THE IMPORTANCE OF MARKETING RESEARCH IN THE NIGERIAN BANKING INDUSTRY: A CASE STUDY OF BANK PHB
This study was intended to evaluate the importance of marketing research in the Nigerian banking industry. This study was guided by the following objectives; to evaluate if marketing research can be used as a measure of development of a firm, to evaluate if marketing research can survive a firm economically, to determine the extent to which marketing research can be used in satisfying customers.
The study employed the descriptive and explanatory design; questionnaires in addition to library research were applied in order to collect data. Primary and secondary data sources were used and data was analyzed using the chi-square statistical tool at 5% level of significance which was presented in frequency tables and percentage. The respondents under the study were 15 employees of bank PHB ogwashiukwu branch. The study majorly focuses on importance of marketing research in the Nigerian banking industry.
The study findings revealed that neglect of marketing research has led to the premature folding up of banks in the industry; marketing research has the capability of improving and developing the banking industry; Based on the findings from the study, banks should be vigorously involved in the marketing research as it helps in the development of banks.
1.1 BACKGROUND OF THE STUDY
African Banking Corporation which established its first branch in Lagos was the fist bank to open its doors in 1892. The colonial masters established the bank solely for their trade in Nigeria which was then a British colony.
According to Ugwanyi (2002:66) other banks come into existence such as British bank for West Africa (BBWA) now first bank of Nigeria Plc in 1894, and other Barclay’s banks. Dominion colonial and oversees (D.C.O) now union bank of Niger Plc. The British and French bank that was established in 1949. The entire expatriate bank dominated the banking arena and was discriminatory against the indigenous customer service the expatriate banks, such as discrimination obviously resulted in the indigenes clamour for the establishment of indigenous banks.
According to Adeleanye (1983: 79 - 80) between 1930 and 1940 the Nigeria activists spearheaded the move to establish indigenous banks that would render creditable services to the indigenes, as the expatriate of such services. Their efforts yielded divided in the 1940’s with the establishment of many banks in Nigeria.
The importance of the banking industry became more pronounced with the establishment of the central bank of Nigeria (CBN) in July 1989, which was sequel to the promulgation of the CBN ordinance of 1958. As a result of various regional governments and co-operative movement established banks in order to enhance economic development of their regions in particular and country as a whole.
Accordingly, the growth of the banking industry become more vivid with the indigenization policy in the early 1970 when more banks were opened by the end of 1981, there were 27 banks with 1,213 branches in Nigeria.
The spring up and survival of the banking industry can be attributed to marketing research.
A systematic approach to the problem of management of modern business. One of the principal functions of management is to make decision. Marketing decisions are peculiarly difficult to make and their effect are felt throughout the business world.
The emphasis on the indispensable role of marketing research as a framework is principally accounted for in the growth and development of any organization. In recent years, interest in the role of marketing research to product, planning and development in banks has grown.
The American marketing Association (AMA) study showed that over 73 percent of larger companies have their own marketing research department. And to be precise each department has established in the past five years.
With the growing emphasis on supply the individual needs of particular kinds of customers, where ever they may be. It is essential that some organized research should be undertaken to identify market opportunity. The competitive conditions of trading which characterize practically every market today, both nationally and internationally, demands of flow of reliable marketing intelligence (CHISNALL 1981).
According to Tall and Hawkers (1980:1) marketing research has an adversary role in marketing management. It is used to acquire and analyze information and to make recommendation to management as to how market problems should be resolved.
According to Zikmund (1987:11) the prime managerial value of marketing research is that it reduces uncertainty by providing information that facilitate decision making about marketing strategies and tactics used to achieve an organizations strategic goals.
Developing and implementing marketing strategy involves the following:
i. Identifying and evaluating opportunities used
ii. Analyzing market segments and selecting target market
iii. Planning and implementing a marketing mix that will satisfy customers need and meet the objectives of the organization and analyzing market performance.
As a means of implementing marketing concept, marketing research helps in obtaining information that identifies the consumer’s problem and needs, bridge gap between marketing executives and the customers.
In the long history of business enterprise, management has devoted most of its attention to managing money, material, machines and men. Management has paid less attention to the fifth recourses of the form information. Many firms in Nigeria have not yet adapted to the intensified information requirement for effective and efficient method of harnessing their resources. This will also make for speedy economic development of the country.
Marketing research is the systematic, gathering; recording and analysis of data about issues relating to marketing products and services. The term is commonly interchanged with market research however; expert practitioner may wish to draw a distinction in that market research is concerned specifically with markets, while marketing research is concerned specifically about marketing processes.
Marketing research is often partitioned into two sets of categorical pairs, either by target market.
1. Consumer marketing research and
2. Business – to – business (BzB) marketing research.
Or, alternatively, by methodological approach
1. Qualitative marketing research and
2. Quantitative marketing research.
Consumer marketing research is a form of applied sociology that concentrates on understanding the preferences, attitudes and behaviors’ of consumers in a market-based economy and it aims to understand the effect and comparative success of marketing campaigns. The field of consumers marketing research as a statistical science was pioneered by Arthur Nielsen with the founding of the AC Nielsen Company in 1923.
THE GOALS OF MARKETING RESEARCH
The goal of marketing research is to identify and asses how changing element of the marketing mix impacts customer behavior.
ROLES OF MARKETING RESEARCH
The task of marketing research is to provide management with relevant, accurate, reliable, valid, and current information.
Competitive marketing environment and the ever increasing costs attributed to poor decision making required that marketing research provides sound information. Sound decisions are not based on gut feeling, in tuition or even pure judgment.
Marketing research helps the marketing manager link the marketing variable with the environment and the consumers. It helps remove some of the uncertainty by providing relevant information about the marketing variables, environment and the consumers.
The role of marketing research in the managerial decision making is explained further using the frame work of the “DECIDE” model: where
D = Define the marketing problem
E = Enumerate the controllable and uncontrollable decision factors
C = Collect relevant information
I = Identify the best alternatives
D = Develop and implement a marketing plan
E = Evaluate the decision and the decision process.
This research is intended to highlight the contribution or usefulness of marketing research as an economic survival and developmental index in the banking industry with a particular reference on bank Phb.
This measure has become necessary as no firm can compete in the market without the use of marketing research.
1.2 STATEMENT OF PROBLEM
This concerns the relationship that exists between the concept “marketing research” as a measure of a firm’s surviving economically and developing.
The production orientation era in the evolution of marketing where firms or organization produce what they want to produce without seeking the preference of the consumer.
Marketing research brought the consumer orientation concept known as the “marketing concept” it entails the organization to find out from the customers and consumers about their needs developing or acquiring the product to fill those needs.
A variety of scholars and practitioners have suggested that a major difficulty in the organization is that very little attention has so far been paid to problems and opportunities of marketing in general and marketing research in particular. In view of this, Peter Drucker not that in some countries, marketing and marketing research are often neglected in the productive field or organization.
This assertion seems closely related to an assumption that the marketing and marketing research system of any country are essentially passive or adoptive in it’s relation to economic system and production thereof.
The question is how does the firm learn about changing customers wants, new competitor initiatives new modes of distribution and so on. The answer is that banks or organization must develop and maintain a marketing information system and can have the skills of carrying out marketing research.
The essence of marketing is that a firm will make what it can sell rather than sell what it can make marketing therefore, requires an assessment of customers need through market research and the orientation of all the firm activities towards the satisfaction to those needs. Identification of consumers needs entail some systematic investigation into market either those being currently supplied or new marketing areas of potential interest.
Today the need for a product is carefully explored before it is produced on a large scale, often people are assigned as product managers and given the responsibilities for co-ordinating product development and marketing. When developing a product to meet a marketing demand, attention must be given to potential competition and to possible change in customers want.
Firm or organization that is not yet acquainted with the concept of marketing research cannot produce products that will fit into consumers needs. This is where the problem of the study lies. It constitutes an inquiry into ascertaining the useful and role of marketing research in surviving and developing the banking industry.
1.3 PURPOSE OF THE STUDY
Having enumerated the problem with regards to the study, it then becomes absolutely necessary that the purpose of this dissertation should logically be derivable from the problems identified. Thus the purpose are as follows:
i. To evaluate if marketing research can survive a firm economically.
ii. To determine whether marketing research can be used as a measure of development in a firm.
iii. To determine the extent to which marketing research can be used in satisfying customers.
iv. To analyse the usefulness of marketing research to a firm.
v. To find out how marketing research could be used as tool for marketing decision toward product development.
1.4 RESEARCH QUESTIONS
The researcher has the main task of finding out the following:
i. Do management of bank Phb care about customer’s satisfaction.
ii. What marketing research activities does the company engage in to ensure customer’s satisfaction.
iii. Are customer’s satisfied with the product of the company as they are being offered.
iv. Can bank Phb use marketing research strategy to maximize profit.
v. Is there any relationship between the economical survival and development of the bank and marketing research.
1.5 HYPOTHESIS STATEMENT
Ho: Neglect of marketing research has lead to the premature folding up of some banks in the industry.
Hi: Neglect of marketing research has not led to the premature folding of some banks in the industry.
Ho: Marketing research have the capability to improve and develop the banking industry.
Hi: Marketing research does not have the capability to improve and develop the banking industry.
1.6 SCOPE OF THE STUDY
This study is based on marketing research as a measure of development and economic survival in bank PhbOgwashi-Uku branch.
A BRIEF HISTORY OF THE BANK
It all formally began on October 22, 2005 when the former platinum bank Plc and former Habib Nigeria bank United signed a Head of agreement document to merge their business and coalesce into a formidable institution that will be in the forefront of banking post consolidation.
The strategic intent then, and now is to build a national and diversified franchise by creating superior value for stakeholders through an unmatched superior customer service experience.
Data collection and other necessary and pertinent information will therefore be limited to the management and employees of the organization Ogwhashi-Uku branch. Generalization in this study is only based on the assumption that business and non-business organizations operating under the same socio-political, cultural, demographic, geographic and economic environment has similar characteristics all things been equal.
1.7 SIGNIFICANT OF THE STUDY
This was motivated by the constantly changing environment of business which could be attributed to increase technological advancement, shortage in raw material supplied, the emergence of consumerism activist group, the constantly changing taste and preference, demographic and psychological environment of business.
This study is also important because of the need for marketing research in the industry. The banking industry through marketing research introduces an E – Banking called “FLASH DIRECT” to pay government ministries, departments and Agencies. Flash Direct, an e-payment solution specifically conceived to revolutionize electronic payment to multiple beneficiaries, is facilitating Nigeria migration to a cashless society, which is one of the hallmarks of the federal government’s policy on e-payment.
The product guarantees secure and timely payment to beneficiaries and offers them instant feedback through SMS and e-mail alert as their account are credited with flash direct, it is all convenience as transactions can be done at ministries, department and Agencies offices while payment approval can be done anytime anywhere by the authorizer.
Apart from the ease of report generation and reconciliation, flash direct reduces turnaround time in processing salary payment while eliminating the stress of paper work and sharp practices associated with manual payment process for successful transaction on the flash direct, beneficiaries should confirm their most recent account number in their respective banks and send them to the ministry, parastatals and agencies which in turn prepare payment schedule in the format advised by their bankers. The flash direct payment solution makes easy tracking of payments and improves the quality of financial reporting’s.
The role of marketing research cannot be neglected in banking industry because of its importance some of which are:
1. Product creation and development.
2. Decision making in the organization.
3. Good policy formulation.
4. Product discovery.
5. Customer satisfaction etc.
However, since this research work is designed to cover the banking industry in Nigeria and a case study of bank PhbOgwashi-Uku branch. It believe this would be of a great help and encouragement to such banks and business firm that lack the human and financial resources to organize this kind of research work in their organization.
1.8 LIMITATION OF THE STUDY
This study is limited to only the management and employees of bank PhbOgwashi-Uku branch.
This study is also conducted under the ambit of human limitation, since human beings are imperfect and the researcher been human the study is not expected to be 100% correct.
The difficulty of getting questionnaire returned would invariably put limitation. There is also time and financial constraint. Time is usually not enough to carryout the research and the cost or money it takes to carryout the research is also usually high, this is also a limitation in the study.
1.9 DEFINITION OF TERMS
i. Marketing Research
Marketing research is the systematic gathering, recording and analysis of data about issues relating to marketing products and services.
ii. Economic Survival
A process or an acting that produces enough profit which enable a firm to continue to live or exist.
This is the gradual growth of something so that it becomes more advanced and strong.
This is the sign or measure that something else can be judged.
This is described as the collection of raw facts and figure of events.
vi. Primary Data
Primary data are the original data gathered specifically for the project at hand.
vii. Secondary Data
These are the data that have been gathered for other purpose
It is a list of question to be asked of a research sample in order to obtain measureable data.
This is a statement about possible relationship between object and the events.
This is the study of the group you wish to generalize your finding to. This is the group you would like to sample from because this is the group the researcher is interested in generalizing to.
This is defined as the consistency, stability or dependability of a researcher’s measures. It is the degree to which an instrument consistently measures whatever it measure and yields the same responses each time it is used under the same conditions.
Validity measures the extent to which a measure can be generalized. A research instrument is a valid if it measures what it claims to measure.
This is a portion of the population, which is selected for the study and which is representative of the population.
A survey consists of gathering data by interviewing a limited number of people (sample) selected from a large group.
This is described as the collection of information through an in-dept one on one formal questioning.
1.10 ORGANIZATION OF THE STUDY
Chapter One: Introduction
Chapter Two: Review of Literature
Chapter Three: Research Methodology
Chapter Four: Data Presentation and Analysis
Chapter Five: Discussion, Conclusion and Recommendations
Adekanye, F. (1983) Financing small scale industries in developing countries, Mac Millian publishers, Ibadan.
Busari, O. S. et al (2002) Essential of marketing, WadstonDusme Ltd.
Oxford Advanced Learner’s Dictionary, seventh edition, Oxford University Press.
Thisday, Vol 14, No. 5083, Page 48
Ugwanyi, S. P. (2002) Banks Financing of small scale enterprises, Africana-Feb Publishers Limited, Onitsha.
WebbsterFedrick, Marketing for managers, New York, Harper Row 1974.
REVIEW OF LITERATURE
It’s necessary to review the need for marketing research in the industry. However, it does not have to be that way, but because many companies and even industries have failed to take marketing research important in product development. Marketing managers and other professionals are now relying more on marketing research in product development to make better decisions clearly, marketing research is vital to marketing decision making. Robert Ferber asserted that “before the product is produced, a market survey must be conducted in other to ascertain the acceptance of the product in the marketing sphere”. He went further to buttress his fact by stating that just as the efficiency of production is dependent on product research, so also the efficiency of marketing depends on marketing research. Marketing research he notes refers broadly to the development of the most efficient means of marketing, that is the discovering of new and better methods of marketing, more economical means of distribution, new market, better means of selling, and other marketing aids. The marketing concept has become firmly established in many organizations. Marketing research focuses on understanding consumers' buying habits in relation to development in product research. Research of this nature will be incomplete without insight into existing related literature on the subject under study. Literature survey, therefore, is described as “A research of strategies trade journals, Articles, Magazines, Newspapers and boos for data or for insight into the problem at hand”. For the purpose of this study, the researcher has relied more on the contribution of authors from Britain and the United State of America who has published articles on marketing research, also those of Nigeria contributions in this field of study.
Marketing is generally interpreted today as including all those business activities concerned with the development, production, and distribution of products to identifiable markets, where they will provide satisfaction to those who buy them.
Marketing research, therefore, covers product development, identifying the market and suitable method of selling, distribution, promotion, pricing, and sales service facilities. Marketing research has an advisory role in marketing management. It is used to acquire and analyze information and to make recommendations to management as to how marketing problems should be resolved. Tall and Hawken’s (1980:1)
Different association, group, and organizations tried to solve the problem which the question “what is marketing” has created, but seems they looked at marketing from a different perspective. In this study, the following definitions by marketing scholars are considered. William J. Stanton, (1975) in his book, fundamentals of marketing, defines marketing as “ the total system of interacting business activities, designed to plan, price, promote, and distribute want-satisfying product and services to present and potential consumers ”. The American Marketing Association (AMA) in its own definition says that “marketing is the performance of business activities that direct the flow of goods and services from the producers to the consumers” The institution of marketing (London) defines marketing as the “management process which is responsible for identifying anticipating and satisfying consumer’s requirement profitably”. Marketing is about identifying and meeting human and social needs. The above definitions receive credit because they have considered marketing from the identification of needs, wants users, and effective communication to the level of satisfying them through effective promotion and distribution of these wants.
The oxford advance learners dictionary defines research as the careful investigation carried out in order to discover new facts, ideas and information are about the subject matter. Research is a process of finding out. It is a scientific method of controlling inquiry. It identifies problems and attempts to find solutions to these problems. In doing this, the research asks a question, tells why is important, describes how it answered, and interprets it briefly to the users.
Philips R. Cateora and John L. Graham (2005) defines marketing research as the systematic gathering, recording, and analysis of data to provide information useful in marketing decision making. British Institute of Management (1962) as “the objective gathering, recordings and analyzing of all fact about problems relating to the transfer and sales of goods and services from producer to consumer”. Geen and Tull (1970) define marketing research as consisting of a systematic and objective collection as well as appropriate analysis of information that will provide the solution to all marketing problems. According to Philip Kotler 13th edition, marketing research is the systematic design, collection, analysis, and reporting of data and findings relevant to a specific marketing situation facing a company. From the above definitions, one can say clearly that marketing research is an essential management tool that executives can use in inducting the risk in the environment of operation by obtaining potential information and putting the resources at the disposal of the manager in order to move the organization forward.
THE MARKETING RESEARCH PROCESS
Effective marketing research follows six steps which are shown in the figure below.