Thursday, 15 August 2013

THE ROLE OF MARKETING STRATEGIES IN THE DEVELOPMENT OF BANKING INDUSTRIES. (A STUDY OF SELECTED COMMERCIAL BANKS IN CALABAR)


CHAPTER ONE
INTRODUCTION
1.1        Background to the study
One of management's main concerns is with the outcome of strategic decision making in particular, how a specific strategic decisions such as the selection of a plan for competitive posting, affect the performance of firms within specific industries. These and related issues have previously been addressed by many studies in the literatures often times with conflicting results (Mcmalian, 2001; Miles and Snow 1978; Porter, 1980; Wilson and William, 2000).
      One aspect strategy is the selection method used t grow the firm, a priority of management, particularly due to growth’s impact on the firm, including the size of the firm, performance, focus of the firm, marketing emphasis and product mix to name a few (Stremersch and Tellis 2004; Wyner, 2005). As growth intensifies, marketing decision becomes more relevant since other operational specialization of firm add up for total success (Day, 2003).
      The bank is a financial institution which accepts deposits and lends money to its customers. As banks deal with their customer’s finances, banking is a high-involvement service. Therefore banks needs to win the trust of their customers based on the customer profiles, banks segment their market into retail banking, corporate banking, personal banking etc.
      Depending on customer needs for finance, the market can also be segmented into trade customer finance etc. For banker to de-maximum returns and enhance his market, the marketing mix has to be effectively made (Howell, 2004). The products offered by a bank may be in core or segmented form. The core products offered by a bank include a current saving bank account or a housing loan.
      The augmented product includes services like, ATMs 24-hour customer service, etc. these services offering from those of his competitors. In the pricing of banking services, determining the interest rates plays on important role these rates in turn determine the revenues and profits of the bank.
      The multiple sources of revenue for today’s bank include annual charges for core services and augmented and services penalties, commissions for cross selling and charges for payment of utility bills, apart from the differential, interests rate. The basic pricing strategy in banks is based on risk-return pay-offs. However, the competitor and customer reaction have to be taken into consideration while initiating a price change (Doyle et al., 1998).
      The place element of the marketing mix refers to making the service available and accessible to customers. Improvement in the availability and accessibility of services has changes the process of banking. Technological innovations have given rise to modern channels like the internet, which have helped banks increase business volumes and attract new customers.
      ATMs and credit and debit cards offer convenience to customers and have also improved the efficiency of banking operations. These changes have helped banks tackle the challenges of services marketing. The promotion of communication mix banking refers to varied strategies like personal selling, advertising, discounts, and publicity etc. used by present banks to promote their service offerings.
      According to Doyle et al (1998), people also play an important role, even though their role has been eclipsed by technology in the recent past. Process determines the efficiency of banking operations and thus the service quality in a bank’s physical evidence includes the infrastructure and building not only in branch offices, but also at the ATMs or other places of interaction, even the quality of physical evidence. The banking industries have changed drastically over the past decade.
      Howell (2004) confirmed that the banking reforms and the opening of the economy to foreign and private banks have improved the working of the public sector banks. This has resulted in improved service to the customs of the banking industry. Increased competition and technology have enhanced the quality of service offered to the customers and also improve the return for bankers.
      Banks are businesses like any other. They have service to sell and they need customers to buy them. Seeking the customer naira in the face of tough competition is the province of the marketing people and the marketing of banks is as varied as the number and type of banks out there. “Most banks focus comes from their strategies plan wherein they decide what they are going to be and who they are going to service” says Dominic Bernardi, President and Chief Executive Officer of the western state school of banking at the Anderson school of management, University of New Mexico. “Some banks take the all things to all people approach”, but if you look closely, they are focusing on certain things; a bank has to decide if it is to be a commercial or retail-oriented bank, then develop it image (Aridishivi et al., 1994).
      Supporting the marketing role in the banking industry, Howell (2004) asserted that, banks all offer a basic menu of services which serves as the “floor” of the marketing plan. The largest banks in Nigeria, such as First bank, UBA and Union bank, view their hug line of services as a selling point while community banks like Ekondo Microfinance bank, Calabar Microfinance bank, Bakassi Microfinance bank and Akwa Savings are pleased to market a shortest list of offering tailored to their small metropolis customers. In the days of electronic banking, most banks can, if they choose to offer their customers pretty much any service. The trick lies in taking a good look at the customers they like to serve.
      Moreover, how the banks attempts to differentiate themselves from others in the mart is often seen in their slogans or catch phrases in the case of large, merged banks the message is very similar as they promote both the convenience and sophistication of their size and their community presence. Similar banks stress their accessibility and individualized customer services and the rich banks focus tightly on the market they are chose to serve (Kotler, 1988).
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