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Management Science and Engineering ISSN 1913-035X [Online]
Vol. 7, No. 2, 2013, pp. 64-69 www.cscanada.net
DOI:10.3968/j.mse.1913035X20130702.3301 www.cscanada.org

Fundamental Role of Marketing in the Banking Sector

OGBADU, E. Elijah[a]; ABDULLAHI, Usman[a],*

[a]
Department of Business Administration, Kogi State University,
Anyigba, Nigeria
INTRODUCTION
* Corresponding author. Email: Atusman96@yahoo.com Good marketing has become increasingly vital ingredient
for business success. And marketing profoundly affects
Received 28 April 2013; accepted 02 June 2013
our day-to-day lives. It is embedded in everything we do
(Kotler & Keller, 2006, p.3-4) Marketing practices are
Abstract continually being refined and reformed in virtually all
Marketing is the process of introducing and promoting industries to increase the chances of success. Marketing is
the product or service to the market and encourages very important in an organization, that one could equate it
sales from the buying public. The study examines the with finance. While finance may be considered as the life
fundamental role of marketing in the Nigerian Banking wire of business, especially start up capital, marketing is
Industry. Nigerian banking sector has been characterized the only thing needed so that the capital invested could be
by an unethical marketing practices which have resulted recouped and for the business to continue to exist.
to poor handling of customers of certain banks. The In the first instance, there is no business that exists
aim of the study is to ascertain the extent of marketing except there is market for such business. While market
practices in Nigerian banks and the role marketing plays may be viewed as a point where exchanges takes place,
in bank’s performance. The study was designed around a marketing is considered as a set of human activities
survey research. Data collected were analyzed in tables directed at facilitating and consummating mutually
and tested the research hypotheses with the analysis satisfying exchange relationship between the marketer and
of variance (ANOVA) statistical techniques. Findings the market (Linus & Vivienne, 1997, p.2). This definition
revealed a direct positive relationship between marketing justifies the dependence of business on marketing.
and bank performance. It then concludes that Nigerian Marketing being the bedrock for business survival
banks engage in marketing to a considerable extent and is commonly believed to have progressed through five
marketing plays a significant role in the banking sector. distinct phases of evolution since the beginning of the
Hence, recommend that bank’s should increase their time. According to White (2010), the simple trade era, the
marketing efforts to enable them perform optimally and production era, the sales era, the marketing department
out perform competition. era, and marketing company era. The modern marketing
Key words: Marketing role; Banking services; have been argued to have evolved in the mid 1800s in
Performance advance countries like the United State of America and the
early 1900s in developing countries such as Nigeria. Linus
OGBADU, E. Elijah, ABDULLAHI, Usman (2013). Fundamental and Vivienne (1997, p.2) argued that a form of exchange
Role of Marketing in the Banking Sector. Management Science relationship within the society had, however, been in
and Engineering, 7(2), 64-69. Available from: http://www.cscanada.
net/index.php/mse/article/view/j.mse.1913035X20130702.3301
relationship before the advent of modern marketing. This
DOI: http://dx.doi.org/10.3968/j.mse.1913035X20130702.3301 exchange relationship started when individuals were able
to produce given items more than they could consume.

Copyright © Canadian Research & Development Center of Sciences and Cultures 64

 OGBADU, E. Elijah; ABDULLAHI, Usman (2013).
Management Science and Engineering, 7 (2), 64-69

The importance of marketing is viewed to the extent Thus, from the foregoing, the study is designed to
that financial success is said to depend on marketing examine the fundamental role of marketing in the Nigeria
ability. Finance, operation, accounting and other business Banking industry in particular and business in general.
functions will not really matter if there is not sufficient
demand for products and service so the company can
make a profit. According to Kofo and Suraju (2006, 1. STATEMENT OF THE PROBLEM
p.14), marketing provides the necessary cash and credit Research shows that unethical marketing behavior impacts
to produce, transport, and store, promote, sell, and buy consumer’s behavior in the market place. Nigerian banks
products. The foregoing are however achieve through are mostly found of this behavior which resulted to poor
revenue generated from sales. handling of customer complaints. Lack of courtesy, failed
The traditional business focus is to produce and sell promises, the pain and stress which customers of certain
to the market (customer), whereas, a firm can never banks are made to go through in a single transaction can
be sure that customers will want to buy its product. be highly frustrating and devastating.
Therefore, the modern marketing idea emphasizes the The long queues and huge crowds in the banking halls
identification and understanding the needs and wants of can also be discouraging most time, especially when the
customer in the market, and adapting the operation of weekend is near. Most times, these long queues are as a
the organization to deliver the right goods and services result of the cashier pushing duty to one another, as to
more effectively and efficiently than its competitors who is to attend to the customer or not.
for their satisfaction and mutual benefit. According to The issue of money transfer in banks is one major
Paul (1995), satisfying the customer is what marketing problem that customers of certain banks have been made
is basically all about. Marketing fuels competition and to experience. In most cases, the customer hardly receives
better deals for consumers, it encourages innovation in the payment of the money transferred in his account
an attempt to satisfy customers better. The basic premise immediately. Thus, marketing practice in Nigeria banks
of the marketing concept is that its adoption will improve is poor especially in areas of customer motivation and
business performance. Marketing is an acid test of the market share.
effect that its use has on key corporate indices such as Academiers have wrote severally and extensively in
profitability and market share.
the banks journal and periodic for adoption and where
In line with this, banks today are operating in a highly
not adhered to. Customer themselves have protested
competitive and rapidly changing environment. In the
through physical complaints and suggestion/complaint
changing economic scenario, a professional approach
box provided by the banks themselves. An International
to business development is essential and the survival of
Organization known as KPMG have also carryout survey
a banking institution depends on its ability to take up
on key aspect of banking service with the view to make
challenges coming up in the environment. Developing
recommendations for way forward to the bank considered
business through marketing of bank’s services is one of
not doing well. All these have proof abortive hence the
the crucial areas which need attention of the bankers to
need to carry out this research to address the problems.
ensure profitable survival.
Bank marketing like any other marketing philosophy,
in any context, refer to the need satisfaction of the 2. OBJECTIVE OF THE STUDY
institution clients. The basic step involves identifying
the needs of the customers and developing products The major objective of the study is to examine how
to suit their needs or modifying the existing products selected banks have used marketing as a tool of
accordingly. It also requires the need for foreseeing competition in the changing business environment in
wants of the customers in future and developing suitable Nigeria. Other specific objectives are as follows:
products of their requirements. To examine the extent of marketing practices in
Weyer, in Moham (2009) attempted a comprehensive Nigerian banking sector.
defination for bank marketing. According to him, it consists To determine the role of marketing in Nigerian banking
of identifying the most profitable markets now and in future, sector.
assessing the present and future needs of customers; setting
business development goals and marketing plans to meet
them and managing the various services and promoting them 3. REVIEW OF RELATED LITERATURE
to achieve the plans, all in the context of a changing market Most researchers determine a bank marketing as an
environment. Further, successful marketing in a bank call for integrated system of organisation development and
commitment at all levels to the task defined in this regard. marketing of banking products, aimed at meeting the
Hence, achieving higher business standards and operational needs for individual consumers and profit based research
performance through marketing of banking services should be and market forecasting.
one of the directional goals of the organization.

65 Copyright © Canadian Research & Development Center of Sciences and Cultures

Fundamental Role of Marketing in the Banking Sector

Deryk Weyer of Barclay’s Bank attempted a 4. RESEARCH METHODOLOGY

comprehensive definition for Bank marketing as quoted
This section described the method and sources of data
by Mohan (2009), it consists of identifying the most
used in the research work. It includes the population,
profitable markets now and in future; assessing the
sample size and technique, data collection and data
present and future needs of customers; setting business
analysis technique.
development goals and marketing plans to meet them and
managing the various services and promoting them to 4.1 Research Design
achieve the plans, all in the context of a changing market Research design helps the researcher develop a mental
environment. image of the structure for gathering the data and the
According to Shamsher (2009), Bank marketing does analysis that will follow as observed by Asika (2006). It is
not only include service selling of the bank but also is the the framework for study used as a guide in collecting and
function which gets personality and image for bank on its analyzing data. The researchers made use of the survey
customers’ mind. Further, bank marketing is based on a research design while carrying out the study.
thorough knowledge of objective information about the
market; the real consumer needs initiative and enterprise, 4.2 Population of the Study
finding the most profitable markets for banking products The population of the study is a census of all items or
and effectively adapting to the market. subjects that possess the characteristics or that have
Marketing plays an informative role in the banking knowledge of the phenomenon being studied (Asika,
sector, it can be used to reach out to more and more 2006). The population for this study comprises of thirty
customers and explain to them the benefits of depositing five thousand, six hundred and eighty (35680) staff of
their money with the bank this will thereby, generating four selected banks in Nigeria as follows: First Bank Plc,
more deposits for the bank. Proven marketing strategies 13,000; UBA 12978; Zenith Bank Plc 7800 and Access
help banks grow and maintain profitability despite Bank Plc 1902 (Abdullahi, 2012).
increased competition. Frank (2012), financial institutions 4.3 Sample Size and Sample Technique
such as investment companies are directly competing A sample is a part of a population. It is a sub group of
with commercial banks. Banks need effective marketing observation from a large population in order to make
strategies to retain their existing customers and attract new inferences about the characteristics of the large population.
customers. According author, the environment for banks Since it would neither be possible nor practicable to study
is more challenging, employing effective bank marketing all customers of the banks, we will determine our sample
strategies will enable a bank to grow and maintain profits. size statistically by applying Taro Yamani formula (1976)
According to Anubhuti (2011), marketing is a very as follow:
useful tool for banking sector for attracting customers for
N
various banking products, stating that old days are gone n = +
1 N (e) 2
for banking where in the customer had to walk into his
Where n = sample size
bank and ask for services. Due to increase in competition,
N = population
it has become imperative for banks to use marketing tool
e = Margin of error (0.05)
to increase there marketing share by providing awareness
The sample size is thus 390. Since our sample
of their products to their prospective customers.
size comprises of staff of four banks, we used Kurnar
Now banks have to provide knowledge of their
Departmental Allocation formula to determine the amount
products to their customers and create requirement of
of sample that dues to each of the banks as used by
their products among the prospective customer and for
Abdullahi (2012), as follows:
that marketing has become a most important tool which
n (MH)
connects the customers and products offered by the bank. nh =
M
For the bank to derive maximum returns and enhance
market position, the marketing mix has to be effectively Where: n = sample size
managed. The marketing mix include product, price, MH = Population of the Department
promotion and place. All these can be integrated into the M = Overall population
configuration of banking services. The sample size allocation is: First Bank Plc 144;
Thus, successful marketing in a bank calls for UBA Plc 144; Zenith Bank Plc 87 and Access Bank 21
commitment at all levels to the task defined in this regard. respectively.
Achieving higher business standards and operational 4.4 Data Collection
performance through marketing of banking services The following method of data collection provided
should be one of the directional goals of the organization. information on how the necessary data on which the

Copyright © Canadian Research & Development Center of Sciences and Cultures 66

 OGBADU, E. Elijah; ABDULLAHI, Usman (2013).
Management Science and Engineering, 7 (2), 64-69

results and conclusions obtained at the end of the study not apparently there before and which would enable a
were base. The study made used of primary data. The summary description of the subject studied to be made.
primary source includes structured questionnaire and The information referred to here is the information that
interview with staff of the selected banks. A total of 396 enables the study to test the research hypothesis. The data
questionnaires were administered. The questionnaire was manually computed with the analysis of variance
is divided into three sections, section A seeks to elicit (ANOVA). Model specification is as follows:
responses on the personal data of respondents. Section B SSB = r/ ( xij - x) 2
examine the extent of marketing practices in the selected SSW = / (xij - x)
2

banks, while section C examine the role of marketing in the
4.6 Data Presentation and Analysis
banks. The general effect of the questionnaire is to examine
the effect of marketing in Nigerian banking industry. This section involved the data collected from the field
survey on the responses to the research question and
4.5 Method of Data Analysis other key questions considered appropriate to address
Analysis of data refers to those techniques whereby the the objectives of the study. These will form the basis for
investigator extracts from data, the information that was testing the research hypotheses.
Table 1
Distribution of Response of the Respondents
Questions Response Percentage
To what extents are marketing practices in Nigerian Banks?
- Low extent 64 16.2
- Moderately 201 51
- Large extent 49 12.4
- Very key extent 47 12
- Undecided 34 9
State the marketing practices carried by Nigerian Banks.
- Speed of service 60 15.2
- Handling customers complaints 202 51.1
- Ethical practices 72 18.2
- Courtesy 47 12
- Uncertain 14 4
How will you rate the role of marketing in Banking sector
- Less significant 167 42.2
- Highly significant 219 55.4
- Not significant 9 2.3
Marketing is a competitive tool for Nigerian Banks
- Yes 326 82.5
- No 54 13.7
- I don’t know 15 3.8
Source: Field survey, 2013

Above table shows the response rate of respondents. A Result above revealed that 167 respondents
total of 64 respondents representing 16.2% of the sample representing 42.2% of the total sample size rated the
size assert that marketing practices in Nigerian banks role of marketing in banking sector as less significant,
is at a low extent, 201 respondents representing 51% 119 respondents representing 55.2% examine the role of
says marketing practices in Nigeria Bank is moderate, marketing in banking sector as highly significant while 9
49 respondents representing 12.4% believe its at large respondents assert that marketing has no significant role
extent while 47 respondents representing 12% states that in the banking sector. Apparently, responding to whether
Nigerian Banks practice marketing at a key extent. 34 marketing is a competitive tool for Nigerian Banks, 326
respondents representing 9% are yet to decide the extent of the respondents representing 82.5% of the sample
of marketing practices in Nigerian Banks. size believes it is, 54 respondents representing 13.7%
In responding to the types of marketing practices carried are of the opposite side and 15 respondents representing
out by Nigerian Banks. 60 respondents representing 15.2% 3.8% of the total respondents don’t know whether it is or
of total sample size went for speed of service option, 202 not. The implication of the result above is that Nigerian
respondents representing 51.1% states that Nigerian Bank’s Banks practice marketing at moderate level, handling of
marketing practices is customers complaints handling, 72 customer complaints is the major marketing practices of
respondents representing 18.2% believes Nigerian Banks Nigerian Banks. Consequently, the role of marketing in
involves in ethical marketing practice while 47 respondents banking sector is highly significant and Banks engage
representing 12% argues that marketing practices in Nigerian in marketing as a way to out perform competition and
Banks is mostly on courtesy. 14 respondents representing 4% achieve optimal performance.
of the total respondents are uncertain of the type of marketing
practices carried out by Nigerian Banks.

67 Copyright © Canadian Research & Development Center of Sciences and Cultures

Fundamental Role of Marketing in the Banking Sector

5. TEST OF HYPOTHESES complaints and solve them as well, and this forms their
The study tested the research hypotheses using the most marketing technique. The study also revealed that
analysis of variances (ANOVA) to ascertain the extent the role of marketing in banks is highly significant.
of marketing practice in Nigerian Banks and determine This is inline with literatures reviewed on this study.
the role of marketing in banking sector. The test is based Also, Nigerian banks uses marketing as a tool to out
on the sample data collected from survey on the selected perform competition. The implication is that marketing
banks as follows: contributes greatly to banks survival and can also be used
to overcome competition in today’s changing business
5.1 Hypothesis I environment. The ANOVA analysis show that F calculated
Table 2 a is greater than F tabulated. This indicates that marketing
ANOVA practices in Nigerian banking sector is highly significant.
Source Sum of square d.f Mean square F Apparently, as revealed by the test F calculated is greater
Between Treatment 39750 1 39750 535.4
than F tabulated. This also indicates that marketing plays
Within Treatment 594 8 74.25
Total 40344 9 – a significant role in the banking sector. The implication of
these is that marketing generally is vital to the survival of
Source: Data Analysis, 2013
Ftab = df under level of significance; F(V1, V2) under 5%, banks in Nigeria.
F (1, 8) under 0.05, standard value = 535.4; Compare Fcal α Ftab (5.32 α
535.4); 535.4 > 5.37.
Decision Rule CONCLUSION
Using the ANOVA test, we therefore reject the null The study has attempted to examine the extent of
hypothesis since Fcal > Ftab i.e., 535.4 > 5.59 and accept the marketing practices in Nigerian banks and the role of
alternative hypothesis (H1) at 0.05 level of significance. marketing in the banking sector. The study established
The implication of this decision is that marketing practices a direct and positive relationship between marketing
in Nigerian banking sector is highly significant. Nigerian practices and the role of marketing to bank survival in
bank should therefore continue to practice marketing a competitive business environment of today. Findings
as it is a reliable source to increases sales and generates revealed that marketing practices in Nigeria banks is
revenue for the bank. significant while handling of customers complaints is one
5.2 Hypothesis II major marketing practice strategies of the banks. Also,
Table 3 b the role of marketing in banking sector is significant and
ANOVA it is used as a competitive tool in the industry. Having
Source Sum of square d.f Mean square F reviewed previous studies in addition to the findings of
Between Treatment 69444 1 69444 22.9 this study, it then concludes that marketing is pivotal to
Within Treatment 12129 4 3032.25 the performance of banks in Nigeria. Management of
Total 81573 5 – Nigerian banks is therefore encouraged to increase their
Source: Data Analysis, 2013 marketing effort as one of the major source of revenue for
Ftab = df under level of significance; F(V1, V2) under 5%,
F (1, 4) under 0.05, standard value = 22.9; Compare Fcal α Ftab (7.71 α the bank.
22.9); 22.9 > 7.71.
Decision Rule
From the ANOVA test, F-calculate is greater than F table RECOMMENDATIONS
i.e., 22.9 > 7.71. The research therefore rejects the Null The Nigerian banking industry should realize the
hypothesis and accepts the alternative hypothesis at 0.05 fundamental role of marketing in their business so as to be
level of significance. The implication of this decision able to develop effective marketing plans and strategies
is that the role of marketing in banking sector is highly for the banks. The following recommendations are made
significant. Henceforth, Nigerian banks should increase to the banks based on the research findings:
there marketing effort to survive in face of the present 1st. The management of the institution should not rely
competitive business environment. on their present marketing effort as this will enable them
remain in business. The banks should also continue to
innovate and providing newer compatible product and
6. MAJOR FINDINGS services to their serving marketing. This can be achieved
From the results, we deduced that marketing is through effective marketing research. Not withstanding,
moderately been practiced by Nigerian Banks giving branches of the banks be empowered to embark on
the views of the respondents. Meanwhile, handling of research on their own base on the environment they serve.
customers complains is the most marketing practices The banks information should also be made available at
of the banks in Nigeria. The implication here is that all level so that interesting individuals can assess them.
Nigerian banks practice marketing, they listen to customer This can lead to new discovery based on recommendations

Copyright © Canadian Research & Development Center of Sciences and Cultures 68

 OGBADU, E. Elijah; ABDULLAHI, Usman (2013).
Management Science and Engineering, 7 (2), 64-69

that will be made by the general public as a result of the Kofo, O. & Suraju, A. A. (2006). Marketing Management
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69 Copyright © Canadian Research & Development Center of Sciences and Cultures