THE EFFECT OF MARKETING STRATEGIES ON DEPOSIT BANK PERFORMANCE
CHAPTER ONE
INTRODUCTION
1.1 BACKGROUND OF THE STUDY
The purpose of business as asserted
by Peter Drucker is to create customers and provide them with two basic functions of marketing and
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innovation. In today’s intense competitive business environment, these words ring more bells. A well designed marketing strategy can make all the difference between success and failure in the marketplace.
While marketing is commonly associated with consumers and good companies such as Nokia Company,
it would be myopic to restrict the relevance of marketing to such instances alone. Marketing ultimately is
about understanding and shaping behavior (Amitav, 2012). Consequently, banks and other financial
institutions, government, medical and non-profit organization from those that design and sell financial
product to those that implement government policy (i.e. those saddle with reducing drunk driving) have
all found out that a well thought out marketing strategy can be critical to the success or failure of
business in the marketplace. It is almost undoubted that it has become more deeply and widely for global
integration of economy and financial system, presently the international competence of the banks in
Nigeria cannot keep up with the foreign banks. In market economy in which Nigeria economy can be
related, analysis and evaluation of marketing performance is objective request of enterprise, investor and
creditors. The process of evaluating and analyzing marketing performance can reveal the effect of an
enterprise marketing strategies, judge its marketing efficiency, analyze the cause for its success or
failure which is of great significance towards the improvement of enterprise management, enhancing the
effectiveness of marketing decision making (Andy, 2012). Marketing is becoming increasingly necessary
in today’s banking competitive environment, intensified rivalry from other financial institutions has
caused the banks to think seriously about how they compete effectively and increased attention on
marketing strategies and techniques.
The success of a bank depends upon the ability to satisfy customers financial needs. An effective use of marketing strategies is becoming recognized as a vital instrument to a successful banking operation. Traditionally, many service industry and companies executive are not oriented towards marketing and have been slow in adopting various marketing strategies and methods in their activities. The need for a marketing strategy in banks started because of intense competition, not only from other banks, but also from other financial companies, government loan scheme, credit unions, insurance companies, building society etc. Also this competition within and outside the banking sector had resulted into reforming strategies i.e. marketing strategies. Baker (2008) simply defined marketing strategy as a process that can allow organization to concentrate it limited resources on the greatest opportunities to increase sales and achieve a sustainable competitive advantage. A marketing strategy also refer to a strategy that integrate an organizational goal into a cohesive whole, ideally drawn from market research, it focus on the ideal product mix to achieve maximum profit potential (businessdictionary.com (http://businessdictionary.com) 2014). It serve as the fundamental underpinning of marketing plans designed to fill market needs and reach marketing objectives , commonly marketing strategies are developed as a multi-year plans with a tactical plan detailing specific actions to be perform in the current year, however the speed at which the environmental change increases shorten this time horizon (Daker, 2008). Marketing strategies involve a dynamic process i.e. It is partially planned or sometimes unplanned. Marketing strategies involve a careful scanning of the internal and external environment (Hausman, 2000). The internal environment factors to be scan include the marketing mix (4P
s) performance analysis and strategic constraint. External environmental factors
include customer analysis, competitor analysis, target market analysis as well as evaluating the element
of technological, economic, cultural, or political/legal environment that are likely to influence the
organization success. Marketing strategy is often drawn from marketing research. A marketing research
is a systematic gathering, recording and analysis of data about issue relating to marketing, product and
services, the goal of marketing research is to assess how changing elements of the marketing mix
impacts customers behavior.
An effective marketing strategies i.e. process of designing sound portfolio of business and product that
is best for the company (i.e. deposit banks) usually help to determine the organization performance. The
performance of deposit bank or any organization can be measure in terms of its effectiveness, efficiency,
market share, liquidity and profitability; these tools are used by organization to determine the impact of
marketing strategies on its performance. Organization performance is a major tool use to determine the
success, growth capability of the organization, which in turn ensures survival of the organization. The key
function of marketing strategy is often to keep marketing activities in line with the overarching mission
statement (Baker, 2008).
After completing the scanning process, a strategic plan will be develop to identify business alternatives,
establish challenging goal and determine the optimal mix to attain these goal. The marketing mix consist
of the 4ps of product price promotion and place and the additional 4p
s of physical evidence, process,
people and planet (environment).
Effective marketing strategies involve the use of different strategy such as promotional strategy
(e.g.advertising, personal selling, sales promotion, communication etc.), product strategy (branding and
packaging, customer satisfaction, product design, specification, reliability, and after sales service),
pricing strategy (discount, bonuse, skimming price etc.), distribution strategy, (channel of distribution,
transportation location etc) mega marketing strategy (i.e the use of economic, psychological, political
and public relation skills,) etc.. These tools are geared towards strategizing the organisation toward
improve and enhanced performance.
This research work however will tend to evaluate the impact of marketing strategies on the performance
of the organization with a focus on the deposit banks in Nigeria.
1.2 STATEMENT OF THE PROBLEM
It has been observed that bank services are not necessarily provided to suit the needs of customers but
to push services to the customers with the hope of profit. In the application of marketing strategy, there is
absolute negligence of customer in the scheme of things, most of the problems encountered in service
organization stems from inadequate knowledge of marketing methodology, application and at the same
time qualification and staff attitude towards customer could be a factor in the slow development of
marketing in banks.
Quality customer service also observed to be lacking in most banks as customers spend
unnecessary time and hours waiting in the queue to be served or attend to, this sorry state can be seen in
terms of a situation where a customer have to wait for about averagely of 1-2 hours before been attend to.
The current competition in the banking sector due to the re-organization and the restructuring of the
banking sector in Nigeria had also bring about the need to use marketing strategies for improving
performance in terms of attracting customer to the organization and hence increase the market share. For
instance, the apex bank (CBN, 2014) recently advice deposit banks to adopt an efficient and effective
marketing strategy not for profit motive alone but for customers satisfaction, which hence can improve
the service delivery in the banking sector.
Effective advertisement is also lacking in the contemporary deposit banking system which has also take a
paramount and salient feature in determining the survival of bank among its competitors. Most of these
banks failed to choose an effective medium of advertisement as one of the strategic marketing process to
counter their competitors in the banking industry.
Similarly, the wrong application of marketing strategies on a certain segment of the market were such
application require a careful use of the marketing mix had also been observed as one of the limiting
factors against the achievement of an improve performance in the banking sector, for instance, the 4ps
(Product, Place, Price and Promotion). Most deposit banks performance has been hindered because the
failed to conspired and placed high importance to these concepts.
1.3 RESEARCH QUESTIONS
In line from the problem stated above, this research work is design to answer the following
specific questions;
Is quality customer service of bank a major consideration in customer’s choice of deposit bank?
Does intensive advertising have significant impact on the deposit bank performance?
Does wrong application of market strategy affects deposit banks performance?
1.4 RESEARCH OBJECTIVES
Every research work is tailored to achieve certain objective, but for the purpose of this research,
the following objectives are to be attained:
To determine if quality customer service of bank a major consideration in customer’s choice of
deposit bank
To determine if intensive advertising have significant impact on the deposit bank performance
To determine how wrong application of market strategy affects deposit banks performance?
1.5 STATEMENT OF HYPOTHESES
Asika (1991) describe hypothesis simply as a tentative statement about relationship that exists between
two (2) or more variables, a conjectural statement about relationship that needs to be tested and
subsequently accepted. Below is the hypothesis that constitutes the bottom line of this research with
regards to the study objective.
Hypotheses One
Ho: Quality customer service of a bank is not a major consideration in customer’s choice of deposit bank.
Ha: Quality customer service of a bank is a major consideration in customer’s choice of deposit bank.
Hypotheses Two
Ho:Intensive advertising in deposit banks does not have significant impact on the deposit bank
performance.
Ha: Intensive advertising in deposit banks have a significant impact on the deposit bank performance.
1.6 SIGNIFICANCE OF THE STUDY
In Nigeria, deposit banks are very important because they are responsible in conjunction with the central
bank of Nigeria (CBN) for the supply and redistribution of money in the economy.
This research work is of immense importance to marketing managers as it serve as a reference for them
in terms of finding solution to most problems that hinder the development of banking service. The
research is also of importance to the staff of the bank (Guaranty Trust Bank) as it provide and empower
them on how to improve their services rendered to customer and to market these services better.
The study is also important to the management of guarantee trust bank and other banks as it will give an
insight into some of the problems that retard profitability, efficiency, and effectiveness which bring about
low performance level.
Being an academic research, the study will be of great importance to the academic community as it will
contribute to the existing knowledge in the area of marketing strategies, other researcher will also benefit
from this research work as it will enhanced their knowledge , perception and understanding of marketing
strategy concept. The research will also serve as a basis for further research into marketing variables that influence performance.
THE EFFECT OF MARKETING STRATEGIES ON DEPOSIT BANK PERFORMANCE