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ABSTRACT
This study was specifically composed to assess the role of marketing in post consolidation of the banking sector, through a strategic study of First bank Nigeria Plc. Consolidation is a reduction in the number of banks and other deposit taking institutions with simultaneous increase in the size and concentration of players in the sector, with a primary goal and objectives to strengthen the Nigeria banking system. To achieve the objective of the study, the researcher took extensive review on related literature, and utilized the Bourley and Yaro-Yemen’s sampling technique, to determine the sample size, out of which a sample size of 88 was derived from a population of 122 in four (4) branches of First bank Nig. Plc operating in Port Harcourt metropolis. This includes GRA branch, Town branch, Rumokoro branch and Oil-Mill branch respectively. The research was by four (4) research questions. In an attempt to answer these questions, three hypotheses were developed and tested, using the chi-square х2 statistical tool. The researcher further uncovered from the respondents that the application of marketing strategies contributes tremendously to the actualization of the reforms on consolidation and post-consolidation of the banking sector in Nigeria. The research further recommended that government and the banking sector in general should improve on Information and Communication Technology (ICT), by employing different application software to gain competitive edge, and that the CBN should strengthen the regulatory and supervisory framework to enhance monitoring of operations of the Deposit Money Bank (DMBs), to ensure that they remain safe, sound and healthy to support the macroeconomic objectives of the government, in general, and monetary policy, in particular.
TABLE OF CONTENTS
TITLE PAGES – – – – – – – – – i
CERTIFICATION – – – – – – – – ii
DEDICATION – – – – – – – – iii
ACKNOWLEDGEMENT – – – – – – – – iv
ABSTRACT – – – – – – – – – – vi
TABLE OF CONTENTS – – – – – – – – vii
CHAPTER ONE
INTRODUCTION
1.1 BACKGROUND OF THE STUDY – – – – – – 1
1.2 STATEMENT OF THE PROBLEM – – – – – – 4
1.3 OBJECTIVE OF THE STUDY – – – – – 6
1.4 RESEARCH QUESTIONS – – – – – – – 7
1.5 RESEARCH HYPOTHESIS – – – – – – 8
1.6 SCOPE OF THE STUDY – – – – – – – 8
1.7 SIGNIFICANCE OF THE STUDY – – – – – – 9
1.8 LIMITATION OF THE STUDY – – – – – – 9
1.9 DEFINITION OF TERMS – – – – – – – 9
REFERENCES – – – – – – – – 11
CHAPTER TWO
REVIEWED OF RELATED LITERATURE
2.1 INTRODUCTION – – – – – – – – 12
2.2 AN OVERVIEW OF MARKETING – – – – – 12
2.3 THE CONCEPT OF BANK CONSOLIDATION – – – – 14
2.4 POSITION OF THE BANKING BEFORE CONSOLIDATION – – 15
2.5 IMPACT OF CONSOLIDATION OF THE BANKING SECTOR – – 16
2.6 REFORMS ON BANK CONSOLIDATION IN NIGERIA – – – 19
2.7 POST-CONSOLIDATION OF THE BANKING SECTOR – – – 21
2.8 THE ROLE OF MARKETING IN POST-CONSOLIDATION – – 24
REFERENCES – – – – – – – – 26
CHAPTER THREE
RESEARCH METHODOLOGY
3.1 INTRODUCTION – – – – – – – – 28
3.2 RESEARCH DESIGN – – – – – – – 28
3.3 POPULATION OF THE STUDY – – – – – – 29
3.4 SAMPLE SIZE/SAMPLING TECHNIQUES – – – – 29
3.5 DATA COLLECTION/DATA COLLECTION TECHNIQUE – – – 31
3.6 RESEARCH INSTRUMENT – – – – – – – 31
3.7 METHOD OF DATA ANALYSIS – – – – – – 32
REFERENCES – – – – – – – – 34
CHAPTER FOUR
DATA PRESENTATION, ANALYSIS AND INTERPRETATION
4.1 INTRODUCTION – – – – – – – – 35
4.2 DATA PRESENTATION, ANALYSIS AND INTERPRETATION – – 35
4.3 TEST OF HYPOTHESIS – – – – – – – 44
CHAPTER FIVE
SUMMARY OF FINDINGS
5.1 INTRODUCTION – – – – – – – – 51
5.2 DISCUSSION OF FINDINGS – – – – – – 52
5.3 SUMMARY OF FINDINDS – – – – – – – 54
REFERENCES – – – – – – – – 57
CHAPTER SIX
SUMMARY, CONCLUSION AND RECOMMENDATIONS
6.1 INTRODUCTION – – – – – – – – 58
6.2 SUMMARY – – – – – – – – – 58
6.3 CONCLUSION – – – – – – – – 59
6.4 RECOMMENDATIONS – – – – – – – 59
BIBLIOGRAPHY – – – – – – – – 62
APPENDIX – – – – – – – – 65
APPENDIX B – – – – – – – – 66
CHAPTER ONE
INTRODUCTION
1.1 BACKGROUND OF THE STUDY
This study is basically designed to analyze the role of marketing in post consolidation of the banking sector, through a strategic evaluation of First bank Nigeria plc, The concept of consolidation as postulated by Brocklington, (1987), is the reduction in the number of banks and other deposit taking institution with a simultaneous increase in the size and concentration of the consolidation entities in the sector.
To this regard, the Central Bank of Nigeria had developed the need to look into the recent reforms on bank consolidation, through employing certain measures to strengthen the Nigeria banking system by drastically increasing the minimum capital requirement from N2 million
to N25 billion ($190 million-US). Through review of relevant literature, analysis of policy documents, official report and economic information on the banking sector, it became evident that the consolidation of banks led to a remarkable reduction in the number of banks from 89 to 25 by mergers, acquisition, initial and other means.
More importantly, the researcher had equally sought to review the application of marketing imperatives, in strengthening the policies of the CBN in relation to the consolidation and post consolidation of the banking sector. Obviously, Lamb (1992), is of the view that the philosophy of marketing is uniquely and directly focused on the maximum satisfaction of the general populace, which ordinarily cannot be achieved in a vacuum, but through a well planned and sophisticated marketing strategy, were the need for integrated marketing becomes paramount.
This entails that the activities of the banking industry in this post-consolidation era, must require the support and contributions of other sectors of the economy, as a policy of the CBN, in strengthening the financial sector. Meanwhile, research conducted by Pandy I M. (2005) unveils that the post-consolidation or current phase of the banking industry has resulted in making banks more efficient and reliable and also, as well as their intermediary potentials been revised through taking a strategic assessment of marketing orientations in the sector.
Meanwhile, before now, the sector was highly oligopolistic with remarkable features of market concentration and leadership. Pandy I M. (2005) noted that there are ten banks that control more than 50% of the aggregate assets of the banking sector, more than 51% of the aggregate deposits liabilities and more than 45% of the aggregate credits. Therefore, it is worthy of note that in this current era of post consolidation, Nigeria banking sector has experienced a boom-and-burst cycle after the consolidation.
On the contrary Ayodele (2005) contended that after the implementation of the structural adjustment programme (SAP) in 1986 and de-regulation of the financial sector, new banks proliferated mainly driven by attractive arbitrage opportunities in the foreign exchange market and according to Brocklington R.B. (1987), prior to the de-regulation period, financial intermediation never took off and even declined in the 1980’s and 1990’s. Jnnings A.R, (1996) also argued that the banking sector was characterized by small scale banks with high overheads; low capital base averaging less than $10 million; heavy reliance on the government patronage and loss making. However, it is prior to these loopholes that the researcher had sought to inculcate marketing imperatives in achieving the consolidation and mergers policy in the banking sector.
1.2 STATEMENT OF PROBLEM
One major challenge confronting the financial sector in post-consolidation is the reform that compelled all commercial banks to raise their capital base from N2 million to N25 billion, this had invariably affected the marketing of bank’s services, resulting to increase in interest rates on bank’s charges. Other marketing problems regarding post-consolidation are:
(1) Due to the existence of high degree of calculated risk in post-consolidation, bank’s customers are compelled to seek alternative bank services, thereby making customers to go from one bank to the other, in search of better alternatives.
(2) The post-Consolidation era is also saddled with very expensive venture for financial institutions in terms of fund required to carry-out more marketing activities like promotional activities of advertising, sales promotion, etc.
(3) The CBN and the concerned or affected agencies had not given much attention to the significant roles marketing activities and its strategies can offer in achieving the consolidation policy.
1.3 OBJECTIVE OF THE STUDY
The main objective of this study is to examine the role of marketing in post-consolidation of the banking sector; with particular reference to First Bank of Nigeria. Other objective includes:
- To identify the relationship between marketing imperatives and post-consolidation in Nigeria.
- To examine the impact of marketing strategies and its related activities in post- consolidation on Nigeria banks.
- To evaluate the significance contribution of marketing promotional tools in post- consolidation.
- To identify the possible marketing environmental challenges on post-consolidation.
- Identify and explain how the marketing mix element can be effectively applied in post-consolidation of the banking sector on Nigeria economy.
1.4 RESEARCH QUESTIONS
- To what extent does marketing imperatives relate to post-consolidation in Nigeria banks?
- To what extent does marketing strategies and its related activities affect post- consolidation of Nigeria banks?
- To what extent does a marketing promotional tool contribute to post-consolidation in Nigeria banks?
- How do you view the increase of customer base in post-consolidation of the banking sector?
- What possible marketing environmental factors pose challenges on post- consolidation in Nigeria?
- How would you rate the influence of the marketing mix elements on post- consolidation of the banking sector in the Nigeria economy?
1.5 RESEARCH HYPOTHESIS
HO: The application of marketing strategies do not significantly contribute in post- consolidation of the banking sector in Nigeria.
Hi: The application of marketing strategies significantly contribute in post- consolidation of the banking sector in Nigeria.
Ho: Marketing strategies do not play significant role in the post-consolidation of the banking sector.
Hi: Marketing strategies play significant role in the post-consolidation of the banking sector.
Ho: Marketing strategies do not affect the post-consolidation of the banking sector.
Hi: Marketing strategies affect the post-consolidation of the banking sector.
1.6 SCOPE OF STUDY
The major area of this study is on the role and contributions of marketing philosophies to the growth of bank consolidation in Nigeria. The study is basically centred on First Bank Plc, Port Harcourt branches. The branches includes, Rumuokoro, GRA, Town, and Oil Mill.
1.7 SIGNIFICANCE OF STUDY
This study will be of importance to the Nigerian economy at large. The study will also be useful to marketing institutions operating within the confine of the Nigeria economy, as it will give them the insight on how to invest, as well as receiving benefits accruing from the banking sector. This study will also encourage the masses to drop their fears and pick up the habit of savings again, hence, a sure ground for good investment.
1.8 LIMITATION OF THE STUDY
In composing this study, the researcher encountered challenges of limited fund to source for information related to the subject matter, other limitation is due the lack of adequate time frame, and materials needed respectively.
1.9 DEFINITION OF TERMS
Bank:- A place of business that receives, lends, issues, exchanges and takes care of money, extend credit and provide ways of sending money and credit quickly from place to place.
Consolidation:- The period after the reduction in the number of banks and other deposit taking institution with a simultaneous increase in the size and concentration of the consolidation entities in the sector
Economy:-The structure of economic life of a country, area or system. Consolidation; The reduction in the number of banks and other deposit taking institution with a simultaneous increase in the size and concentration of the consolidation entities in the sector.
Recapitalization:- The change in the capital structure of a corporation.
Marketing: a management philosophy, that identifies and satisfies individuals and organizational needs and wants at a profit
Marketing imperatives: The extreme important or urgent need of marketing activities in resolving a problem.