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ABSTRACT

This study was intended to examine the role of product management in the marketing of banking service in First Bank, Aba Branch in Abia State, Nigeria. This study was guided by the following objectives; to examine the relationship between product management and marketing of banking service, to find out the environmental difficulties in the process of product management in first banks, to determine the effect of product management on bank profitability and performance, to determine if effective management of bank products leads to increased product quality, to examine if wrong segmentation of target market is the major problem encountered in product management, to examine whether bank customers are really satisfied with bank products or not and why and to proffer possible solutions/suggestion for addressing the problems faced by product management and/or make recommendation that may lead to better bank customer relationship, increase customer satisfaction and bank profitability for brighter future. The study employed the descriptive and explanatory design; questionnaires in addition to library research were applied in order to collect data. Primary and secondary data sources were used and data was analyzed using the chi square statistical tool at 5% level of significance which was presented in frequency tables and percentage. The respondents under the study were 100 staff of First Bank, Aba branch in Abia State, Nigeria. The study findings revealed that there is a relationship between product management and marketing of banking service and that there are environmental difficulties in the process of product management in first banks; based on the findings from the study, training issues need to be addressed in order to implement product management effectively.

CHAPTER ONE

INTRODUCTION

1.1       Background of the Study

The ability to attract and retain high-profit customers is a distinguishing characteristic of successful businesses, and many companies struggle with how to attain that goal. To succeed, firms employ many different strategies, including competency management; customer retention programs; strategic leveraging; global marketing; project management; big, hairy, audacious goals (BHAGs); E-commerce; and supply chain management. Yet all of the tools and techniques espoused by management gurus have not replaced the importance of a solid organizational structure to guide an organization in accomplishing corporate goals. One such organizational structure that has withstood the test of time in many situations is the product management structure. In this type of structure, product managers oversee a set of defined products or services that face different competitors and different customer constraints than many or all of the other products and services in the company. Determining if product management is the optimal structure for a particular company involves a number of considerations, including the company’s culture; how much technical knowledge is required to design, launch, and support specific products; and whether the company’s products require distinctly different approaches to “going to market.”

Once a structure is established, clarifying the roles of company personnel with whom product managers routinely interact is important. The product manager is a generalist who must rely on numerous functional specialists to develop and market the product line. The product manager is the liaison among the functional departments within the company as well as among the company, the sales force, and the customers for all product-related issues. As a result, some understanding of mutual expectations is appropriate. On an ongoing basis, product managers exchange information with the sales force. They represent the voice of the customer at internal meetings on the product line in question. And they need to plan for current and future product activities that benefit the company as a whole. The commercial banking industry has undergone significant change in the past 15 years. From the origin of commercial banking, the cost of its key ingredient ± money ± was controlled. The business activities in which banks could and could not compete were largely determined by legislation (Sullivan, 1986). 

Today, large commercial banks operate in a far more dynamic marketplace. The cost of funds fluctuates rapidly and there is increased competition from both inside and outside the traditional banking industry (Yang, 1990). Federal and state legislation continues to exert influence on the industry, products and customers are increasingly sophisticated and the rate of change in the industry continues unabated (LeGrand, 1992). Such rapidly changing circumstances have prompted a number of significant changes in traditional bank management. Challenges confronting bank managers include developing: a capacity to meet and exceed the performance levels of sophisticated competitors; a customer-focussed marketing approach; an ability to manage numerous and often very diverse products and services; a capability to measure both market performance and product profitability; and initiative and entrepreneurial thinking within their organizations (Cooper et al., 1994; Cosse and Swan, 1983; Franozoni, 1991; Wichman, 1989, 1986).

In response to the need for more responsive management approaches, banks began implementing product management. First used in 1927, by Procter & Gamble, product management is a logical choice when products are quite different from one another or if the number of products offered is too large to be managed by a functional department (Kotler, 1984). Major benefits of the product management system include: improved customer focus, product specialization and coordination, maximum use of resources, product accountability and the generation of new ideas. Placing a single person or even a department in charge of a product or a group of products is more likely to assure that no product is overlooked in the marketplace (Eckles and Novotny, 1984).

Banks have used the product management system for over a decade. While some banks continue to find new applications for product management, other banks are scaling back their reliance on product management in favor of more traditional management approaches (Berggren and Dewar, 1992). Although there is much anecdotal evidence of the uses and applications of product management in banking, little systematic research has been conducted to examine the organizational and individual issues encountered in applying product management to large full-service commercial banks. In fact, our literature review revealed few previously published studies focusing on the major conceptual issues of product management in banking.

Unfortunately, many banking organizations adopt the product management system without completely understanding it and without providing the necessary support (Cummings et al., 1989). Despite the many benefits product management offers both commercial banks and package goods marketers, there are several management and organizational issues which must be dealt with for product management to be successful. One stream of research specifically explores the challenges product managers encounter in the package goods industry (Lysonski, 1985; Reid, 1988). A second research stream explicates the issues concerning the application of product management to the management of services (Lysonski et al., 1988; Southerst, 1994). Other research into the application of product management has focussed on decisionmaking authority and interpersonal relationships (Churchill and Pecotich, 1982; Cummings et al., 1984; Hise and Kelly, 1978; Kelly and Hise, 1979), the role of strategic planning and product management (Crosse and Swan, 1983) and product managers' job satisfaction and job performance and their relationship to select organizational behavioral variables (Cummings et al., 1989).

1.2       Statement of the Problem

First Bank has been making relentless efforts towards the management of product in Aba, Abia state, yet many of the products managed have not been able to satisfy the need of their target customer.  As a result of this, these products do not receive adequate patronage and resources wasted.  This affects bank profit negatively. Moreover, there are many hard  nuts to crack in the management of product which make it difficult for management to introduce new product even when old ones lack patronage- and this effects the ratio at which First Bank manage product and hence slowness  in generating income.

Again, some of the target customers are not aware of the existence of some product of the bank which makes such products lack patronage and even when patronized only a few people patronize them.  Hence banks effort in their management becomes futile. Furthermore, customer  of the bank are not adequate educated on the product managed and some bank staff are not properly equipped on the marketing  of financial service which makes it possible for profitable opportunities to be grasped in the bank such lack of education renders bank effort fruitless and resources used in managing such product wasted. Finally, some management of banks find it difficult to segment market for their product in that the product goes to wrong market where the product receive little or no demand which in the end renders banks effort unprofitable.

1.3       Objectives of the Study

The study sought to know the role of product management in the marketing of banking services. Specifically, the study sought to;

1.  examine the relationship between product management and marketing of banking service.

2.  find out the environmental difficulties in the process of product management in first banks.

3.  determine the effect of product management on bank profitability and performance.

4.  determine if effective management of bank products leads to increased product quality.

5.  examine if wrong segmentation of target market is the major problem encountered in product management.

6.  examine whether bank customers are really satisfied with bank products or not and why.

7.   proffer possible solutions/suggestion for addressing the problems faced by product management and/or make recommendation that may lead to better bank customer relationship, increase customer satisfaction and bank profitability for brighter future.

1.4       Research Questions

1.  What is the relationship between product management and marketing of banking service?

2.  What are the environmental difficulties in the process of product management in first banks?

3.  What is the effect of product management on bank profitability and performance?

4.   Does effective management of bank products lead to increased product quality?

5.  Is wrong segmentation of target market the major problem encountered in product management?

6.  Are bank customers really satisfied with bank products or not and why?

7.  What are the possible solutions/suggestion for addressing the problems faced by product management and/or make recommendation that may lead to better bank customer relationship, increase customer satisfaction and bank profitability for brighter future?

1.5       Research Hypotheses

Ho1:  There is no relationship between product management and marketing of banking service.

Ho2:  There are no environmental difficulties in the process of product management in first banks.

Ho3:  Product management has no effect on bank profitability and performance.

Ho4:  Effective management of bank products do not lead to increased product qualities.

Ho5:  Wrong segmentation of target market is not the major problem encountered in product management.

1.6       Significance of the Study

This study will in a great way be of significance to the bank mangers, customers, individual wishing to engage themselves in banking business, unemployed graduate,  government and corporate organization in Aba. To the government the result of the study will not only enable them find out a well defined administrative strategies and management problems of the bank firms of various state, but also would act as a panel to solving similar problems of  government. To the customer, it will expose them to the various marketing strategies that will lead to optimum banking business and high light problems facing the bankers so to prefer a better solution, it will also expose the advantages they stand to benefit from the bank service patronization.

To the corporate organization and other people or individual wishing to engage themselves into banking business, the study will enable them adopt the policy of consumer banker satisfaction as much as possible and also the possible suitable management procedure that will help them operate at the long run, since this is the motive behind every business. To the students, the study will enlighten their minds on the great importance of product to an effective and efficient marketing strategy through the roles bank services plays in the finance sector.

To the research, the study will enhance an in-depth knowledge of product management marketing strategy, the management and operations while to the customer, to appreciate the marketing means through which they reach them and perhaps bear with them whether they live stock of expectation to problem beyond their control. Finally, this study will be of immense benefit to other researchers who intend to know more on this study and can also be used by non-researchers to build more on their research work. This study contributes to knowledge and could serve as a guide for other study.

1.7       Scope/Limitations of the Study

This study is on the role of product management in the marketing of banking services using four branches of the First Banks in Aba, Abia state as a case study.  The effort they make toward managing product and problems they consider in doing will be discussed.

Limitations of study

Financial constraint: Insufficient fund tends to impede the efficiency of the researcher in sourcing for the relevant materials, literature or information and in the process of data collection (internet, questionnaire and interview).

Time constraint: The researcher will simultaneously engage in this study with other academic work. This consequently will cut down on the time devoted for the research work.

1.8       Definition of Terms

Product: A product can be a service or an item. It can be physical or in virtual or cyber form. Every product is made at a cost and each is sold at a price. The price that can be charged depends on the market, the quality, the marketing and the segment that is targeted. In marketing, a product is an object or system made available for consumer use; it is anything that can be offered to a market to satisfy the desire or need of a customer. In general, product refers to a good, idea, method, information, object or service created as a result of a process and serves a need or satisfies a want.

Product Management: Product management is an organizational lifecycle function within a company dealing with the planning, forecasting, and production, or marketing of a product or products at all stages of the product lifecycle. 

Marketing: Marketing is the study and management of exchange relationships. Marketing is the business process of creating relationships with and satisfying customers. With its focus on the customer, marketing is one of the premier components of business management.

Bank: A bank is a financial institution that accepts deposits from the public and creates credit. Lending activities can be performed either directly or indirectly through capital markets.

Banking Services: The various ways in which a bank can help a customer, such as operating accounts, making transfers, paying standing orders and selling foreign currency etc.

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