Advances
In
Management
Journal
of
Department of Business Administration
University of llorin, Ilorin, Nigeria.
A Publication of the
Department of Business Administration
University ofllorin, Ilorin.
Nigeria.
ISSN: 0795-6967
Journal of the Department of Business Administration
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Journal of the Department of Business Administration
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Journal of the Department of Business Administration
iv
CONTENTS
Page
1.
2.
3.
4.
5.
6.
7.
8.
10.
12.
13.
14.
15.
16.
17.
18.
19.
20.
Empowerment as a Strategy for improving Staff - Management
Relationship in an Organization: an Overview
—
Bello M. L........................................................…………
Industrial Conflict And Trade Unionism in Nigeria
—
Adebisi, Moses Adesola……….......................................
The Roles of Management on Distressed Bank in Nigeria:
An Appraisal
—
Dr. J. A. Bamiduro................................………
A Goal Programming Application in the Education Sector with
Illustration From Kwara State, Nigeria.
—
A. Ibiwoye..............
Financing Human Capital Development For Economic
Development in Nigeria: A Perspective
—
Gafar. T. Ijaiya and Mufutau A. Ijaiya...............……….
The Impact of Compensation on Workers' Motivation: A Case
Study of Kwara State Civil Service —
Umar Gunu.......................…
Privatization: The Ultimate Remedy For The Poor Performance
of Public Enterprises in Nigeria
—
D. O. Elumilade............…….
Using Budget After the Fact as an Auditing tool For Management
Performance in Nigerian Manufacturing Industry
—
Sola Fatokun.......................................................……….
Indigenous Governance of Villages and Cities in South —
Western Nigeria: A Case Study of Ipetumodu
—
Mrs. I. O. Fayomi................................................……….
The Evolution of Information Technology and Auditing Practice: A Treatise
—
Dr. J. J. Adefila...................................................………..
Management of Foreign Exchange Risks in a Selected Commercial
Bank in Lagos in Lagos State, Nigeria.
—
Adetayo J. O.,
Akindele R. I. And E. A. Dionco -Adetayo......................................……….
Labour - Management relations in A Democratic Dispensation
—
Dr. J. A. Adeoti..................................................…………
An Evaluation of customers' Bank selection decisions in Nigeria:
Kwara State evidences
—
Ajayi Michael Adebayo..................…..
Pricing of transport services: A comparative analysis of public
and private operators in llorin
—
Kasum Abubakar Sadiq............
Ratio analysis as a measure of performance in the banking industry
(A case study of selected banks)
—
Abdulraheem Abdulrasheed..……………………......……
Strategic Role of Marketing in the Nigerian Banking industry
—
Dr. J. O. Olujide & Aremu, Mukaila Ayanda..............….…
Standardization of International Marketing Programmes and
Practices Evidence from high Risk Market Environment
—
Dr. A. L. Badmus & Dr. J. A. Oladipo...........................…
The Design and Development of an Action Learning Programme
to Develop Entrepreneurial Skill —
Dr. (Mrs.) S. L. Adeyemi........
1
11
18
28
33
42
50
60
69
82
88
98
107
117
130
141
149
160
Journal of the Department of Business Administration
141
STRATEGIC ROLE OF MARKETING IN THE
NIGERIAN BANKING INDUSTRY
By. Dr. J. O. Olujide & Aremu, Mukaila Ayanda
Department of Business Administration, University Of llorin, llorin.
ABSTRACT
Competition was more or less unknown in the immediate past banking
era, there was little or no need for marketing strategy which include,
innovation, product development, public relation, promotion, and
marketing research. The banks then concentrated mainly on advertising
as their only marketing strategy. The trend in the banking industry in
recent times provides an interesting example of a service industry that
has in the past paid very little attention to the development of strategic
marketing for marketing banking services.
The objective of this study is to examine the relevance of marketing
strategy as a tool for business survival and also to suggest the various
marketing strategies for the banking industry- so that their objectives
can be achieved. The study was based on information collected from
selected banks in Nigerian banking industry. Data collected were
analyzed using statistical summarization technique and contingency test
of chi-square. Findings revealed that marketing strategy- development
and implementation are important for continuing growth and survival of
business organizations in this volatile Nigerian marketing environment.
INTRODUCTION
Marketing strategy is increasingly been adopted in virtually all the sectors of the
economy, particularly the service sector. Marketing strategy has been a major determinant
of any organization's short run and long run success and differential advantage in any
marketing environment. The need for marketing strategy in any organization can not be
over emphasized, strategy is particularly important in the banking industry in Nigeria
today because of the volatility, highly competitive and the turbulent nature of the
marketing environment. Therefore, each of the banking institutions must use marketing
strategy to develop a competitive advantage.
The role of marketing strategy in the organisation is to assist in proffering
alternative solutions to the problems encountered in the marketing of their services.
Thus, the success and differential advantages in marketing of banking services
ADVANCES IN MANAGEMENT
Vol. 4 No. 1 (2004)
(A Journal of Department of Business Administration, University of llorin, llorin Nigeria).
Journal of the Department of Business Administration
142
could be attained when an organization can determine the needs and wants of the
customer and directs its marketing effort towards those needs and wants.
In the light of the foregoing, this research work is designed to examine the role and
contribution of strategic marketing to performance in the banking industry.
OBJECTIVE OF THE STUDY
The major objective of the study is to examine how selected banks have used
marketing strategy as a tool of competition in the volatile Nigerian marketing
environment.
LITERATURE REVIEW
General Motors first practiced the business philosophical strategy that emerged
in the market place in the 1950's. It starts with the identification of need it is a long-term
commitment with many binding and limiting requirements. This concept therefore places
the organization's product or service in a dynamic situation in which the organization has
to keep scouting the environment to see whether its products or services are still
satisfying a need, and to know how they are coping with emerging needs of the consumer
(Kotler, 1997).
MARKETING STRATEGY
In recent years, the idea of strategy has received increasing recognition in
management literature. Series of publications have appeared dealing with product line
strategy, marketing strategy, diversification strategy, and business strategy. They also
suggested appropriate changes in the product/service strategy based on the economic
climate and business cycle (CuILwick 1975, Hannal et al 1975). This interest grew out of
a realization that an organization needs a well-defined scope and growth direction, that
objectives alone do not meet~this~Beed but requires additional decision rules in order to
enable an organization to have orderly and profitable growth. This kind of arrangement
and guidelines has been defined as strategy.
Kotler (1996) defined strategy as "the broad principles by which the business
units expect to achieve its marketing objectives in a target market. It consists of basic
decisions on total marketing expenditure, marketing mix and marketing allocation."
Duro (1999) posited that the most successful companies are those that take
strategic marketing seriously and strive very hard to have competitive edge or advantage.
Marketing strategies match products and services with customer needs, decide where and
when to sell and promote products and set prices (Stoner 1989). The approaches to
marketing strategy depend on:
(1)
Whether the product is new or already established.
(2)
Whether the company is addressing existing customers or is trying to attract new
ones.
Thus, marketing strategy is a set of objectives, policies and rules that guide the
organization's marketing effort over time. This involves response to changing
environment and competitive conditions employing all resources of an organization
towards attaining the desired goals in terms of sales, pricing and distribution. Marketing
strategy statement comprises of two elements: Marketing target and marketing mix. They
comprise of the following ingredients:
Journal of the Department of Business Administration
a.
b.
143
Sales promotion
Advertising media
Blue (1984) defined marketing strategy as a major plan or method for achieving
major objectives or goals; he further said that tactic is the plan or method devised to
implement the strategy.
The total environment in which the company functions best explains marketing
strategy. The business exists like a living organism in an environment that constantly
changes and oblivious of the very existence of any particular company. In order to adapt
to this changing environment, the company must also need to change.
According to Sobowale (1997) Strategy can be looked into from another angle,
which is the deployment of human and financial resources against competitors in the
pursuit of goals and objectives determined by the leaders of business enterprises,
organisations, and even nations.
He argues further that marketing strategy embraces decisions that involve the
kind of company the organisation wants to be and the sort of competitor the company
wants to compete with.
STRATEGIC MARKETING PROCESS
A strategy is a unified, comprehensive, and integrated plan that relates the
strategic advantages of the firm to the challenges of the environment. It is designed to
ensure that the basic objectives of the enterprise are achieved through proper execution
by the organization (Lawrence and William 1988).
Charles and Gareth (1998) define strategy as a specific pattern of decisions and
actions that managers take to achieve an organization's goals. Thus, majority of
organizations usually have well defined goals in order to achieve superior performance.
From the above, a strategy can be defined more precisely as the specific pattern of
decisions and actions that managers take to achieve superior organizational performance.
Nigeria Financial Review (1998) also defined strategy as a proposed action or
sequence of actions intended to have a far-reaching effect on the entity's ability to achieve
its objective. It is a blue print of all the important entrepreneurial, competitive and
functional area actions that are to be taken in pursuing entity objectives and positioning
that entity for sustained success.
Strategy describes the decision-making rules governing the direction of growth
and profits of an organization's business. In the absence of strategy, there will be no rules
to guide the search by the company for new opportunities, there will be a high risk of
making bad decisions and there will be lack of control over the overall pattern of resource
allocation.
Strategic marketing process is thus a managerial process of analyzing market
opportunities and choosing marketing position, programs and controls that create and
support viable business that serve the company's purpose and goals. It involves planning
the future destiny of marketing, it is highly relevant for any organization that intends to
focus on the future rather than the present or past strategies and activities.
Journal of the Department of Business Administration
144
DESIGNING MARKETING STRATEGY
Developing marketing strategy involves a realistic assessment of the weight of
an organization's strengths and weaknesses against the opportunities and risks that exist
in the market place. There are three activities a company needs to complete in order to
develop a marketing strategy;
a.
Determine the desired market position.
b.
Select a growth strategy.
c.
Choose differentiated, undifferentiated, or concentrated marketing.
It is generally believed that organizations in the service sector have been slow to
adopt a strategic approach to their marketing activities. There is increasing evidence to
suggest that the strategic element of marketing has become more prominent in the service
organization (Ennew, Watkins and Wright 1996).
In all organizations, strategies are developed at several levels Corporate strategy
deals with the overall development of an organization's business activity while marketing
strategy focuses specifically on the organization's activities in relation to the markets
served.
According to Ennew, Watkins and Wright 1990, there are two forms of
strategies: deliberate and emergent strategy. The concept of deliberate strategy is based
on the notion that strategy is a process; it is assumed that strategy exists as a result of
consciously planned activities. Emergent strategy on the other hand is based on the notion
that strategy is a pattern, in other words, it is the activities and behaviours which develop
informally but fall into some consistent pattern.
It should be noted that strategy is not just about being efficient, but it relates to
doing a task well while the effectiveness component simply relates to doing the right task
having the right product in the right markets at the most appropriate time In designing
successful marketing strategy, personnel resources are needed. This is to ensure that
suitable and capable person man sensitive, technical and managerial position.
In concluding this section, we want to underscore the fact that the effectiveness
of organizations will depend on their ability to respond positively to their environment
where they operate. It is also worth emphasizing that the concept of strategy has a
dynamic component; it implies effectiveness and efficiency, but it also implies
responsiveness in developing awareness to environmental change and identifying
appropriate and effective reaction to that change.
METHODOLOGY
This study focuses on four banks as case study. The sample size comprises of
one hundred and twenty (120) personnel of the case study. A total of one hundred and
twenty questionnaires were administered out of which one hundred and eighteen were
returned. This represents 98.3% returned rate of the administered questionnaires.
The researcher utilized both primary and secondary data. The primary source
includes the administration of questionnaires and interview with the staff of the selected
banks. The questionnaires were administered to the personnel of banks that carry out
marketing functions.
Journal of the Department of Business Administration
145
The questionnaire is divided into two sections. Section A seeks to elicit
responses on personal data of the staff while the second part examines the marketing
strategy of the banks. The general effect of the questionnaire is to examine the impact of
marketing strategy on the operations and performance of the selected banks. Data
collected were analyzed quantitatively using simple percentage and contingency test of
chi-square.
RESULTS AND DISCUSSION
This section presents the results of the data analysis.
Table 1: Distribution of responses on personal data of respondents
Section A
Personal data
1
Sex:
Male
Female
2
Age: Under 21
21-30
31 -40
41 -50
51 and above
3
Marital Status: Single
Married
Divorced
4
Length of service:1 - 5 years
6-10 years
11-15 years
16 and above
SECTION B
5
How does your bank create
awareness of its services
(a)
Television Advert: Yes
No
(b)
Radio advert
Yes
No
(c)
Newspaper advert: Yes
No
(d)
Poster/Bill board Yes
No
6
Who determines marketing
strategies of the branch
— Bank management at H/Q
— Branch management
— Consultant
Number
85
33
0
19
66
33
—
39
79
—
31
68
19
—
Percentage
72.0%
28.0%
0
16.1
56.0
28.0%
—
33.1
66.9
—
26.3
57.6
16.1
—
Code
1
2
1
2
3
4
5
1
2
3
1
2
3
4
98
20
104
14
91
27
85
33
83.1
16.9
88.1
11.9
77.1
22.9
72.0
28.0
1
2
1
2
1
2
1
2
52
39
27
44.1
33.0
22.9
1
2
3
Journal of the Department of Business Administration
How will you rate marketing
effort of the bank
—
Excellent
—
Good
—
Fair
—
Poor
8
Marketing strategy has
contributed to the bank survival
—
Strongly Agree
—
Agree
—
Disagree
—
Strongly Disagree
—
Uncertain
Source: Field Survey 2003.
146
7
39
59
20
—
33.1
50.0
16.9
—
4
3
2
1
46
51
7
0
14
39.0
44.1
5.9
—
11.9
4
3
2
1
0
The table above shows that from the 118 respondents, 85(72.0%) were male
while 33(28.0%) were female. This is an indication that males dominate the operation of
banks in Nigeria. The table also indicates that respondents are matured because about 99
(84.0%) of them fall between 31-50 years of age. This is an indication that their
information is reliable and dependable.
More also, 79(66.9%) of the respondents are married while 39 (33.1%) are still
single. As revealed from the table 31 (26.3%) of the respondents have spent between 1 to
5 years in the bank while 68 (57.6%) have spent between 6-10 years; only 19 (16.1 %) of
the respondents spent above ten years. However, none of the worker had spent more than
15 years. One can conclude that the fact that most of these respondents are still in (3140) age group might account for the few years of wrong experience.
As regards the method of creating awareness by the banks about 98(83.1%) of
the staff agree that is the most effective means while 20(16.9%) say 'No'. 104(88.1%; of
the respondents agree that radio advert is the most effective while 14(11.9) respondents
disagreed. As regards newspaper and poster about 91(77.1%) and 85 (72.0%) respondents
respectively are in support of the two promotional tools while 27 (22.9%) and 33(28.0%)
are not in support of the tools.
With respect to who determines marketing strategies, about 52(44.1%) said that
the management at head office determines it while 39(33.0%) responded that it is being
determined at branch level while 27i22.9°6) respondents said that is determined by
individuals and groups outside the organisation such as consultancy firms. This shows
that the local branch is not the major determinant of marketing strategy in their branch. In
the rating of marketing effort of the banks, 39(33.1%) of the respondents rate it as
excellent, 59(50.0%) respondents rated it as 'good' and 20(16.9%) rated the marketing
effort as being fairly adequate.
The table also shows that about 46(39.0%) of the respondents strongly agreed
that the continued survival of the banks depend on the application of marketing strategy
while about 51 (44.1 %) agreed that the development and implementation of marketing
strategy has contributed to the continued existence of the banks. Only 7 respondents
disagreed, and 14 respondents had no opinion i.e. they did not make any decision.
Journal of the Department of Business Administration
147
TESTING OF THE HYPOTHESIS
Ho:
The development and implementation of marketing strategy have no relationship
whatsoever with the survival of the bank.
Hi:
The development and implementation of marketing strategy have relationship
with the survival of the banks.
Using the contingency chi-square test, we therefore reject the null hypothesis
since X2C > X2t 0.05 i-e. 14.78 > 9.488 and accept the alternative hypothesis (Hi) at 0.95
level of significance.
X2C = computed value and X2t 0.05 = table value.
The policy implication of this decision is that the development and the
implementation of marketing strategy have relationship with the survival of the selected
banks. Henceforth, the continuing existence and survival of these banks in the face of
competition is based on the different kinds of marketing strategies being used by them.
POLICY RECOMMENDATIONS
Management of banking institutions in Nigeria, should understand the role of
marketing in their business so as to be able to develop effective marketing strategies for
their financial services.
Based on the research findings the following recommendations are drawn.
There is need for integrated banking service. This strategy will assist these banks
in their marketing efforts. This will also assist the customer to have interbank transaction
easily.
There is also need for incorporation of Automated Teller Machine (ATM) in their
computerization scheme. This will eventually reduce the waiting times of customers. It
will also assist customer to deposit and withdraw outside the official banking hours:
Effective marketing strategy will also be achieved if staff member are
encouraged to attend on-the-job training. This training and retraining of employees must
be done on continuous and regular basis so that a successful implementation of strategic
marketing can be guaranteed and also that employees are knowledgeable and skilled in
marketing strategy and marketing environment analysis.
CONCLUSION
This study has attempted to examine the level of strategic marketing
development and implementation in Nigeria's banking industry. The study established a
strong direct relationship between performance and strategic marketing implementation
and that strategic marketing of banking services involves the process of examining both
the present and future marketing environments, formulating organizational objectives,
making, implementing and controlling decisions focused on objectives accomplishment.
It can be concluded from the study that marketing strategy has direct relationship with the
survival of the banks. Therefore, managements of these institutions are encouraged to
pursue the use of strategic marketing with rigour so that these organisations can achieve a
sustainable competitive advantage strategy to ensure that the continuing existence of their
organizations is guaranteed.
Journal of the Department of Business Administration
148
Finally, the challenges of our dynamic environment require efficient and
effective marketing strategy for continuing growth and survival of business organisations.
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