ABSTRACT
This research is a study on the effect of marketing strategies on bank profitability of First Bank of Nigeria Plc in Aba, Abia State. This study was chosen because of the problems and challenges in measuring marketing strategies in relation to profitability which several marketing literature as well as Journals have failed to address. The broad objective was to examine the effect of marketing strategy on bank profitability as used by the First Bank of Nigeria Plc. Aba. Data used in this study was primary and secondary data, primary data was sourced through the use of questionnaire to solicit respondent opinion while secondary data was obtained from available literature on marketing strategies. The data collected for the study was analyzed using descriptive statistics, correlation coefficient and regression model. Findings showed that product strategies were found to be statistically significant at 10% with a positive value. Findings also showed that distribution strategies were found to be statistically at 1% and positively related to bank profitability. The researcher recommends that effectively understanding the customer needs and wants before making sales presentation or proposal will boost banks profitability. The researcher also recommends that banks should segment their market based on customer knowledge of their product, these will also increase bank profitability.
TABLE OF CONTENTS
Title
Page i
Declaration ii
Certification iii
Dedication iv
Acknowledgement v
Table of Contents vi
List of Table ix
Abstract x
CHAPTER ONE
INTRODUCTION
1.1 Background to the Study 1
1.2 Statement of the Problem 3
1.3 Objectives of the Study 4
1.4 Research Questions 5
1.5 Research Hypothesis 5
1.6 Scope of the Study 5
1.7 Significance of the Study 6
1.8 Definition of Terms 6
CHAPTER TWO
REVIEW OF RELATED LITERATURE
2.1 Conceptual Framework 9
2.1.1 Concept and Role of Marketing 11
2.1.2 Role of Marketing in Banking Sector 12
2.1.3 What Bank Marketing Is All About 14
2.1.4 Bank Marketing Strategies 16
2.1.5 Influence
of Marketing Strategies on Return on Investment 20
2.2 Theoretical Framework 22
2.2.1 The Dynamic Theory of Marketing Mix Model 22
2.2.2 The
Banking Product and Services 25
2.2.3 Characteristics
of Bank Services 25
2.2.4 Reasons for Marketing of Banking Services and
Product 26
2.3 Empirical Framework 27
2.3.1 Approaches
to Marketing Strategy and Bank Industry 29
2.4 Brief History of First Bank of Nigeria Plc. 32
CHAPTER THREE
RESEARCH METHODOLOGY
3.1 Research Design 34
3.2 Area of Study 34
3.3 Population of the Study 35
3.4 Sample Size and Sample Techniques 35
3.5 Method of Data Collection 36
3.6. Method of Data Analysis 36
3.7 Validity of Research Instrument 36
3.8 Reliability 37
3.9 Model Specification 37
CHAPTER FOUR
PRESENTATION AND ANALYSIS OF DATA
4.1 To
Examine Whether Pricing Strategy Is Adopted by First Bank
Nigeria
Plc. 39
4.2 Examining
the Relationship between Advertising Strategies
and
Bank Profitability 41
4.3 Influence
of Product Strategies on Bank Profitability 42
4.4 Effect of
Distribution Strategy on Bank Profitability 43
CHAPTER FIVE
SUMMARY, CONCLUSION AND RECOMMENDATIONS
5.1 Summary
of Findings 44
5.2 Conclusion 45
5.3 Recommendations 46
References
Appendix
LIST OF TABLES
Table Title Page
Table
1 Frequency distribution on whether
pricing strategy is
adopted
by First Bank Nigeria Plc 40
Table 2 Correlation
coefficient table showing the relationship
between
advertising strategies and bank profitability 41
Table 3 OLS
Regression analysis showing the influence of product
strategies on bank
profitability 42
Table 4 OLS
Regression analysis showing the effect of
Distribution
strategies on bank profitability 43
CHAPTER ONE
INTRODUCTION
1.1 Background
to the Study
The
effects of marketing on banking services in improving profitability in Nigeria
cannot be over emphasized. The most important objectives in any business
organization are to identify customers’ needs and wants marketing is central in
any business firms and business executive must understand his or her role to be
organization.
Marketing
can be defined as all activities directed to identifying and satisfying
customers needs and wants. Marketing in banking sector identifies the most
profitable marketing strategies now and future; and accessing the present and
future needs of customers. It involves setting banking goals, making plans to
meet them and managing their services in such a way that these plans are
achieved (Nwite, 2011).
UPPAL
(2010), Defined bank marketing as the process of providing services to satisfy
customer’s needs and wants financially. Marketing of banking services in any
country lies on the hand of systematic and professional approach towards
satisfying customer’s need.
The
marketing of financial services is a unique and highly specialized branch of
marketing. The practice of advertising, promotion, publicity and selling of
consumer packaged goods, automobile, electronics or other forms of goods,
making the test of marketing financial services increasingly challenging and
difficult profitability of Nigerian commercial banks expresses the gain made by
banks from operations of services or products. At the micro level, profit is
essential pre-requisite of a competitive banking institutions and cheapest
source of fund, this is why Gitman 2007). Observed that without profit no bank
can attract outside capital.
The
banks need to make adequate returns because they are accountable to the
shareholders who have invested with the purpose of receiving good returns. So
for any bank to meet these needs, the bank needs to get involved in strategies
that will aid its performance, in order to make adequate returns. The outcome
of investigation by financial efforts on the service bank provides increases return
on investments, shows a direct relationship between financial, and economic
growth in both developed and developing countries, these services are examined
as, mobilizing savings, exchange of goods and services, and monitoring the
allocations of managers. Each of these functions can influence savings and
investment decisions, hence economic growth. Since many market frictions exists
and law, regulation and policies differ markedly across economies and over
time.
The
emergent of numerous new banks and financial institutions bring the awareness
to banks, that the need to market their services extensively. Effective banking
profitability is achieved through the application of various and appropriate
marketing strategies such as, advertising, promotion, publicity and public
relation.
1.2 Statement of the Problem
Despite
the importance of marketing strategy in banking industry, there is a problem in
their financial services and activities with particular reference to First Bank
of Nigeria Plc.
Marketing
strategies are dynamic and interactive. They are partially planned as such;
most banks do not adhere strictly to their banks planned strategy sequel to influence
of micro and macro environmental factors. Marketing strategy is vague and
complex to comprehend, as such implementing strategic marketing plan become a
big constraints. This is evident in the fact that there are challenges in
measuring marketing strategies in relation to profitability which several marketing
literatures as well as Journals have fall to address.
Banks
are still lacking in so many spheres in Nigeria, yet the banks perception of
marketing has not shifted from mere advertising until recently as a result of
stiff competition brought about by reforms.
Banks
fail to focus on marketing research and new product development that could
attract the unbanked, thereby leading to inadequate exploitation of its
benefits as well as not giving appropriate value to the banking public.
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. Thus,
marketing practice in Nigeria banks is poor especially in areas of customer
motivation and market share.
1.3 Objectives of the Study
The
broad objective of this study is to examine the effect of marketing strategy on
bank profitability. The specific objectives are to;
i.
Examine whether pricing
strategy is adopted by First Bank of Nigeria Plc.
ii.
Examine the relationship
between promotional strategies and bank profitability.
iii.
Examine the influence of
product strategies on bank profitability
iv.
Provide a clear picture
of effect of distribution strategy on bank profitability.
1.4 Research
Questions
1. What
are the pricing strategies being applied by first Bank Plc?
2. Is
there any relationship between promotional strategies and bank profitability
3. What
is the influence of product strategies on bank profitability?
4. What
are the effect of distribution strategy on bank profitability?
1.5 Research Hypothesis
Ho1: There is no
significant relationship between promotional strategies and bank profitability.
Ho2: There is no
significant relationship between marketing strategies and return on investment.
Ho3: There is no
significant relationship between the various types of product strategies
adopted by First Bank Plc.
1.6 Scope of
the Study
This
research was restricted to commercial banks with reference to First Bank of
Nigeria Plc. as a case study, since the bank is making use of policy that
affect all the branches operation.
This
study is aimed at investigating the effect of marketing strategies on bank
profitability in emerging competitive environment. It goes further in bringing
into focus some problems associated with its impact on bank profitability to
its environment on these strategies now and in future.
1.7 Significance of the Study
The
success of this research project will enable banks to provide a clear picture
of strategic marketing as a tool for improving banking operations that will in
turn lead to sustainable profitability.
It
will however, be of immense benefit to banking sector in Nigeria in determining
their marketing strategies and help those already in the banking sector to
improve on their marketing strategies now and in future.
Finally,
it will be of immense benefit to students who may be interested in knowing more
relating to the subject and useful in the academic community to uplift their
knowledge and further research on the study.
1.8 Definition
of Terms
Marketing Mix: Marketing
mix is a term used to describe the appropriate combination in a particular set
circumstance of the four key elements (product, price, place and production)
that are heart of a company’s marketing variables that a firm uses to appeal to
a target market.
Concept of Marketing: The
concept of marketing refers to what a form or individual assumes within a
particular context.
Marketing strategy: It
is a conscious effort by a bank to promote its financial services develop
customers satisfying services and its delivery at a profit to the bank.
Bank: A
bank is an institution incorporated or unincorporated, recognized by a
country’s highest monetary authority or government for the purpose of carrying
on the banking business determination by that monetary authority or government.
Banking Business: Banking
business as recorded S.6.1 of 2005 banks and other financial institutions is
the business of receiving deposits on current account savings account and other
similar accounts
1. Paying
or collecting cheques drawn by or paid in by customers
2. Provision
of finance or
3. Such
other businesses, as the governor (of CBN) may by order public in Gazette
designed banking as busies.
Bank Customers: The
customer of a bank is regarded as a person who has entered into a contract with
a banker for opening of an account in his name, a person becomes a customer of
a bank when he goes to a bank with money or cheque and demands to have an
account opened in his name and the bank accepts the money or cheque for the
purpose of opening the account in his name.
Bank
profit: It is the total income derived from business operations after the deduction
of total expenses, inclusive of the definition particularly is the profit accruable
to economic shareholders.
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