The Impact Of Marketing Strategy In Nigerian Banking Industry (A Case Study Of First Bank Nigeria Plc)
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.
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:
- To examine an existing marketing principles and theories.
- To examine product marketing strategies of banks in relation to external factors.
- To evaluate how these strategies has been in achieving their objectives.
- To examine the associated constraints in the incrementation of these marketing strategies.
- 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.
Chapter Five
Summary, Conclusions and Recommendation
5.1 Summary
This study was conducted to discuss the impact of marketing strategies in Nigeria Banking Industry. A case study of First Bank Nigeria Plc.
This principal objective of marketing strategies is to aid growth profitability and liquidity for bank. However marketing strategies have to be applied in order to achieve this stated objective. As obvious from the list of services offered by banks, the banking industry markets a wide spectrum of services to the public. These services have to be marketed by personnel whose skills range from the highly specialized to the common place. It bears repetition to say that the shortage of skilled manpower is common phenomenon in the economy and its particularly prominent in the banking industry.
Apparently, customers are becoming more sophiscated and choosy in their needs and to cope with these, available services can be improved while new ones are developed. No doubt, of recent, some banks have deluded into the provision of credit card services, insurance cover and perhaps the most noble and far reaching development for customers is the introduction of the Automated Teller Machine (ATM) into Nigerian market by commercial banks.
There are other facts which were obtained through the review of the questionnaires and other available journals. It was found that the respondents are facing strong competition. This competition has transformed the Nigeria Banking Industry from a regulated oligopolistic market to a monopolistically competitive market. The struggle to survive in this dynamic environment led to the introduction of marketing strategy which all the respondents considered as necessary for survival.
Finally, to emphasis the importance of the banks attached to marketing strategy they all claimed that it is a policy in their organization. And its adoption the unanimously agreed will contribute immensely toward the overall development of the entire Nigerian Banking Industry.
5.2 Conclusion
Generally the introduction of different marketing strategies seems to be encouraging. This is a result of more bank springing up from every nook and corner of the country. The ensuring rivalry from this competition has made Nigeria banks to change from their conservative habit to adopting innovative attitude.
The most important factor to the efficient and effective result of any marketing strategy is customer impression when he enters the bank. The strategy starts from the reception of customers, acquiring such customers with the services offered by the bank.
The effective and efficient dispensation of this fact will create a favourable image in the mind of customers and father enhance acceptance. It is pertinent also to note that banks are in competition, not only among themselves and not only collectively for the business of non-banked customers. They are also in competition with a considerable number of institutions, including foreign banks, for a wide range of services.
However, it must be noted one of the biggest obstacles to the development of the bank services (despite the huge profit after tax declared every year) is lack of market awareness of the products. Being offered many firms are not aware that the banks can of help to them with their pension problems the issuance of capital or provision of alternative forms of finance
5.3 Recommendations
As earlier stated, the research effort is into noted among others to give an insight into the impact of marketing strategies in the banking industry as well as review the impending problems and prospect in the banking industry. In this regard I would like to make the following recommendation.
- That banks should improve on its marketing strategic and include those activities that could compete with counterparts in different countries
- That marketing concepts should focus on customer’s needs
- That banks should intensify their activities on promotion rather than advertising and distribution of corporate gift to their blue-chip customers.
- That banks should design and tailor service to material their needs
- That government should pursue its clean up exercise in the banking industry vigorously so as to restore the confidence reposed on the financial institution
- That there should be improvement in product package otherwise known as product differentiation
- The concepts of the 4ps of marketing which are products, price, place and promotion should be consumer oriented.
- That the social responsibilities of the bank should be properly addressed
- That motivational incentives should be introduced which can ginger staff to accomplish results
- That banks promotional plan should include proper identification of what really motivates customers taking into account the following, availability of credit facilities, friendly services charge special services, parking space, premium or gifts e.t.c
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