Effective Marketing And Sustainable Profit Growth In The Banking Industry In Nigeria

Project and Seminar material for Banking and Finance

Project and Seminar material for Banking and Finance


Abstract


The need for marketing in financial institutions cannot be over emphasized because it is a vital arm of any sector competition within and outside the shores of the country brought about by globalization and an improvement in customer awareness have made banks to use marketing as an important tool to increase returns, improve on the efficiency of the Nigeria banking system and compete efficiently.

This study set out to investigate the effective marketing and sustainable profit growth in the banking industry in Nigeria with specific focus on deposit money banks. The marketing of bank’s products and services has improved the efficiency of deposit money banking system and created satisfied bank customer.

We recommend that all the units of the bank should be involved in marketing white banks should continue to make their customers feel important and have well equipped and experienced staff personnel in customer services unit to be able to provide solution to customer’s complaints and challenges.


Table Of Content


Preliminary Page(s)

  • Title Page
  • Title page
  • Approval page
  • Dedication
  • Acknowledgement
  • Abstract
  • Table of contents

Chapter One

1.0 Introduction

  • 1.1 Background of the study
  • 1.2 Statement of problems
  • 1.3 Objectives of the study
  • 1.4 Research questions
  • 1.5 Statement of hypothesis
  • 1.6 Significance of the study
  • 1.7 Scope of the study
  • 1.8 Limitation of the study
  • 1.9 Definition of terms

Chapter Two

2.0 Literature Review

  • 2.1 Introduction
  • 2.2 Marketing strategy models
  • 2.3 The dynamic capabilities model
  • 2.4 Marketing impact model
  • 2.5 Marketing efficiency model data development analysis
  • 2.6 Strategy marketing planning
  • 2.7 Contents of a marketing plan

Chapter Three

3.0 Research Design And Methodology

  • 3.1 Introduction
  • 3.2 Research design
  • 3.3 Method data collection,
  • 3.4 Research population study
  • 3.5 Data sampling
  • 3.6 Validation and reliability of measuring Instrument
  • 3.7 Method of data analysis

Chapter Four

4.0 Presentation And Analysis Of Data

  • 4.1 Introduction
  • 4.2 Presentation of data
  • 4.3 Analysis of data
  • 4.4 Testing the hypothesis
  • 4.5 Interpretation of results

Chapter Five

5.0 Summary Of Findings, Conclusion And Recommendations

  • 5.1 Introduction
  • 5.2 Summary of findings
  • 5.3 Conclusion
  • 5.4 Recommendations
  • Bibliography
  • Appendix

Chapter One


1.0 Introduction

The Nigeria economy can be termed to be a seller’s market because the problem in Nigeria is producing not selling because anything can be sold, so therefore the need for marketing of banks services. The need for marketing is necessary because of competition, mop up the excess liquidity in the economy and to attract customers so as to sell load to them and buy deposits from them.

As the economy develop and expand around the world, Nigeria is not excluded because there are fresh opportunities as well as threats that will give no chance for any arm chair banker or any bank who is not sound in marketing orientation. But on the other hand, it will favour the advanced banker who is dynamic in these skills, frequently evaluating the internal and external environment, assessing his competitors evaluating the threats and opportunities to his business and identifying new customers in the sector.

In 1899,, Bank of Nigeria another foreign banks was established but was absorbed in 1`912 by the bank by British West Africa. In 1925, Barclays Bank got into the Nigeria banking system as a result of the merging of the Colonial Bank, the Anglo-Egyptain Bank and the National Bank of South Afrca. These banks started operations in localities where the Britsh commercial interests were dominant and did not bother to satisfy the needs of the indigenous Africans because of their foreign commercial interest. This was possible due to the fact that there were no regulation regarding the marketing of banking services then and coupled with the fact that the foreign bank were also not helped to the Africans.

This culminated in the establishment of indigenous banks to serve the African specifically Nigeria. After Nigeria’s as political independence marketing still was done in secret, but thanks to the competition that set in amongst banks and the structural Adjustment programme (SAP) launched in July 1986 by the Babangida administration. The adoption of structural Adjustment programme (SAP) resulted to more competition in the banking industry, liberalization of license process and the establishment of Nigeria Deposit insurance corporate (NDIC) was established in 1988 to protect depositors from bank in (Uche and Ehikwe 2001. Studies have shown that Nigeria has the largest financial services sector in sub-saharan Africa, after South African and it is fast grouling and expanding internationally (Becker et al, 2008) .

Marketing in years past has played a significant role in the bank sector and it aims at satisfying customers and bankers since the products of banks have to be marketed in order to tap the potential customer. Due to the level globalization which has turned the world into a global village, the Nigerian banking system is facing tough competition from global banks. The bank, in the long run, will benefit from a customer oriented approached to marketing customer oriented approached ensure strong foundation for the institutions 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, circumstance and the immediate environment in which he is operating.


1.1 Background Of The 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 banks of African (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 country Trust Bank (GTB), Zenith Bank, Diamond Bank etc. banks need to contend with how to satisfy customer in terms of their services now that customers have the poster and they are more articulate and informed about what they want to purchase than ever before. The recent re-capitalization of banks capital base in 2005 has necessitated an urgent need for banks to take marketing of their products very seriously, producer and services 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, through out strategy as well as tactical flexibility and clanty for a complete all round company performance.

With the increase of non- performing accounts in Nigeria banking industry, the profits of banks are getting thinner. For instance some of the banks such as Afribanks, 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 customers at all times increase efficiency of overall operation e.g. returns on investment, turnover, reduce costs etc there is also the challenge of marketing in banks. After the distree in the financial services, industry in 2009 and the announcement by the CBN that five banks named oceanic Bank, Union Bank, Afribank, Fin bank and intercontinental Bank, were insolvent frequent regulations was rolled out by CBN the reform programmed brought about by Lamido Sansui the present Governor of CBN was based on four pillars: enhancing healthy financial sector evolution and ensuring the financial sector contributes to the real economy.

Some of the reforms include the changing of bank’s accounting years to the calendar year, the limitation of the terms of Chief Executive Officer. (CEO)Years which made some sitting (EO’s to resign, the disclosure of banks yearly financial statement which must follow a circular (issued by the CBN) detailing the format of financial information to be disclosed etc. (Alford, 2011). Clearly the distress in the financial system and the poor performance of some banks should there exist the problem of marketing strategies in these banks to foster improvement of their services for improved efficiency.


1.2 The Statement Of Problem

In formulating a marketing plan and strategy, consideration must be given to the fact that it should derive from and fit into the overall corporation plan and strategy of the organization concerned it should be so designed as to incorporate the marketing element in the corporate plan which it must designed to implements. Beside, the marketing objectives in the marketing plan must be such that their achievement will contribute to the achievement of the overall corporate objectives.

However, banks often have problem of formulating good strategic marketing plan that will enhance the general performance of the organization. In view of this, the study seeks to provide means of which good strategies will be formulated in order to achieve the organizational objectives, growth and development


1.3 Objectives Of The Study

The major objective of this study is to analyze the impact of marketing of financial services on the Nigeria deposit money banks and how it is used to attain various stated objectives:
The following are the specific objectives

  1. To examine the impact of marketing of financial services and products in the Nigeria banking system.
  2. To determine if indeed marketing of banks products and services boosts the success and efficiency in the Nigeria banking system.
  3. To examine how marketing of financial services can be used to satisfy their customers at all times.
  4. To investigate how the problems of marketing in Nigeria banks can be improved upon for efficiency.

1.4 Research Questions

The following research questions will be answered in the course of this study.

  1. What is the impact of marketing of financial services in the Nigeria banking system?
  2. To what extent has marketing of banks products and services helped improve the success and efficiency in Nigeria banking system?
  3. How can banks make use of marketing to satisfy their customers always?
  4. How can the problem of marketing in Nigeria banks be curbed?

1.5 Statement Of Hypothesis

Hypothesis 1

  • Ho: there is no significant relationship between marketing of banks products and services and the efficiency of banking system since Nigeria’s independence.
  • Hi: There is significant relationship between marketing of banks products and services and the efficiency of banking system since Nigeria’s independence.

Hypothesis 2

  • H0: There is no significant relationship between marketing and the satisfaction of banks customers.
  • Hi: There is significant relationship between marketing and the satisfaction of banks customers.

Hypothesis 3

  • H0: There is no significant relationship between the problems of marketing in banks and the Nigeria banking system.
  • Hi: There is significant relationship between the problem of marketing in banks and the Nigeria banking system.

1.6 Significance Of The Study

  1. Banks should embark from time to time on marketing research. This is because effective marketing strategies are a product of marketing research. Thus, good and adequate marketing mix is a product of effective marketing research too. Marketing research will bring about innovation, better services for customer and better method of reduction and processing.
  2. In adopting marketing strategies banks should also compare different companies strategies and access the success and the failure of such strategies in the industry
  3. In addition, banks are encourage to be more customers focused and embrace relationship marketing rather than transaction marketing this will enable them to gain customers loyalty and maintain a long term relationship with customers.
  4. The management of the banking institutions should be transparent and follow the laid down rules so as to create and sustain public confidence. This will definitely increase saving and in turn improve the level of economic growth.
  5. Effective management of depositors’ fund that will disallow failure should be stipulated by the monetary authorities.
  6. Banks should avoid unethical marketing behavior such as dishonesty, unexpected price change, being rigid, abuse of position misuse of information, violation of confidentiality, lack of equitable treatment and poor product quality among others.

1.7 Scope Of The Study

In Nigeria as at today, there are 20 banks but 15 of there banks were selected for this study based on simple random techniques. The banks were grouped into 5 group with five in each group 3 banks were selected from each group to ensure adequate representativeness. The study population consists of all the official and customers of the selected banks. The study should cover four banks out of the twenty banks we have presently in Nigeria. The selected banks are Guaranty Trust Bank (GTB), United Bank for Africa (UBA), ECO BANK, Nigeria and Skye bank. They were selected randomly using probatistic sampling method.

The questionnaire were designed to elicit data from the period between 1960 when Nigeria gained her independence and 2001 Kerjcie and Morgan (1970( in Amadi (2005) aggress with the sample as they proposed the maximum sample size requires for generalization to the best of the researchers judgment, the banks made a good representation of the banking industry in Nigeria,. The expert opinion was sought for in order top validate the content and the structure of the questionnaire during the pilot study.

The need for marketing of services and products in the banking system to satisfy customers and to improve profit levels cannot be over emphasized since the sustainability of any economic system is predicated on the viability of the financial system of that country. Banks are established to accomplish their set objectives includes profit making and for these objectives to be attained marketing must play a significant role it is important to know that due to the present competition amongst banks there is the need for the present day banks top adopt and be involved in marketing top give them an edge over other banks in the aspect of continuously satisfying their stakeholders.

The study will interest the following stakeholders, bank management, customers depositors investors for instance, the shareholders would have more dividends due to company’s profits depositors and creditors would gain more interest on their funds, the customer’s needs would be satisfied employee will be able to maximize profits.


1.8 Limitation Of The Study

During the course of writing this project the researcher encountered some problem or constraints which have gone doing to affect the successful execution of this study.

Lack of finance for running cost and other financial commitment.

There was lack of in equating data and information regarding to the transportation also limit this study because transportations were boarded by the researcher which frustrated his programmed.


1.9 Definition Of Terms

The Above Variable Are Briefly Described Below Profit After Tax (PAT):

the difference between revenue (sales) and cost of goods sold is called gross profits when the other expenses, including interest and taxes are deducted from Gross profit we obtain profit after tax (PAT) profit after tax or net profit is generally regarded as a traditional measure of performance.

Pricing:

prices means the value of a community or service expressed in monetary terms price in banks

include:

interest charges on loans and advanced interest paid on deposits commission and fees charge should not be exploitative but should reelect the true value of the services prices as one of the marketing mix in banks is a major marketing strategy, because it has major impact on profit (zethanl and Bittner, 2000).

Product:

Kotter (2001) defines a product as anything that can be offered in a market that is satisfying a wanton need product could be physical goods, services, experience, event, ideas etc New product development that satisfied needs will have great impact on banks profitability banks products or services includes:

  1. Retail banking product such as current account and saving deposit
  2. Corporate banking products such as loan syndication, equipment leasing treasury and foreign operation.

Promotion:

this is regarded as the marketing function concerned with persuasive communication to target audience in order to facilitate exchange between banks and their customers promotion mix include advertising personal selling, sales promotion and public relations (Brassington and Pettit, 2000)

Promotional activities of banks in Nigeria have increased greatly because of the level of competition in the industry, thus promotional activities is believed to have great impact on banks returns.

Place:

this is simply the distribution strategy. It is concerned with making the banking products and services avertable at the desired time and places ( Abolaji, 2009) channel of distribution in Nigeria banks have greatly increased since the consolidation agenda of the central bank of Nigeria channels of distributions in banks includes Automated Teller Machinery Branch Network, credit cards, mobile banking, Telephone Banking, E-main banking among others. The more channels of distribution a bank has, the more customers it serves and the more returns it makes.

Earning Per-Share (EPS):

Earning pre-share shows that profitability of a firm on a pre-share basis. It is generally taken corporate organization as a measure of performance. The EPS is one of the major measures of performance in the capital market. Mathematically, EPS = profit after three numbers of common shares outstanding


Chapter Five


5.0 Summary, Conclusion And Recommendation

5.1 Introduction

In this introductory summary of the final chapter of this research work, I discovered that the principal objectives of marketing is to provide services, products to satisfy customers, and products offered by banking institutions it is obvious that there are a wide range of offers to the public .

The study revealed that marketing does not only affect the nations banking system, it also has an impact on other aspects like social and economic life.

Also bank marketing is needed to identify threats and weakness that the bank is exposed to due to high rate of competition and to work on them to covert them to opportunities and threats. The problem of bank marketing includes non-computerized bank branches due low level of technological advancement making work pace to be slow, the problem of structuring services and costs in most cases leading to the deterioration of services, problem of nature and ownership communication gap within and outside banks and the problem of turning prospect customers to loyal ones.

Marketing has greatly impacted the Nigeria banking system by assisting banks deal with competition nationally and intentionally, helping to make awareness on the availability of a product, make customers know about the services they are being offered and their benefits.


5.1 Summary

Based on the data gathered through questionnaires that were distributed to both customers and bank staff of Eco bank, United Bank for Africa and Guaranty Trust Bank to measure the impact of marketing in Nigeria banking system some observations and findings were made

  1. Most of the respondents feel the quality of services provided by banks is good.
  2. West bank still have to improve more on their marketing strategies
  3. Bank should engage in quite a number of promotional activities including billboards, radio, television,. Personal selling and sales promotion etc.
  4. Respondents agreed that their bank introduced better ways to satisfying their customers. One of the ways by which this can be continuously carried out is by creating a goose platform for any customer’s compliant on any issues and challenges and by making effort on making customers feel important and keeping them delighted.
  5. The agreed that all the units of the bank and not just the marketing unit should be involved in marketing.
  6. Marketing has led to efficiency in the Nigeria banking system since independence and has assist banks in achieving their goal and objectives.

5.3 Conclusion

Based on the findings of this study, marketing has become a major function in the banking industry as a result of increased competition brought about by bank consolidation and reforms. As a matter of fact, banks staff involved in marketing activities in the post; consolidation era have surpassed those in the pre-consolidation era.

Thus, there is a connection between banks competition brought about by banks reforms and marketing activities. The competition is technical efficiency, varieties of services, convenience banking services, productive efficiency allocate efficiency, lower cost of fund, absence of customer exploitation, higher compensation to depositors, safety of deposit funds, availability of funds for investment, increase savings that will transform and high quality services among others.

The findings in this study shows an overall significance of the marketing variables adopted, although not much effect is seen when a marketing variable is compared with bank performance in isolation of other variables. This helps to conclude that the marketing strategies techniques must be adequately combined in order to bring about improved performance for example, if a bank should engage in promotional activities without adequate knowledge of the market, the aim of marketing will be defeated.


5.4 Recommendation

Considering the data analyzed and presented the following recommendation are made;

  1. Banks should continue to improve their strategies of marketing the bank management should select suitable and consistent principles to achieve profit objectives and to ensure long term patronization from present and potential customers.
  2. Banks should always endeavor to communicate the value of their products to customers, ensure their services are new worthy and inform the public on the availability of services.
  3. Banks should continue to make their customers feel important and have well equipped and experienced staff personnel in customer services unit to be able to provide solutions to customer’s complaints and challenges.
  4. All the units of the banks should be involved in marketing. It is recommended that only the marketing department of the banks should market the bank’s products but all other units should also be involved. This is because in case of any loss incurred as a result of poor marketing it is not just the marketing unit that will suffer the consequences but all the units of the bank.
  5. Finally, marketing should be seen as a very important tool for the purpose of assisting banks in achieving their goals and objectives, as well as improving efficiency in the Nigeria banking system.

Effective Marketing And Sustainable Profit Growth In The Banking Industry In Nigeria


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