CHAPTER ONE 1. 1INTRODUCTION The financial services industry has undergone substantial changes from regulatory, technological, cultural and economical forces, among others. One of the most serious results of these changes is the need for financial service companies to be marketing-oriented. Marketing oriented companies places emphasis on their clients and customers’ needs and wants, and determines how these needs and wants can be beneficially served. A necessary component of marketing orientation is a strong programme for developing products (services).

Marketing activities and markets are ever changing, but the fundamental philosophy of marketing is fairly constant. Marketing changes any business, including financial services businesses. Substantial changes in financial service businesses have been witnessed in form of fund-transfer technologies, structural reforms of financial institutions, and intense competition through the introduction of myriad of products, among others. The rising relevance of marketing in the financial service industry expedited the observed changes in financial service businesses.

In an increasingly competitive and the change-prone Nigerian financial service environment, the efficient and effective practice of strategic marketing should be recognized as a salient corporate goal. Marketing of financial services, therefore, entails the marketing of the services of the financial sub-sectors. These include the services of the Commercial banks, Merchant banks, Central Bank, Bureau de change, saving and Loans companies, Mortgage institutions, Discount House, Nigerian Deposit Insurance Corporation (NDIC), Finance House, Nigerian Stock Exchange and other financial institutions.

Broadly speaking, banking business is concerned with the offering of services, which include deposit collection, financial services, monetary transmission, credit services, foreign exchange services, among others. To offer these services efficiently and effectively to clients, corporate marketing managers must understand and practice marketing (Berry, 1974). Marketing practice has changed Nigerian banks in recent times as bank executives are motivated to source deposit from clients. Effective bank marketing starts with a bank’s clients, and seeks to create mutually –satisfying exchange relationship between a bank and its clients.

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This can be achieved through corporate marketing activities. With the dynamic nature of banking operation in the world, for bank to achieve its organizational goal of profitability and growth, the issue of marketing can not be over emphasized. The bank’s fundamental role of financial intermediation and other functions expected of the bank which will serve as a source of income which will bring about profitability and growth to the organization can not be achieved without effective marketing. This is due to the level of competition in the industry, and the nature of bank business.

In marketing its services, banks must attract depositor on one hand, and attract borrower and users of its services on the other hand. This double-sided nature of bank services brings marketing problems, which are more complex than those which normally, face marketers of other physical products. The decade has seen banking industry goes through enormous changes, and the process is far from over. In the researcher’s strong view, in the years ahead there will be further pressures on the shape of banks, the way business is carried out, and also for less certain ones because is not the job-for-life as used to be.

All this means that bank must be keenly attained to the needs of providing customers with the right services and imbuing them with the necessary standards. The role of marketing in this regard is enormous. Banks wanting to be on the top have to consolidate on marketing strategies or merge into over larger groups to meet competitive challenges because of its numerous and complex services (EZIRIM, 1998). 1. 2STATEMENT OF PROBLEM It is known that customers have lots of banks to choose from.

For a bank to have the highest market share among other banks rendering identical services, there is a need for such bank to combine and blend the main factors (bank objectives, banks environmental (or non controllable) variables, the controllable (or management) variables, and bank’s organization and control variables) together into an overall strategy the customers. Moreso, where there is absence of marketing, the attendant negative effect of this on the profitability and growth cannot be over-emphasized.

After all, it is the good performance (profitability and growth) that can guarantee the sustainability of the organization in relation with its corporate goals and objectives. It must be noted, however, that amidst the importance of bank marketing and considering the fact that Nigerian banking business environment is fast changing which deserves the means by which future opportunities and problems can be anticipated by bank executives and managers. 1. 3OBJECTIVES OF THE STUDY

The board objective of the study is to examine the impact of marketing on profitability and growth with banking industry as focus. To achieve this, the following specific objectives shall be our guide: I. To examine the impact of effective marketing on the profitability and growth of banks. II. To examine the importance of marketing in promoting customer awareness in the banking industry. III. To examine the pattern of relationship and link between marketing, profitability and growth. IV. To examine how marketing has been helpful to bank business in n attempt to achieve its corporate goals and objectives. V. To examine the marketing structure and strategy of ZENITH BANK PLC as it relate to bank marketing. VI. To provide policy recommendation for future users of this research work. 4. RESEARCH QUESTIONS At the completion of this study, the following research questions must have been answered. I. Why the need for Aggressive marketing in the banking Industry? II. What are the marketing concepts, philosophies, strategies, marketing plans and marketing mix used in banking industry? III.

How has marketing, over the years, contributed to the development and continued existence of the banking industry? IV. Do Nigerian commercial banks possess the right marketing strategies to meet up with the increasingly demand of quality services by customer? V. Has marketing succeeded in promoting customer awareness and growth in the banking industry? VI. What are the major problems of bank marketing in Nigeria? VII. To what extent has marketing succeeded in increasing bank Profitability and growth?

VIII. Does the government regulation has any impact on the marketing strategy of the banking sector? 1. 5RESEARCH HYPOTHESES 1. Ho: There is no significant relationship between marketing and bank’s profitability. H1: There is a significant relationship between marketing and bank’s profitability. 2. Ho: There is no significant relationship between marketing and bank’s growth. H1: There is a significant relationship between marketing and Bank’s growth. . 6RELEVANCE OF STUDY While it has been demonstrated that marketing aids profitability and growth, one stands to wonder why some banks still perform very low. Banking business decline is said to be primarily caused by marketing inadequacy or management failures among other things. Thus, banking business may decline because the original marketing strategy was not appropriate to the environment and capabilities of the firm, or because the marketing strategy that was originally corrected had been rendered obsolete due to changes in the environment.

Economic recession changes in social variables, increased competition, and technological advancement may be responsible for banking business reverse. On the whole, it is hoped that this study and its findings will help banks and the banking sector in general. It will serve as a useful guide and assist in formulating and developing their marketing strategies for a desired target market. Besides, some of the suggested solutions and recommendations will be found useful as they open up the nature of the markets complex and dynamic state. . 7 SOURCE OF DATA AND METHODOLOGY The design of this research is to investigate the impact of marketing on bank’s profitability and growth. The data that will be collected for this study will be obtained from primary and secondary source of Information. The primary data will be collected through questionnaire administer to the staff and customer of Zenith Bank branches in Lagos, and the staff members in the Business Development Unit (marketing Department) at the head office of Zenith Bank Plc in Lagos.

The secondary data will be collected from Zenith bank’s annual reports, journals, textbooks, newspapers related to the research work. The nature of the propositions and the sample size, are the main determinants of the mode of analysis that will be adopted. The chi-square and correlation analysis are the main statistical tools to be used for the proposition testing. 1. 8SCOPE AND LIMITATION OF THE STUDY The research is expected to cover Zenith Bank Plc in Lagos, Nigeria. The focus here will be on the marketing of the banking business mentioned early.

It will also cover the annual financial performance report of Zenith Bank Plc for five years (2000 – 2004) to ascertain the impact of marketing on the bank’s profitability and growth over the years. The limitation imposed on the researcher is finance, the researcher would have extended the survey to other Zenith bank branches in other states of the country, but due to financial constraints of transportation and accommodation during the survey in other state outside Lagos state where I reside.

Another limitation is time, the time of study is short, and hence this poses a constraint to this research work. 1. 9DEFINITION OF TERMS Business: Is the sum total of activities involved in the production and marketing of good and services for the purpose of satisfying the need of the people, and for making a profit. Customers: They are those individuals, organisations, or parts of organisation, which use-up or consume products and services. Market: Is all the potential customers sharing a particular need or want who might be willing and able to engage in exchange to satisfy that need or want.

Marketing: Is the management process, which identifies, anticipates and supplies customers requirements efficiently and profitability. Market Planning: It is the systematic process of determining the future of a bank, setting quantifiable marketing objectives and determining the strategies and tactics of achieving the objective in a defined operational environment. Marketing Mix: It is the balanced blend of marketing ingredients best calculated to achieve a defined marketing objective as economically as possible.

It is a four-factor classification called the ‘four P’s’, which denotes product, place, promotion and price. Market Segment: The market segment consists of a group with similar needs or wants and may include geographical location, purchasing power, and buying attitudes. Market Segmentation: The market segmentation divides markets into segments, which have different buying needs, wants, and habits. Marketing Research: The process of gathering the information that serves as the basis for a sound marketing plan.

Merger: The combining together of two or more companies. Profitability: Is an operational concept concerned with the production or creation of wealth. 10. SYNOPSIS OF OTHER CHAPTERS Following chapter one, which is the introductory chapter, the research will include four additional chapters as follows: Chapter two will deal with the literature review, which will explain in details the meaning of marketing, what it entails, the importance and the effect on bank’s profitability and growth.

Chapter three will explain the research methodology that will be adopted by the researcher and it will comprise the introduction, population of the study, the sample size, the instrument used for data collection, Description of the instrument, the Reliability and the validity of the instrument and method of data analysis. Chapter four which will deal with data analysis and interpretation of findings, which includes: Introduction, the analysis of responses to the questionnaire, analysis of personal data, summary of interview responses testing and analyzing of research hypothesis.

Chapter five, which is the concluded part of this project work. It deals with the summary, conclusion and recommendations to the regulatory authority, banking industry and future researchers of the research topic. CHAPTER TWO LITERATURE REVIEW 2. 1INTRODUCTION As the role of the financial services sectors – banking, insurance, building societies, hire purchase, franchising, consumer credit, and general household financial services, etc – continues to grow in the economies of most of the Western nations, pressures are mounting for a more effective marketing management of the financial services offered by the banks.

This applies especially to the banking sector, as it represents probably the most important financial sector, not just in terms of turnover, profits and employment, but also in its paramount impact on the other sphere of the economy. Banks in Nigeria are at the threshold of incorporating marketing in their provision of banking services. Marketing is not a new idea, but what is challenging about it is the application of its principles in the rendition of banking services. In Okeafor (1993:09), marketing is the set of individual or corporate activities designed to direct the flow of need – satisfying goods and services to target buyers.

This is done not by force, but through the exchange process. Marketing starts when one social unit (individual or company) anticipates, seeks out and designs the features of a product or service to match the need – structure of other social units. These efforts are made with the intent to obtain a transaction (an actualized exchange) between competent social units. The recent emphasis on the principles and the applications of marketing to banking has rather been forced on the industry by increased competition and other environmental changes.

Intensified rivalry from other institution has caused the banks to this seriously, about how they can compete effectively. This has led them to pay increasing attention to marketing techniques. Obviously owing to the very nature of banking, it cannot be treated in exactly the same way as, for example, a manufacturing firm. It is important to recognize the two fundamentally different functions that bank marketing must perform. It must attract depositors on one hand and also attract borrowers and users of services on the other.

This double-sided nature of banking business brings marketing problems that are more complex than those that normally face commercial concerns. Onwuchuruba (2003:21) posits that marketing in Nigerian banks has not been given the proper attention it deserves. Evidences abound everywhere. The attitudes of some banks’ staff to customers are sour and the distress state of some banks after the implementation of SAP (Structural Adjustment Programme) in late 1980s and early 1990s are sign of poor marketing. 2. 2MARKETING

Different writers and bodies have defined marketing differently. Kotler (1988:19) sees marketing as “a human activity directed at satisfying needs and wants through exchange processes”. Nwokoye (1981:02) defined marketing as a set of activities that facilitate exchange transactions involving economic goods and services for the ultimate purpose of satisfying human needs. Onwuchuruba (1996:48) defined marketing as the process by which an organization attempts to match its human, financial and physical resources with the wants and needs of its customers.

These definitions show that the focal point of any organization’s activities should be the needs and wants of its customers. Although frequently, the particular form reflects the pre-occupation of individual authors. However, most have certain basic features in common, especially the notion of looking at the organization from the point of view of the customer or striving to ensure mutual profitability from the marketing exchange. Onwuchuruba (2003:22) stated that marketing provides the matching between the organization resources (human, financial, physical) and the society’s needs and wants.

Marketers doing the job must recognize and take proper care of the dynamic characteristics of the environment in which the matching takes place (direct and indirect competition, economic and political uncertainties, legal and social trends, technological changes, and institutional patterns) in order to reduce mis-match to the barest minimum. All these definitions above share certain basic characteristics, which are the major element of modern marketing: i. It is Operational: Managers must take action to achieve results.

Benefits will not emerge from a passive attitude to the results. Benefits will not emerge from a passive attitude to the exchange. ii. It is Customer – Oriented: This will make an organization to look outside itself, focusing on the needs or requirements of the customer. It’s effectiveness lies in finding solutions to the challenges posed by these demands. iii. It emphasis mutual benefits: The exchanges work and persist because it is in the interest of both parties (seller and buyer) to continue.

Through this, both parties prosper as needs are satisfied by goods and services which suppliers will continue to supply because they are profitable and which are bought because customers’ benefits exceed costs. iv. It is value – driven: The culture of the company, the values expounded by its leaders and communicated to all those involved in the organisation are based on a desire to build the business through meeting needs and responding to the market. 2. 3MARKETING CONCEPT Marketing concept is an important substance or feature of modern marketing.

Kotler (1988:31) points out that marketing concept as a business philosophy holds that the key to achieving organizational goals consists of determining the needs and wants of target market and delivering the desired satisfactions more effectively and efficiently than competitors. It is the application and adoption of this philosophy that would determine whether an organization is marketing oriented or not. Kotler (2003:17) outlines these four alternative ways or approaches that can be used by a company to guide and direct its marketing activities.

They include production concept, product concept, selling concept and the marketing concept, which emerged in the mid-1950s. He claims that this concept has challenged other preceding concepts. Instead of product –centered, ‘make-and-sell’ philosophy, emphasis has now shifted to customer-centered, ‘sense-and-respond’ philosophy. Instead of ‘hunting’, marketing is now ‘gardening’. Today, marketing job to organizations is not to find the right customer to your product, but rather, it is to find the right product to your customers. The marketing concept after mid – 1950s became a key for business development.

Peters and Waterman (1982:87) point out that the 60 most successful United State firms in their over 25 yeas of study shared a dedication to marketing proposition as the key strategic discipline of the firms. In Nigeria too, Nnolim (1979:07) agrees that marketing is the most effective engine of economic development, particularly in its ability to rapid develop entrepreneurs and managers. These firms linked their success to the implementation of this important concept, not matter how haphazardly this was carried out. Any firm’s marketing success will lie on the adoption and application of marketing concept.

Also, Onwuchuruba (2003:26) asserts that the adoption and application of marketing concept is one way by which banks and other financial institutions can achieve growth and avoid the prevalent distress state that has engulfed some of them in recent past. The two conflicting element behind this philosophy are customer satisfaction and company’s profit motive. Cannon (1997:06) reveals that the concept that firms exist, first and foremost, to satisfy customers’ needs has not been accommodated easily into the operations of many organizations always put forward as plausible purposes.

He also supports KotIer’s view by saying that the real power of marketing concept lies in three areas: ? The reality of the market-place, that is the alternative purposes stated above (profit motive, job creation and protection, survival objective) can only be achieved in the long-run if the customer is satisfied with the organisation’s offering. ? The recognition that restating the comments above, firms will achieved their targets more effectively if they see that the closer they are to understanding the customer, the more likely that they are to gain maximum profits, hence save/create jobs and survive. The awareness that adding value to the customer offering provides the key to long-term and secure business development. In Nigeria, and other West African countries, the marketing concept has been widely accepted by marketing scholars and practitioners as reflected in their teachings, the adoption and implementation of the concept in many progressive companies, especially in the banks after the Structural Adjustment Programme (SAP) of the Federal Government in the 1980s.

But today, when one considers the rising tides of consumer movement, protecting customer dissatisfaction and frustration in business circles along with increased society’s demand for public welfare, one will begin to speculate that this important business philosophy has been totally ignored or not properly implemented by banks and other financial institutions in Nigeria. Adegboyega (1999:21) stated that the adoption of the marketing philosophy in an ever-changing business environment has four main implications for banks: Continuous investment in research efforts geared at identifying and monitoring consumer needs. ? The evolution of a management system that ensures profitability, continuous communication with employees and free flow of information. ? The planning and implementation of company programmes that further the interest of consumers and put in place products and services that meet the ever-changing needs for customers and respond to competition. ? An avowed commitment to protecting the interest of the society and to remain sensitive to the interest of the stakeholders. ORIGIN OF BANKS MARKETING IN NIGERIA In Nigeria, before mid 1980s, banks and other financial institutions had no Understanding or regard for marketing in spite of the fact that seventeen banks were licensed to operate in Nigeria in 1963 according to Brown (1966:102). Also, by the end of December, 1988 there were forty-two (42) commercial banks operating in Nigeria with a network of over 1600 branches as reported in CBN Annual Report, 1988. One reason for this is that majority of top managers of these institutions were traditional bankers with little of no marketing orientation.

These managers did not see any need for marketing at all. Another is that Nigeria seems to be grossly under banked with one bank branch having an estimate of 100,000 (One hundred thousand) people compared to 4,000 (four thousand) people in Britain. (Onwuchuruba, 2003:26). With the salaries of civil servants and other workers in private sector being paid through commercial banks, this became an additional burden to the bankers as long as queues of customers were formed. The bankers erroneously felt they had no need for marketing.

As long as the queues lasted, they had no problem in getting deposits from customers. Under the above circumstance, the bankers operated in the seller’s market. The banks building were created by the image of the Greek temple calculated to impress the publics with its importance and solidity. This was the banks posture before the age of marketing in the country. According to Onwuchuruba (2003:26), marketing came to Nigerian banks after mid 1980s not in the form of the application of marketing concept but in form of advertising and other promotional concepts.

During this period, banks and other financial institutions were experiencing increased competition among themselves especially with the emergence of new generation banks. In response, they established budgets for advertising, public relations, sales promotion and managed to set up new department of unit called ‘credit and marketing’. This department was assigned the responsibility of procuring and selling funds by various ways. This is a limited function of marketing. Activities of modern marketing were virtually non-existent.

These activities include marketing information system (marketing research), marketing planning, marketing segmentation, and how to organize marketing activities and control. Of course, other issues relating to produce development, price, promotion and distribution decisions were given little or no attention. Only few banks in Nigeria today could be said to have embraced marketing as full-blown. Onwuchuruba (2003:26) stated that there is still a higher concept of banks marketing that represents the essence of modern marketing.

The issue is not whether a bank has installed effective systems for marketing analysis, planning and control. Any bank, which has achieved sophistication in advertising, friendliness, motivation and market positioning but lacked good system of marketing planning and control has not embraced marketing full-blown. Adoption and application of marketing concept is one way by which the banks and other financial institutions can achieve growth and avoid prevalent distress state that engulfed some of them. This is the only way they can secure for themselves prominent places in the 21st century commerce and industry.

According to Sokan (1998:15) marketing principles are the same for both physical products and services but their applications are quite different. This is because of the nature of services in general and banks in particular. 2. 5BANKS SERVICES AND MARKETING Marketing changes any business, including banking. Substantial changes in banking business have been witnessed in form of fund transfer technologies, structural reforms of financial institutions, and intense competition through the introduction of myriads of banking products, among others.

The rising relevance of marketing in the banking industry expedited the observed changes in banking business. (Osuagwu, 2002:940). The financial institutions particularly the banks are economic decision units established for the purpose of providing financial services to its target market with a primary objective of making adequate returns or profits to investors without neglecting other social objective to the society.

For the overall objectives of prosperity, growth and continued life of the business, banks need to conscientiously structure their services in a way that can cater for the financial needs of not only the present customers but also the prospective ones. It is in the long-term interest of the banks to increase the customers’ confidence. Thus, the need for this makes marketing increasingly important and necessary in today’s banks’ competitive environment and pay particular attention to relevant marketing principles and techniques. Onwuchuruba, 2003:27). Obviously, due to the nature of services in general, which Stanton (1981:572) describes as intangibility, inseparability, heterogeneity, perishability and fluctuating demand, and banks services in particular, marketing in this sector cannot be treated in exactly the same way as for physical products of manufacturing firms. Meidan 1984:02) stated that the banking services have the following characteristics: 1. Intangibility: Banking services, except in particularly instances, meet a general rather than a specific need.

Particularly instances, meet a general rather than a specific need. Particularly benefits are not readily apparent and therefore banks are dependent on getting their message across to the public effectively and ensuring that their image and services are attractive. 2. Inseparability: Because of the simultaneous production and distribution of bank services, the main concern of the marketer is usually the creation of time and place utility, that is, have the services available at the right place and at the right time.

This implies that direct sale is almost the only feasible channel of distribution. But as can be seen later, one way of overcoming the inseparability factor is the use of bank credit cards, whereby the service is transferable. 3. Highly Individualised Marketing System: When selecting channels of distribution, the goods marketer will usually have a marketing system containing several established middlemen. More often than not, such systems are the most efficient. Unfortunately, this is not the case for the banker, who has few traditional channels of distribution.

Hence, the banker is induced to locate branches of his outlets as conveniently as possible. In many bank transactions, a client relationship exists between the buyer and seller, as distinguished from a customer relationship. This would be especially true in the case of many corporate and trust accounts. 4. Lack of Special Identity: To the public, one bank’s service is very much like another. The reason a particular bank or branch is used is often due to convenience. Each bank must find a way of establishing its identity and implanting this in the mind of the public.

As the competing products are similar, the emphasis is on the ‘package’ rather than the product. The ‘package’ consists of branch location, staff, services, reputation, and advertising and, from time to time, new services. As the major competitors offer similar services, the emphasis will be on the promotional aspects, rather than on the inherent uniqueness of a particular bank’s service. This is one of the reasons why banks do very little positive selling but mainly rely on indirect methods. 5.

Wide Range of Products/Services: Banks have to offer a very wide range of products/services to meet a variety of financial and related needs from different customers in different areas. On the one hand, it provides a special one-off management service for an industrial customer and other hand, a retail service covering money receipt, storage, supply and transmission. 6. Geographical Dispersion: There has to be a branch network in any bank of size and scope, in order to provide benefits of convenience and to meet both national and local needs.

Therefore, all services or promotions must have an appeal and wide applications. 7. Growth must be Balanced with Risk: When selling loans, the bank is buying risk. There has to be a well-controlled balance between expansions and prudence. 2. 6 THE BANK MANAGEMENT SYSTEM According to Meidan (1984:04), the bank management system is comprised of four major sets of variable: i. Bank Objectives, ii. Bank environment (or non-controllable) variables, iii. The controllable (or management) variable sets, iv.

Bank’s organization and control variables. 2. 6. 1 Banks Objectives Bank Objectives are in two types: i. Flexible goals: For example, increasing (or decreasing) deposits of certain kinds, increasing (or decreasing) loans of certain type(s), directing customers to certain types of products/services. ii. Fixed Objectives: For example, profitability, high return on investment, achieving certain market share (s), and growth rates, development of certain banks image(s), spread of bank customers types in order to minimize risks and business fluctuation, etc.

A written statement of objectives is still exceptional in banking, but is becoming increasingly necessary. Bearing in mind the need to maintain good business and public relations, the general banking business objective is profits sufficiently high to protect depositors and shareholders. Depositors are of special importance since in the clearing banks they finance 90 – 95 per cent of the assets. The return on investment required by the chief executive will influence the operational managers’ targets; as will planned growth and size.

The latter may not necessarily yield economy, but can sometimes yield competitive advantage. Lastly, comes an increased market share, not only because the objective is larger share of selected customers’ groups, and not of the total market. 2. 6. 2Banks Environment Variable Environment or non-controllable variables are the factors that cannot be effectively controlled by the bank’s management, but they affect the attainment of the bank’s objectives and the way the bank has to make use of its various marketing tools and its organization and control techniques.

The non-controllable variables include foreign exchange regulation (determined by the government or the market forces), inflation, government economic policy, competition (from other banks and financial firms, for example, credit firms, insurance companies, etc), legal systems and regulations, political factors, and similar additional factors that might influence the bank management operations. 2. 6. 3The Controllable Variable The controllable facets of variables in banking are those factors under the control of the bank that can be used to influence the bank’s business activity.

These factors are also called management tools and they can be split into five activity areas: ? Financial management: Deals with issues such as sources and cost of capital funds, management of bank’s cash, tax and risk management, budgeting, costing, auditing, financial control, etc. ? Operations: It is responsible for functions such as planning, scheduling and organization of the various bank special operations, process analysis, automation, security and safety of operation, etc. System and Personal Management: System deal with the rapid recent development in electronic system services introduction, like EFTS (Electronic Funds Transfer Systems) while personnel management deals with issues related to personnel recruitment, selection, training and administration, job and salary evaluations, labour relations, arbitration and mediation, wage systems, fringe benefits, employee services and communications, etc. ? The Business Policy or General Management: Emphasizes on the responsibilities of the chief executives, the bank’s top directors and the board, and top management activities such as establishing the bank’s bjectives, planning and business forecasting, establishing policy, directing and controlling, evaluating branches’ and the bank’s managerial and business performance. ? The Marketing: Focuses its attention on customers’ behaviour, attitudes and segmentation; advertising, communication, promotions and publicity; service development and introduction; pricing of the bank’s services; defining marketing strategies, administering and controlling the marketing programme; marketing research. 2. 6. 4Bank’s Organisation and Control Variable

This is concerned with predicting the outcomes of decisions in form of performance measures, collecting information and data on actual performance, comparing actual performance with predicted performance, and correcting the procedure. 7. THE BANK MARKETING MIX The application of marketing principles in the rendition of banking services may best be discussed via the marketing mix – of products, price, physical distribution and promotions. Every bank must use varying combinations of marketing mix elements to make a service. The elements are inter – related and must be used in varying proportions to serve different markets. 2. 7. Product/Service Okeafor (1993:12) stated that a bank services is a special act or performance like “savings accounts” which is offered to a set of customers. These savers deposit their funds with a bank for safekeeping. They primarily buy safety of their wealth, peace of mind. The savings account may be packaged with high or low interest rates, corporate gifts for opening the account or be entitled to a raffle draw etc. Like any other producer, banks must consistently emphasise the service benefits to customers, create new and modify existing services to meet the changing banking needs of its customer or to enter into new markets.

Product, according to Kotler (1988:445), is anything that can be offered to a market for attention, acquisition, use or consumption that might satisfy a want or need. By this definition, issues like new product development, product formulation, test marketing, launching of new products, product packaging etc, are key areas the development of new products must be customer – driven. Every new product must be anchored on clearly defined customer requirements. Adegboyega (1999:43) stressed that in banking, there are hardly new products in the strictest sense of “new”.

Where there is any, it takes little or no effort for competition to improve on it and render the former obsolete. However, new products represent the lifeblood of a bank if it is to remain competitive. Therefore, notwithstanding the toughness of the task of developing new products, banks must strive hard to bring forth new products. This becomes pertinent in the knowledge that every product (no matter the life span) eventually bows to the influence of competition and stronger forces to settle to a decline and eventually decays. (Wilmshurst, 1978:44).

Examples of new products are WEMA Spot Cash, Western Money Transfer, EDGE Account, Home Link Account, Diamond Bank’s Pay card High Yield Current Account etc. 2. 7. 2Price Adegboyega (1999:46) stated that except in some areas such as fee-based products, the pricing of services is governed by the provisions of bankers’ tariff and the annual government monetary and credit policy guidelines. At the level of strategic business units, however, and in order to enhance a bank’s income –base, a bank has to design its marketing strategies in such a way as to make the best out of the prevailing policy regime.

The price for a bank’s product or service is its value in exchange. It is the sacrifice for the use of bank’s resources and in banking; the price equivalent is interest rate. Interest rates therefore form the mechanism for allocating bank funds and services to potential savers and borrowers. Competitive interest rates will serve a bank better these days. Financial marketing executives make use of the following pricing techniques: ? Cost plus, ? Skim – the –cream, ? Situational pricing, ? Marginal costing, ? Demand – related pricing ? Going rate pricing, ? Negative pricing

The cost plus approach is generally used in the pricing of services while the scope and movements of price in the market place are guided by the forces of competition. Interest rate movements of price in the market place are guided by the forces of competition. Interest rate movements both for deposits and credits since the 1992 deregulation programmes have largely followed the oligopolistic nature of the industry. 2. 7. 3Place (Physical Distribution) Okeafor (1993:13) says that the physical distribution of bank services deals with the place and the ease with which bank services may be obtained.

A bank or branch office location must be selected at an attractive point with easily accessible layout and comfortable designs including parking spaces. Specialised branches with limited service levels may be established in certain places but be technologically coordinated to create access to the comprehensive range of services. This will increase the overall bank sales and sustain its competitive position in the industry. An offensive marketing strategy used by banks in this area is characterized by geographical branch network expansion.

They costar mostly in industrial and commercial centers in the country like Lagos, Kano, Kaduna, Port Harcourt, Onitsha, Ibadan, Aba etc. 4. Promotion According to Ijeafir (1993:13), the main task of promotion is to inform customers about the existence of a bank and its services. This is done regularly since people tend to forget information once acquired as well as to introduce new services. Element of bank’s promotional mix includes advertising, public relation – corporate gifts, sponsorship of civic programmes, donation to specific causes, sports and establishing chair-endowments in universities etc.

Adegboyega (1999:44) stressed that promotion consists of personal selling, advertising, service promotions through the use of give-way items, merchandising etc. Advertising is the dominant aspect of promotion package used by banks. It involves the combination newsprint advertisements, television and radio jingles, billboards and directional signs. A banker on deposit mobilization exercises must learn personal selling techniques. He, the banker must be sharp, knowledgeable and above all pleasantly humble to convince a client to patronize his bank.

Extensive talking must be avoided but a careful understanding of the motives and interests of the client expressed or implied, fears or complaints from his present bank may be used to repackage some standard products. An integrated promotions strategy is equally very necessary to enable a financial institution respond to the developments in the market place. In tough times, such strategy is an imperative in order to aid marketing efforts, widen customer-base and encourage patronage. 7. NEW PRODUCT DEVELOPMENT

The new product development is a viable growth alternative to merger and acquisition, and it is compelling reason for bankers to become adept at the skills of new product development. Currently, the banking industry is undergoing a spate of mergers and acquisitions throughout the country. As geographic restrictions to growth continue to fall, and regional and national banking become either a de factor or de jure reality, the banking industry will continue to equilibrate. This will continue until state and federal regulators begin to impose new restrictions on size, concentration, and market control.

Growth by acquisition and merger will be highly controlled or even, in some cases, eliminated. Banks will be forced to seek new growth strategies. Those banks, which have mastered the skills necessary, to engage effectively and efficiently in new product development will be those banks to take lead. (Reindenbach and Grubbs, :03) As the banking industry finds itself in a more volatile market as a result of deregulation, bankers are turning to the liability side of the business with the increasing interest as a source for much revenues.

Banks realize the revenue – generating ability of the liability side of the ledger. In order to maintain revenue flow, banks must continually update and modernize their deposit product offerings to ensure that they continue to satisfy the needs of their customers. Failure to do so will provide the impetus for consumer disaffection and institution switching. Most bankers do not know whether, or to what extent, an individual product is profitable. In fact, it would not be unlikely to find in any given bank’s product portfolio a number of non-profitable products being subsidized by profitable ones.

This is, part, a result of the way in which most banks currently develop new product offerings. The typical development procedure can best be described as a follow-the-leader-reaction development where one bank sees another bank offer a new product and immediately sets out to copy the offering of the competitor. The problem is that this me-two strategy is oftentimes implemented without regard to the potential profitability of the product or whether there exists sufficient market potential to sustain the new offering. The result is a number of new products which make no contribution to bank profitability.

Continuation of this type of development practice will operate as a drag on bank growth and profitability at a time when most banks can least afford it. 8. MARKETING OF ZENITH BANK PLC SERVICES/PRODUCTS The emerging market place will be ruled by information technology (IT), and only those with appropriate skills – mainly computer skill and selling with thrive. (a)Automation The winning edge that some banks have over their competitors has, in some cases, been the culture of automation, some of the efforts made by the bank in terms of automation include: i. Society for Worldwide Interbank Financial

Telecommunication (SWIFT) Under SWIFT, a bank’s membership allows it to transmit financial message globally within seconds while also receiving a spot confirmation. The SWIFT network system is made up of computer-based centers located around the world and interconnected through telephone leased lines or packet switches. It consistently delivers quantifiable business value and proven technical excellence to its members through its comprehensive messaging standards, security, reliability and availability of its messaging platform and its role in advancing STP.

The guiding principles of SWIFT are clear to offer the financial services industry a common platform of advanced technology and access to shared solutions through which such member can build its competitive edge. ii. On line/Real Time Service This is an electronic based product, which satisfies customers convenience. The product enables customer access to his account balance in various branches of the bank. The Electronic networking of branches through the use of the Very Small Aperture Terminal (VSAT) has further enhanced efficiency of banks leading to greater customer satisfaction.

Customers need not physically visit the branches where they maintain accounts and can obtain a myriad of services ranging from knowing their bank balances to cash withdrawals from other branches of their banks. iii. Home Banking This product enables customers to access their transaction from their offices or homes. Most new generation banks in Nigeria presently offer the product. E. g. Telephone Banking. iv. Zenith Bank Smart Card Scheme The bank is a member of the consortium of 19 banks handling the smart card project, under the brand name, Value card.

It is based on the chip cash electronic purse product implemented using card base 2000 referred to as the world leading multi-application smart card management software from Card Service International (CSI). A smart card could work as both a credit or debit card. (b)OTHER CUSTOMER SERVICES The bank has a strong sales culture, which enables it to cross sell products and services. The Bank has maintained a strong and profitable trend over the past years. Within the past years, Zenith Bank Plc had introduced new products/services to maintain its tradition of product innovation.

Most of these products/services are customised to meet the specific needs of its customers. The products/services were classified as follows: a. Credit Products ? Term Loan ? Overdraft (O/D) ? Commercial Papers (CP) ? Lease Finance ? Import Finance Facility (IFF) ? Export Finance ? Import Duty Payment Line b. Contingent Liabilities/Off –Balance Sheet Financing ? Unconfirmed Lc ? Confirmation Line ? Usance Facility ? Deferred Payment LC ? Bid Bond ? Performance Bond ? Advance Payment Guarantee (APG) ? Bank Guarantee ? Customs Bond c. Treasury Products Fixed Deposit ? Call Deposit ? Individual Retirement Account (IRA) ? Commercial Paper (CP) ? Guarantee Commercial Paper (GCP) ? Bankers Acceptance (BA) ? Treasury Bill (T-Bills) ? CBN Certificate/National Savings Certificate ? Cash Management Services (CMS) ? Settlement Bank for the CSCS d. E-Business Products ? Valucard ? Telelink ? Internet Banking ? GSM Banking ? View Facility ? Online Bill Payment/Automated Direct Payment ? InterSwitch – EazyPay and SwiftPay e. Liquidity/Cash Management Products Collections ? Suppliers Payment Service ? Cash delivery/Cash pick-up service ? Teller Inplant (in cash offices) f. 3rd Party Logistic Providers Scheme ? Key Distributors (KD) Scheme ? Indenting Agents scheme/LPO finance ? Invoice Discounting Facility (IDF) g. Funds Transfer Products ? Western Union Money Transfer ? NIBSS Fast Fund ? Draft Issuance Service (D. I. S)/Flow-line ? ZIB Internal Transfer ? Capital Importation ? Direct Debit Order/Standing Instruction h. Form A Transactions/Invisibles Travellers Cheques (PTA/BTA) ? Remittances i. Investment Banking ? Issuing House and Receiving Bankers ? Fund Management ? SME Finance/Venture Capital ? Project Finance ? Loan Syndication ? Trusteeship/Custodian Banking ? Financial/Business Advisory ? Stock broking j. Special Credit Products (MCP Group( ? US-EXIM Bank facilities ? IFC Trade/Project finance facilities ? ADB (Private sector windows) ? Bank of Industry facilities k. Collection of Taxes l. Private Banking 2. 10THE PROBLEMS OF BANKS MARKETING IN NIGERIA

Onwuchuruba (2003:27) stated that in spite of efforts being made all over the world to embrace marketing full-blown in banks following the revelation that marketing techniques are transferable to the banking services sector, the executives of Nigerian banks have been very slow in adopting and applying marketing orientation in their operations. The reasons adduced here formed the bedrock of major problems of banks’ marketing in Nigeria. i. Comparative to other business functions, modern marketing as a distinct discipline and profession came into existence and recognition in early 1950s.

This is responsible for the late adoption of marketing in many service firms in Nigeria just as it happened in developed countries like U. S. A and Britain. ii. Until recently, banks in Nigeria had been operating in seller’s market. It was easier for them to have customers and deposit mobilization was not a serious problem because workers salaries were paid through the commercial banks network. In fact, their problem was excess liquidity. This kind of situation did not encourage the affected banks to embrace professional marketing. Many banks in spite of their changing business environment are yet to adopt marketing full-blown. ii. Another observable reason is that many top management of banks in Nigeria have professional qualifications in Accounting and Banking with very little or no marketing content. iv. Consequently, even in the face of serious marketing problems arising from the implementation of SAP (Structural Adjustment Programmes) and deregulation policies of the Federal Government, they do not search for and cannot find marketing solutions to some of their operational problems. v. Many banks have erroneous belief that good marketing are for physical products alone and not for intangible services. i. Another obstacle to banks marketing may be described as success – deceit. Many banks seemed until recently, to have been doing well by declaring huge profits even in the face of a general economic decline. This success – deceit has made banks’ executives felt complacent and not to worry about marketing. vii. Majority of banks’ executives see marketing from the narrow perspective of buying and selling funds as reflected in mobilization and dispensation of deposits in their promotional strategies: advertising, publicity and public relations.

Marketing functions are not seen from its broad perspective reflecting efforts to satisfy customers profitably. 2. 11SUMMARY Marketing changes any business, including banking. In Osuagwu (2002:940), substantial changes in banking business have been witnessed in form of fund-transfer technologies, structural reforms of financial institutions, intense competition through the introduction of myriads of banking products, among others.

The rising relevance of marketing in the banking industry expedited the observed changes in banking business. According to Meidan (1984:04), the rising importance of marketing in the banking sector is a function of four major variables, which include increased competition for customers, increased sophistication of those customers, increased technology and the increased cost of meeting customer needs profitably.

In Osuagwu (2002:946), Nwachukwu posits that the deregulation and liberalization of the Nigerian banking industry brought many changes in the Nigeria banking environment such as increase in the number of banks, specialization in the Nigerian banking industry, the prudential guidelines, Decree number 94 and 95 (BOFID), automation in the Nigerian banking industry, the establishment of the NDIC, the abolition of granting credit facilities backed by foreign guarantees, the introduction of stabilization securities, increase in liquidity and minimum reserve ratios, and increase in capital base, among others.

Therefore, in order to operate efficiently and effectively in the Nigerian banking environment, sound marketing strategies are required. Also, sound marketing strategies are required. Also, sound marketing strategies are necessary for Nigerian banks to achieve their many goals, which may include flexible goals and fixed objectives. The performance of banks in the Nigerian banking system did not seem to have been good enough because some banks appeared to have brought dynamism, challenges, competition and growth in the banking sector, while others seemed to have lost some of the confidence which their clients had in them.

This poor condition of some Nigerian banks is an expression of a complex set of interrelated problems and issues. In Osuagwu (2002:946), the causes of bank problems/distress are due to micro-economic factors (bank management) or macroeconomic factors (environmental factors). He also posited that bank failure in Nigeria is a function of mismanagement or such illegal activities as fraud and embezzlement. The survival and growth of Nigerian banks are of substantial interest to government at all levels, the general public, and bankers.

These interest groups generally would like to see a safe; sound, efficient, effective, profitable, and socially – conscious banking system in Nigeria. While these desires are general among the relevant groups, in Nigeria. While these desires are general among the relevant groups, each of the above interest groups would want to weigh these desires differently. For example, government and the general public would like to see a socially – conscious banking system in Nigeria. Bankers, on the other hand, are interested in profitability and safety of banking business.

For Nigerian banks to meet the foregoing desires, there must be well throughout management strategies to ensure survival and growth of banking business in Nigeria. (Osuagwu, 2002:948). Faced with the compelling need to achieve their organizational goals (profitability and growth), Nigerian banks can explore new avenues to achieve set goals and objectives. A variety of approaches can be used to achieve set corporate goals and objectives. These approaches are generally called strategic management, and the thrust on strategic management has given rise to marketing (strategic marketing).

Marketing considerations, together with those of other functional areas of business, play an important role in designing and implementing corporate goals and strategies. Marketing success is a major determinant of organizational success, and the future survival and growth of any organization. (Osuagwu, 2002:948). Nigerian banks need also to be conscious of the environmental factors which impact on marketing which include the economic environment, the cultural environment, the legal and regulatory environment, the competitive environment, among others.

The economic environment has substantial influence on a bank marketing strategy (Meidan, 1984:23). Product, price, promotion and place (physical distribution) are all influenced by the state of the local, state, and national economy. During the periods of expansion and prosperity, the demand for some bank services may be intense, while during the periods of recession the opposite may be the case. The condition of the Nigerian economy and the associated levels and costs of available funds have an impact on the pricing strategies of banks, as well as effect on the demand for banks services.

CHAPTER THREE METHODOLOGY 3. 1INTRODUCTION The design of this research is to investigate the effectiveness of the marketing in the face of the dynamic marketing environment, with a view of developing adequate and suitable marketing strategies in order to achieve the growth and profitability of the organization. Following some logical steps that will enhance the attainment of the research goals and will explain the method of study employed in this research work will carry out this study.

And also, effort will be made to explain the population of the study, sample size, data collection instrument, description of instrument, reliability and validity of the instrument and method of data analysis. 2. POPULATION OF THE STUDY Population is the total group that the researcher wishes to study. It is also called the universe. This study will be carried out among the employees of Zenith Bank Plc, branches in Lagos, Lagos state. This study will concentrate on the managers and officers.

These groups of people will be sampled and data relating to marketing, and the bank’s growth and profitability will be extracted from them so as to know whether the organization truly and adequately implement it (marketing). 3. SAMPLE SIZE These are varieties of research techniques that can be employed in any research work. But in order to ensure that the sample size that will be used is statistically representative of the population and to stay clear of bias and ambiguity as much as possible in the selection procedure, stratified random sampling will be adopted.

One hundred (100) questionnaires will be distributed to the respondents from Zenith bank branches in Lagos only; since a greater percentage of the bank’s branch network are in Lagos. And the researcher is of the opinion that at least 70% of the questionnaire will be returned. 4. DATA COLLECTION INSTRUMENTS The data required for the research study will be generated from primary and secondary sources of information. Primary data is the collection of data from subjects or respondents compared to using data already collected by someone else.

The primary data will be collected through questionnaires that will be administered to managers and officers of Zenith Bank Plc branches in Lagos. The secondary data will be collected from the organization’s news, annual reports and other publications. 3. 5 DESCRIPTION OF INSTRUMENT The questionnaire will be drafted from the research hypotheses and questions, and will be distributed to the managers and officers of Zenith Bank Plc for their responses. The questionnaire is designed to be in two parts. Section A will request information on personal data of the respondents.

Through such information, the researcher will be able to know the caliber of people who have responded, their qualifications and number of years of working experience as well as the department in which the respondent works. The researcher, for easy responses and analysis of data set out in section B of the questionnaire will deal with provision of data from the hypotheses to be tested. In the course of trying to provide answer to the research questions, data that will be generated from the questionnaires will be analyzed, interpreted in a tabular form, and conclusion will be derived. . METHOD OF DATA ANALYSIS The use of chi – square quantitative technique will be adopted in providing answers to the research hypotheses being stated in chapter one of this study. The chi – square test is concerned with establishing whether the discrepancies between the observed frequency and expected frequency are statistically significant, or whether they may be attributed to chance sampling errors or variations in the data that will be employed. The formula is as follows: Chi – SquareX2( O – ? ) 2 ? Where

X2-computed or calculated frequency chi-square O-observed frequency of any value ?-expected frequency of any value 6. LIMITATION OF THE STUDY The limitation imposed on the researcher is finance; the researcher would have extended the survey to other Zenith Bank branches in other states of the country, but due to financial constraints of transportation and accommodation during the survey in other states outside Lagos state where I reside. Another limitation is time, the time of study is short, and hence this poses a constaint to this research work.

CHAPTER FOUR ANALYSIS OF DATA 4. 1 INTRODUCTION The objective of this chapter is to analyse and interpret the data collected for the purpose of this study. To achieve the above therefore, the responses will be tabulated and analysed. Various statistical methods such as cross tabulation and chi square test will be used to present the data for easy understanding and interpretation, and to determine if there is any significant relationship between the variable in each hypothesis, at confidence level of 0. 5. 4. 2 ANALYSIS OF PERSONAL DATA Table 4. 1Distribution of Respondents by Department |Department |Questionnaire Administered |Questionnaire Returned |Questionnaire Retrieved in % | |Finance | 15 | 9 | 11. 25 | |Marketing | 40 | 35 | 43. 5 | |Research and | 20 | 16 | 20 | |Development | | | | |Operations | 25 | 20 | 25 | |Total | 100 | 80 | 100 |

Source: Field Research, 2007 Table 4. 1 shows that11. 25% of the respondents represents the finance department, 43. 75% represent the marketing department, 20% represent the research and development while 25% represent the operation department. Table 4. 2 Distribution of Respondents by Position |Position |Frequency |Percentage | |Top Management Staff | 19 | 23. 75 | |Manager | 29 | 36. 5 | |Officer | 32 | 40 | |Total | 80 | 100 | Source: Field Research, 2007 Table 4. 2 above shows that 23. 75% of the respondents are top management staff, 36. 25% are managers while 40% are officers. Table 4. 3 Distribution of Respondents by Age |Age |Frequency |Percentage | |21 – 25 | 5 | 6. 5 | |26 – 30 | 7 | 8. 75 | |31 – 35 | 16 | 20 | |36 – 40 | 33 | 41. 25 | |41 – 50 | 11 | 13. 75 | |Above 50 | 8 | 10 | |Total | 80 | 100 | Source: Field Research, 2007 Table 4. 3 shows that 6. 5% of the re

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