The Effect of Marketing Strategies on Deposit Bank Performance
Chapter One
Objectives of study
- To examine the relationship between marketing strategies adopted by the commercial banks and profitability.
- To examine if lower cost of commercial bank services increase customer patronage.
- To investigate if availability of variety of bank deposit services promote customers satisfaction.
- To assess if availability of more branches, ATM points increase commercial banks profitability.
- To investigate if effective mutual interpersonal relationship of the account officer (commercial banks‟ Marketers) promote customers‟ satisfaction.
CHAPTER TWO
REVIEW OF RELATED LITERATURE
Conceptual Review
Marketing Strategy
Marketing Strategy is the marketing logic by which the business unit hopes to achieve its set marketing Objectives. It consists of specific strategies for target markets, positioning, marketing mix and marketing expenditure level (Gray, 1986). Marketing strategy is the activities geared to the needs of consumers or clients and also to the strategy being used by competitors. Borden (1995) put forward that marketing strategy refers to the appointment of effort, the combination, the design and the integration of the elements of marketing into a programme or mix which on the basis of an appraisal of the market forces, will best achieve the objectives of the company. Stanton (1994) opines that marketing Strategy comprises of (1) defining and analyzing a target market and (2) creating and maintaining a marketing mix which would be appropriate for the target market. Marketing strategy involves the pricing strategy which determines the type of customer that the company will attract and any pricing error can effectively cancel out other marketing mix decisions. Price strategy can either be full-cost or variable cost price strategy (Kerin and Peterson, 1990). Gilligan and Pearson (1992) posit that pricing strategy can be categorized as cost oriented and market oriented. Product strategy involves the development of product and services which satisfy customer and client needs and wants beneficially (Achumba & Osuagwu, 1994). The ever changing nature of research and development (R & D) activities makes product strategy an important dimension of marketing strategy (Mathew et al 1964). Baker (1993), Major (1977) opined documented that “Price” is the price of product, “Promotion” is the promotion of Product; “Physical Distribution” is the distribution of product. Considerable efforts must be paid to product and services to be offered to customer (Kent, 1984). Physical distribution Strategy involves series of marketing activities through which tide to or control of a product or services or idea is transferred from producers or service providers to customers, clients, and business users. Promotional Strategy involves marketing communication. Marketing communication are those messages that deal with buyer – seller relationship (Crane, 1972). Farayola and Adeyanju (2001) asserts that marketing strategy is the total directional thrust of the company, the how to of the marketing plan. In marketing, the objectives are what you want to accomplish while the strategy determines the method. Achumba and Osuagwu (1994) documented that marketing Strategy involves how a particular marketing objective is to be achieved and emphasized that the following are the types of marketing strategies to achieve objectives; pricing, distribution, promotion, product among others.
Deposit banks Profitability
Deposit banks Profitability: a common yardstick employed to measure deposit banks performance is net income or profit after tax (PAT). It doesn’t totally serve the purpose of measuring how effectively banks are functioning in relation to its size and doesn’t really reflect its asset efficiency (PWC, 2012). Profitability based measurement on the other hand serve as a more robust and inclusive means to measure the performance of banks by measuring the extent of operational efficiency as well as capturing the degree of bank‟s diversifying earnings through non-interest income activities (PWC, 2002). Guru et al (2002) as cited in Mustapha and Bassam (2010) documented that the determinants of deposit banks profitability can be classified into two main categories which are management controllable and the external determinants which are beyond the manipulation of management of deposit banks. Internal determinants are factors that are mainly influenced by the deposit bank‟s management such as the level of liquidity, capital adequacy, reduction in asset and capital risk, operational efficiency and the expense & cost management. The external determinants of deposit banks profitability are market concentration, market share, and competition, macro-economic conditions like GDP, income, consumption or aggregate demand Guru et al (2002).
CHAPTER THREE
RESEARCH METHODOLOGY
Research Design
This research work used Survey research design. This permitted the study to gather the data with the use of questionnaire. The whole commercial banks in Ogun-State are the population of study. In an effort to ensure high level of representation the officers and customers were selected base on MultiStage and Simple random sampling procedure.
Sources of Data
Both secondary and primary source of data were used in the study, questionnaires were mainly used to obtained the primary data and the sources of secondary data consists of textbooks, published journals, conference and research working papers.
CHAPTER FOUR
ANALYSIS OF DATA AND INTERPRETATION
Results
320 Questionnaires were administered and 303 were retrieved indicating 99% of the distributed questionnaires were responded to. Out of these 303 questionnaires, 1was invalid. This indicates high degree of response. Table 1 below presents the questionnaire retrieval analysis.
Table 1. Questionnaire Retrieval Analysis Table
CHAPTER FIVE
SUMMARY, CONCLUSION AND RECOMMENDATION
Summary of the Findings
Having empirically analysed the responses descriptively with one sample t-test, and chi-square statistics, the study finds that 1) operation of varieties of accounts (Products development) to suit the customers‟ peculiar needs doesn‟t significantly increase deposit banks profitability. 2) Lowering cost of deposit bank services significantly increase customer patronage. 3) That availability of variety of bank deposits significantly promotes customers satisfactions. 4) The proliferation of branches and ATM points in the geographical disperse state of Ogun-state doesn‟t brings about increase in deposit banks profitability in Ogun State. The reason for this might not be unconnected to the fact that given the dispersed geographical nature of the state, provision of more branches and the ATM machines might be adding more to the cost than the income that will be generated from the additional investment. 5) The assignment of banks marketers to each customer as their various account officers is the right action in the right direction. This will go a long way in increasing the customer‟s satisfaction by the deposit banks. The study ultimately finds that the marketing strategies adopted by the deposit banks in Ogun-State have significant impact on the performance of the banks.
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