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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