AN EVALUATION OF MARKETING CONCEPT IN THE BANKING INDUSTRY A CASE STUDY OF UNION BANK PLC

CHAPTER ONE

INTRODUCTION

1.1. BACKGROUND OF THE STUDY

What philosophy should guide a company marketing and selling efforts?  What relative weights should be given to the interests of the organization, the customers, and society?  These interest often clash, however, an organization’s marketing and selling activities should be carried out under a well-thought-out philosophy of efficiency, effectiveness, and socially responsibility

Five orientations (philosophical concepts to the marketplace have guided and continue to guide organizational activities:

1.  The Production Concept
2. The Product Concept
3. The Selling Concept
4. The Marketing Concept
5. The Societal Marketing

The Production Concept. This concept is the oldest of the concepts in business.  It holds that consumers will prefer products that are widely available and inexpensive.  Managers focusing on this concept concentrate on achieving high production efficiency, low costs, and mass distribution.  They assume that consumers are primarily interested in product availability and low prices.  This orientation makes sense in developing countries, where consumers are more interested in obtaining the product than in its features.

The Product Concept. This orientation holds that consumers will favor those products that offer the most quality, performance, or innovative features.  Managers focusing on this concept concentrate on making superior products and improving them over time. They assume that buyers admire well-made products and can appraise quality and performance.  However, these managers are sometimes caught up in a love affair with their product and do not realize what the market needs.  Management might commit the “better-mousetrap” fallacy, believing that a better mousetrap will lead people to beat a path to its door. 

The Selling Concept. This is another common business orientation. It holds that consumers and businesses, if left alone, will ordinarily not buy enough of the selling company’s products.  The organization must, therefore, undertake an aggressive selling and promotion effort.  This concept assumes that consumers typically sho9w buyi8ng inertia or resistance and must be coaxed into buying.  It also assumes that the company has a whole battery of effective selling and promotional tools to stimulate more buying. Most firms practice the selling concept when they have overcapacity.  Their aim is to sell what they make rather than make what the market wants.

The Marketing Concept.  This is a business philosophy that challenges the above three business orientations.  Its central tenets crystallized in the 1950s.  It holds that the key to achieving its organizational goals (goals of the selling company) consists of the company being more effective than competitors in creating, delivering, and communicating customer value to its selected target customers. The marketing concept rests on four pillars:  target market, customer needs, integrated marketing and profitability.

Distinctions between the Sales Concept and the Marketing Concept

The Sales Concept focuses on the needs of the seller.  The Marketing Concept focuses on the needs of the buyer. 

The Sales Concept is preoccupied with the seller’s need to convert his/her product into cash.  The Marketing Concept is preoccupied with the idea of satisfying the needs of the customer by means of the product as a solution to the customer’s problem (needs).

The Marketing Concept represents the major change in today’s company orientation that provides the foundation to achieve competitive advantage.  This philosophy is the foundation of consultative selling.  The Marketing Concept has evolved into a fifth and more refined company orientation:  The Societal Marketing Concept. This concept is more theoretical and will undoubtedly influence future forms of marketing and selling approaches.

The Societal Marketing Concept. This concept holds that the organization’s task is to determine the needs, wants, and interests of target markets and to deliver the desired satisfactions more effectively and efficiently than competitors (this is the original Marketing Concept).  Additionally, it holds that this all must be done in a way that preserves or enhances the consumer’s and the society’s well-being.This orientation arose as some questioned whether the Marketing Concept is an appropriate philosophy in an age of environmental deterioration, resource shortages, explosive population growth, world hunger and poverty, and neglected social services.  Are companies that do an excellent job of satisfying consumer wants necessarily acting in the best long-run interests of consumers and society?  

The marketing concept possibily sidesteps the potential conflicts among consumer wants, consumer interests, and long-run societal welfare.

To be competitive, financial institutions must appraise how they are delivering products and services, determining that their marketing approach meets their customers' needs and demands for financial products. Non-banking entities continue to enter the financial services arena which has given rise to the need to market products more effectively. Additionally, customers' wants and needs are constantly changing, along with changing technology and delivery methods. Attention to service quality is mandatory for those institutions who hope to increase their marketshare. A dilemma is created for those in the financial services industry. Where is emphasis placed--on service or cost? The successful financial institutions will be those who can adapt their marketing approach to meet the demands brought about by changing laws, technology, and customer requirements.Therefore the research seek to evaluate the marketing concept in  the Banking industry with a case study of union Bank plc.

1.2. STATEMENT OF THE PROBLEM

The recent developments in the banking industry  from consolidation , to mergers ,and acquisition of small banks by the big ones  has led to to stiffer competition in the banking industry

As a result it is imperative that banks refocus their  marketing strategies to be relevant and customer driven. present economic climate in our country possess serious challenges to the banking industry, ranging from effective and prudent management of resources to the quality of service rendered and their accruing mutual satisfaction to both banks and customers. In other words, it calls for the adopting of a marketing orientation and the application of the tools of marketing to banking business to ensure survival and growth.Therefore the problem confronting this research is to evaluate the marketing concept in the banking industry with a case study of union bank plc

1.3    RESEARCH QUESTION

1. What is the nature of   the marketing concept
2.  What is the relevance and application of the marketing concept in the Banking industry
3. What is the nature of the marketing concept in union Bank

1.4. OBJECTIVES OF THE RESEARCH

1 To determine the nature of the marketing concept

2 To determine the relevance and application of the marketing concept in 3 the Banking industry

4  To determine   the nature of marketing concept and its significance in union Bank plc

1.5. SIGNIFICANCE OF THE RESEARCH

The research shall profer the relevance of the marketing concept in the banking industry

It shall serve as a source of information to marketing expert in the banking industry

1.6. STATEMENT OF THE HYPOTHESIS

 Ho    competition faced by union Bank is low

 Hi      Competition faced by union bank is high

Ho     marketing concept is not given significant attention in union Bank

Hi    marketing concept is given significant attention in union Bank

Ho   The impact of marketing concept in union Bank is low

Hi   The impact of marketing concept in union Bank is high

1.7. SCOPE OF THE STUDY

The study focuses on the evaluation of the marketing concept  in the Banking industry with a case study of the  effect of marketing concept in union Bank plc

1.8. DEFINITION OF TERMS

 The Marketing Concept.  This is a business philosophy that challenges the above three business orientations.  Its central tenets crystallized in the 1950s.  It holds that the key to achieving its organizational goals (goals of the selling company) consists of the company being more effective than competitors in creating, delivering, and communicating customer value to its selected target customers. The marketing concept rests on four pillars:  target market, customer needs, integrated marketing and profitability.

SALES  CONCEPT

The Sales Concept focuses on the needs of the seller.  The Marketing Concept focuses on the needs of the buyer. 

 The Sales Concept is preoccupied with the seller’s need to convert his/her product into cash.  The Marketing Concept is preoccupied with the idea of satisfying the needs of the customer by means of the product as a solution to the customer’s problem (needs).

MARKETING MIX DEFINED

The marketing mix is a business tool used in marketing and by marketers. The marketing mix is often crucial when determining a product or brand's offer, and is often associated with the four Ps: price, product, promotion, and place.[2] In service marketing, however, the four Ps are expanded to the seven Ps[3] or Seven Ps to address the different nature of services.

In the 1990s, the concept of four C's was introduced as a more customer-driven replacement of four P's.[4] There are two theories based on four Cs: Lauterborn's four Cs (consumer, cost, communication, convenience), and Shimizu's four Cs (commodity, cost, communication, channel).

In 2012, a new four P's theory was proposed with people, processes, programs, and performance

CUSTOMER DEFINED

A customer is an individual or business that purchases the goods or services produced by a business. The customer is the end goal of businesses, since it is the customer who pays for supply and createsdemand. Businesses will often compete through advertisements or sales in order to attract a larger customer base.

BANKING SERVICES

the various ways in which a bank can help a customer, such as operatingaccounts, makingtransfers, payingstanding orders

BANKING PRODUCT

goods and services that banks provide for their customers, for example, statements, direct debits, and automatic debits

REFERENCES

Althouse, Jeanne, (1999). Director, Future of Money Program for The Institute for the Future, Menlo Park, CA, Presentation to the Independent Community Bankers Annual Convention, San Francisco, March.

Bexley, James B. (1998). Directors' Duties & Responsibilities in Financial Institutions, Huntsville, TX: Sam Houston Press, Huntsville.

Federal Deposit Insurance Corporation, (1998) Annual Statistical Data.

Hempel, George H. & D. Simonson. (1999). Bank Management-Text and Cases, 5th Ed., New York: John Wiley & Sons, Inc.

Koch, Timothy W. (1999). Bank Management, 4th Ed., Fort Worth: The Dryden Press.

Rose, Peter S. (1999). Commercial Bank Management, 4th Ed., Boston: Irwin/McGraw-Hill.

Sinkey, Jr., Joseph F. (1998), Commercial Bank Financial Management, 5th Ed., Englewood Cliffs: Prentice-Hall.

James B. Bexley, Sam Houston State University

Joe James, Sam Houston State University