.4.3 Signs, Symbols, and Artifacts 22
2.5 Summary 23
CHAPTER THREE
RESEARCH METHODOLOGY
3.1 Research
Design 25
3.2 Area
of Study 25
3.3 Study
Population 25
3.4 Sampling
Techniques 26
3.5
Sample Size 26
3.6 Method of Data Collection 27
3.6.1 Instrument 27
3.6.2 Data
Sources 27
3.7 Data
Analysis 28
3.8 Model
specification 28
3.9 Validity
29
3.10 Reliability 29
CHAPTER
FOUR
RESULTS AND DISCUSSIONS
4.1 Questionnaire Distribution 30
4.2 Socio-economic Characteristics of
Management and Employee 30
4.2.1 Distribution of Respondents according to Age 31
4.2.2 Distribution of Respondents according to
Marital Status 32
4.2.3 Distribution of Respondents according to
Household size 32
4.2.4 Distribution of Respondents According to Level
of Education 34
4.2.5 Distribution of Respondents According to Years
of Experience 34
4.2.6 Distribution of Respondents According to
Annual Income 35
4.3 Correlation Analysis 41
CHAPTER FIVE
SUMMARY,
CONCLUSION AND RECOMMENDATIONS
5.1 Summary 45
5.2 Findings and Conclusion 45
5.3 Recommendations 46
REFERENCES
APPENDIX
LIST OF TABLES
Table
4.1: Distribution of respondents by age 31
Table
4.2: Distribution of respondents
according to marital status 32
Table
4.3: Distribution of Respondents by
Household size 33
Table
4.4 Distribution of Respondents according to Problems facing physical environment design 33
Table
4.5: Distribution of respondents by
level of education 34
Table
4.6: Distribution of respondents
according to working experience 35
Table
4.7: Distribution of respondents
according income 36
Table
4.8: Distribution of respondents according
to the services rendered by the financial services of the bank to
her customers 36
Table
4.9: Distribution of respondents
according to interest rate of the Bank 37
Table
4.10: Physical environment and buyer
behaviour 37
Table
4.11: Physical environment and customer
satisfaction 38
Table
4.12: The determinants of physical environment, customer service delivery and
its impact on profitability of Eco bank Plc. 39
Table
4.13: Physical environment influencing buyer behavior of target customers 41
CHAPTER ONE
INTRODUCTION
1.1 Background of the Study
Financial service
marketing is the application of marketing principles and concepts and
strategies in the financial sector of the economy. It refers to the adoption of strategic
planning, analysis and control in delivering superior value to the bank
customers (Anuforo and Boniface, 2013).
The planning of the physical environment of the bank is not done
haphazardly. This is because the
interaction of the customer with the physical environment goes a long way to
determine efficient service process and delivery to the target bank customers
(Baker, 2004).
Financial service
environment, also called financial service land scape relate to the style and
appearance of the physical surrounding, equipment, layout and other
experimental elements encountered by financial service customers at service
delivery site; especially during banker-customer interaction. Thus, designing the service environment of
the bank is an art that takes considerable time and effort, and can be
expensive to implement. Once designed and built, financial service environment is
not always easy to change (Stephen et al, 2003).
However, there are so
many factors that are considered before designing the physical environment of
the bank. These factors are
complementary in nature for financial service packaging, image, positioning and
differentiation (Lovelock and Wirtz,2000).
Packaging of financial services, unlike packaging in the tangible
product industry, shift its emphasis on the bank itself, especially on their
unique chain for customer service delivery system. This is because financial service marketing,
and with special emphasis on service packaging takes another dimensional
approach (Stephen et al, 2000). The
opinion can be justified by the special characteristics of services generally
and the financial service in particular (Ladipo and Olufayo, 2011). These characteristics include perishability,
inseparability, intangibility, variability etc.
From the above
observation, it is then believed that the design (packaging) of the financial
service, as well as the way service are delivered are all geared to enhance not
only image attraction, but corporate differentiation of both the financial
service organization and its value proposition.
It is on this rationale that Lovelock and Wirtz (2004) observed that the
financial service physical environment, and its accompanying atmosphere impact
customer perception and buyer behaviour in three important ways:
i)
As
a message creation medium by using symbols and cues to communication to the
potential customers about distinctive nature and quality of the financial
service experience.
ii)
As
an attention-creating medium to make the physical environment stand out from
those of competitors and to attract customers from target market segments.
iii)
As
an effect-creating medium, in which the use of colours, spatial design and
modern equipment are used to enhance the desired service experience and, or to
heighten an appetite for financial service packages.
The above observations
are imperative because the physical environment of the bank services are
strategic physical evidence for service differentiation and positioning. This is because services are always
intangible, and customers cannot assess quality well. Therefore, the physical environment does not
only help in quality assessment but also for value proposition. Because it helps to shape appropriate
feelings and reaction in customers and employees.
1.2 Statement of Problems
The physical environment,
the people, the machines and the equipment of the financial service marketer
all have greater influence in the buyer behaviour and degree of customer
patronage of contemporary banks. The
achievement of target market objectives and corporate goals of the bank can
also be enhanced by a well-designed physical environment of financial service
providers.
A review of the
observations of Lovelock and Whirtz (2004), the attainment of market
performance and productivity in the financial service sector of the economy of
any nation can be precipitated by an effectively and efficiently designed
physical environment. However, some
factors constrain effective design of the physical environment and the
influence of the patronage rate of customers.
These constraints are problem areas facing the environment of the
financial service marketers.
For banks delivering
high-contact financial service packages, like merged commercial banks, the
design of the physical environment, the package, use of symbols, layout,
equipment, personnel etc. are strategically planned and coordinated. Therefore, the cost and technological aspects
of these factors normally affect effective and efficient designing of the bank
physical environment.
Also, the use of customer
behaviour studies to influence the motivational cues of the targeted financial
service customer has been impaired by behaviour dynamics of the customers.
Thus, the use of colour, symbols, signs etc. to attract new customer, retain
old ones and, or retrieve lost ones is a difficult task to financial service
providers cum marketers.
Furthermore, the
appearance and behaviour of both financial service personnel and customers to
reinforce the impression created by a service environment is not usually easy
to determine. And however, within the
constraints imposed by legal obligations and skill requirements, financial
service firms seek to recruit staff to fill specific roles, costume them in
uniforms as physical evidence (Jochen et al, 2000).
It is therefore,
important to discover that the holistic characteristics of the financial
service environment makes it physical evidence professional approach should be
adopted to focus on specific areas that will be effective in not only
influencing customer satisfaction and patronage, but also efficient enough in
delivery superior service value at least cost to the target markets.
1.4
Objectives of the Study
The general objective of
the study is to determine the relationship of physical environment in influencing
service purchase behaviour in the banking sector.
However, the study seeks
to achieve the following specific objectives, which are to:
i)
evaluate
the effect of the socio-economic characteristics of the target respondent in
the customers’ choice of a bank;
ii)
determine
the effect of image on the buyer behaviour of customers in the banking sector;
iii)
determine
the significance of colour in retaining bank customers;
iv)
ascertain
the effect of space in the number of bank customers;
1.4 Research Questions
The following research
questions were designed to guide the research study. There are:
i)
Do
the socio-economic characteristics of the target respondents influence
customers choice of a bank?
ii)
Does
the image of a bank have significant effect on the buyer behaviour of target customers
in the banking sector?
iii)
Does
the colour of the financial service firms have significant effect on customers’
patronage?
iv)
What
effect does the space of a bank have in the number of bank customers?
1.5 Research Hypotheses
Some null hypotheses were
formulated in the course of the study.
They are:
H01: The socio-economic characteristics of the target respondents does
not have significant effect on customers’ choice of a bank.
Ho2: The image of a bank does not have significant
effect on the buyer behavior of target customers in the banking sector.
Ho3: The colour of financial service firms does not have significant
effect on customers’ patronage.
H04: The space of banks does not have any effect on the number of bank
customers
1.6 Significance of the Study
A study of this nature
will be of immense important to different group of people. These groups are discussed below:
To the Banks, an
effectively designed physical savings environment will help in facilitating the
service delivery of the bank.
To the Customers, the
physical environment of the bank, if well designed will serve as physical
evidence to access service quality to customer and may in turn influence their
service purchase behaviour positively
To the Researcher, this
material will service as source of data for subsequent research studies and
review of the topic.
To the Academics, this
work with its related empirical studies will serve as contribution to
literature of marketing especially in financial service subsection.
1.7 Limitation of the study
This study is not a perfect
work. Every study has aspects in which it falls short of the ideas which the
researcher has established. It is a mark of intellectually honesty to admit
that this short coming did exist and to give an account of the way they have
been manifested.
The following are the
constraints encountered by the researcher in carrying out the study;
Some of the respondents,
especially the employees of the case financial firm were not easily convinced
to cooperate to release value data that could help the researcher carry out
this study. But through strenuous efforts and persuasion, the researcher was
able to convince them that the data collected will be used only for academic
purposes.
Also in carrying out the
research, the researcher encountered some militating factors such as financial
problems, time constraints and other related course work that were carried out
by the researcher at the same time. The researcher had to balance his research
work with his daily educational program.
Coupled with the fact
that some of the questionnaire distributed were not correctly filled by the
target respondents. However, it affected the results of the questionnaire a
little if not for the efforts the researcher made to explain the questions to
the respondents especially the bank customers. This in turn gave the researcher
likely correct answers to the questions.
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