EFFECTIVENESS OF MARKETING STRATEGIES ON BANK PERFORMANCE CASE STUDY OF IBTC BANK

ABSTRACT

The topic of this study is chosen bearing in mind the crucial role of effectiveness of marketing strategies on banks performance.

The proliferation of banks in Nigeria coupled with advancements in technology brought about competition in the industry from the hitherto "arm chair" banking of the past whereby customers run after banks. Given the dynamic of the operating environment, banks had to employ various marketing strategies to make their services in order to survive.

This research proposal is therefore intended to carry out an evaluation of effectiveness of marketing strategies on bank's performance by Stanbic IBTC. The study tries to evaluate the effect of marketing by Stanbic IBTC to its phenomenal success as shown in its consistent profitability and gross earning as a bank.

Secondary data was obtained from Stanbic IBTC. These data are: all audited financial reports, various bulletins and brochures issued by the bank at various times as well as bank's rating reports issued by independent consultants.

In conducting the analysis, simple regression techniques was used to analyze the existing secondary data and it was established that effective marketing strategies has a significant effect on bank's performance as measured by gross earnings and profitability, which is a yardstick for success.

            TABLE OF CONTENTS

Title Page

Certification

Dedication

Table of Content

CHAPTER ONE:        

BACKGROUND OF STUDY

1.1     Introduction

1.2     Statement of the problem

1.3     Objective of study

1.4     Significance of the study

1.5     Research Question

1.6     Research Hypothesis

1.7     Methodology

1.8     Limitation of Scope of Study

1.9     Organization of Study

1.10   Definition of terms

1.11   Reference

CHAPTER TWO:

REVIEW OF LITERATURE

2.0     Introduction

2.1     Market Concepts

2.2     Involving Effective Market Strategies

2.3     Understanding Customer and their needs

2.4     New Product Development Strategies

2.5     Image Projection Strategies

2.6     Market Communications

2.7     Nigeria Financial System

2.8     Classification of Banking Product

2.9     IBTC'S Marketing of Financial Services

2.10   Products and Services Provided by IBTC

2.11   Theoretical Framework

2.12   Marketing Strategies of IBTC

2.13   Marketing Strategies in term of Corporate Image   

and Product differentiation

2.14   Evaluation of Marketing Strategies of Financial

Services on consumer satisfaction

CHAPTER THREE:

RESEARCH METHODOLOGY

3.0     Introduction

3.1     Analytical Technique

3.1.1 Correlation Coefficient

3.1.2 Standard Error Test

3.2     Model Specification

3.3     Definition of Variable

3.4     Nature and Sources of data

3.5     Limitation of Methodology

3.5.1  T - Test

3.5.2 F - Test

CHAPTER FOUR:          

DATA ANALYSIS AND INTRODUCTION OF RESULT

4.0     Introduction

4.1     Presentation of hypothesis

4.2     Restatement of hypothesis

4.3     Empirical Result

4.4     Summary

CHAPTER FIVE:    

SUMMARY CONCLUSION RECOMMENDATION

5.1     Summary

5.2     Conclusion 

5.3     Recommendations

5.4     Suggestion for further research

CHAPTER ONE

BACKGROUND OF THE STUDY

1.1   INTRODUCTION

Sometime in 1993, the National Westminister Bank, London Chairman Lord Alexander, was asked on a Television Programme how bank differentiate itself as a brand. He appeared confused by the question. Someone from the marketing industry who wished to be anonymous wrote to Lord Alexander and pointed out that really marketing and branding were perhaps issues that should not have confused him. Branding and marketing were not highly important Issues.

Two years later in 1995, National Westminister Bank started addressing people on how marketing can be used to make it different from the pack. National Westminister's story typified what used to be prevailing altitude in financial service organizations in Nigeria "Customers may be king, but we crown them".

The foundation for the present operation environment for Nigeria Banks was laid by the adoption of the Structural Adjustment Programme (SAP) in 1986 by the Nigeria Government. President Ibrahim Badamosi introduce SAP. The major policy instruments of SAP are:-

·               Privation and commercialization of public sector enterprises, debt rescheduling conversion.

·               Adoption of appropriate pricing policies for all sectors with greater reliance on market fore.

·               Reduction /elimination of administrative controls.

·               Adoption of realistic exchange rate policy and liberalization of external trade.

·               Monetary and credit restraint by Government.

Prior to this, the Government had maintained a pervasive if not a suffocation presence in the banking sector.

The coming into force of SAP in 1986 and the consequent deregulation of the financial system led to the Nigeria banking industry witnessing a phenomenal explosion in the number of licensed banks, both merchant and commercial banks operating within the system, owning a bank became the vogue. Such was the situation that forms the number of 45 banks, in 1986, it rose to 122 and in 1992 67 commercial banks was established and 55 merchant banks. There were also the specialized banks like the people's bank, the community banks, and primary mortgage institution like financial houses.

Prior to 1986, the banks that were operating in the country were used to "arm - Char" Banking whereby the banks officials sit in the offices while customer look for them.

Banking in Nigeria was then essentially a seller market with customer made to have the erroneous impression that it was a privilege to enjoy the service of a bank. The proliferating of the banking institutions have however led to increased competition, which had compelled banks not only to adopt marketing principles but to also differentiate their offerings.

1.2   STATEMENT OF THE PROBLEM

From the foregoing background of study, there is no doubt that the banking industry will face greater challenges ahead. This research in aimed at finding solution to more of the problem of poor quality of financial services in Nigeria.

There have been wide spread complaints b customers for delay in effecting simple bank transaction. Customer wait for hours in the banking hall of Nigeria banks to obtain baking facility. This is one of the most legitimate criticisms of the quality of bank services. The significant areas of lapses in marketing of financial services which was regarded as problems according to Aliliele (1998) include the following:-

•     The low level of confidence by some clients as a result of high rate of bank's failure.

•     The poor skill and attitude of staff.

In fact banks seem to perceive themselves as the "financial messiah" of the customer and see themselves to be master instead of being servants. Because of this "self perception" the internal policies of the bank are made to override the customer's interest.

Due to disparity in interest rate as a result of deregulation competition between the banks is more apparent than real. This is likely to have adverse effect in the banking system. The limited knowledge of Investment Banking and Trust Company (IBle) activities, services and other perceived product completing.

The trauma of the early 1990's bank failures experienced by customers has not left their. According to Azara (1989) "most banks despite their high level profile has not successfully been able to custom the spill - over effect of 1990's mass bank failures, experienced by some of its customers. As a result, some of them still have some doubt about the bank's capabilities to meet her daily demands.

This research is therefore, to ascertain the extent to which the research will exist and find out solution to them. In addition, this research will recommend possible courses of action to alleviate inefficiency in marketing of financial services in Nigeria.

1.3   OBJECTIVE OF THE STUDY

The objectives of study are:-

a.           Access the various marketing strategies used to market financial service in the banking industry.

b.           Evaluate the effectiveness of marketing strategies used by IBTC to distinguish itself in the market and these achieve success as measured by profitability.

c.            To find out if there has been as increase in customer orientation and satisfaction as a result of the market concept application in Investment Banking and Trust Company.

d.           To ascertain if the infrastructural limitation discourage customers or create in efficiency in service orientation marketing on the part of the bank.

e.            To ascertain if the perception of banking staff as the "financial messiah" affect the customer satisfaction or improve banking services.

1.4   SIGNIFICANCE OF THE STUDY

The whole process of marketing financial service, reviewing the past to enable proper projection made for the future. This study is therefore important as the objective and growth of any business organization.

The study of this nature should help in providing knowledge to guide managers on the use of marketing as a tool for survival in a competitive environment. The study also helps to illuminate happenings within the banking sector with a view to provide required knowledge for scholars which could help to improve management of banks which contribute to academic excellence and intellectualism.

It also finds out the ways and methods of applying the marketing concept so as to improve the performance of our banks.

Finally, it try to sensitize researchers, investigators, academicians, practitioners and professionals on the need for researchers work and for further studies and also to motivate other interested researchers in this subject Hereby giving item impetus to venture into a fresh field of study.

1.5   RESEARCH QUESTION

Specifically, research question are specific questions addressing dimensions of the statement of problem i.e. broad question the relevant research question are as follows:-

·                    Was it because of poor skill and attitude of staff toward work?

·                    Why do we have poor quality of financial service in banks?

·                    Was it because of interest rate as a result of deregulation?

·                    Is it because banks cannot be able to meet up with there customers demand.

·                    What is the cause of customer's delay during the processing of simple bank transaction?

Answer to the above question will help in clarifying and answering the board questions rose under the statement of research problem.

1.6   RESEARCH HYPOTHESIS:

Hypothesis is a tentative statement of relationship that exists between identified variables. The research hypotheses developed for this study are:-

Ho:   Marketing expenditure has no significant effect on bank's Gross Earnings.

H₁:   Marketing expenditure has significant effect on bank's Gross Earnings;

Ho:   There is no significant relationship between marketing expenditure and profitability level in banks.

H₁:   There IS significant relationship between marketing expenditure and profitability level in banks.

1.7   METHODOLOGY

The marketing employed for this study derives from the hypothesis to be tested with focus on the statement of this problem, the methodology will be used to validate or invalidate the stated problems, find answers to the research questions and test the stated hypothesis.

Secondary method of data collection will be employed for this study.

The regression equation is given as:

Y =   b_o + b₁ X₁ + b₂X₂ + µ

Y =    Dependent Variable

X_­1 =   Independent Variable

X₂ =   Independent Variable

b₁ =   Coefficient of X₁

b₂ =   Coefficient of X₂

b_o =   Constant

µ = Gror term

1.8   LIMITATION OF SCOPE OF STUDY

In order to achieve the objective of the study, this project is designed to focus on the "effectiveness of marketing strategies on Banks performance" with reference to Investment Banking and Trust Company Limited (IBTC) as a case study of service oriented business enterprise. The choice of I BTC has been determined by two factors:

Firstly, IBTC is one of the new generation banks that emerge as a result of the liberalization of the licensing procedure of banks.

Secondly, the bank has emerged within period of one decade as one of the most successful bank in Nigeria.

General Examination of the marketing activities of IBTC to create a niche for itself will be carried out and evaluate to determine whether marketing of it services has any effect on the success of the bank. Success here is measured by profitability and grass earnings.

Although banking is over 100 years in Nigeria, this study only covers a period of 10 years (1999 - 2007), being the period showing banking operation of IBTC from inception to 1998. The findings of the study are therefore limited to IBTC.

This type of research need adequate fund, lack of finance militated against the researcher shutting within Lagos to collect the needed data for this research work.

Further, one of the limitation is the short period which to complete this project. There is time constraint and limited period for the academic calendar were limited factors.

1.9    ORGANIZATION OF STUDY

This research is divided into five chapters.

Chapter One: Contain the introduction and background of the study, which will show the under view and general description of the study.

Chapter Two: A review of all related literature within the reach of the researcher will be made.

Chapter Three: how the method specification and sources of data.

Chapter Four: Shows the analysis and interpretation of data Obtained from different sources.

Chapter Five: Contain the summary, recommendation and conclusion to the study

1.10 DEFINITION OF TERMS

MARKETING: According to Kotler Philip (1990), marketing is "human activity directed at satisfying needs and wants through exchange process". While Nwankwo G.O.(1991) defined marketing as "a discipline analysis of the needs, wants, perception and preferences of target and intermediary markets which forms the basic for effective product design, pricing, communications and description".

Nwankwo G.O defined MARKETING OF BANKING SERVICE as the creation and delivery of customer satisfying services at a profit to the bank.

Koller Philip (1990) defined a PRODUCT as something that is viewed as capable of satisfying a need or want. A product can be an object, service, activity, place, organization or idea.