APPLICATION OF MARKETING STRATEGIES FOR IMPROVING PERFORMANCE OF SELECTED MONEY-DEPOSIT BANKS IN IMO STATE NIGERIA

ABSTRACT

 A market focused organization first determines the potential customer’s desire, and then builds the products or services. Marketing theory and practice are justified in the belief that customers use a product or service because they have a need, or because it provides a perceived benefit. With the increase of non-performing accounts in the Nigerian banking industry, the profits of banks are getting thinner. For instance some of the banks such as Afribank, Spring Bank and Bank PHB have been taken over by the Central Bank of Nigeria (CBN) in 2011 because of their poor performance.  The study examined the application of marketing strategies for improving performance of selected money-deposit banks in Imo state Nigeria using united bank of Africa, first city monument bank, keystone bank and mainstreet bank in Imo state. The specific objectives of the study is to examine the impact of marketing strategies on sales volume of money-deposit banks, determine the impact of marketing strategies with increase in the customers’ satisfaction, and investigate the impact of marketing strategies with increase in customers’ patronage in banks. A sample size of 250 was computed from a population of 362 using Taro Yemen’s formula. With a survey research design, Pearson Correlation analysis test statistics was formulated to incorporate three hypotheses of interest. A total copy of 250 questionnaires was administered, 40 to staff and 210 to customers but only 220 were found valid for this study and descriptive analysis was used to analyze the 220 retrieved questionnaires. The researcher adopted simple correlation coefficient to assess the relationship between application of marketing strategies and performance of money-deposit banks and to know if improving performance of banks can be measured by sales volume, customers’ satisfaction and customers’ patronage. Our findings revealed a close relationship exists between marketing strategies and performance of money-deposit banks. That is to say that the application of marketing strategies is significant in performance of banking industry. We therefore recommend that all banks should start making use of (OPEX marketing strategies) a proving international transactional risk management software provider to protect and facilitates transaction effectively. This will help reduce fraudulent practices and poor performance in banks.  

TABLE OF CONTENTS

Title …...………………………………………………………………………..i

Declaration……………………………………………………………………..iii

Certification…………………………………………………………................iv

Dedication………………………………………………………………………v

Acknowledgements...…………………………………………………………...vi

Table of Contents……………………………………………………..................x

List of Tables..………………………………………………………………….xi

Abstract………………………………………………………………...............xii

CHAPTER ONE: INTRODUCTION

1.1     Background to the study………………………………...………………..1

1.2      Statement of the problem………………………………...………………4

1.3   Objectives of the study...……………………………………….………….5

1.4     Research questions……………………………………………………….5

1.5        Research hypotheses…………………………………………................5

1.6        Significance of the study……………………………………………….6

1.7     Scope of the study………………………………………………………..7

1.8 Definition of the terms……….……………………………………………..7

1.9 Limitations of the study……………………………………………………..8

CHAPTER TWO: REVIEW OF RELATED LITERATURE

2.1.1      Introduction…………………………………………………………9

2.1.2 Nature and Meaning……………………………………………………9

2.2.1 What Is a strategy?...................................................................................10

2.2.2 The Hierarchies of strategies……………………………………………11

2.3 Theoretical Framework……………………………………………………12

2.3.1 Historical background of commercial bank in Nigeria……………..……12

2.3.2 History of united bank of Africa (UBA)……………………………........14

2.3.3 History of First City Monument Bank (FCMB)…………………………15

2.3.4 History of Keystone Bank Limited………………………………………15

2.3.5 History of Mainstreet Bank Limited (MBL)………………………..........16

2.3.6 Problems of Bank Marketing…………………………………………….17

2.3.7 Factor Influencing Bank Industries and its Remedy……………………..17

2.4 Theories and models……………………………………………………….17

2.4.1 Marketing strategies……………………………………………………...18 

2.4.2 Types of marketing strategies……………………………………………19

2.4.3 Introduction of CRM…………………………………………………….21

2.4.4Focus on Customer Satisfaction …………………………………………21

2.5.1 Academic Review………………………………………………………..24

2.5.2 Summary of literature……………………………………………………24

CHAPTER THREE: RESEARCH METHOLOGY

3.1 Research Design…………………………………………………………25

3.2 Study area………………………………………………………………..25

 3.3Population of the study…………………………………………………..26

3.4 Source of data ……………………………………………………………26

3.4.1 Sampling plan………………………………………………………….27

3.4.2 Sampling unit…………………………………………………………..27

3.4.3 Sample size…………………………………………………………….28

3.4.4 Sampling procedure……………………………………………………29

3.4.5 Sampling method……………………………………………………….29

3.5 Statistical/Analytical Technique………………………………………….30

CHAPTER FOUR: DATA PRESENTATION, ANALYSIS AND INTERPRETATION

4.1 Presentation of Data………………………………………………………32

4.2 Descriptive Analysis of Data……………………………………………..33

4.3 Test of Hypotheses……………………………………………………….44

CHAPTER FIVE:  SUMMARY, CONCLUSION AND RECOMMENDATION

 Introduction ……………………………………………………………….53

5.1Summary of Findings……………………………………………………….53

5.2 Conclusion …………………………………………………………….......54

5.3 Recommendations………………………………………………………….54

REFERENCES

APPENDIX

LIST OF TABLES

Table 1 Distribution and return rate of questionnaire………………………………………32

Table 2 Which is in charge of setting the marketing strategies for the company’s………..33 product?

Table 3 Whether customers are satisfied with the marketing strategies associated with the35 company’s product

Table 4 Whether middlemen are allowed to fix their own marketing strategies…………..35

Table 5 Presence of difficulty in the market place due to price wars………………………36

Table 6 Most important marketing strategies objectives…………………………………….37

Table 7 There is no significant relationship between marketing strategies and sales volume of money-deposit banks……………………………………………………………..38.

Table 8 the attainment of marketing objectives has no significant relationship with the marketing strategies adopted………………………………………………………..39

Table 9 most crucial factors in the determination of the company’s marketing strategies…40

 Table 10 Consumption of products of money-deposit banks….…………………………..40

 Table 11 Reasons for preferring products of the bank……………………………………..41

 Table 12 the marketing strategies that enhance consumers’ purchases habit…………….42

Table 13 frequency of using the banks services……………………………………………43

Table 14 whether consumers enjoy any incentive from the bank………………………….43

CHAPTER ONE

INTRODUCTION

1.1     Background to the study

           A market focused organization first determines the potential customer’s desire, and then builds the products or services. Marketing theory and practice are justified in the belief that customers use a product or service because they have a need, or because it provides a perceived benefit (Kotler and Keller, 2006). Two major factors of marketing are the recruitment of new customers (acquisition) and the retention and expansion of relationships with existing customers (base management. For marketing plan to be successful, the mix of the 4 “Ps” must reflect the wants and desires of the consumers in the target market. Trying to convince a market segment to buy something they do not want is extremely expensive and seldom unsuccessful. Marketers depend on insights from marketing research, both formal and informal, to determine what consumers want and what they are willing to pay for. Marketers hope that this process will give them a sustainable competitive advantage (Meldan, 2001). The study of Akinyele (2011) for the bank sector in Nigeria suggest that strategic marketing is a driver of organizational positioning in a dynamic environment, and that it helps to enhance the development of new product/service for existing markets. The adaptation of any strategy depends much on factors such as management style and experience of the top management, age of the institution, economic environment, and regulations. Generally, we can safely identify whether a particular bank is a market leader, challenger, and follower by identifying its vision, mission, objectives, and marketing strategies. Banks offer a wide range of financial services, to personal and business customers; some of these services which are bank account, guarantor ship, and

Investment adviser are needed by an appreciable number of customers, but many other financial services such as import/export services, money transfers, credit cards and soon have to be brought to the attention of potential users, who then must be persuaded to use them (Abolaji, 2009, Eckie, 2006). Many services offered by banks are also offered by ‘rival’ organisations. Building societies have developed customer accounts which are similar in many ways to a bank account. Thrift and cooperative societies provide lending services to their numerous members and indirectly to the society at large. Solicitors act as executors, and trustees and accountants give advice and so on. Banks not only compete with each other but also have to contend with challenges from other types of organisation in the market (Sobowale D. 2007). To do this successfully, bankers need an understanding of the process of marketing which will aid in improving banks performance. Marketing is an area of activity infamous for re-inventing itself and its vocabulary according to the times and the culture.

 Marketing is customer oriented and as such we need to identify our customer’s needs and satisfy them. The role of marketing in a bank’s existence and growth cannot be overemphasized in today’s competitive environment.

According to Drucker cited in Mohan and Kotler (2008), marketing is so basic that it cannot be considered a separate function, it is the whole business seen from the point of view of its final result, that is, customer’s point of view. The survival of any bank depends upon its ability to acquire resources necessary for its sustenance, and one of the modes of survival is “exchange”, whereby a bank creates and offers products and services that are able to attract and satisfy the customers in exchange of its value.

This option can be gainfully exercised only if the bank develops the capacity to produce the needed goods and services. The general belief is that the objectives of marketing are to maximize the market’s consumption of banks products and services. However, it would be desirable to set the goal at maximizing consumer satisfaction rather than consumption only. The bank, in the long run, will benefit from a customer oriented approach to marketing. Customer oriented approach ensure strong foundation for the institution’s existence because the concept of marketing has its origin on the premise that man is a creature of needs and wants and there is constant effort on his side to satisfy his needs.

                Further, his needs and wants keep changing with time, circumstances and the immediate environment in which he is operating. This forms the background for this study. Up to 1988 there was the era of ‘arm-chair banking’ in Nigeria banking. During this period the banks were few and were patronized by the indigenous people who had no option. The big four banks Union Bank of Nigeria (UBN), United Bank of Africa (UBA), Afribank and First Bank of Nigeria (FBN) controlled the market share. The entrance of new generation banks from 1989 changed the tempo and tide of banking; new technologies were introduced by Guaranty Trust Bank (GTB), Zenith Bank, Diamond Bank etc. Banks need to contend with how to satisfy customers in terms of their services now that customers have the power and they are more articulate and informed about what they want to purchase than ever before. The recent re-capitalization of bank’s capital base in 2005 has necessitated an urgent need for banks to take marketing of their products very seriously. Producer and service providers in banks not only have to satisfy their customer’s requirements, they also have to be sensitive to them. Marketing especially in the conservative area of banking involves providing a coherent and well-thought out strategy as well as tactical flexibility and clarity for a complete all round company performance.

1.2      Statement of the problem

With the increase of non-performing accounts in the Nigerian banking industry, the profits of banks are getting thinner. For instance some of the banks such as Afribank, Spring Bank and Bank PHB have been taken over by the Central Bank of Nigeria (CBN) in 2011 because of their poor performance. It therefore means that banks need to spend more funds in marketing its products and services and this is worsened by competition amongst banks. There is need for new marketing strategies to be applied to attract deposit and source for funds, satisfy customers at all times, increase efficiency of overall operation e.g. returns on investment, turnover, reduce costs etc.

According to Okuonghae (2009), the only way to thrive in competition is to partake in marketing strategy, identify customers’ needs and also scan the environment. There is also the need for bank operators to articulate policies geared towards customer satisfaction. Financial products are those products offered by banks to its customers. There are six categories of products as stated in Aigbiremolen (2004). They are retail banking products, corporate banking products, foreign operations, corporate financing and electronic banking.

           A service is any intangible value which one offers to another but does not lead to the ownership of something. The two main characteristics of services is their nature and the fact that customers consume the service while it is produced and are hereafter involved in the service production process. Other characteristics include intangibility, variability, inseparability, perishability and lack of ownership. The    characteristics of marketable services as stated in Worlu et al. (2007) are intangibility, inseparability, variability, perishability and lack of ownership. According to Zeithhaml V, (2000), there are generic dimensions that customers use to evaluate service quality. These tangibles are reliability, competences and responsiveness, courtesy and credibility and customers’ knowledge.

1.3   Objectives of the study

            The main objective of the study is the application of marketing strategies for improving performance of selected money-deposit banks and it would be use to attain various objectives. The following are the specific objectives:

i. Examine the impact of marketing strategies on the sales volume of money-deposit bank.   

ii. Determine the impact of marketing strategies with increase to customers’ satisfaction. 

iii. Investigate the impact of marketing strategies with increase in customers’ patronage in money-deposit bank.

1.4     Research questions

           In the process of carrying out this study, the following research questions will be discussed:

i. What is the impact of marketing strategies on sales volume of money-deposit bank?

ii.  To what extent has marketing strategies with increase to customers’ satisfaction?

iii. How can the impact of marketing strategies increase in customers’ patronage in money-deposit bank?

1.5        Research hypotheses

The research hypothesis is stated in their null and alternative form as follows:

HYPOTHESES 1

H₀: There is no significant relationship between application of marketing strategies and sales volume of money-deposit bank.

H₁:    There is a significant relationship exists between application of marketing strategies and sales volume of money-deposit bank.

HYPOTHESIS 2  

H₀: There is no significant relationship between applications of marketing strategies with increase to customers’ satisfaction.

H₁: There is a significant relationship between applications of marketing strategies with increase to customer satisfaction.

HYPOTHESIS 3  

H₀: There is no significant relationship between application of marketing strategies and increase in the customer’s patronage in money-deposit bank.

H₁: There is a significant relationship between applications of marketing strategies with increase in customers’ patronage in money-deposit bank.

1.6        Significance of the study

The significance of the study is divided into practical and theoretical significance.

Practical significance

i. This study will help money-deposit banks to improve or reshape their marketing strategies for efficient marketing performance.

ii. It will enable the management to enhance their marketing strategies to determine an increase in customers’ satisfaction.

iii. This study will enhance marketing strategies of money-deposit banks on their customers’ patronage.

Theoretical significance

i. This study will build up workers and customers relationship.

ii. It will help the staff of money-deposit banks to scan the needs and wants of their customer and how to satisfy them best.

1.7     Scope of the study

The scope of the study was reduced to the application of marketing strategies for improving the performance of selected money-deposit banks in Imo state, Nigeria. Studying the whole of banking sector in Nigeria will be too ambiguous. Therefore the scope was further reduce to four (4) banks in Imo state namely; united bank of Africa (UBA), first city monument bank (FCMB), keystone bank, mainstreet bank limited (MBL).

1.8 Definition of terms

i. Marketing is also a prime tool of the banking sector because it satisfies customers benefit and deal with both the bankers and the customers.

 Marketing is customer oriented and as such we need to identify our customer’s needs and satisfy them.

ii.Strategy is a plan that integrates an organization’s major goals, policies, decisions and sequences of action into a cohesive whole. It can be applied at all levels in an organization and pertain to any of the functional areas of management. Thus there may be production, financial, marketing, personnel and corporate strategies, just to name a few. In marketing, there may be pricing, product, promotion, distribution, marketing research, sales, advertising, merchandising, strategies.

iii. Marketing strategy is commonly defined as a strategy employed by a firm to attain its marketing objectives, which in turn is related to achievement of the firm’s business objectives.

iv. Banking is a personalized service oriented industry and hence should provide services which satisfy the customer’s need.

Bank is a financial institution which accepts deposits from customers and invests it, and also borrows it out when required and gains profits in the process.

1.9 Limitation of the study

A study of this nature, a lot of hindrances and challenges were encountered during the process of accomplishing this research work. The researcher carefully studies the banking sector of some selected money-deposit banks, and realized the problems associated to the banking sector and derived the following findings and recommendation.

This study however, was limited by lack of sourced data; pasted studies related to this research work were scarce. The researcher was constrained by limited finance to obtain data/materials and to retrieve questionnaires. Time was a major limitation, being a graduating student the researcher had no adequate time due to lecture, personal time, appointments with respondents and getting relevant information from organization of interest.