THE EFFECTIVENESS OF SALES PROMOTION STRATEGIES IN COMMERCIAL BANKING (UNION BANK OF NIGERIA PLC ABAKILIKI EBONYI STATE)
This research work was to evaluate the effectiveness of sales promotion strategies in commercial banking with particular reference to Union Bank of Nigeria Plc Abakiliki Ebonyi state, generally spend huge sums of money on sales promotion. Then, of what positive impact or otherwise does sales promotion have on the company’s product awareness; customers patronage and on its profit. The population of the study was drawn from MTN staff, dealers, consumers and Topmans formula was used to determine the sample size. Questionnaire was used to collect data, analysed and chi-square statistics was used to test the formulated hypothesis. The major findings of the study revealed that: - sales promotion increases consumer’s awareness, increases consumers’ patronage, it, among other things leads to increased profit of Union Bank of Nigeria Plc Abakiliki Ebonyi state. That the most important factor in choosing a GSM operator and not necessarily sales promotion. Based on the above, the following recommendations are made; that Union Bank should improve the quality of its services – as that is the prior factor considered by consumers in choosing a particular service.
1.1 Background of the study
Globalization is growing faster than ever. In order to keep up with the competition, companies are forced to think globally and to expand their business across borders.
National boundaries are falling and multi-national companies are increasing in numbers. The focus on internationalization efforts and development of global strategies has tended to fall upon manufacturing companies. However, due to the growth of the service sector and its important role for many countries in compensating trade deficits, as well as its increasing internationalization, service companies have become more and more
important. (McLaughlin & Fitzsimmons, 1996) Today, services are the fastest-growing part of world trade and account for the largest
share of gross domestic product in almost every country (Albers-Miller & Straughan, 2000). In an internationalization process, services are assumed to be encountering larger risks than manufactured goods, since service providers often immediately have to establish its operations abroad and cannot gradually export the goods (V‰likangas & Lehtinen, 1994). This is due to the fact that services generally cannot be separated from the person performing or selling them (Nicolaud, 1989). One of the sectors within the service industry that has been influenced the most by the changes in the globalization process, and at the same time has been highly internationalized, is the banking sector. (Sanchez-Peinado, 2003)
However, internationalization within this sector is now taking place, either through cross-border mergers and acquisitions, or through the establishment of subsidiaries in foreign countries. (Quintana, 2003) Flohr-Nielsen et al., (2003) claim that the best place to study how companies meet market and technology challenges is within the Nordic-banking sector.
What makes this banking sector particularly interesting are the ongoing changes reflected in mergers, acquisitions and technological developments. (ibid) Apart from the Benelux countries, the Nordic countries appear to be the only region within Western Europe where cross- border bank mergers have achieved satisfactory results. The reason for this success is said to be the resemblance in culture, language and history of the countries within those regions. (Quintana, 2003) 1.1.2 Promotion of Financial Services Promotion is the direct way an organization tries to reach its publics. This is performed through the five elements of the promotion mix, i.e. advertising, sales promotion, personal selling, public relations, and direct marketing (Czinkota & Ronkainen, 2004) With the growing importance of the financial sector, pressures are escalating for more effective marketing management of the financial services.
Despite the recent recessions, the financial services sector is continuing to grow in terms of turnover and profits and thus, has a supreme impact on the other spheres of the economy. Consequently, there is currently growing interest in applying marketing techniques and tools in financial services. (Meidan, 1996) In spite of major changes on the market of financial institutions, there are indications that banks have not yet successfully embraced the marketing philosophy or achieved levels of its implementation consistent with satisfied customers. Financial institutions are realizing that their established promotion practices are inadequate for new market conditions as levels of customer defection in the sector grow.
Traditionally, banks have tried to reach out to everyone in the community, but recent research proposes that banks should aim to
identify and serve micro-segments.(Dawes & Brown, 2000)The role of promotion has been redefined into managing long-term relationships with carefully selected customers, including construction of a learning relationship where the marketer maintains a dialogue with an individual customer (Dawes & Brown, 2000).
Due to this fact, the personnel are one of the most important resources of a bank. Their competence will determine the quality of the bank and how well it operates. (Marquardt, 1994) The difficulties with understanding a foreign culture often leads to insecurity, which as a result makes it harder to operate on a new market. This is a reason why many banks choose to operate in markets that are similar to those of their home countries. (Marquardt, 1994)
1.2 Statement Of The Problem
Financial activity across borders is a phenomenon as old as international trade (Marquardt, 1994). Since the 1960s, the internationalization of banks has expanded at a rapid pace, and banks from all over the world have established themselves abroad since then (Lindstrˆm, 2003).
According to Albers-Miller & Straughan (2000) banks have been encountering numerous challenges during the past two decades, including competition, recessions and image problems. Additionally, many banks have been facing mature domestic markets with limited future growth potential, which as a result, has led to expansion of their services abroad (ibid). Until recently, banks were seen as highly bureaucratic organizations operating solely in national markets.
Today, they are more likely to be efficient and modern institutions operating in a highly competitive environment, and often on international markets. (Quintana, 2003) There are three primary driving forces behind these transformations. The first force is the process of globalization (Daniels & Radebaugh, 2001). Globalization has affected the banking sector both directly, through the increasing interdependence of national financial markets, and indirectly, through the parallel internationalization of organizations.
The second force is the reduction of regulations concerning the banking industry in most countries, including the decreasing interference of central banks. (Quintana, 2003) Finally, the technological expansion has been an important factor behind the transformations (Daniels & Radebaugh, 2001). For a long time retail banking operations have to a great extent been conducted nationally.
1.3 Objective of the study
The aim of this research work is to examine the effectiveness of sales promotion strategies in commercial banking with particular reference to Union Bank of Nigeria Plc Abakiliki Ebonyi state.
The specific objectives of this research work include the following;
1. To examine the effect of sales promotion on the profitability of Nigerian banks.
2. To evaluate the impact of sales promotion on the development of Nigerian banking industry.
3. To examine the various promotional strategies of Nigerian banks.
4. To evaluate the challenges facing the sales promotion in Nigerian banks.
1.4 Research Question
1. What are the effects of sales promotion on the profitability of Nigerian banks?
2. What are the impacts of sales promotion on the development of Nigerian banking industry?
3. What are the various promotional strategies of Nigerian banks?
4. What are the challenges facing the sales promotion in Nigerian banks?
1.5 Significance Of The Study
This research work will be of immense help to: