Locational Factors Influencing The Marketing Of Financial Service

Project and Seminar Material for Marketing

Locational Factors Influencing The Marketing Of Financial Service


Backs are established to make profit. Are these profit made at me expense of the customers? Or is it as a result of the service provided by these banks.

This study attempts to highlight those key factors that different banks management will consider in their choice of branch locations and customers preferences for their choice of banks to serve them this will enable banks to focus on the critical factor that affect market preferences.

The study was done using survey research design with questionnaires as they key instrument for collecting primary data. A total of 100 and 200 banks customers and officials questionnaires respectively were duly completed and analyzed based on the analysis of the generated data formulation hypothesis were tested at 95% level of significance using 2 test of profit.

The under listed constitute some of due major finding of the study management of bank have special preference for large markets like Lagos and Aba for their branch locations. Manketing activities of banks in these large markets are dieted at protecting and expanding their stream of revenues un these areas banks in both market describes the nature of their banking business in terms of the product service they offer and their. I.T power of product continues product service innovations and improvements banks should always invest heavily in information technology to remain relevant and profitable. As banks must to open branches in these market it is appropriate for bank to make their customer defendant on them and gain their trust and confidence.

Chapter One


1.1 Background of the Study

The deregulation of the Nigeria economy came into being in 1986. by that time the banking industry was one of the most vibrant and most south after by investor in Nigeria. According to Nwankwo (1991.2) the number of commercials and merchants banks rose form 33( thirty three) commercial bank and 15 merchant banks 1987 to 65 (sixty five ) and 47 (forty seven) respectively in 1991.

The bank industry entered this decade with less caution but aware of global economic changes according to Clausen (199:2) the industry entered the new decade well aware that the world was about to change but in retrospect not fully realizing the far reading extent of that change nor its velocity and impact. In the ensure six years the industry was unable to respond rapidly enough to the wrenching dislocation brought by deregulation fierce new competition and unstable world economy cribs erupted within the first quarter of this decade and the condition deteriorated in the in the following area.

  1. The industry was losing money with losses in billion since mid nineties
  2. Some of the banks suspended payment of dividends on their common stocks
  3. Some if the bank were facing hostile take over attempts by the regulatory bodies (NDIC AND CBN )
  4. Regulatory bodied had directed several bank boards of directors to redress the worsening capital base and
  5. Questions were raised about some of the banks ability to survive independently

Marketing in the banking industry in Nigeria as we know today owes much to the survival strategies of some new generation commercial and merchant banks after the banking distress of1992 through 1996. this development attended the tastes and demand of the society stimulated competition and created selling opportunities and reward. The banking habits new spread throughout the social classes.

New service have been introduces as the bank met competition fill gaps in their service ragge or try to steal a march on the competition by endeavoring to discover and satisfy the needs of new riche markets business customer have also wittiness the wind of change as the bank gained a greater appreciation highly profitable corporate mar let. thus the banks own marketing expertise has been pushed along by competition and a desire to gain market share. It has also been full along its customer demanding more flexible advantageously priced and comprehensive facilities.

The need of customer and prospective ones cannot be ignored by any bank especially in larger market like Lagos and Aba environment. Relying merely on selling only those service which are already available is at best a short term expedient as market attitudes preferences technology environmental factors are constantly.

To survive profit must be earned by banks and part of this process involves containment of cost when seeking the most profitable market to exploit. Therefore banks resources must be channeled towards the potentially more profitable banking markets which in turn necessitates making a choice among larger markets like Lagos Aba Kano Onitsah Kaduna etc. it is the identification of these chosen larger market and the allocation of the right balance of resources that calls for the marketing skills of research planning and assessment.

1.2 Statement of the Problem

Without customer banks would have no revenues marketing is directed at protecting and expanding this stream of revenue organization (inducing banks) regards customers wherever they may be as their single most important reason for existing. They operate in a rapidly changing regulatory and economic environment consequent upon this it is the job of the market to under study and understand the purchase decision/ patterns of these customers who have been know to be difficult and complex in nature. The task become even different in the light of increasing competitions growing customers sophistication and innovation in an environment of trade liberalization financial deregulation and internalization.

The problem was further compounded by the recession in the economy which led to the introduction of S.AP (structural) adjustment programme) in 1986. as Effion (1990:15) pointed out between 1986 and 1992 there were low capacity utilization in most industries declining per capital income and reduce disposable income.

The bank sector thus become more competitive and business environment like Lagos Aba Onitsha port-Harcourt Kano etc developed peculiar business climates/ markets and attracted and larger number of bank braches to their areas.

Against this background it became necessary for us to establish the location factor that influence banks in the marketing their financial services with particular reference to Lagos and Aba market.

1.3 Objective of Study

The objective of this study is to examine the location factors influencing the marketing of financial service in Lagos and Aba markets it will seek to do the following

  1. Examine if there are locational differences between factors affecting banks preference for Lagos and Aba market
  2. Consider the factors that determine banks preference for a particular location in both Lagos and Aba market.

1.4 Research Question

The purpose of this research is to analyze the demand for banking services: The factors affecting customer‟s preference. For the purpose of this research the following questions will have to be answered:

  1. What types of customers are common in Lagos and Aba?
  2. Which are the most important preferences of customers in order of merit?
  3. Why are customers‟ preferences for banking services continuously increasing in Lagos and Aba?
  4. Does accessibility to this bank branches influence customers‟ preference for their services in Lagos and Aba. Is response time to customers‟ inquiries and transaction important factor?

1.5 Statement of Hypothesis

  1. Ho: Banks are not establishing many branches in Lagos and Aba markets
    H1: Banks are establishing many branches in Lagos and Aba Markets
  2. Ho: Accessibilities to these bank branches does not influence their patronage in these market.
    H1: Accessibilities to these bank branches influence their patronage in these market.

1.6 Scope and Limitation of the Study

This study shall be restricted to Lagos and Aba business/banking environment Lagos and Aba market were chosen because.

  1. The head official of about 90% of the banks are in Lagos
  2. The banks that do not have their head offices in Lagos have regional offices and /or head office annexes
  3. Many banks have either regional office and /or area office in Aba
  4. Lagos is the nations industrial capital with over 75% of the industrial base of the nation which have led to more banks user
  5. The under listed 10 (ten) banks (by number of branches) have at least five branches in Lagos and at least two branches in Aba (excluding their cash enters ).
  • Banks Branch net work Ranking Marketing slogans
  • First bank of Nig Plc 319 1 Truly the first
  • Union bank of Nig plc 284 2 Big strong reliable
  • United bank for Africa 219 3 The wise choice in banking
  • Africa bank Nig plc 137 4 The one stop bank
  • 87 5 We treat you like a person
  • Bank of the north ltd 86 6 We earn your confidences
  • Wema bank plc 86 7 Vision to be become a role
  • Standard trust banks 77 8 Model for Africa B12
  • Habib Nig bank Ltd 55 9 The bank with a difference
  • Ailstable trust bank Plc 47 10 The professional banks

Respondents for the study will be drown from banks senior official and individual bank customers and the objectives will be to find out what information their bank ( branch) locational considerations the under listed have been identified as some of the limited factors.

1. Bas of respondents:

The respondents are form different backgrounds with their own prejudices since they have no direct stake in this study the reliability of data generated from them is suspect and will be fraught with many inconsistencies.

2. Sample error:

I have only a sample to represent the entire population the sample was selected using convenience sampling technique since the sample is just a small representation of the entire population sampling error is therefore inevitable.

1.7 Significance Of Study

This research will attempt to show the locational factor influence the marketing of financial service in Lagos and Aba markets issue to be analyzed will include people banking habits branch net works technology application interest rates on loans security of funds response time amongst others the customers will be classified into 2 (two) broad group for analysis viz

  1. Corporate bodies and
  2. Individuals

We shall therefore strive to establish the existence of difference in factor that influence various bank choice of location in Lagos and Aba business banking environment.

Having established the existence of a difference or lack of it.

The research will then make suggestions that would help banks price their product better in the lagos and Aba competitive banking environments improve on their technology applications ensure security of customers funds and other general attributes that customers consider vital

Chapter Five

Summary of Finding, Conclusions and Recommendation

5.1 Summary of Findings

With the help of various literatures effectively reviewed and research findings through the use of questionnaire and personal interviews, it had been established that there is effective demand for banking services in major city like Lagos and Aba. Through this research, it has been established that obtaining of facility, business advice, and accessibility of Banks (i.e. convenient location of bank branches), conducive Banking environment, branch Network, the usage of modern Technology, highly innovative Banking, asset base and prompt and courteous services are some of the basic factors affecting customers‟ preference for banking service in Lagos and Aba.

5.2 Conclusion

In conclusion, banks exist for the purpose of providing services to its customers. These customers are the boss- they are the reason for the existence of any bank. As a result, banking services of any type must be packaged putting the customers into consideration in terms of the springing up; it becomes paramount for banks to understand what their customers‟ needs are and provide them.

Banks should understand their customers; provide them with conducive banking environment and staff who demonstrate a true desire to satisfy them.

It is necessary for banks to listen to complain and suggestion of their customers; for them to know the factors affecting their (customers) preference in this competitive banking environment.

Management should also leave no stone unturned to ensure that the legitimate needs and aspirations of their staff are met to the best of their ability and without undue friction. It is only when the staff are contended that they can be relied upon to attain a high level of efficiency and effectiveness. Improved and contended workforce will enhance good service delivery and eliminate poor counter service. For other measures which are capable of generating improvements, let us examine recent developments in the industry elsewhere in the world.

Those who are familiar with bank services in developed countries will testify to continuing improvements in banking practices. The cash point facility for instance, which enables customers to slot in a micro-sensitive disc into a computer or cash dispenser and obtain virgin currency notes. Most of the banking transactions can be done without visiting the banking hall. British banking transaction can be referred to as 24/7. Internet banking is widely used by almost all cadres of customers unlike Nigeria where it is exclusively for the elite and the rich.

It is a fairly widespread practice in the United Kingdom that cheques of certain customers are not referred before they are paid over the counter, while the market is virtually becoming cashless with the use of various credit cards. British banks are also agents of one another for purpose of cash withdrawals (made possible by the cheque – cards facility) and cash lodgments are made into one bank for credit on an account in another bank (through the bank giro system) but these are still foreign to us.

5.3 Recommendation

In attempt to make my recommendation, it will be essential to quote Mr. Sola Salako CEO of Purples consult, he said‟ Consumers are usually wary of financial products because they are not always what they seem. Almost all these products are perceived to have hidden clauses that make it more difficult to buy than its communication lets on. Though the interest rate was reasonable to me, when I considered buying, I was immediately put off by use of conditions and „extra cost‟ I had to meet. I was required to find a vendor for the generator I wanted to finance, secure a one year guarantee from that vendor, take out an insurance policy at my own expenses on the generator which the bank as the beneficiary and of course, not to forget the legal fees. All of these conditions translated to extra cost, time wasting and of bureaucracy to me. So where is the convenience of buying this product when I could easily raise N160k by over draft at the same conditions (with collateral of course)?

The experience of Mr Salako is similar to the responses of some people interviewed. As a result, I recommend that banking services should be convenient for the customer to patronize, affordable in terms of cost, must be well communicated to the customers. Bank must Endeavour to live up to their promises to their customers. Customers get disappointed when they spend more time than necessary when cashing a cheque drawn on a sister branch of the same bank either as a result of V-sat not working or on-line processing not fully in place or faulty.

Furthermore, banks should improve to be more innovative, e.g, opening an account with a bank in the web site and withdrawing cash via internet without necessary going to the Bank.

The management of the bank has to be more customers focused. Branches should be fully staffed to avoid congestion of customers questing and sitting and waiting to be attended to.

Banks in order to sustain and gain more customers should imbibe human relation culture. Customers should be treated as kings and not as people seeking for assistance.

I should hasten to add that the customers themselves sometimes contribute to some of their difficulties by submitting hastily prepared and ill-digested proposal for support. Nevertheless, it is the bank‟s duty to be patient with its customers and give them all the necessary advice and guidance. As much as possible, banks should support viable proposals subject only to lay down guidelines, the customer record, and the availability of resources.

It is pertinent to emphasize here that the processing of loans and advances is an aspect of bank‟s operation that demands the highest level of integrity. Banks are therefore advised to ensure that in the interest of their image, staff charged with responsibility for this vital function is seen to demonstrate the highest degree of integrity and professionalism.

Banks must make reference to the complaint of their customers, such as failure to issue statements of accounts to customers on regular basis. They should also endeavour to review the procedures for opening accounts, which are in some cases cumbersome. The minimum amount fixed for opening accounts may also need to be reviewed if prospective customers with limited resources are to be encouraged to inculcate good banking habits.

The bank‟s marketing plan should include proper identification of what really motivates the customer. A survey was carried out in 1971 by Mark Alpert of USA tagged „identity‟ and compare attributes that features conspicuously which include bank‟s reputation, location, availability of credit, friendliness, service charged, full service, offering of special service, parking space, premium or gift, convenience of services, influence of friend & etc. An overall market plan should take all these into account. Marketing efforts should take due cognizance of the need to improve the quality of service that people get.. the delayed in affecting simple bank transactions, poor counter service, poor skill, skill and attitude of staff and tendency of most bank employees to feel that they are doing the long delayed and neglected customer some favour must be greatly discouraged.

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