1 TOPICS BY GANIYU ABIOLA ALIYU PG/MBA/08/53302 PROJECT SUBMITTED IN PARTIAL FULFILLMENT FOR THE REQUIREMENTS FOR THE AWARD OF MASTERS OF BUSINESS ADMINISTRATION (MBA) IN MARKETING DEPARTMENT OF MARKETING, FACULITY OF BUSINESS ADMINISTRATION UNIVERSITY OF NIGERIA ENUGU CAMPUS. SUPERVISOR: DR (MRS) G.E UGWUONAH JANUARY 2011.
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1
TOPICS BY
GANIYU ABIOLA ALIYU PG/MBA/08/53302
PROJECT SUBMITTED IN PARTIAL
FULFILLMENT FOR THE REQUIREMENTS FOR THE AWARD OF MASTERS OF
BUSINESS ADMINISTRATION (MBA) IN MARKETING
DEPARTMENT OF MARKETING, FACULITY
OF BUSINESS ADMINISTRATION UNIVERSITY
OF NIGERIA ENUGU CAMPUS.
SUPERVISOR: DR (MRS) G.E
UGWUONAH JANUARY 2011.
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Certification This is to certify that this study has been approved and accepted by department of marketing in partial fulfillment for the award of masters of business administration (mba) in marketing. ……………………………. …………………………… Dr. (mrs) G.E ugwuonah date (project supervisor) …………………………….. …………………………… Dr. (mrs) J.O nnabuko) date (H.O.D marketing)
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Dedication This research work is dedicated to God Almighty Allah for his mercies in my life
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Acknowledgement
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TABLE OF CONTENTS
Title Page == == == == == == == == == i
Certification Page == == == == == == == ii
Dedication == == == == == == == iii
Acknowledgement == == == == == == iv
Abstract == == == == == == == == == v
Table of Contents == == == == == == vi
List of Tables == == == == == == == == vii
CHAPTER ONE: INTRODUCTION
1.1 Background of the Study == == == == == 1
1.2 Statement of Problem == == == == 4
1.3 Objectives of the study == == == == == 5
1.4 Research Question == == == == == 6
1.5 Research Hypothesis == == == == 7
1.6 Significance of Study == == == == == 8
1.7 Limitations of the Study == == == == 9
1.8 Definition of Terms
References == == == == == == == 10
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CHAPTER TWO: LITERATURE REVIEW
INTRODUCTION == == == == == == == 11
2.1 Overview of Banking Operations == == == 14
2.2 Bank Marketing Versus Goods Marketing == == 17
2.3 The Process of Bank Marketing == == == == 19
2.4.1 The History of First Bank of Nigeria == == == 25
2.4.2 History Pre-Independence == == == == 26
2.4.3 Post Independence == == == == == == 26
2.5.1 Society for World Wide Interbank Financial
Telecommunication (SWIFT) == == == == 28
2.5.2 On-Line/real time service == == == == 28
2.5.3 Home banking == == == == == == 28
2.5.4 First bank smart card scheme == == == 28
2.5.5 Other Customers Services == == == == 29
2.6 The Changing Market Stage of the Bank == == 29
References == == == == == == == 37
CHAPTER THREE: RESEARCH METHODOLOGY
3.0 Introduction == == == == == == == 34
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3.1 Research Design == == == == == == 34
3.2 Research Hypotheses == == == == == 37
3.3 Characteristics of Population == == == == 39
3.4 Determination of Sample Size == == == == 39
3.5 Data Collection == == == == == == == 40
3.6 Location of Data == == == == == == 42
References == == == == == == == 44
CHAPTER ONE
INTRODUCTION
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1.1 BACKGROUND OF THE STUDY
The continuing evolution of the banking and financial
markets has created opportunities both for providers and for
users of financial products, and this evolution has been
beneficial to the economy. However, innovations in financial
products also have given rise to some new challenges for
market participants and their supervisors in the areas of
corporate governance and compliance. The events of the past
few years demonstrate again that fraudulent conduct and
weak corporate governance at a few firms can dramatically
change the cost of capital and impose additional regulatory
burden on even well-managed organizations.
We may recall that the current rises which began in the
United States, affecting banking sector, housing and credit
has gone global, hitting a wide range of economic activities. In
banking sector alone, affecting banks in the recently
concluded bank reforms by the apex bank Governor, Sanusi
Lamido Sanusi closed the fear at their all-time- year low pries.
Precisely, in 2009, Afribank Nigeria Plc, which recorded an all-
time year high of N10.06, closed the year at N2.55 per share,
while Intercontinental Bank Plc closed at N1, 61 per share
from an all-time year high of N13.65. Others include Oceanic
Bank International Plc, Union Bank of Nigeria Plc, Fin Bank
Plc. and Bank PHB Plc, as they all closed the year at N1.69,
N6.00, 53 kobo, and N1.32 respectively from an all-time-year
high of N12.05, N21.12, N4.45 and N10.24.
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The place of banks in the national economy is a
significant one and it assists to stabilize the economic life of
any nation. The importance and significance of banks with
respect to economic and social development of a nation cannot
be overemphasized. Banks are known to perform many
functions. Deposit mobilization and lending are perhaps the
most significant of these functions. Leading is essentially a
follow-up of deposit mobilization. The banks are responsible
for the safety of the funds entrusted to them while also
responsible for channeling the funds into profitable activities
not only to ensure their recovery, but also to earn adequate
returns on the fund. The quality of the banks leading
decisions, significantly determines the extent of its customer
carriage. Apart from the fact that lending is a significant
function of the bank for the above reasons, loans and
advances have been found to constitute the largest portion of
the banks assets and this assets items possesses the highest
rate of returns relative to other alternative investments, it is
thus the most important source of Banks income. While it is
highly profitable, it also possesses perhaps the greatest risk
and consequently, less liquid. What makes loan portfolio
selection difficult is the need to find an appropriate balance
between profitability, risk and liquidity.
For now, it is all a game of trial and error! No one can say
with certainty what could be done to bring economies back to
the pre-meltdown era. Stimulus packages, bail-outs, etc are
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used by national and transnational authorities to tackle the
meltdown. A direct result of the meltdown has been the
emergence of recession in the global economy. The United
States, Japan, and most Europeans countries have
acknowledged that their economies have entered into
recession. Simply put, an economy is said to be in recession,
when it experiences negative GDP for two consecutive
quarters.
Gross Domestic Product, GDP, measures the value of all
goods and services produced within the confines of a country
by both nationals and non-national resident within the
country.
It can be seen that the remora of many barriers affecting
the financial service marketing has a tremendous impact on
competition. As information of financial services flood in on
consumer – every – day-through the Television, the Internet,
radio, newspapers/magazines, and Junk mails, there is to
much to handle as quality is being eroded. There has been a
time of enjoyment of buoyant economy,
Which is followed by recession and now uncertainty.
Customers have become more financially prudent, and are
much more demanding in terms of service quality and
openness in service delivery. The dilemma for financial
services organization is no longer that of Saturday activity, but
that of 24-hours, banking throughout that year.
1.2 STATEMENT OF PROBLEM
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The Seller’s market in which banks operate hitherto, and
which could be easily backed by highly conservative doctrines,
has now changed into a buyer’s market requiring new
concepts, ideas and orientation in the field of marketing.
Gradually, the line between the profession of banking and
marketing is in fact thinning. We now have more marketers in
banking as well as bankers in marketing than ever before.
There is also the increasingly blurring of the dichotomy in the
activities of banks. The question remains: To what extent has
the marketing of financial services improved the banking
operations?
The banks continue to examine and re-examine their
businesses with emphasis on future sustainable performance
as opposed to short-term gains. Also, the punitive measures
introduced by the failed banks tribunal hardly escape the
minds of operators. For the surviving one, it is a fight to
remain afloat, thus, it is now imperative for them to embrace
marketing strategy in their operational drive.
Questions of interpretation may arise in determining
whether and to what extent information in public or private,
especially for organizations operating in global markets. Does
material non public information on one name in an index fund
taint the entire index? Are the bank’s internal ratings or
changes in internal ratings private information? Issues of
“signaling” private information also arise when public-side
traders become aware of transactions entered into on the
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private side. That is, to what extent can traders infer material
nonpublic information through action (or inaction) in private-
side business lines? Last, but certainly not least, information
may be confidential or proprietary even if it does not rise to the
level of material nonpublic information. The misuse of
confidential or proprietary information that is not material
nonpublic information may not give rise to securities law
violations, but it may give rise to common law claims.
1.3 OBJECTIVES OF THE STUDY The objective of this study is to determine the imminent
need for the use of promotional mix strategy in the marketing
of financial services and to ascertain approaches necessary as
well as find out how to meet up with the customer’s
satisfaction:
1. To determine whether the Marketing Strategies adopted
by commercial banks enhance their ability to gain more
customers
2. To critically examine whether the recent financial
meltdown indicate that strong and effective corporate
governance is require in the Nigerian economy.
3. To ascertain various marketing strategies, concepts and
ideas used by banks in satisfying the changing needs of
their numerous customers and meeting their
expectations
4. To examine the emphasis by the emerging trend whereby
banks are easily made the ”beast of burden” whenever
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there are instances of unintended effects within the
economic management matrix of the nation.
5. To measure the effectiveness of the marketing strategies
employed by banks mainly on issues relating to banking-
customer relationship.
1.4 RESEARCH QUESTIONS The research questions formulated to guide this study
are as follows:
i. To what extent has the marketing of financial services
improved the banking operations in the face of Economic
melt down?
ii. What are the major service characteristics in a Bank
Marketing Environment?
iii. What role has marketing played in promoting customers
awareness in Banking and other Financial Industry in
Nigeria during the current Economic melt down?
iv. What has been the Marketing Strategy Banks employ to
ensure that customer’s needs are met?
v. What has been the prospect and problems of marketing
financial products by banks?
1.5 RESEARCH HYPOTHESES
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Ho 1: Promotion Mix adopted by First Bank does not
significantly affect its services demand.
Ho 2: Marketing of goods and services on the internet by
banks do not have positive impact on the Nigerian economy.
Ho 3: The recent financial meltdown does not indicate
that strong and effective corporate governance is required in
the Nigerian economy if companies are to meet their
shareholders’ needs.
1.6 SIGNIFICANCE OF STUDY The information data so obtained would add to the field
of academic. The findings will enable the Banking Industry
know the extent to which marketing can contribute to achieve
the organizational goal. It will also enable the bankers to know the reaction of
their respective services, towards the adoption of promotional
mix to boost service delivery. Tied to this is the fact that the
bank will be in a position to know whether to continue
adopting the same method as at when necessary or to dump it
for a new promotional method.
However, is highlighted in the fact that a good knowledge
of brand loyal customers, the appropriate market segment and
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the benefits it seeks will enable the bank plan and adopt the
necessary strategies, and also effectively manipulate its
marketing mix in order to ensure success in an increasingly
competitive environment.
The study, when completed, will serve as a reference
point and source of secondary data for future researchers in
the field.
Above all, it will form a useful addition to existing
literature in the marketing of financial services in the banking
sector in general:
a) The first Bank of Nigeria Plc. management and staff
b) The banking industry and other financial institutions.
c) The Nigerian economy as a whole
d) Subsequent research on the topic
1.7 LIMITATIONS OF THE STUDY The execution of this research was not without problems.
It has been particularly constrained by inaccessibility to some
relevant data for analysis. Some of these are considered by the
banks to be confidential.
Also, there are limitations of time as limits for
submission are always specified. Financial constraints also
limit the scope of research work that can be embarked upon
by students.
In view of the problems involved in data collection, time
and financial constraints, the study is limited to Marketing
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Strategies in First Banks during the economic meltdown. The
scope of the study is limited to First Banks in Enugu. Hence,
the findings were not extended to other banks and
generalizations of the result of the finding are limited.
The execution of this research will therefore not be
general but rather specific to First Bank.
1.8 DEFINITION OF TERMS The following Words are defined as they will be in this study:
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MARKETING: A social and managerial process whereby individuals
and groups obtain what they need and want through creating and
exchanging products and value with others.
BANK: A place where money is kept paid out, lent, borrowed, issued
or exchanged.
BANKER: A person conducting the business of a bank.
SERVICES: Any activity or benefit that one party can offer to another
that is essentially intangible and does not result in the ownership of
anything.
FINANCIAL SYSTEM: A financial system encompasses all institutions
and economic agents that either provides financial services provide
financial resources for the system or regulate the system.
FINANCIAL MARKET: Financial market refers to the money and capital
markets where short term, medium term and long term debt and equity
instruments are traded.
CAPITAL: The finance used to invest in a business with a view of
making a return from it in future years. It is used to purchase the other
resource inputs that enable an organization to carry out business
activity.
PRICING POLICY: This constitutes the general framework within
which pricing decisions are made. They provide the guidelines within
which management formulates and carryout pricing strategy.
DEREGULATION: Deregulation is a response to regulating failure which
occurs when the outcome of attempting to fight market failure are
inferior to what the situation would have been without regulation.
MARKETING STRATEGY: Designing an initial marketing objective
for a service or product based on concepts.
SEGEMENTED PRICING: Selling a product or service at two or more
prices, where the difference in prices is not based on differences in cost.
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ADVERTISING: Any form of paid communicating by a sponsor about
goods, services or ideas for the purpose of informing and persuading
customers to buy.
MARKET: Consists of individuals and organizations that are interested
and willing to buy a particular product or service to obtain benefits that
will satisfy a specific need or want and who have the resource to engage
in such a transaction.
MARKETS PROFILE: A description of the geography, housing
population and economic activity in the primary and secondary areas
where a product is sold.
MARKET RESEARCH: The process of getting and analyzing factual
information about a specific market-its geography, customers and
competitors to understand better one’s own position.
MARKET SEGMENTATION: Dividing a market into distinct groups of
buyers on the basis of needs, characteristics, or behaviour who might
require separate products or marketing mixes.
MARKETING MIX: The combination of four marketing activities –
product development, pricing, promoting and distribution aimed at
creating demand among the target market.
REFERENCES
Abubakar, M. (2009), The Effects of Global Financial Crisis on Nigerian Economy, Retrieved from http://www.rrojasdatabank.info on 10/02/2010
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Baker, Dean (2008) “The Housing Bubble and the Financial Crisis,” Center for Economic and Policy Research.
Central Bank of Nigeria (2008a), www.cenbank.org. on 10/02/2010 Economy, retrieved from http://www.rrojasdatabank.info on
10/02/2010 Leaven, L., and Valencia, F. (2008), ‘Systemic Banking Crises: a New
Database’ International Monetary Fund Working Paper 08/224. Mtango, E.E.E. (2008) “African Growth, financial Crisis and Implications
for TICAD IV” GRIPS-ODI-JICA joint seminar: African Growth in the Changing Global Economy paper presented by Ambassador of Tanzania and Dean of the African Diplomatic Corps in Japan retrieved from www.google.com on 24/02/10.
Nigeria-Unexplored Territory-with 84% of Money in Circulation Outside
the Banking System…”, the Banker, April, 2006. Ojo, D. (1988) “Towards Better Banking Services” Daily Times, 14 p. 7-8 Olashore Oladele (1985) “Policy issues in Nigeria Banking and Economic
Management” Published by International Bank for West Africa Limited.
Pezzulo, Mary Ann (1993) Marketing for Bankers; American Association
Bankers, USA. Soludo, C.C (2009), Global Financial and Economic Crisis: How
Vulnerable is Nigeria? Retrieved from http://www.cenbank.org on 10/02/2010
CHAPTER TWO
LITERATURE REVIEW
INTRODUCTION
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Financial market innovation and the development of
increasingly complex structures for credit risk transfer also
may give rise to legal or reputation risk. In recent years, we
have seen considerable advances in the management and
transfer of credit risk, including credit default swap and
collateralized debt obligations. These practices and the
development of new and more liquid markets have come about
because of better risk measurement techniques. They have the
potentials, to substantially improve the efficiency of world
financial markets through the diversification benefits that
credit risk transfer mechanisms can provide. However, the
fundamental elements of risk management must be kept
firmly in mind if these innovations are to succeed. By their
design, credit risk transfer instruments segment risk for
distribution to the parties most willing to accept them. A key
point, however, is that market participants must be able to
recognize and understand the risks underlying the
instruments they trade and be able to successfully absorb and
diffuse any subsequent loss. Another consideration is whether
one party to the transaction is entering into the trade with an
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unfair advantage by virtue of its role as a lender to the same or
a related entity.
The statement of principles fulfils a number of objectives.
The most critical, in my view, is the promotion of fair and
competitive markets in which the inappropriate use of material
nonpublic information is not tolerated. At the same time, the
statement allows lenders to effectively manage credit portfolio
activities to facilities borrower access to more – liquid and
more – efficient sources of credit. This effort recognizes that
the liquidity and efficiency of our financial markets are related
directly to the integrity of, and public confidence in those
markets. The joint statement describes two models of credit
portfolio management the “private side” model and the “public
side” model. In reality, most banking organizations appear to
have adopted a hybrid model that lies at some point along a
continuum between pure private and pure public. In general,
in a private – side model, credit derivatives traders may have
access to material nonpublic information, but traders must
pre-clear each transaction they execute. In a public-side
model, traders are walled off from private-side information and
22
personnel to prevent their access to material nonpublic
information: accordingly; the circumstance in which a
transaction is restricted because of the trader’s possession of
material nonpublic information is limited.
The capability to satisfy their personal financial management
need. Marketing, however, entails an ongoing process of
planning, executing those plans, monitoring their results, and
modifying them. In other words, marketing is a management
process, the business of marketing must be organized and
directed in order to be effective.
2.1 OVERVIEW OF BANKING OPERATIONS
The appropriate definition of what a bank or banker is
has a subject of debate over the decades. A good number of
attempts have been made to define what a bank actually is.
The banking Decree (1979) subsequently adopted Banking Act,
1979 defines a bank or banker as “any person who transact
banking business and whose business includes acceptance of
deposits withdrawable on demand “Nwankwo (2003) seems
less satisfied with this definition and he says “the central
question is: what is banking business? He stated that “rather
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than attempts any precise definition of a bank or a banker, let
us try and know what a banker really does.
Undeniable, marketing is becoming increasingly
important in the current banking environment. This stems
from the increased competition fuelled by the introduction of
structural Adjustment programme within the banking and
other Financial Institutions. This view is corroborated by
Maiden (2003) when he said competition has geared banks
toward paying attention to marketing activities”. The question
can be asked: what are the marketable commercial banking
services? These are the various services offered by banks:
1. Deposit Collection Account
(a) Savings account
(b) Current account
(c) Fixed deposit account
2. Provision of credit to customers inform of loans and