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).
1.2 Statement of the problem
As the Nigerian banks customers becomes
more sophisticated, it is now very important that banks determine the factors
that are important and relevant to the customer’s bank choice decisions. The
challenge of matching the bank with its target customers lies in the marketing
of its services.
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. Against this
backdrop, banks need to wind the trust of their customers. However, bank
marketing is implemented by a combination of its own marketing departments,
advertising agencies and personal vision f the management.
How the banks attempt to differentiate
themselves from others n the market determines its profitability and
sustenance. But for the banker to derived maximum returns and enhance his
market position, the marketing mix has to be effectively managed, how the
banker combines these element of the marketing mix to achieve the growth and
development in his industry is the is the essence of this study. The researcher
believes that the findings of study will assist bank managers in refining their
marketing strategies as a means of overcoming the intense competition that
exist in the Nigeria banking system.
1.3 Objectives of the study
Marketing plays vital roles in the
economic growth and overall development of a nation. The objectives f this
study as determined by the researcher is on how marketing has impacted
positively and assisted commercial banks in Nigeria to:
a. Specialization
in activities of comparative advantage.
b. Enhance
resources-use efficiency and trade.
c. Advance
in their service delivery to their customer to enhance economic growth and
development.
d. Adopt
the emerging internet banking as a means f gaining market share.
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