The practice of market orientation in the banking industry a case study of Kumasi Banks
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Date
2008-08-25
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Abstract
The marketing environment within which banks operate has undergone a lot of changes from 2 banks in the pre-colonial era to the current state of about 24 major banks and a number of rural banks and non-bank financial institutions.
The banking environment has changed from a state regulated one in the 1950s through to the 70s to the current liberalised state from the 1980s.
This may be attributed to a number of conditions or factors like
(i) Government deregulation policy
(ii) Introduction of new banks in the sector
(iii) Sophistication of the customer
(iv) Technological advancement
These factors have created new behaviours and stiff competition for the banks.
The competition on the other hand has lead to the decline of customer loyalty to the banks. Customers are therefore willing to use more than one bank to meet their financial needs.
. According to Kotler (1994) banks were slow or reluctant to adopt marketing as a business philosophy.
The kind of competition in the industry calls for an understanding of how the banks managing and the methods that they are using to compete.
The issue now is how the banks in general and those in Kumasi in particular are managing this competition in the sector.
According to Narver and Slater, market orientation is relevant in such an environment as is found in the banking industry today. Market Orientation can however be defined as being close to customers by knowing what they need, at the same time knowing what competitors are doing and coordinating the activities of your firm to meet the customers demands.
Therefore a set of 29 questions based on the market orientation scales of Narver and Slater and Kohli and Jaworski was administered to the banks that were operating in Kumasi, to find out their market orientation status.
The study therefore sought to find how the banks were competing and to giye recommendations as well.
Despite the initial challenge of getting information from the respondents( representatives of banks) partly due to the competition and the oaths of secrecy that they are made to sign, all the 17 banks that were in operation as at may 2008 responded. The data collected was analysed by the SPSS programme.
The findings indicated that all the banks were practicing market orientation despite the fact that they were using different aspects of the concept and at different frequencies of time like weekly, monthly and even quarterly.
The findings also shown that most of the banks see marketing as a guiding light in their operations and therefore the effective incorporation of market orientation into their operations has help them to to withstand the competition. Some of the recommendations made were that
Management should institute regular research to know customers and their needs. Again during recruitment management should look out for abilities that can impact on customer acquisition and retention.
The banks were also advised to to give equal attention to all aspects of the concept order to reap the benefits therein.
Description
A long essay submitted to KNUST School of Business in partial fulfilment of the requirements for the award of a degree in Masters of Business Administration, 2008