A Survey on Problems of Marketing Commercial Bank Services

A Survey on Problems of Marketing Commercial Bank Services


Business orientation has moved gradually from the production of selling concept, to marketing concept and finally to societal marketing concept.  The original marketing concepts holds that the key to achieving organizational goals consists of determining the needs and wants of tangled markets and delivering the desired satisfactions more officially and effectively than competitors (kotler, 1994).  This marketing concept is based on three principles.  The focus is on understanding and responding to customer needs.  The emphasis is on integrated market planning involving product price physical, distributions and promotions.  The company marketing profit through customer wants satisfaction.marketing

The view of professor peter Durucker on the importance of adopting this marketing plglosophy by firms is shown here since he is one of the early advocates of the need for firms to adopt a story marketing.

Orientation:   According to him, the marketing concept of satisfying consumer wants provides an essential orientation for any business through innovation, a firm then designs new and better products and services that meet the unsatisfied needs of customers it had identified as a result of its marketing orientation.  (frain, 1996)  The first practical evidence of widespread adoption of the marketing concept emerged from the United states was the first to be faced with the danger of our production.  Most business organization practiced the marketing concepts but before these concept under which organization conducted their marketing activities and they include the product, production and concept are still practiced in many third world countries like Nigeria.

Bankers have, historically, viewed themselves foam “production” perspective as being prudent lenders of money.  However, during the 1960s and early 1970s, some progressive banks realized that to grow (attract funds), they had to financial instruments.  Although they have in corporate the original marketing concept into their services, they still have a long way to go before they adopt the societal marketing concept.

The societal marketing concept posits or holds that in carrying out the task of determining the needs more efficiently and effectively than competitors organization should do so in such a manner that enhances or preserves the consumers and society overall well being.


Marketing strategy in banking operation is defined as the reaction capability developed by a bank using the appropriate marketing mix elements to meet the banking needs of its costumers.  It involves the set of services, programmers etc adopted by a bank to render its services at minimum (Okafor, 1994).  There are three marketing strategies which can be used in any type of business organization and they are target marketing eross marketing and conduct marketing.  In this paper, we will be more concerned with target marketing which involves designing the services rendered in direct response to the commented want and needs of the customer segments.  Mc Cathy describes this marketing strategy as consisting of two distinct, yet interrelated parts.  The identification of a target market.  That relatively homogeneous group of a target market of users to which the organization will direct its appeal (market segmentation).

1.       The marketing mix:  The determination of a moisture of marketing variables (product) service, price, place and promotion) which the organization will combine in order to satisfy this target market.  For firms to grow and prosper in this very harsh enviers they must manage more skillfully, their existing business and very carefully select new fields to enter.  Marketing is concerned primarily with understanding the characteristic of different business and designing responses to develop market patented.  Thus in process of evaluating present and potential businesses and selecting those that are most promising.  Three primary strategies that firms can use to increase their sales and profits in the ling run are intestine, integration and diversification growth strategies.

Intensive growth strategy has three strategies that a company may decide to adopt.  They include market penetration, market development and product development.  Intensive growth strategy is normally used by companies that have fully exploited the opportunities that are latent in its current markets and products.  Integrated growth strategy is used by a company if its basic industry has a strange growth future and the company can cereuses its profitability by moving backwards, forward or horizontally within the industry.  Diversification growth strategy makes sense to a company if the task marketing system does not show much additional opportunity for growth or if the opportunity outside the marketing system is superior.  This does not mean that the company will take just any opportunity that comes along.  It will rather try to identify fields or areas that make use of its distinctive competence of help overcome a particular problem.  Most companies experience seasonal or cyclical fluctuations  which are expensive in terms of power, inventory carrying costs, or cash-flow management.  The have different seasonal or cyclical pattern.  No matter what strategy adopted, and effective applications of the marketing principles using the marketing mix application of the elements.  (product) service, price, place and promotion) is always very important.


To appreciate full what bank marketing means, we have to

understand, firstly, what marketing means general.  It may be defined as a management process which identifies anticipates and satisfies consumer requirement profitably.  The corporate thinking.  This means that the consumer is the central theme of any business and that everyone involved in the business must realize that then reliant  economic survival begins and ends with the customer.

No industry, institution or individual can afford to ignore marketing, or exist without it.  The fundament nature of banking involves taking risk and confidence is the anchor and cornerstone on which banking is built.  It is a veritable and handy instrument that assists bank in quickly dispelling rumors and suspicious as well as sustaining confidence.  Banking was formerly a simple activity which involved opening a bank at a good location and customers would come to the bank During this period, marketing was virtually unknown and ever today.  It is still resisted by many traditionally oriented bank managers.  Times have since changed and the response to these changes is essentially marketing, that is doing what customers wants, the way they want it.  With the marketing approach, the bank no longer sees itself as travelers cheques  or safe deposits but as facilitating cash requirements, and no longer offering loans but enabling customers to satisfy their wants and needs today instead of waiting till tomorrow when they would have saved enough.  One of the most important changes in consumer lifestyle, income and spending pattern, impact on liberalization of world trade and son on.  One consequence of the above changes is an increasing discriminating public and increase as the brand and consumer loyalty.

Once a product is offered with a particular distinctive consumer appeal, the consumer is prepared to buy the product and switch over to it.  The same is applicable to the banking sector where is such a situation, the customer will switch over banks to the one with the appeal.  Guided by the marketing concept banks would be satisfying customers financial needs.  Marketing has also evolved into an indispensable weapon used in addressing the increasing competition for financial services nationally and internally, while competition has always existed among financial institutions because of the fusibility of their product and the homogeneity of their services it has become much keener since the 1970’s banks must also realize that financial needs very among different groups of people and that the services to meet these needs should be differentiated according to the customer type.


The history of banking in Nigeria may be broken down into six distinct phases.  The colonel era 1892 – 1957

The independence era 1952 – 1970

The indigenization era 1970 –1985

The privatization and commercialization era 199 – 1998

Bank rehabilitation and restricting era 1999 – 1998

Electronic banking era 1999 till date.

Prior to 1970, the growth of banking institutions was left to fortuitous developments within the economy.  Between 1987 and 1990, an average of 10 commercial banks were confessed annually.  In 1988, the member of persons per banks was put at 1,500 for the united states of America, 3,700 for the united kingdom, 10,200 for Japan; 16,000 for parkiotan 15,750 for Indonesia; and 77, 170, for Nigeria (Banking world, 1988)

Considering that Pakistan and Indonesia are approximately at the same stage of economic development as Nigeria, one could therefore conclude that Nigeria was under –banked.  Modern- day banking began in Nigeria 1892 with the establishment of the African banking corporation.  The British bank for West Africa, presently first bank of Nigeria, which took over the assets of African bank of Nigeria was established soon after in 1894.  Apart from British Bank for West Africa, two other expatriate banks were established during this period.  The period 1892 to 1957 was generally described as the colonial, early or free banking era.  The period was characterized by lack of banking legislation.  The most remarkable consequence of this was the establishment of inventive indigenous banks during the period.  However, it is important to note that, of the many indigenous banks established during this period, only four survived beyond the period.

It is revealing to observance the pattern of distribution of bank offices across the length and breath of the country.  The total member of commercial bank branches in December 1990, was 1993 (14%) followed by Oyo State with 147 (7%) while katsina trailed behind with 32.  In addition, the head offices were also concerted in Lagos State accounting for 70% of total number of 58 banks in the country by December 1990.

The structural Adjustment programme (SAP) deregulated the economy and greatly liberalized bank licensing .  As a result of the critical role, banks were expected to play in the implementation of the economic recovery programme, the number of banks in Nigeria tripled between 1986 and 1992 and the establishment of these institutions heptanes competition in the finance services industry.  The competitive environment apart, fore reaching developments took place in the legal and regulatory fram work, for instance, the central bank of Nigeria ( CBN) Decree 24 and the Bank and other financial institutions Decree 25 of 1991 were promulgated.  Particularly remarkable was the withdrawal government deposits from cameral and merchant banks in 1989, the abolition of offshore guarantees for Naira denominated facilities and the frequent use of stabilization securities.  These  developments made the banking environment very challenging.  This situation was further heightened by the sadden shift of economic policies of the federal government in the 1994 budget, which resulted in the virtual abandonment of the policy of economic deregulation.

A further review of Nigeria’s banking history reveals in the over one hundred years of banking business, that the country has experienced only two banking crises.  The first, during the free banks era before independence and secondly, the more recent one during the liquidity crises which befell the banking system is late 1989 and early 1990’s.  It was observed that certain licensing requirements such as the stipulation of geographical spread for shareholders from discontinued and the five percent/latter raised to ten percent for individuals and thirty percent for corporate invertors respectively) maximum equity participation requirements to the appointment of incompatible pentanes and ‘front’ as boardroom members in banks thus, bringing about increased board disputes and in many instances protracted litigations.

There are compelling reasons why the liberal attitude towards the authorization of new financial institution, especially banks, should continue until on acceptable bank dusting ratio commensurate with Nigeria’s level of economic development is attained.  Today, the industry combines the character tics of branch banking peculiar to the British banking system as well as unit banking as practiced in the united states of America.

The foregoing has been a spirited attempted re-appraising the Nigeria banking system, essentially as a background to other things follow the entire economy, no doubt, is at serious crossroads presently.  However the financial system has had a glorious part, neatened a very difficult period but presently could be said to be experiencing some level of improvement.


The need for bank marketing is not difficult to explain.  The two sided nature of banking demands that the banker attracts customers from whom he can buy deposits and customers to whom he can shell loans and advances.

It need for bank marketing is not difficulty to explain.  The two sided nature of banking demands that the banker attracts customers from whom he can buy deposits and customers to whom he can shell loans and advances.

It is also essential that banks should more away from the sales orientation which has, liter to, characterized the marketing of financial services in developing countries including Nigeria.  Competition is appearing with the emergence of a good number of the now called generation banks.  Banks, therefore, have to adjust to the challenging needs of changing environment.

Thirdly, as the economy expends and develops, new horizons will continue to inflows and new opportunities and challenges will continue to open.  Such dynamic environment will have now room for stagnant banker, hamstring by age old banking traditions.  The day will carried by the progressive and dynamic bankers who is so doing, carefully manages his resources to meet diverse and competing priorities.  This cannot be achieved without the application of effective marketing techniques.  Marketing of financial services is also essential because lack of awareness among both customers and non-customer about the services provided by the banks.

Finally, marketing is essential not only because of the existence of too great a quantity of funds outside the banking system.  The marketing mix is also an important point for consideration and the components of the marketing mix are:  product, place, price and promoting (4ps).  These 4ps are the variables or elements that must be combined or mixed in a unique manner while devising a marketing strategy.

From the above, it becomes clear that effective marketing of financial services in a since-qua-non to, for the progress of any banking institution.  We can also see that effective use of the element of the marketing mix serves a useful purpose in achieving the goals of financial efficiently.  All these go to point out that financial services can equally be marketed like the physical products.  This means that the marketing concepts and philosophies also apply to financial services.  If banks-are to survives competition in the present day Nigeria, they should vigorously adopt and use all aspects of the marketing mix and even practice market segmentation.

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