CHAPTER ONE
INTRODUCTION
1.1 BACKGROUND
TO THE STUDY
Marketing is the process of planning and
executing the conception, pricing, promotion and distribution of ideas, goods
and services, organization and event to create and maintain relationships that
will satisfy individual and organizational objectives. It is fundamental to
business growth. It basically includes getting goods and services to the final
consumer satisfactorily.
The Nigeria banking sector has changed
tremendously since the introduction of the Structural Adjustment Programme
(SAP) on 1st July, 1986. Prior to this period, most Nigerian banks
engaged in an effort aimed at encouraging certain classes of customer resulting
in rejection of deposits or accepting them on dictated terms due to the fact
that there were few banks to render services to a considerably large numbers of
customers which led to a decline profit volume.
However, the period between the SAP and
now has witness various amendments of banking laws and policies ranging from
BOFID 1991, to universal banking policy of 2001, various increased in the
capital base e.t.c. these changes have therefore necessitated the need to find
a way of promoting banking services, which is possible with the impact of
marketing strategies in the banking sector.
It is surprising that banks have not
been able to come up with a competitive and comprehensive approach for
marketing of banking services and product. A close look at the recently
concluded re-capitalization process showed evidently the above assertion. This
process witnessed what is called “Aggressive Marketing” which is not a replete
of what banking stands for in terms of integrity and utmost good faith.
The trend of the introduction of
marketing department (marketing strategies) in banks is a welcome development
and has made arm-chair banking part of the history of the banking sector. Bank
marketing was thus defined as “that part of banking services profitability to
selected customers”. The need for marketing in banks evolved from the intense
competition from not only rival banks but also non-financial institutions.
Staffs are placed on target to be achieved and are compensated or promoted
using their ability to or not to meet their targets.
However, customers should be at the
forefront in terms of the banks planning and corporate thinking. An organization
cannot be talking of profit without considering the customers patronage that
yields that profit. The strategic or corporate planner therefore has to take
cognizance that the survival of a business rest solely on the customer. It can
be seen that the relevance or importance of marketing to the banking industry
cannot be over estimated.
The banks needs to make adequate returns
because they are accountable to their shareholders who have invested with the
purpose of receiving good returns. Also, the substantial cost incurred in the
day-to-day operation must be sufficiently covered from the profit earned. For
any bank therefore to meet these needs, the bank needs to make adequate
returns. Meeting these needs is termed maximizing the shareholder’s wealth.
1.2 STATEMENT OF THE PROBLEM
Despite the importance of marketing
strategy in the banking industry, there is a problem in their financial
services and activities with particular reference to First Bank of Nigeria Plc.
During the era of arm-chair banking, the
banks were very few and patronized by the indigenous people with no option, but
following the increment of indigenous ones between 1945 – 1960 and the recent
re-capitalization of banks’ capital base to N25billion has necessitated a dire
need for banks to take marketing of their products very seriously. It is
obvious that competition amongst banks would increase and as such there is need
for real marketing strategies to be applied to further professionalize the
industry.
It is believed that banks with more
funds would be well positioned to become one of the leaders in the dynamic and
competitive sector and marketing plays a pivotal role in deposit attraction and
sourcing of funds.
1.3 OBJECTIVES OF THE STUDY
The general objectives of the study is to
determine the impact of marketing strategies in Nigerian banking industry and
how they are used to attain stated objectives. This study will evaluate impact
of marketing strategies in relation to external factors operation and proffer
solutions based on the data collected and the scope of the researcher.
Other
specific objectives of this study include:
1.
To examine an existing marketing principles and theories.
2.
To examine product marketing strategies of banks in relation to external
factors.
3.
To evaluate how these strategies has been in achieving their objectives.
4.
To examine the associated constraints in the incrementation of these marketing
strategies.
5.
To make necessary recommendations for an efficient banking policy.
1.4 SIGNIFICANCE OF THE STUDY
All organizations are established to
accomplish their set objectives; therefore, banking industry is no exception.
For some of these set objectives to be attained, they must be converted into
marketing objectives which calls for the development of a clear cut marketing
strategy and well thought supporting programmes for their attainment.
The research work that has been done in
the past on the marketing strategy to bring out and justify the importance of
the study is not much.
However, it is important to note that
with the present stiff competition among the banks, the researcher saw the need
for the present day banks to adapt and be involved in marketing strategy.
1.5 SCOPE OF THE STUDY
This research work was
restricted to commercial bank with reference to First Bank of Nigeria Plc as a
case study, and only First Bank of Nigeria Plc, Ilorin branch was used for the
purpose of the study, since the bank is making use of the policy that affects
all the branches operation.
1.6
PLAN OF THE STUDY
This research work
comprised of five chapters and all chapters were presented in a logical and
sequential mode as follows:
Chapter one contains
background information, statement of the research problem, objectives of the
study, significance of the study, scope of the study, plan of the study and
definition of terms (keynotes).
Chapter
two contains the review of some related literatures on marketing strategies
written by some authors and some other researchers on marketing strategy, scope
and components of marketing strategies. It also studies the marketing
strategies in banking industry, marketing research and the summary of the
chapter.
Chapter
three deals with research methodology which is made of history of First Bank of
Nigeria Plc, Ilorin branch, sampling size, source of data collection and method
of data analysis, research hypothesis.
Chapter
four and five dwell on analysis and presentation of data and summary,
conclusion and recommendation respectively.
1.7 DEFINITION OF KEY TERMS
MARKETING:
This
was defined by (Peter Drucker, 1973) as human activity directed at satisfying
need and wants through exchange processes.
However,
(Wroe Anderson, 1976) equally defined marketing as individual and
organizational activities aimed at facilitating and expediting exchanges within
a set of dynamic environmental forces.
MARKETING
CONCEPT: This is a philosophy of business that states the
customers’ want-satisfaction is the economic and society justification for a
firm existence. It stresses that the emphasizes on all business activities
should be focused or geared towards the satisfaction of the customers.
MARKETING
ENVIRONMENT: This refers to all factors and forces
both internal and external that influences the marketing decision making. The
internal forces are controllable which includes the organizational structure,
the 4M’s i.e. Man, Money, Machine and Materials.
However,
the external forces which are uncontrollable falls outside the firm, constitute
the greatest opportunities and threats to the firm. These include economic
condition, socio-cultural influences, competitors, customers, political and
legal environment, international influences, technological factors e.t.c.
PRODUCT:
A
product can be an idea, a service, a good or any combination of these three. It
could also be defined as anything that can be offered to the market for
attention, acquisition, use or consumption that will satisfy a need. This
implies that product include physical, objects, services, persons, places,
organization and ideas.
MARKETING
STRATEGIES: This is a written plan, usually
comprehensive describing all activities involved in achieving a particular
marketing objective and their relationship to one another in both time and
magnitude, it will include short and long term sales forecast, production and
profit target, pricing policy, promotional and selling strategy, staffing
requirement as well as the selected marketing mix and expense budget.
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