NEW PRODUCT DEVELOPMENT AND ITS IMPACT ON PROFITABILITY IN BANKING INDUSTRY (A CASE STUDY OF BANK PHB NIGERIA PLC)
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NEW PRODUCT DEVELOPMENT AND ITS IMPACT ON
PROFITABILITY IN BANKING INDUSTRY
(A CASE STUDY OF BANK PHB NIGERIA PLC)
ABSTRACT
This research is title “New Product
Development and its impact in Banking Industry” with special reference to Bank
PHB Plc. Kaduna Branch, Kaduna
TABLE OF CONTENTS
Title - - - - - - - - - - - i
Declaration- - - - - - - - - - ii
Approval page - - - - - - - - - iii
Dedication - - - - - - -- - - - iv
Acknowledgment - - - - - - - - v
Abstract - - - - - - - - - - - vii
Table of contents- - - - - - - - - viii
CHAPTER ONE
INTRODUCTION
1.0
Background of the study - - - - -- - 1
.1
Historical Background of the Bank PHB Kaduna
.2
Statement of General Problems - - - - - 6
.3
Objectives of the study - - - - - - - 9
.4
Significance of the Study - - - - - - 10
.5
Research Question 11
.6
Statement of Hypothesis - - - - - - 11
.7
Scope and Limitation of the study - - - - - 12
.8
Definition of Terms - - - - - - - - 13
CHAPTER TWO
LITERATURE REVIEW
Introduction 17
2.1
Product - - - - - - 17
2.2 Sources
of new Product Ideas 21
2.3 New
Product Development decisions process 22
2.4 Product
life cycle Plc strategies 25
2.5 Need
for Adequate Research in New Product Development 30
2.6 Unique
selling Proposition for new product 35
2.7 Importance
of new product Development 38
2.8 Consumer
profitability 39
2.9 New
Product suchapterccess and Failure
41
CHAPTER THREE – Research Methodology
Introduction - - - - - - - - - 44
.1
Area of study - - - - - - 44
.2
Design of the study 44
.3
Population of the study 45
.4
Sampling Technique - - - - - - - 45
.5
Data Collection
instruments - - - - 43
.6
Validity and Reliability of the instrument - - -- - 45
.7
Administration of research instrument 46
.8
Techniques of data Analysis 46
.9
Limitation of Methodology 47
CHAPTER FOUR - Presentation and Analysis of Data
4.0 Introduction - - - - - - - - 48
4.1 Data
Analysis of Staff/Management Questionnaire - - - 48
4.2 Summary
of findings - - - - - - - - 56
4.3 Test
of Hypothesis - - - - - - - 57
CHAPTER FIVE - Summary, conclusion and
Recommendations
5.0 Introduction
- - - - - - - - 60
5.1
Summary - - - - - - - - - 61
5.2
Conclusion - - - - - - - - - 62
5.3
Recommendations - - - - - - - 63
Bibliography
- - - - - - - - 65
Appendix 66
CHAPTER ONE
1.0 BACKGROUND OF THE STUDY
INTRODUCTION
Banking Industry
has to be good at developing new products. It must also manage them in the face
of changing tastes, technologies, Interest rates, exchange rate and
competitions. Every product seems to go through a life cycle. It must go
through several phases, and eventually die as new products that better serve
consumer needs came along. The product life cycle presents two major
challenges, First, because all products eventually decline, the bank must find
new products to replace the declining one (The problem of new product
development).
Secondly, the bank
must understand how its product age adapts its marketing strategies as product
pass through life cycle. (the problem of product life cycle stages) Hence, it
is very important to look at the problem of finding and developing new
products, and them at the problem of managing them successfully over their life
cycles in the banking industry and as well as its profitability.
Given the rapid changes in consumer states, and
competition, banks must develop a steady stream of new products and services.
As a matter of fact, bank can obtain new products in two ways, one is through
“Acquisition” that is buying a whole distress bank(s) a license to offer other
bank services. And secondly through “New Product development in the banks own
research and development department.
As the cost of
developing and introducing major new products have claimed, many large banks limited.
First bank, Union bank, and United bank for Africa, have acquired existing
services rather than creating new ones like these new generation banks, i.e.
Intercontinental bank, Trust bank, All State Trust bank, Ecobank, Guaranty
Trust bank, Zenith Bank and of course the case study of this research project
that is bank PHB Nigeria Plc. Kaduna. Though, other banks have saved money by
coping competitors’ mode of services.
However, new
product implies original products improvements, products (services)
modification and new method of granting loans, Financing, customers advice interest
rate, mode of payment etc. that the bank developed through its own research and
development.
Importantly, the
recent distress syndrome in compared with the global technological and,
economic changes has made the Nigerian banking environment very competitive and
dynamic.
The development
has led to selective purchase or patronage of product and services by
customers, especially those that are still skeptical about the longevity of the
banks and viability of their product. In this regard, marketing as an essential
elements of communication mix has becomes the sought after strategy not only to
already existing clients but also to non-potential one by any enterprising bank
in the country today when a promising idea come along Bank PHB Nigeria Plc a
venture team made up of the research who
develop the idea and other people from
personnel, sales/marketing, legal admin and foreign department or sections will
team up to natures of the products, protect and member stays with such product until
its has succeeded.
However, quality
banking services is one of the marketers major positioning tools. Quality has
two dimensions level and constituency. In developing new product, the bank must
first choose a quality level in the target means, market.
However, any bank
that fails to introduce and maintain new products as the world changes may have
itself to blame as regards loose of
customers, fame or it position in the community of financial industry and
consequently may be liquidated or distress.
Hence introduction
of new products is the strength of the bank and the ability to maintain it at the given
profit is the success of the bank.
1.0 HISTORICAL
BACKGROUND OF BANK PHB PLC KADUNA
Platinum
Habib Bank Limited was incorporated as a Private Limited Liability Company in
November, 1982. It was granted Banking License on 7th march, 1983
and commenced operation on 16th May of the same year.
OWNERSHIP
The
stakeholder ratio is 40 percent to Bank PHB Nig. Plc, Pakistan
OBJECTIVES
The objectives of the venture have been
to: introduce and maintain a banking style with a difference in Provide financial and technical
assistance to the public and private sector organizations within the framework
of government of Mobilize deposits by encouraging savings
through the introduction of effective banking services and effective
advertising programme.
With these at the background, Habib Nigeria Bank Limited
went into a full range of retail banking services tailored to the needs of all
categories of customers, emphasizing services and professionalism with a
difference.
The tremendous transformation in the Nigeria banking
landscape was made when Professor Charles Soludo made a pronouncement (on 6th
July, 2004) on the issue of re-capitalizing the banking financial base from N2 billion to a minimum of N25 billion, which should be complied with
by 31st December, 2005. This has drawn different views. As expressed
by Anameje (2004).
The name was coined from he merger between Platinum Bank
and Habib Nigeria bank Ltd in October 2005 due to the transformation in banking
industry made Platinum Bank and Habib Bank to sign an agreement to merge their
businesses and coalesce into a formidable institution that will be n the fore
front of banking post consolidation. The name was changed to Platinum Habib
Bank Plc.
1.1 STATEMENT OF GENERAL PROBLEM
Marketing is said to be applicable to
all spheres of life, for this fact, the banking industry is not an exemption.
For the achievement of the overall corporate objectives of prosperity, growth
and contisciously structure their services in such a that they cater for the
financial needs of not only the current customers but also the prospective
customers.
It is a fact that comprises
irrespective of where they are located, hat product or service they offer, who
their shareholders are et face one problem or the other.
Under new condition of competition, companies or banks that do not
produce or develop new products or services risk much because of the changing consumer
needs and tastes, shortened product life cycle, increased competition and new
technologies etc.
Banks and other financial institutions
under the prevalent economic environment would have to be efficient in order to
survive. High cost of funds as a result of liquidity squeeze and deregulation
of interest rates complete with the unstable exchange value of the naira may
have a dampening effect on banking operation.
Faced with this situation banks have to
compete more aggressively with one another to get a better market share have
good business volume. Banks now realize that the good old days of the “seller
market” which they have enjoyed during the oil boom period and the days of free
fund from importers known as cash cover are all over.
This imply hat the era of an chair
banking and cheap profits was over, leaving behind a new era of trial and turbulence
where the survival of even the most seemingly
solid banks was being threatened.
For a bank to remain in business, more
especially in this high tech driven industry
and s competition and the degree of uncertainly increase, it has to among other
things, create an image and reputation to differentiate itself from others.
Banks would have to analyse markets, consumers trends and competitive
activities and deliberately fashion out strategies and integrate their marketing
efforts to the needs of target market in order to achieve corporate goals and
objectives. This could only be achieved through aggressive marketing of their
services and by the development of new products.
couple with high level of innovations in the banking sector
can cause a threat to the industry. These indirect manifest to discipline and
turn to obsolete banking system.
The introduction of new product by the bank has led to a
global competition in the industry. This is as a result of this, it makes the
developing nation banking system to be developed nations where
internet/electronic banking is the order of the day.
A situation whereby bank lack clearly thoughout policies,
rewards and remuneration to help its staff and maintain it’s goal and loyal customers
over a long time period. This slow and cumbersome relationship will not assist
or sustain new product when introduced into its market. Thus political
appointment also hamper the ability of the bank to introduce the right product
at the right time to the right people, in that, they considered political
friends in granting loans facilities to the genuine investors of the economic
sectors. Not until of recent when Bank PHB Nig. Plc. Emulate of recent when
Bank PHB evaluates in new product, development. It was classed to be one of the
banks to be distressed in the early 90s. But these associated lack of marketing
departments, research and development, lack of able and qualified.
1.3 OBJECTIVES
OF THE STUDY
The main objective of the study is to examine new product
development and its impact on profitability in banks with reference to bank PHB
Nigeria Plc. Kaduna branch.
The study specifically attempts to achieve the following:
i.
To find out the new product development
process in bank PHB.
ii.
To examine the problems associated with new
product development in commercial banks.
iii.
To identify the strategies used by the Bank
PHB to overcome the problems of new
product Development.
iv.
To find out the impact of new product
development on the profitability of banks.
v.
To provide suggestion and recommendations for
the improvement of the operations of commercial banks.
1.3 SIGNIFICANCE OF THE STUDY
The
significance of this study cannot be overemphasized, because of the benefits.
This research work serves as a pre-requisites for the award of Higher National Diploma in Business
Administration.
It will
be of benefit to bank PHB as it provides suggestions and recommendations for
the improvement of marketing of financial products so as to increase their
profitability.
The
research work will be a source of information or materials to students and
future researchers willing to further study on the subject matter.
1.4 RESEARCH QUESTIONS
1.
What
is the process of new product developed used by bank PHB.
2.
What are
the problems associated with new product development in commercial banks.
3.
What are
the strategies used by Bank PHB to overcome the problems of new product
development
4.
What is
the impact of new product development the profitability of bank.
5.
What are
the suggestions and recommendations necessary for the improvement of the
operations of commercial banks.
1.5 STATEMENT OF HYPOTHESIS
The
following hypothesis is (null and Alternative) are presented for this study.
Ho: (Null Hypothesis): New Product Development in
Bank PHB has not significantly increased the profitability of the bank.
Hi: (Alternative Hypothesis): New Product
Development in Bank PHB has significantly increased its profitability.
The introduction of new product by the bank has led to a
global competition in the industry. This is as a result of this, it makes the
developing nation banking system to be developed nations where
internet/electronic banking is the order of the day.
1.6 SCOPE AND LIMITATIONS OF THE STUDY
This
research work is undertaken to cover new poduct development in Bank PHB Nigeria
Plc., considering constraints of time a scope beyond this might produce
something less than satisfactory. This scope is therefore, limited to the
banking industries marketing operations with particular reference to bank PHB
Nigeria Plc. The degree to which they take into account marketing strategies in
proper marketing of their product or services. Also all other area related to
the actual function of marketing will be studied for the purpose of knowing the
extent of their relatedness.
During
this research work, the researcher was confronted with a lot of constraints and
the most pronounced among them are the following:
i.
Time Constraints: Academic work’ (especially
the semesters system) during the period of this exercise could only allow
limited time space for this research work that requires a lot of consultations.
ii.
Secondly, is the financial constraints, the
present economic hardship has limited the movement of the researcher for this purpose
purchase of writing materials and the production of vital documented evidences
for clarity of expression. And unstable power supplies also pose problems during
this production.
iii.
Problems of busy schedules, rescheduling of
booked appointments, receiving of phone calls and scheduled meeting etc.
iv.
Guidelines governing the writing of project
also limit the presentation of the works to an acceptable format and volume.
v.
Facts and vital information regarded as “secret”
are been “hoarded” were not released to the researcher.
1.7 DEFINITION OF TERMS
The
following terminologies that appear in this study are defined below:
1.
Marketing:
The
total system of business activities designed to plan, price, promote and
distribute want satisfying goods and services to present and potential
consumers.
2.
New
Product: A good service or idea that is perceived by some
potential customer as new.
3.
New
Product Development: The
development of original products, product improvement, product modification and
new brands through the firms own research and development efforts.
4.
Product:
Anything that can be offered to a market for attention, acquisition, use or
consumption that might satisfy a want or need. It includes physical objects,
services, person, place, organization, and ideas.
5.
Respondents:
Person who answer or responded to a question in a questionnaires or an
observation unit on which such observations are measured of attributes can be
made.
6.
Profitability: The
degree to which income exceeds cost and expenditure.
7.
Bank: A
commercial bank that provides checking account plus other traditional banking
services.
8.
Questionnaire: a
formalized schedule to obtain and record special and relevant information with
tolerable accuracy and precision.
9.
Advertising: Any
paid form of no personal presentation and promotion of ideas, goods or services
by an identified sponsor.
10. Marketing Research: Is
a systematic way of recording, analyzing, and implementing of problems that
relates to marketing activities and prefer solution.
11. Marketing segmentation:
Dividing a market into district groups buyers with different needs,
characteristics, or behaviour who might require separate products or marketing
mixes.
12. Customer Satisfaction: The
extent to which a products perceived performance matches a buyers expectations.
If the products performance falls short of expectation, the buyer is
dissatisfied. If performance matches or exceeds expectation, the buyer is
satisfied or delighted.
13. Product Life Cycle (PLC): the
course of a product sales and Profits over its life time it involves time
districts stages, production development, introduction, growth, maturity, and
decline.
14. Innovation:
This is an idea product, or prices of technology that has been developed and
marketed to customers who perceive it as novel or new.
15. Offer: Boundless of
utilities present for acceptance.
16. Distress:
when the bank is out of operations.
17. Marketing Information system(MIS):
People equipment, and procedures to gather, sort, analysis, evaluate, and
distribute needed, timely and accurate information to marketing decision
makers.
18. Market Potential: The
upper limit of market demand.
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