THE IMPACT OF MARKETING STRATEGY IN NIGERIAN BANKING INDUSTRY (A CASE STUDY OF FIRST BANK NIGERIA PLC)
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THE IMPACT OF MARKETING
STRATEGY IN NIGERIAN BANKING INDUSTRY
(A CASE STUDY OF FIRST BANK NIGERIA PLC)
ABSTRACT
The Nigeria banking sector has undergone tremendous competition
since the introduction of the Structural Adjustment Programme (SAP) on 1st
of July, 1986, which has led to stiff competition in the industry.
Marketing strategies is a written plan, usually comprehensive
describing all activities involved in a particular marketing objective and
their relationship to one another in both time and magnitude which include all
the necessary activities which an organization can use to achieve its long term
objectives which are growth and profitability.
This research study focus on the impact of marketing
strategy in Nigeria banking industry using First Bank of Nigeria as a case
study,
The study focus on the use of primary source of data by
using administering of questionnaire both to the employee of the bank and also
to the customer of the bank and observation method was also used in obtaining
data.
The research used multiple bar charts to give a pictorial
diagram of the data analysis for the demographic data while T-test was employed
to test the various hypotheses formulated. The hypotheses are five in number.
At the end of the study, it was revealed that marketing
strategy does not only have impact on marketing of physical product alone but
also on marketing of service in order to achieve the overall organization
objective of profitability and growth.
TABLE OF CONTENTS
PAGE
TITLE
I
CERTIFICATION II
DEDICATION
III
ACKNOWLEDGEMENTS
IV
ABSTRACT VI
TABLE
OF CONTENTS VIII
CHAPTER
ONE
INTRODUCTION
1.1 Background Information 1
1.2 Statement of the Problem 3
1.3 Objectives of the Study 4
1.4 Significance of the Study 5
1.5 Scope of the Study 5
1.6 Plan of the Study 6
1.7 Definition of Key terms 6
CHAPTER
TWO
LITERATURE
REVIEW
2.1 Introduction
9
2.2 The
Meaning of Marketing 10
2.3 Marketing
Concept 13
2.4 Marketing
Environment 15
2.5 Types
of Markets 20
2.6 The
Product 23
2.7 Product
Life Cycle 25
2.8 Price 28
2.9 Marketing
Banking Services 30
2.10 Objectives
of Customer Services in First Bank Plc 31
2.11 First
Bank Products 32
2.12 Marketing
Strategies in Financial Institution 47
2.13 Banking
and the Impact of Marketing Strategy 50
2.14 Corporate
Planning 54
CHAPTER
THREE
RESEARCH
METHODOLOGY
3.0
Introduction 32
3.1
Historical Background of First Bank of Nigeria Plc 57
3.2
Research Design 58
3.3
Data Specification 59
3.4
Research Hypotheses 60
3.5
Sampling Frame 62
3.6
Method of Data Analysis 63
CHAPTER
FOUR
DATA
PRESENTATION AND ANALYSIS
4.1 Introduction
65
4.2 Analysis
of Research in First Bank Plc, Ilorin 65
4.3 Demographic
Analysis for Staff 67
4.4 Test of
Hypotheses 70
4.5 Demographic
Analysis of Customers 80
4.6 Test of
Hypotheses 84
4.7 Discussion
of Research Findings 92
CHAPTER
FIVE
SUMMARY,
CONCLUSIONS AND RECOMMENDATIONS
5.1
Summary 94
5.2
Conclusion 95
5.3
Recommendations 96
Bibliography 99
Appendix 101
CHAPTER ONE
INTRODUCTION
1.1 BACKGROUND INFORMATION
Marketing is
the process of planning and executing the conception, pricing, promotion and
distribution of ideas, goods and services, organization and event to create and
maintain relationships that will satisfy individual and organizational
objectives. It is fundamental to business growth. It basically includes getting
goods and services to the final consumer satisfactorily.
The Nigeria
banking sector has changed tremendously since the introduction of the
Structural Adjustment Programme (SAP) on 1st July, 1986. Prior to
this period, most Nigerian banks engaged in an effort aimed at encouraging
certain classes of customer resulting in rejection of deposits or accepting
them on dictated terms due to the fact that there were few banks to render
services to a considerably large numbers of customers which led to a decline
profit volume.
However, the
period between the SAP and now has witness various amendments of banking laws
and policies ranging from BOFID 1991, to universal banking policy of 2001,
various increased in the capital base e.t.c. these changes have therefore
necessitated the need to find a way of promoting banking services, which is
possible with the impact of marketing strategies in the banking sector.
It is
surprising that banks have not been able to come up with a competitive and
comprehensive approach for marketing of banking services and product. A close
look at the recently concluded re-capitalization process showed evidently the
above assertion. This process witnessed what is called “Aggressive Marketing”
which is not a replete of what banking stands for in terms of integrity and
utmost good faith.
The trend of
the introduction of marketing department (marketing strategies) in banks is a
welcome development and has made arm-chair banking part of the history of the
banking sector. Bank marketing was thus defined as “that part of banking
services profitability to selected customers”. The need for marketing in banks
evolved from the intense competition from not only rival banks but also non-financial
institutions. Staffs are placed on target to be achieved and are compensated or
promoted using their ability to or not to meet their targets.
However,
customers should be at the forefront in terms of the banks planning and
corporate thinking. An organization cannot be talking of profit without
considering the customers patronage that yields that profit. The strategic or
corporate planner therefore has to take cognizance that the survival of a
business rest solely on the customer. It can be seen that the relevance or
importance of marketing to the banking industry cannot be over estimated.
The banks needs to make adequate
returns because they are accountable to their shareholders who have invested
with the purpose of receiving good returns. Also, the substantial cost incurred
in the day-to-day operation must be sufficiently covered from the profit
earned. For any bank therefore to meet these needs, the bank needs to make
adequate returns. Meeting these needs is termed maximizing the shareholder’s
wealth.
1.2 STATEMENT
OF THE PROBLEM
Despite the importance of marketing
strategy in the banking industry, there is a problem in their financial services
and activities with particular reference to First Bank of Nigeria Plc.
During the era of arm-chair banking,
the banks were very few and patronized by the indigenous people with no option,
but following the increment of indigenous ones between 1945 – 1960 and the
recent re-capitalization of banks’ capital base to N25billion has necessitated
a dire need for banks to take marketing of their products very seriously. It is
obvious that competition amongst banks would increase and as such there is need
for real marketing strategies to be applied to further professionalize the
industry.
It is believed that banks with more
funds would be well positioned to become one of the leaders in the dynamic and
competitive sector and marketing plays a pivotal role in deposit attraction and
sourcing of funds.
1.3 OBJECTIVES
OF THE STUDY
The general objectives of the study
is to determine the impact of marketing strategies in Nigerian banking industry
and how they are used to attain stated objectives. This study will evaluate
impact of marketing strategies in relation to external factors operation and
proffer solutions based on the data collected and the scope of the researcher.
Other specific objectives of this
study include:
1.
To examine an existing marketing principles and
theories.
2.
To examine product marketing strategies of banks in
relation to external factors.
3.
To evaluate how these strategies has been in achieving
their objectives.
4.
To examine the associated constraints in the
incrementation of these marketing strategies.
5.
To make necessary recommendations for an efficient
banking policy.
1.4 SIGNIFICANCE
OF THE STUDY
All organizations are established to
accomplish their set objectives; therefore, banking industry is no exception.
For some of these set objectives to be attained, they must be converted into
marketing objectives which calls for the development of a clear cut marketing
strategy and well thought supporting programmes for their attainment.
The research work that has been done
in the past on the marketing strategy to bring out and justify the importance
of the study is not much.
However, it is important to note
that with the present stiff competition among the banks, the researcher saw the
need for the present day banks to adapt and be involved in marketing strategy.
1.5 SCOPE
OF THE STUDY
This research
work was restricted to commercial bank with reference to First Bank of Nigeria
Plc as a case study, and only First Bank of Nigeria Plc, Ilorin branch was used
for the purpose of the study, since the bank is making use of the policy that
affects all the branches operation.
1.6
PLAN OF THE
STUDY
This research
work comprised of five chapters and all chapters were presented in a logical
and sequential mode as follows:
Chapter one
contains background information, statement of the research problem, objectives
of the study, significance of the study, scope of the study, plan of the study
and definition of terms (keynotes).
Chapter two contains the review of
some related literatures on marketing strategies written by some authors and
some other researchers on marketing strategy, scope and components of marketing
strategies. It also studies the marketing strategies in banking industry,
marketing research and the summary of the chapter.
Chapter three deals with research
methodology which is made of history of First Bank of Nigeria Plc, Ilorin
branch, sampling size, source of data collection and method of data analysis,
research hypothesis.
Chapter four and five dwell on
analysis and presentation of data and summary, conclusion and recommendation
respectively.
1.7 DEFINITION
OF KEY TERMS
MARKETING: This was defined by (Peter Drucker, 1973) as human
activity directed at satisfying need and wants through exchange processes.
However, (Wroe Anderson, 1976)
equally defined marketing as individual and organizational activities aimed at
facilitating and expediting exchanges within a set of dynamic environmental
forces.
MARKETING CONCEPT: This is a philosophy of business
that states the customers’ want-satisfaction is the economic and society
justification for a firm existence. It stresses that the emphasizes on all
business activities should be focused or geared towards the satisfaction of the
customers.
MARKETING ENVIRONMENT: This refers to
all factors and forces both internal and external that influences the marketing
decision making. The internal forces are controllable which includes the
organizational structure, the 4M’s i.e. Man, Money, Machine and Materials.
However, the external forces which
are uncontrollable falls outside the firm, constitute the greatest
opportunities and threats to the firm. These include economic condition,
socio-cultural influences, competitors, customers, political and legal
environment, international influences, technological factors e.t.c.
PRODUCT: A product can be an idea, a service, a good or any
combination of these three. It could also be defined as anything that can be
offered to the market for attention, acquisition, use or consumption that will
satisfy a need. This implies that product include physical, objects, services,
persons, places, organization and ideas.
MARKETING STRATEGIES: This is a
written plan, usually comprehensive describing all activities involved in
achieving a particular marketing objective and their relationship to one another
in both time and magnitude, it will include short and long term sales forecast,
production and profit target, pricing policy, promotional and selling strategy,
staffing requirement as well as the selected marketing mix and expense budget.
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