CHAPTER TWO
REVIEW OF RELATED LITERATURE
HISTORICAL BACKGROUND
Marketing has become a major consideration in the present day service industry as a result of dynamism and competitiveness of the economy. Competition in this sector of the economy grows more intense and steadily more professional especially in the banking and other financial institutions. The age of specialization in the banking industry has changed to one where most organisations offer a wide range of services in competition with each other (Abdulqadir, 2010). It has, therefore become essential to use all the resources and techniques that marketing offers to survive and succeed in the ever changing business environment in the world with reference to our country Nigeria (Bale &Akpan, 2009). Thus marketing communication comes into consideration as it is intended both to communicate with and to sell to customers. At independence in 1960 there were 12 commercial banks in the country with 160 branches. (Ajibade,1984). Resulting from deregulation and liberalization in the Nigerian banking industry, the industry environment has changed in many ways. Before 1987, there was little or no competition because the governent restricted entry with the concentration of activities on the four largest banks (First Bank, United Bank for Africa, Union and International Bank for West Africa) (Redasel,1989, 1990). Later, developments in the economy witnessed series of business transactions and the emergence of banks became very desirable. The desirability aided the proliferation of many new banks and the rapid growth of existing ones. The number of banks grew from 45 in 1986 to 122 in 1992, comprising 67 commercial and 55 merchant banks. This was in addition to specialized banks like Peoples Bank, primary mortgage institutions, urban development banks, and non-bank financial institutions like finance houses, all of which were offering one specialized service, product or another. The market became more aggressive and competitive. This competition was further exacerbated by the emergence of finance houses, mortgage banks and community banks in the late 80’s and early 90’s, all competing for the same deposits in varying forms (Abdulqadir, 2010). Another phenomenon in the banking industry in Nigeria, which posed serious challenge to the sector is the issue of financial distress in the banks. As at March 1994, no fewer than 29 banks had been declared technically insolvent by the Central Bank of Nigeria (Isiaka, 1997). In 1997, interest rate deregulation was reimplemented while entry restriction was again relaxed in 1999 (Asogwa, 2004). The banking industry in Nigeria in January 2001 witnessed an important development – the introduction of Universal Banking. Universal Banking is a system of banking in which the operators licensed to undertake the business of banking are permitted to offer full-range of financial services.
Marketing is also the prime tool of the banking sector because it satisfies customer benefit and deals with both the banker and the customer. It deals with the customer by providing their deep wants and desires and also the banker because it assists in identifying and targeting potential clients. The aim of marketing is to serve and satisfy human needs and wants making it a strategic factor in the economic structure of any society. This is because it efficiently allocates resources and has a great impact on other aspects of economic and social life (Ogunsanya, 2003). The power of marketing is essentially the same but there may be some qualitative and quantitative differences like fewer products and services moving through the system and various types of services offered (Baker, 1985). A company’s first task is to ‘create customers’ as identified by Drucker (1999), however customers are faced with several choice of products, prices and suppliers of services and products. It can be a challenging task for a company to create its own customers which are the purchasers of its services or products, but they can make it less difficult and maximize their standards by forming value expectations and acting upon them. According to Okuonghae (2009), the only way to thrive in competition is to partake in strategic marketing, identify customers’ needs and also scan the environment. There is also the need for bank operators to articulate policies geared towards customer satisfaction. Financial products are those products offered by banks to its customers. There are six categories of products as stated in Aigbiremolen (2004).They are retail banking products, corporate banking products, foreign operations, corporate financing and electronic banking
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