New Product Development And Effective Marketing Strategy As Tools For Increased Profitability (A Case Study Of Ecobank Plc)
This project was conducted to examine the new product development and effective marketing strategy as tool for increased profitability in Nigeria. To determine the rate at which development and growth in banking industry, ion terms of employment, income, staff utilization and technology.
The literature review explained the challenges of the new product development, need for marketing strategy in banking services, factors that enhance the efficiency and effectiveness of a new product, steps in the new product process and problems indication of banks product.
In research methodology sources and method of data collected like primary and secondary data such as questionnaire which is a formalized schedule for collecting data from respondents which is used to measure past behaviour, attitude and respondents characteristics of the data based on the questionnaire that were administered to the respondents. Two hypotheses were tested as conducted by the researcher.
Finally, the whole project was summarized that new bank product are developed as an aid in increasing the profitability and marketing share of the bank and also as a completive conclusion and recommendation that bank should not delay in services delivery, they should reduce cost of product and fulfill claims made by the new products.
Table Of Content
- Title Page
- Approval Page
- Table Of Content
- 1.1 Background Of The Study
- 1.2 Statement Of The Problem
- 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
2.0 Literature Review
- 2.1 Introduction
- 2.2 The Concept Development For New Products In The Bank
- 2.3 Challenges Of New Product Development
- 2.4 Need For Marketing Strategy In Banking Services
- 2.5 Steps In The New Product Development Process
- 2.6 Factors That Enhances The Effectiveness Of A New Product For Increased Profitability
- 2.7 Problems Indications Of Bank Products
- 2.8 How New Product Have Impacted On The Profitability Of Eco Bank
- 2.9 How New Product Development And Effective Marketing Strategy As Tools for Increased Profitability Affects The Operation Of Eco Bank
3.0 Research Methodology
- 3.1 Introduction
- 3.2 Research Design
- 3.3 Sources / Methods Of Data Collection
- 3.4 Population And Sample Size
- 3.5 Sample Technique
- 3.6 Validity And Reliability Of Measuring Instruments
- 3.7 Methods Of Data Analysis
4.0 Presentation And Analysis Of Data
- 4.1 Introduction
- 4.2 Presentation Of Data
- 4.3 Analysis Of Data
- 4.4 Test Of Hypothesis
- 4.5 Interpretation Of Results
5.0 Summary, Conclusion And Recommendations
- 5.1 Introduction
- 5.2 Summary Of Findings
- 5.3 Conclusion
- 5.4 Recommendation
1.1 Background Of The Study
It has been identify that banks form a significant part of the financial institution of modern society because of their structure, wealth and influence on an economy. Commercial bank through their basic roles of resources mobilization and allocation for efficient investment plays a great role in economic development of any nation.
In (2003) according to Nolin Nigeria stock in trade of commercial bank the provision of financial service like overdraft facilities, discounting bills of exchange, purchasing and selling securities etc. if the bank did not see the need for providing adequate services and encourage patronage, maybe there was no need for such activities in some years bank due to the fact that banks were few and competition between banks in increasing and the level of financial competition of their banking need by the customer.
Olupitan (2004) pointed out that banking in Nigeria is becoming very competitive but also sophisticated; the banking industry has gone beyond mere acceptance of deposits and to the customers. Banks have now injected various ways in new product development into the industry of banks.
The stimulant is traced to the unprecedented rise in the number of banks between 2003 – 2005, which resulted into creating a very competitive banking atmosphere among banks. Olupitan (2004) also noted that in the early days of banking in Nigeria, the use of banks services was limited to government, business house and few affluent in the society.
Now, the bank will introduce new product in the banking industry. New product development in commercial banks cab be seen in the light of various services offered by banks to the generality of the public including the firm’s industry, organization and the government.
These products are usually services oriented, designed to facilitate financial transaction as it funds in opening account and mobilization of funds from the surplus unit to the deficit unit which is regarded as the major function of commercial banks. Although a lot of commercial banks use new product development as a growth strategy, some dread it because of the losses they incur when the product fails.
Commercial banks develop new product because they want to maintain their position in the industry of banks, sales expands the demand from customer and more maintain in a profit level. For example, “DIAMOND BANK,” took other banks by surprise when they came up with diamond interacted banking services, a product for quick branch nation wide.
Western union transfer was introduced by First bank, these product enable funds to be transferred in minutes in the world.
UBA (United Bank for Africa) introduced the banking industry easy card. Hallmark bank PLC also talks about their product.
Hallmark in carrying the amount up first remit international cash transfer, in the house banking service hallmark entrepreneurship scheme account the banking industry became saturated with so many of the new product development.
1.2 Statement Of The Problem
Banks have generally made financial transaction simple than ever before bills can easily be settled without physical cash exchanging hands. Funds can be transferred through electronic media in minutes. Financial deals are concluded in seconds through banks as intermediaries and banking profession is given its right place in the society. In Nigeria banking industry are becoming dynamic, banks through a leaf from their foreign counterparts by introducing some of these product into the industry. Banks today face one of the greatest challenges in the area of customers services, they show constantly satisfy the needs and wants of their customers with the right product at the right time and price, using the right promotion and making it available to the customers at the right places.
The Problem Associated With The Study Are:
Lack Of Identification:
Lack of customers want and plan on how to satisfy them.
By encountering them in rendering services to the customers
Limited knowledge of bank product to the customers
The extent were by new product affect the bank profit level
The improper way of introducing new bank product.
1.3 Objectives Of The Study
From the study of new product development, this intends to ascertain the following:
- Examine these products in the enhancement of the country’s technological capabilities in banking services and identify the extent to which these products are creating employment opportunities in the banking industry.
- New bank product on the overall profitability of the bank by widening or narrowing the differential advantage over competition and evaluate their contribution to growth in the banking industry in terms of profit level.
- How do commercial banks reconcile their problem with their customers to generate good customer satisfaction in introducing these they are testifies.
- Customer perception of new products and their level of patronage with the banks.
- These new product were run and whether or not the goals on which they were set and also achieved.
1.4 Research Questions
This project will address the under listed issues.
- What are the effects of new product development on banking industry?
- Is the service sector efficient and accurate with the adoption of modern equipment?
- What impact does the adoption of new product have on profitability and customer’s satisfaction?
- How smooth is cash flows around the industry?
1.5 Statement Of Hypothesis
- H1: New product development and efficient marketing strategy increases operating costs and leads to decrease in banks profitability
- H1: New product development and effective marketing effort does turns in adequate deposits and hence increase banks liquidity.
1.6 Significance Of The Study
- Nigeria citizens will be better to be informed on what these products are because it facilitates on their financial transaction and how much risk is reduced through their use.
- Introducing new product development by commercial banks in Nigeria through this information about the product that will serve as an advisory piece to proprietor of commercial bank on how it can be produce whether or not.
- Particular types of product will bring advertisement expenses that can be reduced or increased while keeping a check on the profit margin.
- It helps to determine the rate at which the introduction of the new product development can help the economic and the growth of the banking system. E.g. in terms of income, staff utilization, employment and technology.
1.7 Scope Of The Study
New product development in commercial bank has performed all services that covers banks introduction to their operation which facilitate them in their transaction.
1.8 Limitation Of The Study
Lack Of Finance And Time Constraint:
This made it impossible for the attainment of some facts needed for this research work.
Marketing managers and officers who are in the position after much persuasion was been made to give information were not too open and free with releasing or complying with the research.
1.9 Definition Of Terms
Financial institution which deals in money and credit, receives deposit from public organization and institution were repayable on demand by cheque.
Is where people must have opened an account with the banker and have at least one transaction on the account.
Bank is the financial house that established in accepting deposits and ending out fund to further services, banker is the person who carries out the banking work, whose career is into banking; these include acceptance house, discount house and financial institution.
It comprises of all money loan by individuals, they are largest single source of fund by commercial banks, companies and corporate bodies to the bank.
This is a relationship between the numbers of banks in an area, the total population in geographical area is to determine on how the quality of conduct or services would affect the density of the geographical of its low or high.
It helps dive customer by bank in transferring their money to their banks both local and industrial for settlement of debt and other obligation at the institution and directive of the customers.
The profit level is difference between the total bank relevance and expenditure that’s measured in naira per year.
They are un-conditional order in address by one person to another, the person will sign on it and it will enable us to pay at a fixed or determinable future time, some certain amount of money order by the bearer.
It is an account where the customers credit balance is withdraw able on demand by the cheques issued.
It is non-personal paid information to create awareness to stimulate the minds of the customers to make them buy their product.
The decision and activities that are directed towards trying to create and maintain firms intended product, concept customers mind.
It is a demand creating and human activity embrace production, packaging, advertising, personal selling which aims at the satisfaction of needs and wants of the customer of the product. In activity, the marketing objective or traffic of a company, there will be strategy in an organization.
Is an activity that benefits us, one party can offer to another. In services essentially there is intangible and does not result on the ownership of anything.
This is new product in the firm that modify to existing product and the line acquisition of which involves assimilation of something new to the product line.
They are those responsible for marketing or introducing new ideas and techniques to challenge an existing item or create a new product item.
Traveling Or Traveler Cheque
They are cheques that provides and are processed by the bank to their customers for easy foreign trip with a bank traveling allowance.
It is temporary advance (loan) which is repayable within a stated short-term period of not more than 12 months as the case may be.
It carryout the amount that is up to sixteen million naira and it is a member of the smart pay consortium that is accepted at over 400 locations in nationwide.
It is the degree of effectiveness with satisfactory result without wasting resources.
In addition we consider the nationality of the bank owner, for example, whether the bank is a domestic or a foreign bank, as institution is defined as a foreign bank, if at least 50 percent of the banks stocks are in foreign hand.
Anything that can be offered to mark for attention, acquisition or consumption, for example, personalities, place and organization.
The process of transforming a product into manufacturable product. It can not be product with development an ideas on it.
It is a complex process by which the people receive, select, organize and interpret sensory stimulation. The information is relating to the product into a meaningful way of the product.
Loan Loss Provision Over Total Loans
It is a measure of a bank’s credit quality, the loan loss provision and reported on the bank’s income statement. A higher ratio goes together with a lower credit quality and a lower profitability.
Equity Over Total Assets
As a proxy for the bank capital, the ratio of equity to assets banks with higher capital to assets ratio are considered relatively safer compared to institution with lower ratio. Bank with low capital ratio are also riskier in comparison with better capitalized financial institution.
5.0 Summary, Conclusion And Recommendation
This chapter intends to summarize, conclude and give recommendations of the new product development and effective marketing strategy as a tool for increasing profitability.
5.2 Summary Of Findings
New product development introduced by commercial bank of Nigeria was exclaimed using Eco Bank PLC as a case study. The study revealed that new banks products are developed as a competitive strategy to gain an edge over banks increasing the profitability and market share of the bank.
It affects the customer patronage of the bank to a durable and thereby affects on the banks deposits volume, from the research, it was discovered that other reasons for introducing new product development include providing customer and enhancing the country’s technological capabilities in banking services. It also involved that new product development was introduced into the banking market by the use of “launching / new paper coverage”.
- Launching/ newspaper coverage
- Advertisement in T.V/ Radio
- Oral lectures about the product from the bank marketing units
- Bill boards and posters
The study revealed that, the most frequently used means of approach is advertisement in TV/ radio. Also it was discovered that there is a considerable input made by new bank product in enhancing the country’s technological capabilities in banking services such as:
- Card and electronic banking product design
- Helping to improve inter-bank financial telecommunication
- It improve computer knowledge technology
- It helps monitor and coordinates all transactions nation wide
Why discovery the falling of product are
- Poor marketing services with the bank product
- Lack of management control with the products
Two hypothesis were tested during the course of this study, one of the hypothesis was tested and if the new product development was introduced by commercial banks as a competitive strategy, its positively related with increase in profitability for the bank, it was accepted as the computed X2 value of 12.52 was greater than the tabulated X2 value 3.84 so the null hypothesis is rejected.
The other hypothesis was tested to find out if new product development and effective marketing effort does turn in adequate deposits and hence increase banks liquidity. It was accepted and alternative hypothesis was rejected because the calculated X2 value was lower than the tabulated X2 value.
From the findings of new product development discussed, it can be deducted from the products.
- New bank product has increased employment opportunities in the banking industry and is directly affected by the employment level of the country.
- New bank product contributes to a considerable extent in helping to develop banking technology in areas, such as card and electronic banking products.
- The significant relationship between the development and introduction of new bank products and customers patronage.
- New product development introduced by commer5cial banks as a competitive strategy of positively related with increase profitability of the bank.
- New bank products are introduced mainly by advertisement in the television/ radio while other means include bill board, posters, launching/ newspaper coverage and oral lectures about the product from banks marketing units are also used periodically.
The above conclusion and findings, the researcher made the following recommendations about a stakeholder.
- The customers from the new product development has a lot of advantages, it possible for the customers to misunderstand the intensions of the bank, so more input should be made in educating customer in the utilization of such products by organizing oral lectures, educative programme, orientation of the product to avoid misconception.
- The banking sector is very important to the development of the economy; therefore, bank should design a product that has a contributing effect on the community serve and not only to the bank customers.
- The bank should not delay in services delivery, reduce cost of the product and fulfill claims made by the new product development.
Also, the central bank as the findings showed, the banking business has a bright prospect in the country. These requirements are therefore effective supervision of the industry by the central bank of Nigeria. The Apex bank should ensure the effective introduction of these new product developments at the appropriate time, with this, the bank should establish a good management team for proper coordination and marketing their products.
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