The Impact Of Market Orientation Practices On Organisational Performance In Nigerian Banking Industry (A Case Study Of First Bank, First City Bank, Sterling Bank, UBA And Zenith Bank)

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The Impact Of Market Orientation Practices On Organisational Performance In Nigerian Banking Industry (A Case Study Of First Bank, First City Bank, Sterling Bank, UBA And Zenith Bank)


Abstract


The purpose of the study is to gain a better understanding of the theoretical and empirical relationship between market orientation practices (intelligence generation, intelligence dissemination and responsiveness, customer focus, competitor orientation and inter – functional coordination) and some measures of organizational performances (profitability customer satisfaction, long term objectives, short term objectives) of Nigerian banks.

A Cross Sectional Survey research design was adopted; while data were generated by means of structured question. Aides administered to members of staff of the following selected banks in Lagos metropolis; First bank, FCMB, Sterling bank, DBA and Zenith bank.

The study generated a ninety percent (90%) response rate from two hundred questionnaires that were given out.

Responses from the survey were statistically analyzed using simple frequency percentage, descriptive statistics, factor analysis and Pearson product moment correlation with the aid of SPSS.

Results of the study indicate that the studied banks were market oriented to a very large extent. It is apparent from the findings that banks attached great importance to obtaining relevant market intelligence and responding appropriately in order to gain competitive advantage.

The study also revealed that market orientation practices of the banks have significant correlation with aforementioned performance measures.

Finally, conclusions, recommendations and suggestions for further studies were highlighted to demonstrate the generalization of the results of the study.


Table of Contents


  • Title page
  • Certification
  • Dedication
  • Acknowledgement
  • Abstract
  • Table of content

Chapter Two

Introduction

  • 1.1 Background of the study
  • 1.2 Statement of the problem
  • 1.3 Research questions
  • 1.4 Research hypothesis
  • 1.5 Objectives of the study
  • 1.6 Scope of the study
  • 1.7 Significance of the study
  • 1.8 Operational definition of terms
  • References

Chapter Two

Literature Review

  • 2.0 Introduction
  • 2.1 Historical perspective of marketing
  • 2.2 What is Market Orientation
  • 2.3 The determinants of market orientation
  • 2.4 Market orientation versus marketing orientation
  • 2.5 Services marketing and marketing orientation
  • 2.6 Alternative model in Services context
  • 2.7 Different views on market orientation
  • 2.8 The Nigerian banking industry
  • 2.9 Brief history of case study
  • 2.10 Conclusions based on literature review
  • References

Chapter Three

Research Methods

  • 3.0 Introduction
  • 3.1 Research design
  • 3.2 Re-statement of research questions
  • 3.3 Re-statement of research hypothesis
  • 3.4 Population of the study
  • 3.5 Sample size and sampling technique
  • 3.6 Data collection methods
  • 3.7 Data analysis methods
  • 3.8 Limitation of the study
  • References

Chapter Four

Data Analysis and Interpretation

  • 4.0 Introduction
  • 4.1 Analysis of questionnaires
  • 4.2 Analysis of demographic variables
  • 4.3 Analysis of responses to research questions
  • 4.4 Factor of Analysis
  • 4.5 Test of hypothesis
  • 4.6 Keys of variables used in data analysis

Chapter Five

Summary, Conclusion and Recommendations

  • 5.1 Summary
  • 5.2 Conclusions
  • 5.3 Recommendations
  • 5.4 Suggestions for further studies
  • Bibliography
  • Appendices

Chapter One


Introduction

1.1 Background of the Study

An Organization is primarily established to achieve certain predetermined objectives, once of which could be the production and distribution of products and services which fulfils the needs and satisfaction of its consumers.

Thus, the needs of the consumers must be identified appropriately by organizations in order to produce goods and services that will satisfy the consumers on one hand and generate sales and profit for the organizations on the other hand. This assertion underscores the very essence of marketing in value creation and organizational performance-Marketing researchers have long stressed the importance of the marketing concept and have regarded it as a foundation of the marketing discipline. Recent researcher provide the much needed theoretical framework for the effect of marketing orientation the implementation of a marketing concept on business performance and shows some empirical support (e.g, Jaworski and Kohli 1993, Narver and Slater 1990. Tung-Zougchan and Su s.c 2004)

Fundamentally, Kotler (2002) identified five business philosophies toward the market place. These philosophies include: Production concept which state that consumers will purchase those products which are available in the greatest quantity and at the lowest cost of the, product concept which state that consumers will favour goods that are superior to others in quality or features. The se1ling concept shifts the emphasis from the product to aggressive selling and promotions closing the sales is goal of this orientation, while societal marketing emphasizes the need for organizations to offer quantity products to maintain or improve the consumers and society’s wellbeing.

Finally, the marketing concept otherwise regarded as the production of market orientation according to Kotler, eschewsthe notion that the most important element in business philosophy is either the production capability or capacity or aggressive sales. Instead, this concept focuses on needs and wants, both present and future of potential customers.

Kotler juxtaposed clearly that ‘selling focuses on the needs of the seller; marketing on the needs of the buyer” (Kolter 2002; Juffery D. Derrick, 2002).

In the same vein, Kolterand Jaworski who have researched extensively on market orientation defined the concept as the ‘implementation of the marketing concept” They also emphasized three basic element of market orientation which include Intelligence Generation (includes demand assessment, examination of external factors, competitors and customer needs); Intelligence Dissemination (Sharing the data secured among functional units) and Responsiveness (selecting the target markets) designing new product or changing existing ones in response to consumers input, anticipating picture customer’s needs and distributing and promoting products that elicit a favorable action on the part of the customer (Jeffery D and Derrick, M.S 2000). Thus, responsiveness may appropriately be considered the spring broad to becoming a more market-oriented firm.

Accordingly, Geoff Lancaster et al (2000) emphasized the important of adapting a market-oriented organizational structure in becoming a marketing oriented firm.

According to them, although the proper organizational structure is an important element in a becoming market oriented, such an orientation is not achieved simply by adopting an organization chart. Management must also adopt and use the marketing concept as a business philosophy. Hence, in a marketing-orientated firm, marketing is not confined to the marketing director and marketing department rather it must permeate the whole company. A change of labels and tittles will not achieve the necessary fundamental change in company attitudes. It is the company’s whole approach to business problems that is the key issue. It is the adoption of a business philosophy that put customers’ satisfaction at the centre of management thinking throughout the organization. It is the understanding, recognition, appreciation and delivery of customer’s value and desired satisfactorily than competitors do. It is this that distinguishes as market-oriented firm from a production or sales oriented firm.

Suffice to mention here that the relevance of market orientation practices in Nigerian banking sector, considering the volatility and competitive nature of Nigerian business environment, cannot be over emphasized.

Although, one would notice a sharp disparity in the degree of market orientation practices in the pre-consolidation and post consolidation banking era in Nigeria.

In the pre-consolidation era, the prevailing or dominant business philosophy could best described as ‘Quasi Marketing”. This practice was characterized by low competition, little or no customer service, and poor service delivery and above all, customers were considered to be at the mercy of the banks. In contrary, the post consolidation period has witnessed an unprecedented turn-around in the marketing of banking products and services in Nigeria. The hitherto over hundred banks in the pre-consolidation period were whittle down to twenty five (25) mega banks with minimum capital base of twenty five billon naira (N25 billion).

The development has contributed greatly to improvement in market orientation practices among banks such that the new banks are beginning to redefine their scope, vision, mission, orientation and business focus by identifying the basic banking needs of the people and designing products, services, strategies and processes to facilitate superior service delivery. Thus, today banking sector has put on a new look that is driven by intense competition, business re-engineering, customer focus, continuous products improvement, customer-oriented organizational cultured, precision, information technology, total quality management and impeacable speed of operations among other variables and determinants of economic (business) and non-economic performance .


1.2 Statement of the Problem

Nigerian banking sector has come of age and a number of reforms have been implemented by the apex bank to reposition and reenergize the sector to meet greater challenges, for improved performance locally and internationally and for other socio- economic justifications.

Today, most banks in Nigeria are growing in lips and bounds and their performance and service delivery have improved considerably.

However, the problem of this study is to find out whether this performance is determined by market orientation practices. Thus, in the light of the above and given the volatility, competitiveness and dynamism of Nigerian business environment nowadays there is undoubted task before the banks to consolidate their market orientation practices.

To this end therefore, it is imperative to carry out an intelligent, systematic, objective and holistic assessment of the level of market orientation practices in Nigerian banking sector. The study shall focus on the following selected banks as cases to be studied; First bank, First city, Sterling bank, UBA, and Zenith bank.


1.3 Research Questions.

The study is aimed at addressing the following salient research questions;

  1. What are the impacts of market orientation practices on the performance (profitability, business growth, market share etc) of Nigerian banks?
  2. Is there any relationship between market orientation and customer satisfaction in Nigerian banking sector?
  3. To what extent do environment all dynamics affect market orientation in Nigerian banking sector?
  4. Is there any relationship between the antecedents to market orientation and the overall effectiveness of market orientation in Nigerian banks?

1.4 Research Hypotheses

Based on the research questions the following hypotheses are proposed for the study.

Hypothesis One
  • Ho: The greater the market orientation practices of an organization, the lower the performance.
  • Hi: The greater the market orientation practices of an organization, the higher its performance.
Hypothesis Two
  • Ho: The greater the market orientation practices of an organization the lower its customer satisfaction.
  • Hi: The greater the market orientation practices of an organization the greater its customer satisfaction.
Hypothesis Three.
  • Ho: That environmental dynamics of market turbulence, competitive intensity and technological turbulence would have negative effect on the relationship between market orientation and organizational performance.
  • Hi: That environment dynamics of market turbulence, competitive intensity and technological turbulence would have positive effect on the relationship between market orientation and organizational performance.
Hypothesis Four.
  • Ho: The greater the antecedents to market orientation (Top management emphasis, interdepartmental dynamics and organizational systems) the lower the overall market orientation of the organization.
  • Hi: The greater the antecedents to market orientation (Top management emphasis, interdepartmental dynamics and organizational systems) the greater the overall market orientation of the organization.

1.5 Objective of the Study

The following are the objective of the study.

  1. To determine the impact of market orientation practices on the performance of the Nigeria banks.
  2. To determine the relationship between market orientation practices and customer satisfaction in Nigerian banks.
  3. To examine the relationship between the antecedents to market orientation and the overall effectiveness of market orientation in Nigerian banks.
  4. To determine the extent at which environmental dynamics affect market orientation practices of Nigerian banks.

1.6 Scope of the Study.

In the course of the study effect shall be made to cover various dimensions or aspects of market orientation in the selected banks (First bank, First city, Sterling bank, UBA, Zenith bank). The study shall look into the processes of intelligence generation, dissemination as well as responsiveness of the banks to customers’ needs, product/services improvement and service.

The study will also cover other aspect of market orientation such as competitor’s orientation and profitability. The study will investigate how competitor’s intelligence is gathered, analyzed and actedupon to gain better insight into new ways/ approaches of improving banking operations and to facilitate customers satisfaction and organizational profitability.


1.7 Significance of the Study.

The study will be relevant to the extent that it will have theoretical and practical significance.

On one hand, marketing practitioners especially those in the banking facet of the economy will find this study handful, as they will give a better insight into the impact of market orientation on business performance. The study wills them to improve on their existing marketing strategies and be more customers – focused without losing sight of the marketing strategies of competitors.

On the other hand, marketing academics (Students, Researchers, Scholars and Tutors) will also benefit-from this study as it will not only serve as a reference point for further researches, but also provide an empirical understanding of the concept of market orientation.


1.8 Operational Definition of Terms.

For better understanding of the study, some salient operational terms and concepts are explained here;

1. Market:

This is used to mean a set of potential and actual buyer of a product or service.

2. Business Philosophy:

This consists of basic beliefs and values that are expected to guide organizational members in conducting organizations business.

3. Market Orientation (MO):

This is used to mean an organization wide generation, dissemination and responsiveness to market intelligence.

4. Banks Consolidation:

This is used to mean strategic alliance of banks through merge, and acquisition to enhance service delivery and compete internationally.

5. Antecedents Of Market Orientation:

This mean organization factors that enhance or impede the implementation of the business philosophy represented by the marketing concept.

6. Product Concept:

The ideas that consumers will favour products that offers the most quality, performance and features.

7. Production Concept:

The ideas that consumers will favour products that are available and highly affordable.

8. Selling Concept:

The ideas that consumers will not buy enough of the organization products unless the organization undertakes a large scale selling and promotion effort.

9. Societal Marketing Concept:

The ideas that organization should determine the needs, wants and interests of target market and delivery the desired satisfactions move effectively than do competitors in a way that maintains or improves the consumers and society’s well-beings.

10. Marketing Intelligence:

This is the day to day information about happenings or developments in the marketing environment that assist managers prepare and adjust marketing plans.

11. Customer Loyalty:

This is the behavior exhibits when customers make frequent repeat purchases of a particular brand such that they become brand additive.

12. Organisation Culture:

This is a set of common understandings around which action is organized in a clearly distributive manner by members of a group organization,

13. Internal Marketing:

Marketing by a service firm to train and effectively motivate its customer employees and all the supporting service people to work as a term to provide customer satisfaction.

14. Customer Satisfaction:

The extent to which a product’s perceived performance a buyer’s expectations.

15. Customer Value

The customer’s assessment of the product overall capacity to satisfy his or her needs.


Chapter Five


Summary, Conclusions and Recommendations

5.1 Summary

The purpose of this research study was to carry out an assessment of the impact of market orientation practices on organizational performance in Nigerian banking sector, especially in the areas of financial performance, sales performance, customer satisfaction, competitive strength, environmental sensitivity and commitment towards accomplishing corporate goals and objectives of the banks.

However, since it is practical impossible to reach all commercial banks in Nigeria, the following banks were selected as case study.

  1. First Bank of Nigeria
  2. First City Monument Bank
  3. Sterling Bank
  4. United Bank of Africa
  5. Zenith Bank

The study is divided into five chapters which are briefly summarized as follows. Backgroundof the study, research problem, research questions, hypothesis, objectives, scope and significance of the study.

Chapter Two dealt with the literature review and theoretical framework of the study. Chapter Three concentrated on the description of the research methods including research design, sampling techniques research instrument and methods of data analysis.

Chapter Four presented a comprehensive and systematic sorting, collation, analysis and presentation ofdata including test of hypothesis with the aid of SPSS (statistics package for social science).

Chapter Five is the final part of the study where conclusions are reached and recommendations are made.

Summary of Matter Findings

The finding of the research study show clearly that market orientation practices are considered as integral parts of corporate mission and strategic thinking and orientation of the studied Nigerian banks.

From hypothesis one, it can be deduced that market orientation practices of Nigerian sector have significant impact on the overall economic and non-economic performance of the banks. This is true because the test shows a high degree of positive correlation (0.78) between market orientation practices and performance measure (market share, profitability, sales, and market awareness).

The second hypothesis also shows a significantly positive relationship between market orientation and customer satisfaction. A correlation coefficient value of 0.958 suggests that customer satisfaction is perhaps the hallmark and central focus of market oriented Nigerian banks.

The third hypothesis confirms the impact of environmental dynamics on the relationship between market orientation and organizational performance. With correlation coefficient of 0.766, we can argue that the combination of market turbulence, competitive intensity as well as technological turbulence, political and legal framework and socio cultural factors would have strong impact on market orientation practices and performance indicators.

From hypothesis four, It can be deduced that the interplay of the antecedents of market orientation which include top management emphasis, inter-department dynamics, organizational systems-reward and control mechanism, organizational culture and structure would determine the overall market orientation practices of Nigerian banks.

The greater the antecedents are harnessed and integrated the higher the overall market, orientation and performance of the banks.

Other findings of the study based on the analysis of the data include;

  • Nigerian banks usually carry out environmental scanning analysis to identify possible threats and opportunities, competitor’s strategies and programmes and to develop appropriate strategies to strengthen their market visibility.
  • Nigerian banks demonstrate greater emphasis on market intelligence generation, dissemination and collaboration at difference phases of the banks market orientation strategies and implementation such that every employee is fact becoming part time marketer treating customers excellently well and ensuring that their needs and wants are adequately satisfied.
  • As part of the market orientation practices of Nigerian bank, relationship marketing is heightened and Nigerian banks have moved from the era of transaction marketing to relationship marketing by building long term and mutually beneficial relationship with key accounts or customers.
  • Total quality management is also emphasized. Nigerian banks are beginning to develop systems of operations that facilitate just in time, hi-tech and sophisticated services delivery where customer services are provided with minimum error.

5.2 Conclusions

The object of this study is to examine the impact ofMO on organizational performance in Nigerian banks, which could serve as a reference for, researchers studying MO and for managers seeking to initiate market oriented activity.

From the finding, it can be concluded that the growth and sustainability of Nigerian banks depend largely on their ability to consolidate on market orientation practices given the downturn in Nigerian Economic environment as well as the dynamic nature Nigerian business and competitive environmental conditions.

The implication of this is that Nigerian banks must do more than just satisfying the banking needs of the people. They must build on their core competences and distinctive capabilities, motivate their workforce, optimize their internal strength, minimize their weaknesses and scan the environment to identify and capitalize on the opportunities therein and try as much as possible to reduce environmental threats.

In addition, Nigerian banks must as a matter of priority intensify and integrate their activities including process design, systems and structures to create distinctive and superior market values in order for then to have competitive advantage over competing banks, build strong, customer base and customer loyalty and create an impression of strong reliable and dynamic financial sector.

Overall, our conclusions are clear; for researcher and commentators, we conclude that the business environment and consumer behavior that allow firms (banks) to claim superior rewards from customers through market orientation in the developed countries of USA and United Kingdom is also in place in Nigeria.
For Nigerian manager, we offer a strong message that given the evidence in the research, developing and implementing a market orientation is likely to enhance business performance.


5.3 Recommendations

Based on the finding of the research work, the following recommendations are suggested

  1. Nigerian banks should Endeavour to attract and build profitable long term relationship with their key accounts as relationship marketing constitutes an important element of a successful market orientation practice.
  2. Nigerian banks must also emphasis superior service delivery at all times by adopting a total quality management strategy. This strategy reduces waste and employees inefficiency by providing effective processes and systems that facilitate improved productivity and employee’s efficiency.
  3. Nigerian banks should always carryout environmental analysis of the factors impinging on their operations, growth and development before articulating appropriate strategy for market orientation. This activity will also help the banks to identify the unmet needs of their actual and potential markets.
  4. Nigerian banks must always carryout competitors’ analysis to create competitive advantage. Competitor’s orientation is an integral part of market orientation strategy formulation and implemental. This is necessary to assess competitor’s strength and weakness. The banks can also benchmark themselves against other banks, comparing the banks product and process to those of competitors or leading banks to find ways to improve quality and performance. Benchmarking has become a powerful tool for increasing a company’s competitiveness (Kotler, 2002).
  5. The banks should also endeavour to pay serious attention to dissatisfactions of the customers as well as trying to solve them along with perceiving the importance of the subject (that is, the customer) by various units of the bank.
  6. Maintenance of systems for following dynamically the customers complaints and special attention to after sales services must be considered as very important case concerning the customers.
  7. The banks should also practice internal marketing by training and effectively motivating its customers – contact employees and all the supporting services people to work as a team to provide customer satisfaction.
  8. The banks should ensure that market orientation is adopted as company-wide philosophy. Every employee irrespective of the unit or department he /she belongs to in the bank must be made to be customer- focused. Both marketer and non¬-marketing employees including receptionist, security personnel must work together to facilitate superior values and satisfactions, banks profitability and achievement of overall corporate objectives.
  9. Emphasis on the importance of inter-department collaboration must be considered through participation of the bank sections in compiling the banks plans and strategies, balanced: state on how to utilize the resources between units or department, as well as knowledge offering the superior value to the customer.
  10. After collection, analyzing and organizing the information which can be about market (customers, competitors and environment), the information must be given to different departments and offices of the bank to be utilized and used in their own decisions.

5.4 Suggestion for Further Study

This research study examined the impact of market orientation practices on organizational performance in Nigerian banking industry. However, further studies can be carried out in other sectors of the economy such as manufacturing, non-profit, hotel and tourism sectors. The role of environmental influence on the ability of a firm to adopt and practice market orientation also needs to be researched upon.


The Impact Of Market Orientation Practices On Organisational Performance In Nigerian Banking Industry (A Case Study Of First Bank, First City Bank, Sterling Bank, UBA And Zenith Bank)


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The Impact Of Market Orientation Practices On Organisational Performance In Nigerian Banking Industry (A Case Study Of First Bank, First City Bank, Sterling Bank, UBA And Zenith Bank)


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