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An Evaluation Of The Effects Of Relationships Marketing In Achieving Competitive Advantage In Commercial Banks
ABSTRACT
This research question has been to examine the influence of relationship marketing in achieving competitive advantage in commr4cial banks. United bank for Africa (UBA) is the case study. The common view of the researcher is to prove that relationship marketing is necessary for any bank to be able to compete and survive in today’s market place. The objective of the research work is to find out if the banking industry is adopting relationship marketing, to ascertain the impact of relationship marketing in the practices of the banking industry and to find out its profitability in the banking industry after which the topic will be narrowed to the effect of relationship marketing in united bank for Africa (UBA) the researcher adapted a descriptive method of survey research. The sample method used is a stratified sampling method, which divided the company’s total population in to three different strata. Both primary and secondary source are used to obtain relevant information. The bank has a total population of 34 and sample size of 24 was drawn from the population with a respondent rate of 24 and 50 customers were also required to receive and answer questioners but only 41 were returned, Yaro yanni formula is used to determine the sample series. Data collection was analyzed using simple percentage technique. The major findings were summarized and we found out that relationship marketing in the bank is highly emphasized by the bankers, but since services cannot be provided exactly the same way to the same person at deferent time, so they are bound to be some in adequacies and unsatisfied customers. Finally, the researcher made some recommendations to the marketing management of the bank advising them to ensure continuous product and service innovation and that the bank should not waste time and resources on every customer as some customers are maintained at a loss, thus the bank should make use of their data base to select and focus their attention on those customers which are more profitable to the bank.
CHAPTER ONE
INTRODUCTION
1.1 BACKGROUND OF STUDY
Today banks are facing the toughest challenges ever change is occurring at an accelerating rate. Today is not like yesterday and there is no promise that tomorrow will be like today. So confusing today’s strategy may be risky. It is becoming evident that to complete and survive in today’s volatile market place requires strategies that are capable for providing high level customer values which are low cost and reliable. Banks must therefore scan their environment to enable them pick up changes in the market place on a continuing basis.
In the past banks took their customers for granted facing an expanding economy and rapidly growing markets these banks could practice ‘leaky buckets’ approach to market yet achieving their goals, growing markets meant a growth of new customers, these institutions customers without worrying about losing old customers through holes in the bottom of the buckets. The orientation then was mere transaction focus,
However it is no longer what it used to be in the past.
Banks today are facing some new marketing realities, changing demography, government policies, more sophisticated competitors and over capacity in the banking industry. This the cost of attracting new customers is rising according to Jones and Sesser (1999:89) if costs five times as much to attract a new customers as it does to keep a current customer satisfied. Banks are also realizing that losing a customer means losing more than a single sale. According to Kottler and Armstrong (2001) it means losing the entire stream of purchase that the customers would make over a life time of a patronage.
The ever changing buying patterns in the markets characterized by the rapid changing customers’ wants and needs associated with the changes in information technology also account for the desire to change on banks focus.
This gave rise to the need for several researchers customers preferences purchase decision and behaviors in an attempt to capture the customers mind and heart as a path to catching his pocket too. Furthermore the environment is now characterized by declining profits margins which are rising at a decreasing rate. Customers are moving from one bank to the other in search of better service and products, confidence in the banking industry is dropping very seriously. The confidence of the mid 1980s and early 1990s are now replaced by the trauma of bank failure announced by the Nigeria deposit insurance corporation (NDIC) coupled with the increase in banks capital base as announced by the central bank of Nigeria (CBN) a bank is nothing until it is trusted and returns to nothing when the trust is lost .What went wrong banks now started looking at their “MINOS” and they started asking questions .How can we get to know our customers better so that we can best meet their wants and need thereby retaining their loyalty and longer patronage in line with enabling us to maintain a deferential advantage and achieve organizational goals especially long term profits .A key factor in this process of long and trust worthy relationship formation with key stake holders a strategic prospective of changing from a transaction focused to a relationship focus hence the emergence of relationship marketing coordinating whole company efforts to create value satisfying relationship with key customer and stakeholders.
1.2 STATEMENT OF THE PROBLEM
There are identifiable gaps that exist between the ideals and norms of banking services in united bank of Africa (UBA) plc in Enugu, Enugu State. A careful observation behind what is the banking industry practice is not completely same. A visit to the united bank is not Africa (UBA) plc Enugu bank show that they just started to practice and appreciate relationship marketing as competitive in the banking industry raised as a result of the target given to them by the central bank of Nigeria (CBN) this is against the pursuit of professionalism by the banking practioner. Again their seems to be a great shortage of professionalism in the employment of some of these banks.
This is probably responsible for the poor nature of their programmers’ and services. A brief interaction with some of the employees suggest that most of the banks have no clear training and development programmers’ for its employees employment seems to be lowly motivated and lacking in job satisfaction. In fact many animosities are readily noticeable for the poor nature of their programmers’ and services.
This makes one to wonder of the whole noise about the reserve of 25 billion by banks in the central banks of Nigeria (CBN) hitherto to the banks failed to appreciate that the market may be less ‘turned on’ and even move in the direction of competitors for their interest and loyalty. This could only be possible through relationship marketing strategy, when we realize the fact that the principal reason behind the establishment for reserve by the central banks of Nigeria (CBN) was to ensure that the activities of banks are closely monitored and self regulated.
1.3 OBJECTIVES OF THE STUDY
In line with the intent of banks to establish a good and favorable relationship marketing which will enhance their productivity. The researcher has made this study to strengthen and revaluate the following objectives;
1. To determine if the banking industry is adopting relationship marketing in their banking services.
2. To ascertain the impact of relationship marketing in the practices of banking industry.
3. To identify position of relationship marketing in the banking industry.
4. To find out the practice of relationship marketing in the banking industry is profitable.
1.4 FORMULATION OF HYPOTHESIS
Ho; There is no significant relationship between the adoption of relationship marketing and banks profitability.
Ho; Banking industry doesn’t adopt relationship marketing.
Ho; delivery of superior customer value does not necessitate long term customer loyalty.
Ho; Banking industry has not benefited from the relationship marketing.
1.5 SIGNIFICANCE OF THE STUDY
The importance of the study of this nature and magnitude cannot be overemphasized.
- The outcome of this search and is capable of helping to improve the practice of banking industry to a great extent. In these findings we believe to go a long way to improve then gray areas in society.
- Banks and customized banks will have a lot to gain in terms of exposure development and strategies.
- This piece of work will also help to make banks to be alive in its responsibilities.
- For the government banks and customers banks the possible outcome of this study customers.
In the banking of Nigeria it is quite obvious that presently the relationship between banks and its players in the industry have been that of a ‘master and slave’. However we expect that at the end of the day both parties will begin to see themselves as partners in progress.
This definitively will go far in improving the banking industries. Government will be made to understand their own part in the banking industry drama.
The banking industry happens to be a veritable tool towards the propagation of moral, economic, political and social values for the society; if they are made to do the right thing which this work as a package of information as to the nitty gritty of banking and finance institutions practiced in Nigeria made up of what the study learn in school as theory. This work therefore will assist in closing the heavy gap and practice in banking.
The academic with the help of this study will come to better, appreciate the fields of banking and financial practices in Nigeria.
1.6 SCOPE OF THE STUDY
The study population covers he marketing staff and the customers of the limited liability banks for (UBA) plc, Enugu branch especially given the fact that the branch was among the earnest to implement relationship marketing. The marketing unit which has the branch manager as hand of the marketing department is made up two members of staff while the operation unit which the operations manager (assistant manager) as the hand is made up of 18 members staff.
The customers include all those who transact business with the bank in monetary terms exceeding five hundred thousand naira (N500,000.00) on only basis and these customers are the sole attention of the marketing staff as well as the potential customers.
OPERATIOAL DEFINITION OF TERMS
CUSTOMERS ATTRITION:- this refers to a situation where customers regularly withdraw their patronage from a particular bank.
Customers the term represents both individual and corporate bodies who consume bank products and services.
LEAKY BUCKETS:- the theory that believes that there will always be enough customers also a relationship that exist between a firm and its publics.
BANKS: - is an organizational piece that provides financial services to people, customer keep money and valuables in the banks safety or for security purpose.
MARKETING BASKETS: - sourcing of new customers though marketing means that is using of new latest marketing strategies to source for new customers.
COMMERCIAL BANKS: - these are financial institution that offers financial services to its customers at a price and for which it hopes to realize profits, they are the major supplies of basis finance in Nigeria, they constitute the single largest group of deposit taking business.
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