1.9 Background to the Study
In Nigeria, the banking industry has been experiencing cyclical
movements in its development patterns right from independence in 1960 to date.
As a result of the importance of the banking industry in the economic
development of the country, successive governments in the nation came up with different
policies, programmes, regulations and strategies in the form of financial
guidelines with the aim of improving the performance of the industry. These
guidelines include: regulation, deregulation, liberalization, globalization,
paging of interest rate, consolidation and the like.
In essence, the relevance of any business organization lies in its
ability to develop new product in line with the needs, wants, interests and or
aspirations of the society or community within which it operates. However, changes
in the consumer taste, preferences and aspiration, as well as technological
innovations, open market economy, challenges of globalization coupled with the
new banking consolidation policy aimed at sanitizing the fragmented and crowed
banking industry in the country, have brought in discipline and orderliness in
the sector. However, there is no guarantee that a successful product today will
remain relevant or success in the near future.
However, with deregulation and liberalization policies, the central bank of Nigeria was able to reduce the number of small indigenous banks from 89 to about 25 mega-sized banks, solely to provide a wide range of new product lines, including retail and whole sale banking as well as project financing and other investment services. With stiff competition in the industry, banks must do their best to meet the challenges; hence they must come up with projects or programme that includes: researching new products and or services in order to prosper because it is risky for banks to rely only on their existing products in the face of ever changing technological innovations.
Despite all the financial regulations and policies in the industry, its
performance or contributions to the economy and customer satisfaction is still
quite discouraging and for banks to grow, they must, from time to time, produce
new products that lead to customer satisfaction vis-à-vis huge profit
attainment within the industry. Sanusi, (2010) gave five measures of enhancing
quality of banking in Nigeria. These measures are industry remedial programmes
to fix the key causes of the crises; implementation of risk based supervision;
reforms to regulation and regulatory frame work; enhancing provision for
consumer protection; and internal transformation of Central Bank of Nigeria
The survival and growth of commercial banks in Nigeria depend solely on
their ability to develop new product and or service in order to cope with the
global market challenges, but in the process, care must be taken in order to
avoid producing “dogs” which are neither profitable nor satisfying customer
of the Problem
The introduction of Structural Adjustment Programme (SAP) in 1986 led to
the proliferation many of commercial banks in Nigeria. As pointed by Nigerian
Deposit Insurance Corporation (2009) that by then there were 89 active banks.
The presence of these banks led to intense competition among different banks
within the industry (both old and new generation ones). Also with the coming of
the new generation banks into the scene, their new and sophisticated products
posed a challenge for the old generation banks to adopt to new banking method
in order to survive and grow in the new competitive environment.
Competition in the industry makes the old system of “Arm-Chair” banking
impossible where bankers normally sit waiting for customers to come. For banks
to survive now, they must embrace the “principles of marketing” if at all they
want to survive and remain relevant in industry. They must encourage, persuade,
motivate, attract and influence both existing and potential customers. They
must engage into different promotional efforts such as personal selling,
advertising, sales promotion, publicity, mass selling, public relation,
branding, packaging and offer variety of products in order to capture large
share of the market.
As a result of severe competition, marketing is currently occupying a prominent position in the Nigerian commercial banks where every banker is a “marketer”. This is the reason that led this study of the Assessment of New product development as a strategy for sales growth in UBA Plc, with the aim of finding out how new product development may lead to sales growth in the banking industry of Nigeria by taking UBA (Nigeria) Plc as a case.
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NEW PRODUCT DEVELOPMENT AS A STRATEGY FOR SALES GROWTH, PROFITABILITY AND COMPETITIVENESS IN UBA (NIGERIA) PLC