TOTAL QUALITY MANAGEMENT

TOTAL QUALITY MANAGEMENT, FIRST SEMESTER, 2023/2024 SESSION, 400 LEVEL.

1. GENERAL INTRODUCTION

Quality aspect has grown with humanity. For instance, during the Stone Age period, people used strong stones or sharp weapons to hunt. This shows that they knew the qualitative difference in tools for effectiveness of work. In the same vein, for businesses to satisfy and retain their customers, improving the quality of their products to the taste of their customers is vital.  

A business is likely to make mistakes when it offers what it perceives as value to its customers. Therefore, a business should learn to look at customer value from the perspective of customers in order to meet or exceed customer requirements. 

One popular approach to improving product quality is called, “Total Quality Management (TQM)”. The approach has developed over time and has different meanings at different periods. For instance at a time it was called quality control. Generally, TQM involves the organisation’s long-term commitment to the continuous improvement of quality throughout the organization and with the active participation of all members at all levels, to meet and exceed customer expectations. This top-management-driven philosophy is considered a way of organizational life. In a sense, TQM is efficient and effective management. 

Although the specific programs may vary, they usually require a careful analysis of customer needs, an assessment of the extent to which these needs are currently met, and a plan to fill the possible gap between the current and the desired situation. To make the TQM program effective and efficient, the top managers must be involved by setting a vision, reinforcing organizational values that emphasise product quality improvements, set product quality objectives or goals, and deploy resources for the product quality program. It is also obvious that TQM demands a free flow of information: vertically, horizontally and diagonally.

Training and development is another aspect that is critical in improving product quality. It helps in developing the skills for learning how to use tools as well as techniques such as the statistical product quality control. This continual effort for improving the quality of the organizational products requires that the organization should be a “learning organization:. 

All these product quality improvement efforts by business organizations result from the fact that today’s customers are becoming more powerful, complex and sophisticated.   

2. THE MEANING OF PRODUCT QUALITY AND TOTAL QUALITY MANAGEMENT

Product Quality: In general, quality is a value of things relative to their purpose. Business wide, quality is the usefulness or worth of a product to customers. Thus, product quality can be seen as the totality of features and characteristics of a product that bears on its ability to satisfy stated and implied needs of customers /consumers.

Products that are viewed qualitative by the customers are the ones that meet the specifications and performance standards of the customers and consumers. Traditionally, it was viewed solely as meeting customer specifications. However, the total quality view or the current view of product quality is the ability of the product in satisfying customers’ needs and exceeding their expectations.

 Total Quality Management: The modern TQM is now referred to as, “Business Excellence”. As earlier defined, TQM is the organisation’s long-term commitment to the continuous improvement of quality throughout the organization and with the active participation of all members at all levels, to meet and exceed customer expectations. It is a top-management-driven philosophy that is based on a continuous product quality improvements, productivity and customer satisfaction. It is a philosophy that makes an organization to fully involve all its stakeholders (departments, employees, suppliers, customers etc.) in its quality culture; and all these efforts are customer-driven. 

3. HISTORY OF TQM

Total quality management is the integration of all functions and processes within an organization in order to achieve continuous improvement of the quality of products and services. Deming defined quality as a “never ending cycle of continuous improvement. Juran defined it as fitness for use (purpose). Bearing in mind that TQM is a long term improvement process which requires significant resources. It is also important to realize that TQM is a dynamic process not a static process that is based upon continuous efforts to improve quality in products. Since there are no deadlines or targets to be met, then TQM can never be considered complete which makes it to become a way of life.

 During the early years of manufacturing, inspection was used as a tool to decide if a worker’s job or a product met its requirements. At that time inspection was not done in a systematic way, yet it worked well when the volume of production was low. However, as organizations became larger and more complex, the need for more effective operations became obvious. 

In the early 1900s, “The Father of Scientific Management” Frederick W. Taylor helped to satisfy this need. He proposed a framework for the effective use of people in industrial organizations through his book ‘The Principles of Scientific Management’. One of his concepts was clearly defined tasks performed under standard conditions. Inspection was one of these tasks and was intended to ensure that no faulty product left the workshop or the factory, it also focuses on the product and detection of problem in the product, and testing every item to ensure that the product match the requirements or specifications of the customers. This process is carried out at the end of the production process and requires specially trained inspectors. The need to performing this process was the reason that led to the emergence of a separate inspection department which resulted in the emergence of defect prevention concept which led to quality control. 

The roots of Total Quality Management can be traced back to the 1920s when Dr W. Shewhart developed the application of statistical methods for the management of quality. He demonstrated that variation in the production process leads to the variation in the product, thus by eliminating the variation of the process a good standard of end product can be achieved. The theory of Statistical Quality Control focuses on the product and detection and control of quality problems that involves testing samples and statistically inferring compliance of all products. This process is carried out throughout the production process and requires trained production employees as well as quality control professionals. Towards the end of 1920s the theory was further developed by Dodge, and Romig who developed statistically based acceptance sampling as an alternative to 100% inspection.

In 1940s, the quality guru Deming with his peer co-workers Juran and Feigenbaum continued with the improvement of the theory. However, instead of focusing just on quality of products the concept rapidly widened to involve quality of all issues within an organization i.e. Total Quality Management.

 During the 1950s, many Japanese products experienced low quality and viewed by the world as junk products. Industrial leaders in Japan recognized this problem and decided to produce high quality products by inviting and seeking the help of American quality gurus such as Deming, Juran, and Feigenbaum. Deming suggested that this aim could be achieved within just five years. As a matter of fact not many Japanese believed what Deming claimed. However, they followed his suggestion in order not to lose face and because they respected him. But at last Japan was able to achieve it.

In the late 1950s, quality control management developed rapidly and became the main theme of Japanese management. Interestingly, the idea did not stop at the management level. In the early 60s the concept of the quality control circle was first introduced in Japan by K. Ishikawa. A quality circle is a group of workers who meet and discuss issues to improve all aspects of workplace and make presentations to management with their ideas for improvement. In this way workers were motivated because they felt that they were involved and listened to. Another advantage was the idea of improving not only the quality of products but also all aspects of organizational issues, which probably was the start of Total Quality. The term Total Quality was first used by Feigenbaum at the first international quality control conference in Tokyo in 1969. 

During the 1980s and1990s a new phase of management and quality control began, which became known as Total Quality Management (TQM). Although there are many different definitions for TQM yet the concept is still the same. Nowadays, TQM can be referred to as Business Excellence. The development and success use of TQM in Japan has led to the widespread use of the concept worldwide.

4. A) DIMENSIONS OF PRODUCT QUALITY IN MANUFACURING ORGANIZATIONS

i. Performance: This entails the ability of the product to meet the purpose for which it was purchased to do. It refers to doing the job it is supposed to do as specified by the customer/consumer. Performance has operating characteristics such as speed, comfort, ease of use, etc.

ii. Features: Does the product possess all of the features specified, or required for its intended purpose? Product features are additional characteristics that enhance the appeal of the product to the user. It is often a secondary aspect of performance. They are those characteristics that supplement their basic functioning. An example includes free drinks on a plane.

iii. Reliability: It is the likelihood that the product will perform as expected, free from malfunctioning within a given time period and in different places. It clears the consumer’s doubt on whether the product will consistently perform within specifications and over a desired period of time. The emphasis here is on consistency of the product to perform.

iv. Durability: This means the normal longevity of the product; i.e. getting longer life without much repairs, inconveniences and necessity to replace. Durability measures the length of a product’s life. The item will be used until it is no longer economical to operate it. This happens when the repair rate and the associated costs increase significantly. Technically, durability can be defined as the amount of use one gets from a product before it deteriorates.  

v. Conformance: It is the degree to which the product satisfies or conforms to pre-established standards. It answers on whether the product conforms to the specifications of the customer.

If it is developed based on a performance specification, does it perform as specified? Conformance therefore, refers to the precision with which the product meets the specified standards.

vi. Service ability: This includes the speed, ease, and convenience of getting or making maintenance work or repairs and the courtesy and competency of service employees. As end users become more focused on Total Cost of Ownership than simple procurement costs, serviceability (as well as reliability) is becoming an increasingly important dimension of quality and criteria for product selection.

vii. Reputation or perceived quality: Reputation refers to the past performance of a company’s product. While perceived quality, is the quality attributed to a good or service based on indirect measures. They are subjective opinions about the product based on images or attitudes formed by advertising and/or the reputation of the producer

viii. Aesthetics: The aesthetic properties of a product refer to its appearance. It involves how the product looks, feels, sounds, tastes, or smells. It is clearly a matter of personal judgment and a reflection of individual preference. 

B) DIMENSIONS OF PRODUCT QUALITY IN SERVICE ORGANIZATIONS

 i) Reliability: Consistency of the satisfaction to be derived from the service provider.

ii) Accessibility and convenience: Ease of obtaining the service (is the service easy to obtain?)

iii) Timeliness: Will a service be performed at the promised time?

iv) Completeness: Are all items in the order included?

v) Tangibility: The extent to which their tangible facilities are good.

vi) Empathy or Courtesy: Mutual respect for customers 

vii) Responsiveness: Prompt response to customers stated and unstated needs as well as their complaints.

5. BENEFITS OF PRODUCT QUALITY 

The following are some of the benefits to be derived by profit-making organisations from adhering to product quality.

i. The image of the organization will be high: The improved reputation can result in making the

business to be a major player in the industry.

ii. For consistency in product quality, market share will increase and consequently sales and

profits will be higher.

iii. Due to improved quality, the re-work and delays are avoided or reduced. This reduces the manufacturing cost.

iv. Productivity will increase due to reduced re-work and lesser inspectors’ time spent.

v. Employees’ morale at all levels will be high. This will improve work atmosphere and lead to better team work.   

vi. Adhering to product quality use to ease the introduction of new product lines because of the reputation earned previously by the business through its qualitative products. 

vii. Customer retention: Product quality can help in keeping committed customers/consumer

6. CAUSES OF PRODUCTS QUALITY FAILURE

The following are among the issues that can cause product quality failure or can result to low quality products in an organization depending on how the organization handles them.

i. Manpower Related: Human error can happen due to fatigue, poor eye sight, hearing and movement, inadequate training and re-training as well as poor knowledge of the process. Lack of supervision, frequent changes, transfers and absentees and too management’s lesser attention to product quality.

ii. Facilities Related: To get a particular standard of quality, the machinery, tools and fixtures, as well as measuring instruments should have the accuracies. The machineries should be good enough to give consistency of quality in all the productions. Worn-out tools, deteriorating machines, are to be reconditioned periodically or replaced. Preventive maintenance should be directed to all the basic and important machines. 

iii. Process Related: If the designed and adopted processes of production were not tested before subjecting them to mass production or were not easy to operate, it may affect the quality of products produced.

iv. Raw Materials Related: This has to do with the raw materials for the production of the goods. Quality of the products can be affected if the supplied raw materials are not in a good condition. Businesses should therefore, make sure that they supply the right and correct raw materials that will support the production of quality products.   

v. Conduciveness of Production Environment Related:   

7. REASONS FOR MANAGEMENT EFFORTS FAILURES IN PRODUCT QUALITY MANAGEMENT

Both employees and organisations are aware of the importance of producing quality products for the survival and growth of their businesses. Despite this, there are still organisations that are not adhering to the notion of quality products or achieving success in quality improvement. Experts feel that it may be due to the adherence of the production concept or philosophy that whatsoever is produced is sold which has since challenged during Elton Mayor. As earlier stated, product quality should be top management-driven. Some of the reasons for product quality culture failures are as follows:

i. Targets and financial turnover are given more emphasis by the management of some organisations. This leads to little slackness in quality of products.

ii. Most often, managers of some organisations look for short-term gains and try to push products in a hurry.

iii. Manpower selection, not well suited to products and processes.

iv. Inability of managers to provide the required facilities which is not helping in getting the desired result or achieving the organizational objectives. Quality improvement programs require some investments in facilities, training, and R&D work. Some managers have a wrong notion that quality improvement costs too high, hence fail to provide funds for these; which use to create problems. Such managers are to be made to understand that investment pays in the long run in terms of customer satisfaction and hence high sales and profits. 

8. COST OF QUALITY

Cost of Quality can be seen as the process that measures and determine where and how the resources of organizations are utilized for, in maintenance of quality and prevention of delivering poor outputs. In other words Cost of quality is a method for calculating the costs companies incur in ensuring that products meet quality standards, as well as the costs of producing goods that fail to meet quality standards. It talks about the costs that the organization bears while trying to achieve and maintain the quality output. 

The Cost of Quality can be represented by the sum of two factors. The Cost of Good Quality (CoGQ) and the Cost of Poor Quality (CoPQ), as represented in the basic equation below:

CoQ = CoGQ + CoPQ

The Cost of Quality equation looks simple but in reality it is more complex. The Cost of Quality includes all costs associated with the quality of a product from preventive costs intended to reduce or eliminate failures, cost of process controls to maintain quality levels and the costs related to failures both internal and external.

Cost of quality has 4 basic components categorized under two main components as below:

A) Cost of Good Quality (CoGQ)

1. Prevention costs. These are the costs incurred in preventing mistakes.

You incur a prevention cost in order to keep a quality problem from occurring. It is the least expensive type of quality cost, and so is highly recommended. Prevention costs can include quality planning, market research, proper employee training, supplier certification and a robust product design. A focus on prevention tends to reduce scrap costs, because the scrap occurrence reduces. Expenditure in this area is seen as an investment.

2. Appraisal costs. These include the costs incurred in order to maintain acceptable product quality levels. Appraisal costs can include, but are not limited to, the following: costs of inspecting products, Incoming Material Inspections, Process Controls, and Supplier Assessments.

B) Cost of Poor Quality (CoPQ)

3. Internal failure costs. These are the costs incurred when a product does not conform to quality standards. Examples include the costs of scrap, repairs to defective products, Waste due to poorly designed processes

4. External failure costs. These are the costs incurred when the customer receives a poor quality product. Examples include the costs of investigating complaints, of replacing products returned by the customer, and warranty charges, and the cost of losing a dissatisfied customer that change his loyalty to a new supplier. 

9. PRINCIPLES OF TOTAL QUALITY MANAGEMENT (TQM) 

With increased competition and market globalization, Total Quality Management principles and practices are now becoming more and more important for the leadership and management of any organization. Below are the basic principles of TQM that are practiced worldwide. 

i. Customer Focus: Customer focus is perhaps the most important principle of TQM among other principles. This principle stresses that an organization should understand its customers in terms of what they need and when they need it while trying to meet and exceed their expectations. As such profit will increase as a result of an increasing pool of loyal customers lured to the business, from its customer oriented activities.

 ii. Leadership: Good leaders help to unite an organization and give employees a sense of direction. They create and nurture an environment where everyone’s views are given careful consideration in charting a course to the organization’s objectives. Organizations succeed when leaders establish and maintain the internal environment in which employees can become fully involved in achieving the organization’s unified objectives. Therefore, without effective leadership, an organization loses its direction. This principle establishes that leaders are fundamental in setting clear goals and objectives and ensuring that employees are actively involved in achieving these objectives.

iii. Total Employee Involvement: This is where each and every employee’s effort or contribution to the organization is required or is viewed important. It requires that all the employees are to participate in working toward common goals. The idea is that, if employees were made to feel that their ones effort or contribution is important or can contribute to the achievement of the overall organizational goals and objectives, they become innovative, creative and eager to participate in achieving the organizational objectives. Hence, this principle helps in creating a commonality of purpose in the organization.

iv. Continual Improvement: Continuous improvement is part of the management of all systems and processes. Achieving the highest level of product quality requires a well-defined and well-executed approach to continuous improvement and learning. Continual improvement drives an organization to be both analytical and creative in finding ways of becoming more competitive and more effective at meeting stakeholders’ expectations. This continues improvement will lead to improved and higher quality processes.

v. Process-centered: A fundamental part of TQM is a focus on process thinking. A process is a series of steps that take inputs from suppliers (internal or external) and transforms them into outputs that are delivered to customers (internal or external). The steps required to carry out the production are defined, and performance measures are continuously monitored in order to detect unexpected variation.

vi. Strategic Approach to Improvement: Businesses must adopt a strategic approach towards quality improvement to achieve their goals, mission and vision. A strategic plan is very necessary to ensure quality becomes the core aspect of all business processes.

vii. System Approach to Management: Organizations sustain success when processes are managed as one coherent quality management system. This involves identifying, understanding and managing interrelated processes to enable the sub-systems of the organization contribute to the organisation’s effectiveness and efficiency which can help in achieving the objectives of the organization as the larger system. Therefore, this principle stresses that several processes are managed simultaneously in an organized system. This makes the system much more effective and greater than the sum of its individual parts.

viii. Decision-making based on facts: Decision-making within the organization should be based on facts and not on opinions (emotions and personal interests). Data should support this decision-making process.

10. TOTAL QUALITY MANAGEMENT GURUS AND THEIR CONTRIBUTIONS

To fully understand and appreciate the TQM movement, we need to look at the philosophies of notable individuals who have shaped the evolution and development of TQM. Their philosophies and teachings have contributed to our knowledge and understanding of TQM today. Below are the notable ones:

1. Walter Shewhart: He was an USA Professor of Statistics. He contributed to the understanding of “process variability” by developing a “Statistical Quality Control Chart”. Shewhart studied randomness and recognized that variability existed in all manufacturing processes. He developed Quality Control Charts that are used to identify whether the variability in the process is random or due to an assignable cause, such as poor workers or ineffective machinery. He stressed that eliminating variability improves quality. Professor Shewhart was the first person to advocate the use of Statistical Quality Control method in quality evaluation. His work created the foundation for today’s process control and he is often referred to as the “grandfather” of quality control.  

2. W. Edwards Deming: Deming is often referred to as the “father of Quality control”. He was a Statistics Professor at New York University in the 1940s. After World War II, he assisted many Japanese companies in improving quality. The Japanese regarded him so high that in 1951they establish the Deming prize: an annual award given to firms that demonstrate outstanding product quality. It was about 30 years later that American businesses began to adopt Deming’s philosophy. A number of elements of Deming’s philosophy depart from traditional notions of quality. The first is the role management should play in a company’s quality improvement effort. Traditionally, poor quality was blamed on workers- on their lack of productivity, laziness or carelessness. However, Deming pointed out that only 15 percent of quality problems are actually due to worker error. The remaining 85 percent are caused by processes and systems, including poor management. Deming said that it is up to management to correct system problems and create an environment that promotes quality and enables workers to achieve their full potentials. He believed that managers should drive out any fear employees have on identifying quality problems. Proper methods should be taught and detecting and eliminating poor quality should be everyone’s responsibility.

Deming outlined his philosophy on quality in his famous “14 points”. These points are principles that help and guide companies in achieving quality improvement. The principles are founded on the idea that top level management must develop a commitment to quality and provide a system to support this commitment that involves all employees and suppliers. Deming stressed that quality improvements cannot be achieved without organizational change that comes from the top level management.

3. Joseph M. Juran: After W. Edward Deming, Dr Joseph Juran is considered to have had the greatest impact on quality management. Juran initially worked in the quality programme at Western Electric. He became better known in 1953, after the publication of his book, “Quality Control Handbook”. In 1954 he went to Japan to work with manufacturers and teach classes on quality. One of Juran’s significant contributions is his focus on the definition of quality and the cost of quality. Juran is credited with defining quality as, “fitness for use” rather than simply conformance to specifications. According to Juran, fitness for use takes into account customer intentions for use of the product instead of only focusing on technical specifications. Juran was also credited with developing the concept of cost of quality, which allows measuring quality in monetary terms rather than on the basis of subjective evaluations. Consider the following table for the main contributions of these 3 contributors:

Quality Guru

Main Contribution

Walter Shewhart

i. Contributed to understanding of process variability.

ii. Developed concept of Statistical Control Charts.

W. Edwards Deming

i. Stressed management’s responsibility for quality

ii. Developed “14 points” to guide companies in quality improvement.

Joseph M. Juran

i. Defined quality as “fitness for use”.

ii. Developed concept of cost of quality

Other contributors include: Armand V. Fegenbaum, Philip B. Crosby, Kaoru Ishikawa and Genichi Taguchi.

11. STATISTICAL QUALITY CONTROL (SQC)

Statistical Quality Control refers to the use of statistical methods in the monitoring and maintaining of the quality of products. Its main objective is to achieve quality in production through the use of adequate statistical techniques.

SQC began a long time ago, when manufacturing began, and competition accompanied it, with consumers comparing and choosing the most attractive products. The Industrial Revolution, led producers to the need of developing methods for the control of their manufactured products. During the industrial revolution, SQC was comparatively new; its greatest developments have taken place during the 20th century. In 1924, at the Bell Laboratories, Shewhart developed the concept of control chart and, more generally, statistical process control (SPC), shifting the attention from the product to the production process. Dodge and Romig (1959), also in the Bell Laboratories, developed sampling inspection, as an alternative to the 100% inspection. Among the pioneers of SPC we also distinguish W.E. Deming, J.M. Juran, and P.B. Crosby. But it was during the Second World War that there was a generalized use and acceptance of SQC, largely used in USA and considered as primordial for the defeat of Japan. In 1946, the American Society for Quality Control was founded, and this enabled a huge push to the generalization and improvement of SQC methods.

Good Luck.

Marketing of Financial Service

Meaning and Characteristics of Services

A marketing product is principally categorized into two namely; goods and services.  Goods are tangible products while services are intangible products.

There  are  two  types  of  services,  primary  and  secondary  services. Primary services are those intangible product offerings that form the main item of trade in a marketing transaction. Secondary services on the other hand are the service component or accompaniments of a tangible product (good). They are not the main item of trade in a marketing transaction. For the purpose of this unit, our concentration is on primary services.

On the strength of the above, we define a service as a bundle of intangible benefits offered to a market by an individual or organization for attraction, purchase and consumption. Beyond being intangible, there are  other  characteristics of  services  that  differentiate it  from  goods version of products. Nwokah (2008) captured those characteristics as follows; Lack of ownership, Inseparability, Perishability and Heterogeneity.

i)        Lack of ownership

A  service  cannot  be  stored  like  a  tangible  product.    Services  are therefore time barred and cannot be owned like goods.  For instance, if you pay for a hotel room, you can only lay claim to that room for a period of time after which its ownership goes back to the proprietor. There is therefore no permanent ownership to a service by a customer.

ii)       Inseparability

A service cannot be separated from the service provider because it is produced and  consumed at  the  same  time.    You  cannot  separate a lecturer from his lectures, nor an electrician from his expert services, nor a carpenter from his carpentry services.  By implication, the assessment of a service is somehow tied to the personality of the service salesman or service provider.

iii)      Perishability

Services are highly perishable. More perishable than agricultural products. In the words of Nwokah (2008), perishability of services refers to the fact that services cannot be shared, stored, resold, returned or identified.  Services are produced and used simultaneously if not so, it perishes.  For instance, an unused bed space in a hotel on a particular day, is lost forever.

iv)      Heterogeneity

No two services even if from the same service provider are completely the same. If a lecturer gives a lecture on the same topic at different times, the lectures can never be exactly the same.   Therefore, there is quality variation.

Challenges of Services Marketing

The challenges of  services marketing stem from the peculiarities of services with respect to its characteristics. We shall hence reproduce partially, the opinion of Nwokah (2008).

i)        Intangibility

This characteristics poses the following challenges:

a)       Lack of inventory

b)       Fluctuation in demand 

c)       Lack of legal patent

d)       Difficulty in display and communications 

e)       Difficulty of quality assessment

ii)       Heterogeneity/Variability

The challenges inherent in this characteristics are as follows:

a)       Variations in quantity/quality in consistency. b)       Quality control beyond the provider.

c)       Level of demand determines quality.

iii)      Inseparability

Here, the marketer is faced with the following challenges:

a) Customer is present at the point of production and may even take part in the production by offering advise.   For instance, in a restaurant, a customer may demand that his dish be served in an enamel plate rather than a plastic plate for health reasons.

b)       Mass production is difficult.

c)       Quality is dependent on existing factors at the time of service.

d) Service   providers   personality   is   tied   to   service   quality assessment.

iv)      Perishability

a)       Inability to store or return a service

b) Demand   for   forecasting  ability  and   creativity  in   capacity utilization on the part of service provider.

Service Marketing Strategy

The following strategy is recommended with regards to the marketing of services in order to achieve the marketing objectives of the firm.

Product Strategy: Every service product must have an accompanying tangible element in order to give flesh to it, thereby, marking it more visible. Automation, flexibility and warrantee are recommended.

Pricing Strategy: Service prices must be flexible enough to accommodate changing conditions.    The  service  marketing manager must not be too rigid with pricing.  For instance, a hotel manager must be able to adjust his price to accommodate a guest who wants to check- in towards the end of the day.  This will take care of the perishability of the service.

Promotion Strategy: In crafting promotional messages, vivid audio- visual items should be made use of, in order to make the required impact on the minds of present and potential customers given the tangibility of services. Personal selling and sales promotion are key, too.

Place Strategy: Such things as Compact Disks, Video and Audio cassettes should be used to store services and transfer from one place to another.  Adequate training is required for management and employees in terms of physical appearance and responsiveness to customers.

Types of Services

Services  as  we  have  earlier  said  can  be  classified  as  primary  or secondary services. These  have  been  explained  earlier. However, primary services can be categorized according to professional areas or level of professionalization. Services can therefore be unskilled, semi- skilled or skilled service.   This is based on the level of expertise or qualifying training required of the service provider.

Services can equally be classified based on the special sector or industry where the service is produced and consumed.  We therefore have such things as:

a)       Banking services/financial services 

b)       Insurance services

c)       Consulting services

d)       Agricultural extension services 

e)       Educational services

f)        Health and allied services

For  the  purpose  of  this  study,  our  focus  is  on  financial  services marketing and this will form the focus of our next unit (unit 3).

Concept of Financial Services

In our two previous units (1 & 2) efforts were made to explore the concept of marketing and services respectively. Presently, our efforts will be focused on financial service concept.

Finance generally involves the activity of sourcing and application of funds or money in order to create more wealth.   Okpara (2002) as captured by Nnamdi and Nwakanma (2011) opined that finance is any activity or body of knowledge concerned with the utilization of available monetary resources to add value to existing wealth. Finance is therefore focused on wealth creation. They went further to capture the opinion of Kotler (2006) on service being any form of human activity or benefit that is intangible in nature usually offered by one party to another but does not necessarily result in the transfer of ownership of title or any other thing.

In furtherance of their discussion on financial services, Nnamdi and Nwakanma   (2011)   defined   financial   services   as   those   services essentially delivered through the administration of designed financial products with the ultimate improvements in the financial positions of the clients (customers) as well as the financial service providers (institutions and persons) without necessarily resulting in the transfer of titles or ownership of anything to either party.

Peculiarities of Financial Services

By  peculiarities  we  are  referring  to  the  characteristics  of  financial service.   We had identified the basic characteristics of services. All of them are applicable to financial services and are captured by Nnamdi and Nwakanma (2011) thus, intangibility of financial service, variability in quality of service, common valuation of inputs and outputs in  financial  service,  service  and  product  inseparability and  implied financial responsibility. In all these, only two were not addressed in unit 2, we shall therefore proceed to capture the opinion of the two authors on them.

Common Valuation of Input and Output

Nnamdi and Nwakanma (2011) opined that, in the financial services, industry, the inputs and outputs are all expressed in common monetary unit, Naira unlike in the goods industry or market.  This gives rise to the concept of presumption.   In physical products, what goes in as raw materials is different from what comes out as finished product.

ii)       Implied Financial Responsibility

Nnamdi  and  Nwakanma  (2011)  is  of  the  view  that  a  financial relationship is implied in the financial services industry as trust appears to be the core element.   They opined that customers‘ patronage of a financial service firm and its products implies that they have equally purchased the trust and guarantee of that firm that their fund will be safe and returned on demand.

Financial Service Products/Providers

The service product in the financial industry is divided according to the financial sub sectors or service providers.  The sub sectors include the banking sector, insurance, consulting, stock brokerage, leasing, discount and  refinance, hire purchasing, factory services, off-shore financing, credit-card   service,   trust   services,   pension   fund   (Nnamdi   and Nwakanma, 2011). We shall proceed to explain them.

Banking Sector/Services

Banking is  the  function or  process of  mediating funds between the surplus sector of an economy and the deficit sector. The process ensures that funds which are built up in the surplus sector are made available for investment and production at the deficit sector. The major institution which carries out this banking function is called a bank. A bank is a licensing institution which accepts deposits from individuals, organizations etc. and provides them various financial services (Sanni, Momodu, Ngerebo, Olagungu and Ogunbiyi, 2008). They went further to define banking as ―the business of accepting funds for purpose of lending or investment of deposits of money from the public-repayable on demand or otherwise-and withdrawable by others for expenditure. The following are some of the banking products.

(a)      Current account deposits

(b)      Savings account deposits 

(c)      Fixed account deposits 

(d)      Loans services

(e)      Over draft services

(f)       Forex deposits

(g)      Kiddies special accounts

(h)      Investment certificate

(i)       Call deposits

(j)       Certificates

(k)      Contingency liability products

(l)       Service related products

(m)     Instant banking

(n)      Online banking

(o)      Diaspora banking

(p)      Consumer and commercial loans

(q)      Money transfer

(r)       Pay gate

(s)      Mobile money

(t)       POS

(u)      Bank cards

(v)      Automated Teller Machines

(w)     Merchant Applications

All these services have sub products attached to them.

Insurance/Insurance Services

Aneke (2004) as captured by Nnamdi and Nwakanma (2011) defined insurance business as that facility through which those relatively few and unfortunate victims of some losses can gain compensation through the pooled contributions of many who are exposed to the same risk.

These are insurance products to cover every aspect of life namely:

a)       Life Insurance/Assurance

b)       Motor Vehicle Insurance

c)       Education Insurance Service a)       Health Insurance Services

b)       Unemployment Insurance Service c)       Fire Insurance

d)       Theft/Burglary Insurance

e)       Goods-in-Transit Insurance f)        Liability Insurance

Like the banking services, there are equally other sub products attached to these.

iii)      Leasing/Leasing Services

Ogbuji (2011) considers leasing as the most commonly used option in industrial marketing. It refers to acquiring and equipment on the periodic payment of an agreed sum known as rent or royalty. Leasing is normally used in  the  temporary acquisition of  heavy equipments or installations.

Ekeke (2009) as contained in Ogbuji (2011) identified two major types of lease service to be:

(i)       Maintenance lease

(ii)      Net lease

Other lease services include

(iii)     operating lease

(iv)     sale and lease back

(v)      direct lease

(vi)     leverage/lease buy out

(vii)    hire purchase

In the words of Ogbuji (2011), hire purchase is an arrangement whereby an agricultural marketer is allowed to finance the purchase of an equipment, material or facility by paying for the total cost of the item purchased in a given number of installments, normally three (3).

The process is such that at the point of acquisition of the item, the hiree is expected to pay the first installment and an agreement will be reached between the parties (hiree and hirer) as to when the other subsequent installments will  be  paid.    However,  until  the  full  payment  of  the purchase sum, ownership is not transferred and the agreement may be revoked for failure to pay at the stipulated date.  This service can be in either of the following two options.

a)       Cash installment credit

b)       Commodity installment credit

iv)      Consultancy/Investments/Business Advisory Services

This is one critical area in the financial services industry that determines to a large extent, the success and failure of business ventures. Without including words, information is the key to effective business decisions and the business advisory services provides the needed information for this.

Nnamdi and Nwakanma (2011) identified the following consulting/investment service.

i)        Periodic transaction

ii)       Purchase and sale of securities

Investment management services 

iv)      Investment advisory services

v)       Business combinations (mergers & acquisitions)

vi)      Business restructuring 

vii)     Safe custody of items 

viii)    Security underwriting

v)       Stock Brokerage Services

A stock broker is a regulated professional individual, usually associated with a brokerage firm or broker dealer, who buys and sells stocks and other securities for both retail and institutional clients through a stock exchange or over the counter in return for a fee or commission. Identifiable services rendered by a stock brokerage firm include:

i)        Security purchase/sale order arrangement ii)       Security underwriting

iii)      Margin loans for share purchases

iv)      Currently and commodity trading advices v)       Investment/portfolio management etc.

Nature and scope of Service Customer Orientation

The Meaning of Customer Orientation

Customer orientation has its root on the marketing concept, which according to Kotler and Keller (2007) holds that the key to achieving organizational goals consists of the company being more effective than competitors in creating,   developing and communicating superior customer value to its chosen target markets. Unlike other orientations (production, product, sales) that firms practiced before mid-1950s when the marketing concept emerged, the marketing concept lays emphasis on the centricity of the customer in the overall activities of an organization.

As an offspring of the marketing concept, customer orientation stresses the need for all functions in an organization to work together to respond to,  serve  and  satisfy  the  customer.  Organizations that  are  customer oriented value customer satisfaction far and above organizational profit. This is because such best practice organizations understand the power and benefits of customer satisfaction especially, the word-of-mouth promotion which is capable of increasing the patronage level of a firm astronomically.

Several definitions have been offered for customer orientation, some of which include:

Customer  orientation  is  collecting  customer  information  and using this information in business units (Kohi & Jawoski, 1990).

Customer orientation is the act of collecting information from customers and using it to develop a strategy to meet the needs of the customers (Ruekert, 1992).

Customer orientation is the set of beliefs that puts the client‘s interest at the top of the organization‘s stakeholders, including owners of the organization, managers and employees to make the company profitable (Deshparde, 1993).

Day  (1994)  defines  customer  orientation as  a  concept  which transforms marketing into a potent competitive weapon, shifting organizational values, beliefs, assumptions, and premises towards a two-way relationship between customers and the firm.

Narver and Slater (1990) see customer orientation as the sufficient  understanding of  one‘s  target  buyers  to  be  able  to create superior value for them continuously.

Customer oriented culture suggests that a firm concentrates on providing products and services that meet customer needs ( Dean and Bowen, 1994).

Niles-Jolly  (2006)  argue  that  customer  orientation  requires  a continuous positive disposition towards meeting customers‘ exigencies and therefore a high degree of concern for these customers.

While  Schneider  and  Bowen  (1993)  suggest  that  customer- oriented culture is nurtured through regular supply of customer information about their needs so as to be able to design and deliver good products.

Therefore, service customer orientation is that organizational philosophy which recognizes the customer as the focal-point of any organizational decision or activity, and this seeks to continually keep the customer satisfied at every stage of the service delivery process.

Requirements for Service Customer Orientation

The Financial Service Institution Manual (2017) noted that leading institutions are implementing customer-centric strategies by focusing on three critical elements:

Breaking down organizational silos and structuring incentives to promote a customer culture.

Understanding customer needs behavioural drivers and profitability.

Delivering a high-quality customer experience.

Each  of  these  elements  requires  sound  customer analysis  and  an approach to process improvement that focuses on the customer.

In addition, Neda (2014) suggested that firms that are willing to practice true customer orientation should:

Create a customer orientation culture.

Facilitate access to company

Create commitment and working conscience in staff towards the customer.

Create a certain hierarchy of customers and values for employees.

Show that employee behavior can affect the customer.

Consistently show findings on customer satisfaction.

Organize periodic training programmes for all staff.

Encourage organization‘s channel  members to  think  customer first.

Again, Maush, Sparrow and Hird (2010) identified six building blocks of customer centricity to include:

Mass customization

Consumer involvement in the design process

Structuring around the customer and not the product.

Empowerment of front line staff.

Democratization of customer relationship.

Capacity to filter data set.

Other Orientations Adopted by Firms

Apart  from  the  customer  orientation,  service  providers  and manufacturing firms equally practice other forms of philosophies and orientations in their dealings with their customers. As earlier noted, prior to the advent of the marketing concept, firms adopted the production, product and sales concepts or orientations. Each of these had their focus on quantity, quality and sales volume respectively. Today, most service outfits have interests in other issues other than the customer in their activities. For instance, Kotler and Keller (2007) noted that some firms are competition oriented; trying to follow the dictates of competitive pressure and paying little or no attention to the actual needs and requirements of the customers. Also, some firms are technology- oriented, size-oriented, etc. Comparing the activities of firms that are competition oriented and the ones that are customer oriented, Kotler and Keller (2007) have these to explain:

Competitor-centered companies

A competitor-centered company sets its course as follows:

Situation

Competitor W is going all out to crush the Market.

Competitor X is improving its distribution coverage  and hurting our sales.

Competitor Y has cut its price in sugar, and we lost three share points.

Competitor  Z  has  introduced  a  new  service  feature  in  New

product, and we are losing sales.

Reactions

We will withdraw from the  market because we cannot afford to fight this battle.

We will increase our advertising expenditure in sales.

We will meet Competitor Y‘s price cut in sugar.

We will increase our sales promotion budget in New product.

This kind of planning has some pluses and minuses. On the positive side, the company develops a fighter orientation. It trains its marketers to be on constant alert, to watch for weaknesses in its Competitor‘s and its own position. On the negative side, the company is too reactive. Rather than formulating and executing a consistent, customer oriented strategy, it determines its moves based on its Competitor‘s moves. It does not move towards its own goals. It does not know where it will end up, because it so much depends on what its Competitors do.

Customer-centered companies

A customer-centered company focuses more on customer developments in formulating its strategies.

Situation

The total market is growing at 4 percent annually.

The quality sensitive segment is growing at 8 percent annually.

The deal-prone customer segment is also growing fast, but these customers do not stay with any supplier very long.

A growing number of customers have expressed interest in a 24- hour hot line, which no one in the industry offers.

Reactions

We will focus more effort on reaching and satisfying the quality segment of the market.

We will buy better components, improve quality control, and shift our advertising theme to quality.

We will avoid cutting prices and making deals because we do not want the kind of customer that buys this way.

We will install a 24-hour hot line if it looks promising.

Clearly,  the  Customer-Centered Company is  in  a  better  position  to identify opportunities and set a course that promises to deliver long-run profits. By monitoring customer needs, it can decide which customer groups and emerging needs are the most important to serve, given its resources and objectives.

Steps towards Service Customer Orientation

To help organizations attain customer orientation, the following steps are required:

1. Create a customer value proposition (CVP): Decide at board level the sum total of benefits which you as a vendor promise to deliver to your customer, in return for the customer‘s loyalty.

2. Recruit customer-friendly people: Hire for attitude, train for skills is  the  mantra here. Empathy, good communication and problem solving abilities are the qualities to look for.

3. Treat your employees well: How your employees feel at work has a much bigger impact on how they deal with customers than any training will.

4. Train your team: Frontline as well as back-office staff must gain a full understanding of the customer, product and industry they support. Coaching must also focus on the soft skills; communication and teamwork.

5. Walk the talk: Leaders must fully embrace the customer service orientation process and take to the frontline from time to time.

Companies that value a culture of servant leadership will excel in this area.

6. Implement a CORE program: CORE  is  an  acronym  for: Customer Orientation, Referencing & Engagement. In this program cross-functional teams focus on the needs and behaviors of customers as well as internal procedures. An orientation is built around customer needs and the customer profile forms a reference point for the business.

7. Listen to the Voice of  the Customer (VOC):  An  honest appraisal of how you are doing in the eyes of your customer is critical. This can be achieved by conducting a formal customer satisfaction survey or by gathering and recording customer comments.

8. Define  your  standards:  By  analyzing  feedback obtained  via your VOC program you will be able to fine tune your service levels according to customer needs and expectations. Create a Balanced Scorecard to measure your performance and rectify any shortcomings.

9. Empower your staff: Make sure your team has the authority to resolve most customer complaints without further escalation to a supervisor.

10. Co-ordinate  functions:  Avoid  silo  mentality by  encouraging different departments and functions to work closely together.

Also, Jaideep (2017) identified the following actions:

1. Define   the   target   market   carefully   and   collect   relevant information.

2. Find out customers‘ needs and wants.

3. Produce products as per their expectations.

4. Ensure fair deal with customers and ensure commitment toward them.

5. Establish and maintain long-term relations with consumers.

6. Provide them correct information when demanded.

7.  Safeguard their long-term interest/welfare.

8. Treat them as business partners.

9. Take care of consumers‘ suggestions and tackle their complaints.

10. Find  out  the  best  way  to  entertain  them,  and  meet  their expectations.

Financial  service  marketers  are  therefore  encouraged  to  carefully develop customer-oriented practices by adopting or adapting the steps identified for improved customer involvement and satisfaction.

How Customer-Oriented is Your Firm?

The questions below will help firms to assess their level of customer orientation:

1.  Does your management team meet with customers at least once a month? (even when there isn‘t a problem)

2.   Does customer service appear at least once a month on the top team‘s agenda?

3. Does the management team give equal weighting to customer data as they do to financial data?

4. Do  you  have  a  formal  customer  satisfaction  measurement programme?

5. Does the customer satisfaction measurement programme involve regular, monthly feedback from customers?

6. Are the customer feedback and employee feedback programmes aligned?

7. Are your organisation‘s values based on customer and employee feedback?

8. Have behaviour codes and competencies been developed based on values?

9. Do individuals receive 360 degree feedback on how well their behaviours are aligned to the brand?

10. Do all employees have a good understanding of how their job provides added value to the customer?

11. Do  individuals receive  encouragement from  their  manager  to live the brand‘?

12. Do all employees have a good understanding of what are the current customer concerns?

13. Are service providers involved in service improvement planning and implementation?

14.  Do all employees have a good understanding of what is being done to remove customers‘ concerns?

15. Do  employees  sometime  act  as  customers,  to  experience  for themselves what it is like to be a customer of theirs?16.      Are   training   interventions   in   place   to   increase   customer awareness and align people‘s behaviour to the brand?

17. Are employees selected for their customer orientation?

18. Are employees rewarded upon customer feedback and service orientation? (This can be non-materialistic recognition as well as financial)?

19. Is the balanced score card used to measure customer orientation and performance?

20. Is  there a  clear link between customer satisfaction, employee satisfaction and profitability?

How  to  Measure  the  Success  of  a  Customer  Centric Company

Not every organization will have the same customer metrics to measure customer centricity. However, the two most important customer centric metrics that should be carefully monitored are churn rate and customer lifetime value (Steven, 2017).

Churn rate

Acquiring new  customers is  getting  more  difficult. Therefore, more companies are investing in keeping existing customers instead of trying to find new ones:

Acquiring new customers can cost up to 5x more than keeping existing customers

A  2%  increase in  customer retention has  the  same  effect on profits as cutting costs by 10%

On average, companies lose approximately 10% of its customer base each year

Companies with a high retention rate grow faster. The key to success is to understand why people leave, and why people remain customers.

To calculate the churn rate, measure the number of customers who left in the last 12 months divided by the average number of total customers (during the same period).

Customer lifetime value (CLV)

For a customer-centric business, the most valuable asset is the customer. The profits generated during the retention phase are often known as customer lifetime value or CLV. Customer Lifetime Value (CLV) measures the profit your organization makes from any given customer.

Benefits of Customer Orientation

Consumer orientation is not a marketing philosophy only, but it is a dominant business philosophy and it deserves many practical implications for better managing. Company can achieve its goals effectively by practicing consumer orientation philosophy. Consumer orientation leads to consumer satisfaction (Jaideep, 2017). Consumer satisfaction offers several benefits to company.

The   basic   question   is:   Why   is   companies  interested  to   satisfy consumers?

Company can have following benefits if it satisfies its consumers:

Satisfied consumer buys more quantity of company‘s products.

Satisfied   consumer   buys   the   company‘s   products   more frequently.

Satisfied consumer talks favourably about the company and its products.

Satisfied  consumer  is  not  easily  impressed  or  attracted  by Competitors.

Satisfied consumer tries and buys new products as and when the company introduces them.

Satisfied   consumer   extends   necessary   support   during   bad (adverse) time. He compromises with the company‘s offer and he continues buying the product even at a little loss.

Satisfied consumer remains loyal to the company, gives valuable suggestions, and protects company‘s interest in all possible ways.

Satisfied consumer extends all possible support to the company to carry out its operations effectively.

The Nature and Scope of Consumer Behaviour/Decision Making Process

The Meaning of Consumer Behaviour

Consumer behaviour can be defined as the process and activities individuals, groups, or organizations engage in when securing, using and disposing of products, services, experiences, or ideas so as to satisfy their needs and desires.

Engel et al (1978) defined consumer behaviour as those acts of individuals directly involved in obtaining and using economic goods and services, including the decision processes that precede and determine these acts.

Decision-Making Process

Consumer decision-making process comprises of five stages. The stages are as follows:

Need recognition

Information search

Evaluation of alternatives

Purchase decision

Post-Purchase evaluation

Need/Problem recognition

Need/problem   recognition   is   caused   by   a   difference   between   the consumer‘s perfect state and actual state. For example, a hungry person recognizes the need for food.

Information search

After  the  need/problem  has  been  identified,  the  consumer  goes  after relevant information that can aid him or her in solving the problem. Consumers can make personal decision based on previous experience of using  a  specific  product  or  service.    The  consumer can  also  seek  for information from friends, relatives, co-workers, newspapers, reports on TV etc.

Evaluation of alternatives

After acquiring relevant information about how to satisfy the unsatisfied need, the consumer compare the information using different criteria‘s such as price, quality, warranty, corporate reputation etc.

Purchase behaviour

Here the customer makes a select or choice after having carefully evaluated the available alternative using his choice criteria whichmay include, price, delivery terms, taste and preference, etc.

Post purchase behaviour

At this stage, the customer or consumer examines the effectiveness of the product  or  service  vis-à-vis  the  unsatisfied need.  There  will  be  repeat purchase, if he or she is satisfied with the efficacy of the product or service. However, if the consumer or customer experience cognitive dissonance (a feeling of psychological tension or post-purchase doubt that a consumer experiences after making a difficult purchase choice), he or she will stay away from such product or service unless his choice for the product or service is reinforced by the seller or producer.

Factors Influencing Consumer Decision Making Process

A lot of factors can influence consumer behaviour in relation to the way he thinks, believes and decides on the alternative goods/service to purchase.

We shall be considering four factors, namely:

Social group factors

Psychological factors

Mass media factors

Situational factors

Segmentation, Targeting and Positioning

Market Segmentation

One of the most important strategic concepts contributed by the marketing disciplined to business firm is the development of market segmentation strategy. Market segmentation, according to Myers (2000) is a process by with groups of buyers within a market is divided and profiled based on certain range of variables, which determine the market characteristics and tendencies. The  rational for  segmentation is  the  fact  that  all  actual  or potential customers may not respond in a similar manner to various marketing mix programmes. Certainly, they have varying needs, taste, and preferences. It is therefore important to divide the mass market into distinct groups with members having similarly characteristics in each group. Marketing mix variables are then blended to suit each of these groups. Market segmentation can be done on the basis of the following:

Demographic:   Here   the   market   is   categorized   according   to   key demographic characteristics such as age, sex occupation, income level etc. Psychographics: This variable refers to personality and emotions based on behavior. It is linked with purchase choices, attitudes, life style etc. While the demographic variable explains who are your buyers, psychographic tells you why they buy.

Geography: This is divided according to geographical regions or areas with the believe that people in the same area may respond in a similar fashion than people of different areas.

Behavioural: This refers to the nature of purchase, brand loyalty, usage level, benefits, sought, reaction to marketing factors, etc.

Believe and Values: This refers to people‘s religious, political and cultural belief. It categories their believe value systems.

Market Targeting

One thing is to divide the mass market into segments, and another is to deploy and/or choose a segment and focus on that segment by deploying resources  and  developing  marketing  programmes  for  it.  Targeting  can enable  the  marketer achieve this.  According to  Vitale  and  Gig  (2002) targeting is the determination and selection of a particular segment that the firm  has  deemed  it  worthy of  venturing into.  More  so,  Kotler  (2000) presented a list of factors or conditions the form or marketer needs to evaluate in order to ascertain whether the segment is Worthwhile serving:

Size of the Market: The market must be large enough to justify segmenting

Accessibility: The marketing must be such that the firm can easily access with the least resources.

Viability:  The  selected  segment  must  be  economically  viable. This explains that the segment must be commercially attractive.

Profitability: This is that hallmark of all. Any segment that will not add to the profitability of the firm is not worthy of venturing into; it is rather better to let go of them.

Positioning

This the final stage in the segmenting,targeing and positioning  process. Its primary focus is on how the customer perceives the marketer‘s offering in relation to competitors offering. As Bowen (1998) puts it, customer perception and view has a huge impact on the brand positioning in the market and is important in gaining a competitive advantage. Levens (2012), posits that three types if positioning the brand to a competitive advantage. According to the author they include:

Functional  Positioning:  This  types  of  positioning  focused  on the aspects of the product or services that can fulfill consumers‘ needs or desires.

Symbolic   Positioning:   This   is   based   on   the   attribute   or characteristics of the brand that fulfills customer‘s esteem.

Experiential    Positioning:    This    is    mainly    based    on    the characteristics  of   the  offering  that  stimulates  the  sensory  or

emotional connection with the customer.

Financial service Development and Management

The Meaning of Financial Service Development

It is a consensus amongst scholars that service development had been relatively overlooked compared to product (goods) development prior to the advent of  technological breakthroughs of  the 21st century (Agu, 2014; Aruna, 2007; Easingwood, 1993). One reason behind this neglect is that new service development is often less conspicuous, less spectacular and less eye catching. New service development covers all the activities involved in realizing new service opportunities, including product or service design, business model design and marketing (Boundles, 2017). According to Agu (2014), service development is also known as new service development or service innovation. It takes the form of new way of providing a service, often with a novel and very different business model.

Therefore, financial service development is concerned with financial service  innovation.  That  is,  planning,  implementing  and commercializing new  ways  of  providing financial services  to  target customers. This has to do with the introduction of new, convenient, competitive and profitable ways of providing financial services to target customers.

For financial services companies to stay relevant to modern consumers, they need to think outside the vault (Mathew, 2016). To actualize a successful financial service innovation (development), Mathew (2016) suggested that financial organizations need the following capabilities:

Encourage  network  participation  that  incorporates  employees, customers and other external influencers.

Listen better to digital conversations.

Thoroughly  document  ideas  and  understand  the  correlation between them.

Synthesize concepts and create instant proposals.

Monitor and report on status and results.

Reward the drivers, propellers of the innovation programme by recognizing  them adequately.

Financial Service Development Process

The new service development process has a similar development process to  product  development, but  there  are  significant differences in  the activities and research techniques (Johne & Storey, 1998). However, Easingwood (1993) argued that service firms are less likely to perform concept tests, test marketing, launching activities and are inefficient in product development activities. This, however, is not applicable in all cases as most financial services in Nigeria have passed through the market testing stage  prior to  the  full  commercialization of  the  new service. For instance, the cashless policy in Nigeria started in few states where it was tested before the full implementation in other states of the federation.

In a review of service development, Cowell (1988) as quoted by Aruna (2007) noted the following about service development:

Services development appeared to be technology driven rather than user driven

Generally, the rate of new service creation is quicker, while user adoption of new services are  slower, relative to new products

There  are   more  service  improvements  rather  than   service innovations

In most services, users are involved in the service production process

 Service staffs are critical to service production and delivery.

More recently, Andrey and Mention (2016) identified four patterns of new service development in the banking sector as:

a. Problem-driven pattern which starts with problem definition and reports a bank‘s response to an issue.

b. Proactive-driven pattern which commences with idea generation to explore a variety of activities.

c. Market-driven pattern which lays emphasis on a profit rationale and starts with a business analysis.

d. Strategy-driven pattern which frames idea generation within the scope  of  business  goals  and  starts  with  the  development  of service concepts.

.

Drivers of Financial Service Development

The nature of services and the pace of change have shifted dramatically in recent years, and mastering the traditional aspects of service delivery will no longer be enough. To seize the opportunities, companies must learn to tap the potential for service innovation made possible by four evolving trends (Tony, David & Evan, 2015):

Higher customer expectations: More than ever, consumers demand greater involvement, customization, personalization, and mobility from services-with immediate results. When they see  cutting-edge service innovations in one industry, they expect to find them in others as well; witness the spread of self-service kiosks from airline check-ins to the retailing and hospitality industries. As industry boundaries increasingly blur for customers, companies must look for new ideas beyond their immediate rivals.

The rise of the mobile internet: About 1.5 billion smartphones are currently in use worldwide and more than 100 billion apps were downloaded in 2013, up from 64 billion in 2012.  The resulting mobile and self-service possibilities are transforming   service delivery.

Advances in digital payments are increasingly spurring mobile commerce, with far-reaching implications in financial services and retailing. The proliferation of smart devices unlocks growth opportunities, reduces the cost to develop services, and dramatically lowers barriers to entry.

Big data and advanced analytics: Companies such as Amazon and Harrah‘s are known for using customer data to personalize and tailor their services. Continued advances in analytic capabilities allow companies to draw insights from massive, previously untapped sources, leading to new service possibilities.

The Internet of Things: Pervasive machine-to-machine (M2M) connectivity is already facilitating real-time service delivery in a number of B2B applications, such as the sensors GE uses in aircraft engines to monitor performance and improve the efficiency of maintenance. In the B2C space, Nest (recently acquired by Google) uses M2M connectivity to link its smart thermostats to other home devices, including washing machines and personal-fitness bands, thus positioning the company as the  network  hub  in  a  digitally connected  home.  The  prevalence  of connected devices opens up possibilities for proactive, even ―touchless‖ service, as well as new commercial models quite unlike the traditional fee-for-service one.

Companies that evolve quickly will better position themselves to capture this growth, while those clinging to traditional models will face growing pressure from digital attackers. To meet the challenges, forward-looking incumbents are pursuing three imperatives:

Institutionalize service innovation

Services, like products, have a shelf life. After all, customer demand evolves, service expectations change, and technological advances constantly bring new possibilities. Services, therefore, should be periodically examined and refreshed, just as products are. Many companies think of R&D as exclusively for product development. Yet when they dedicate resources and management attention to developing and refining their service offerings systematically, they can make significant improvements.

Personalize the customer experience

Companies have always sought to understand customers better to tailor services  to  their  needs.  Traditionally,  this  has  meant  focusing  on customer segments or groups. While that wisdom still holds, the advent of massive new datasets and the spread of mobile devices mean that services can now be personalized cost effectively to a  much higher degree. The initiative helps the company to strengthen its relationships with merchants and serve them better, while also staying relevant to younger, digitally savvy customers. Some incumbents go further by giving consumers even more control over. When customers volunteer additional information, the experience can be personalized further.

Simplify service delivery

Digital attackers tend to thrive on simplicity. Many adeptly combine new technology with process improvements to make services straightforward and more pleasing. Meanwhile, big incumbents, burdened by legacy IT  systems and  entrenched processes that  have evolved  over   time,   often   struggle  to   keep   things   simple.  Still, incumbents can bring more simplicity to their service operations by looking at the world the way their customers do.

Benefits of Financial Service Development

When  a   financial  service  organization  develops  new,  innovative offerings, the following benefits are accruable:

Enhanced competitive edge

Improved customer satisfaction and loyalty

Sustains profitability

Enlarges the market size (Attraction of new customers)

Corporate image enhancement

Ability to compete internationally

May  create  avenue  for  employment  of  staff  with  required innovative skills.

Good for the shareholders and corporate stakeholders.

Marketing Channels and the Effect of Technology

Overview of Marketing Channel

Conventionally, a marketing channel is a structure that is composed of several interconnected bridges (Channel members) to deliver the product from the manufacture to the end user or customer. According to Bucklin (2000),  a  marketing  channel  is  an  organized network  of  agencies  and institutions that are functionally dependent. More so, Balocco (2012), asserted  that  marketing  channel  is  entirely  denoted  to  performance  of certain activities that ensure the product or service distribution to the right customer at the right time and place and in the most efficient and effective way. Given the above definitions, it is pertinent to mention that the prime objective of marketing channel is the movement of product from the manufacturers through to the end consumers. A recent innovation in the marketing channel system has brought about tremendous changes with the application of internet and mobile technology.

Classification of Marketing Channel

A typical marketing channel can be classified into two-direct and indirect channel. A channel is said to be direct when goods and services are sold by manufacturers directly to final consumers without activities of the middle men. In this case, producers transact business directly with end users. These end users could be government, institutions, churches, educational institutions, commercial businesses, companies, or even individuals.

On the other hand, an indirect channel entails a system whereby the activities of middlemen are required in the movement of goods and services from manufacturers to end users. According to Iyer (2003), an indirect channel exists when intermediaries are inserted between the producer and consumers and they perform numerous channel functions.

Types of Marketing Channels

There are basically four types of marketing channels. They are zero level, one level, two levels, and three level channel. A zero level channel is also known as a direct channel whereby no intermediaries are involved in the movement of goods to consumer. A one level channel is when one intermediary (either a wholesaler or retailer) is involved in the distribution system. Furthermore, a two level channel involves activities of both wholesalers and retailers in getting the product to the final user. Finally, a three level channel exist where agents, wholesalers, and retailers are highly needed in pushing the product to consumers.

Technology and Marketing Channels

The traditional view and structure of the marketing channel was amended and restructured after the invention of the internet technology (Bucklin, 2000). This alternative channel that is pertinent to the virtual environment is termed ―online channel‖. According to Boundless (2015), the characteristics, functionality, interactivity, distribution flow and association of different channel members, and the overall marketing strategy for this unique channel have drastically changed the marketing channel concept. It may not be far from the truth to say that conventional channel manager has really gotten momentum through the inclusion of the information technology.

It is important to also say that mobile marketing and other marketing decision support systems have assisted marketers and channel managers to effectively and efficiently manage the marketing channel system. This has brought  about  cost  reduction,  a  more  coordinated  channel  structure, efficient dissemination of information to stakeholders or channel numbers, and ultimately, enabled the consumer to get product with minimum stress and at the right time and price.

Marketing Staff Retention and Loyalty

Overview of Marketing Staff Retention and Loyalty

The firm‘s ability to retain its marketing staff is termed marketing staff retention.   In several lights, the negative consequences of employee turnover have been portended. For instance, Knight, Edwards, and Flynn (2012) demonstrated that staff turnover increases workplace demands and  decreases perceptions of  support.  This  underscores the  need  to reduce stress and minimize subsequent turnover. But the general consensus is that when employee turnover is high, both staff and the firm in question can be affected negatively. Specifically, marketing staff are the closest to the customers. Given that customers are the ultimate reason that firms exist, customer dissatisfaction arising from employee turnover can affect organizational performance. In fact, the service triangle as captured in Grönroos (1984) shows that staff and customers are the base upon which every firm stand. Smart companies must therefore work assiduously to retain their marketing staff and keep them loyal especially the high performing ones. Since every company employee or department is involved in marketing in one way or the other, we generically look at marketing staff as all the company‘s employees and used the two terms interchangeably although our discussion in this unit stems mainly from the marketing perspective. This is more so because as Grönroos(2009) noted, every staff in the organization is involved in developing and communicating value propositions and supporting customer value delivery processes.

Drivers of Marketing Staff Retention and Loyalty

Customer orientation: Customer loyalty ensues when company employees exhibit positive attitudes. Kotler and Keller (2009) argued that job satisfaction and employee commitment can be enhanced by instilling customer orientation in employees. Committed employees are easier  to  retain  and  keep  loyal  than  other  employees. Boosting  the customer orientation of employees is therefore a key factor that drives their retention and loyalty to a particular company.

Job security: Based on intuition, it is difficult for employees to wholeheartedly commit their efforts toward the realization of the objectives of a company that does not guarantee them job security. Such employees may continue working for the company as long as long as alternative offers are yet to surface. For instance, if the staffs of most Nigerian banks have better alternative job offers, they will certainly leave because of the level of job insecurity that currently characterize that sector. To retain the best talents, the firm must therefore not only strive to keep the customers happy in the short term but must also work out policies that will guarantee employees job security.

Promotion and attractive remunerations: According to Charley Polachi,  the  managing  partner  at Polachi  Access  Executive  Search. Achievement and recognition are high motivators for employees. If they take risks, reward them. Give them a coupon to go out for dinner, an extra  day  off,  tickets  to  a  show,  etc.  The  small  stuff  adds  up.

Summarily, when employees are promoted as and when due and remunerated for hard work, they tend to become more loyal than when such incentives are absent. In sum, one key way to retain employees is to design handsome rewards for good performance.

Opportunities for self-development and staff training: Many workers join their organizations not just for the sake of having a job but to develop a career. According to Kotler and Armstrong (2010), training can  make  employees  better  at  their  jobs  and  consequently improve service productivity. Grönroos (2009: 357), a leading Scandinavian marketing academic stated as follows: ―Enabling promises explicitly points out the need to prepare employees who are not trained as marketers and whose main task is not marketing for their customer- related duties‖. Additionally, Dibb and Simkin (2009) further noted that employees will be better at doing their jobs if a well-managed training programmes are instituted. According to Feigenbaum (2017), employers who want to harness the full value of their employees and foster loyalty and retention will find training is a winning prospect for all involved because employees who are engaged in their jobs and careers want to know more about their company and industry and to learn skills that will improve their performance.

Treat employees as customers: Thinking of employees in the same way—as   customers—may   similarly   improve   both   key   business outcomes and employees‘ experience. Since we have a Customer Experience Group, it is also important to create an Employee Experience Group. With such groups, the issues and concerns of employees can easily be ascertained and dealt with just as Customer Experience Group fosters similar fit. Strengthening the employee experience is particularly critical for firms to be able to realize their mission and goals of retaining their employees and keeping them loyal. And as with customers, the employee experience brands firm‘s service for potential employees as well. Like customers, today‘s workforce has greater awareness of and access to other opportunities, driving employers to rethink how they develop or maintain a competitive position in today‘s talent market. The prevailing view of talent management resembles a supply chain, with an on-ramp for hires and an off-ramp for retirees—and the tools to support this life cycle tend to reflect the ideas found in manufacturing: standardization and scale. But just as consumer products have evolved from using mass marketing and ―push‖ advertising, organizations today should move beyond a ―one-size-fits-all‖ approach to their workforce. Instead, more cross-cutting, holistic solutions tailored to a specific business context or outcome are required to realize the full potential of workforce including their retention.

Internal marketing: Internal marketing focuses on people inside business  boundaries,  and  places  emphasis  on  the  satisfaction  of employee needs (Roberts-Lombard, 2010). The main objective for the internal marketing is to make employees the first market of company because the function of internal marketing is to obtain motivated and conscious personnel at every level. Increased awareness of employee importance in business change and implementation has contributed to the adoption of internal marketing. Communication is at the heart of internal marketing. Thus, firm-employee internal communication within helps to ensure that employees needs are satisfied. According to Anthony Smith, CEO and founder of Insightly, ―The best benefit you can provide to your employees is the opportunity to make a difference through their work and help guide the course of the company. Benefits such as clear and frequent communication on company happenings, individual and department direction, and big-picture company direction make all the difference in employee happiness. Employees whose needs are satisfied and are therefore happy are much likely to remain in the organization than dissatisfied and unhappy employees. After all, Roberts-Lombard (2010) found that improved level of internal communication between managers and their employees creates an environment that can promote mutual respect, trust and concern between management and employees.

Conducive work environment: According to Kotler and Armstrong (2010), the design and delivery of a service through a superior work environment can create service differentiation which consequently leads to the attainment of competitive advantage. Such superior or conducive work environment is much more likely to attract reliable, competent, and loyal employees than an unconducive work environment.

Advertising: Advertising do have a positive effect on organizational employees. According to Fill (2009: 905), ―advertising  can serve to clarify  roles,  make  promises  that  can  be  realistically delivered  and demonstrates that the organization values its employees‖.  These have the ability to improve the morale and commitment of the employees which in turn leads to staff retention and loyalty to the organization. In more specific terms, the firm‘s adverts must be realistic for it to elicit positive  effects  on  employees.  According  to  Fill  (2009),  the  three criteria that employees utilize to evaluate the adverts of their employers are message accuracy, value congruence, and message effectiveness. For the organization to meet the above three criteria to the satisfaction of marketing staff within the enterprise and boost their morale and commitment, the  staff  have to  be  involved in  the  development and sometimes, the actual participation of the advertising.

Benefits of Marketing Staff Retention and Loyalty

There are a number of benefits that firms derive from retaining existing employees and keeping them loyal. These benefits include:

Service quality management: Service quality vary according to customer-employee interactions (Kotler and Armstrong, 2010). When front-line employees are empowered, they deliver the best possible service to customers. As customers continually interact with the same employees, they get accustomed with the service capabilities of certain specific service employees within an  organization to  deliver certain services. Failure to retain such employees can lead to customer dissatisfaction because the new employee who the customers are not familiar with may fail to deliver services that will meet the customers‘ needs and expectations especially if new employees are less competent than the outgone ones.

Promise management: In the process of value creation and delivery, organizations make promises and deliver on those promises if customers must be satisfied. The delivery of promises made to customers during value proposition is accomplished with employees. According toGrönroos   (2009:   355),   ―promises    cannot   be   expected   to   be successfully kept  by  the  firm  unless  its  employees  are  willing  and motivated to do so‖.  Additionally, employees will be less willing and motivated to deliver a firm‘s promises to customers when their welfare in the organization is in doubt. One of the typical instances where the morale and  motivation of  employees will  suffer a  setback is  if  the employees are  not  sure of  the  organizational programmes poised at retaining their services and extending their job tenures.

It boosts consumer-staff relationships: It has been argued that consumers‘ attitude toward front-desk personnel often determines their attitude toward the service encounter as a whole especially because of the inseparable nature of services. This reasoning evokes an evident role of  employee‘s  customer  orientation.  In  the  majority  of   services activities, the  customer is  often  interacting with  contact  employees, whose role has become an element of differentiation. Through their attitude, contact employees could influence the quality of service perceived  by  the  customer.  As  the  consumer-employee interactions continue, consumers develop mutual bonding with existing employees of the company. Employee turnover can mar the development of such mutual consumer-employee bonding. But  with the  retention of  high performing staff, such bonding is rest-assured and consumer-staff relationships are bound to witness massive boost.

It leads to employee commitment: Employees who are retained for their  contributions  to  the  success  of  the  organization  are  bound  to become more committed. This is because employee retention is a sign that the company values them. In fact, in a firm where employees are valued, they can‘t wait to get to work (Kotler and Keller, 2009).

It  leads  to  overall  organizational  performance:  A  number  of evidences have linked employees‘ positive attitudes to organizational performance.  For  instance,  Kotler  and  Keller  (2009)  cited  Sears‘ research that found a high correlation between customer satisfaction, employee satisfaction, and store profitability. Thus, when employees are satisfied with the company, they are motivated to deliver satisfactory services to customers. When customers are satisfied, firms become more profitable probably because satisfied customers tend to not only buy more  from  the  firm  but  also  drum  up  businesses  for  the  company through word of mouth communication.

Overview of Globalization and External Environment

Globalization

Globalization  is   the   process   by   which   the   world   is   becoming increasingly interconnected as a result of massively increased trade and cultural exchange. It has also increased the production of goods and service (www.bbc,globalisation). This process is made possible by the advent and existence of Information and Communication Technology. Globalization reduces the stress involved in firms going international by making the entire world market a single unit. This created a new market space instead of the traditional market place.

External Environment of Marketing

The marketing environment is also called the world of marketing. It is the totality of all the factors and forces that directly or indirectly, implicitly or explicitly affect the marketing activities of a firm. This environment is divided into internal and external environment.

The external environment includes all those factors that are macro in nature and are highly beyond the control of the financial service organization. The organization therefore can only adapt to them and constantly respond to changes in them if the organization is to survive.

Concept of the Global Customer

The global customer refers to those customers operate beyond national boundaries. It means an international buyer or customer. A customer from another country other than that of the seller or producer

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Environmental Factors in the Financial Services Sector

Basically, a business environment is made up of the customers, employees, suppliers, products and the external environmental factors which consist of economic, technological, political/legal, socio-cultural, competitive factors etc.  We shall concentrate efforts at identifying only the variables in the external environment of the financial service sector.

(i)       Economic Factors

Presently,  Nigeria  is  undergoing  a  period  of  recession  which  is negatively affecting the fortunes of many businesses in the financial service sector.   Other economic factors include inflation, interest rate, lending rate, per capita income, exchange rate etc. in the recent times, the exchange rate of the Naira to the US Dollar has risen to an all time high, whereby the Naira has very low value compared to the dollar. This has affected the operations of firms in the financial service sector negative leading most of them to downsize their workforce and close some branches. This incidence has equally affected our economy adversely.  This  exchange  rate  regime  has  affected  other  economic indices mentioned above and has driven the Central Bank of Nigeria into a summer assault of policies targeted at grappling with this mantra.

(ii)    Technological

The advent of the internet has given rise to globalization, which has presented its own challenges to banks and other financial institutions. The rate of technological innovations and inventions is overwhelming. This has affected the way financial businesses are carried out. Today, banks are developing various innovative products in response to changes in technology. Such products include, mobile banking, internet banking, automated teller machines (ATM), point of sale machines (POS) and many mobile apps, some of which has earlier been mentioned in a previous  unit  addressing the  issue  of  retail  and  wholesale  banking.

Innovations in technology have equally made the internationalization of financial operations easier for both service providers and consumers. However,  technology  in  financial  service  sector  is  not  without  its inherent problems some of which are password theft, online criminal activities, system downtime etc.

(iii)  Political/Legal

In the recent past and indeed presently a lot of reformations have taken place in the financial sector.  Series of policies have equally been put in place to give clear directions in the way financial services are carried out. Again, there are a lot of laws, acts of parliament regulating and controlling the way financial sector businesses are carried on and these laws enabled the creation of government regulatory agencies.  Some of the regulatory agencies of government involved in the financial service sector includes, Central Bank of Nigeria (CBN), National Deposit Insurance Company (NDIC), Economic and Financial Crimes Commission (EFCC), Consumer Protection Council (CPC) etc.

(iv)        Demographic Factor

The population of Nigeria is constantly increasing by available statistical records. It is estimated that the population is slightly above 200 million people presently.  This has made Nigeria one of the largest markets in the world today.  However, the incidence of high rate of unemployment and illiteracy have affected the purchasing power, consumption rate and savings rate of Nigerians as well abilities to use innovative financial products, thereby creating serious challenges for financial institutions with such products.   Some demographic indices to look out for are educational qualification/level of literacy, population growth rate, unemployment rate, occupation, mortality rate, birth rate etc.

(v)         Competition

The  level  of  competition has  become  more  intense in  the  financial service sector  with  many banks  out  of  business already and  others merely struggling to survive given the economic circumstances. The economic hardship is further creating more competitive problems for financial institutions in the country.

(vi)        Socio-cultural Factor

Religion is a sub culture and the level of religious crises is on the increase.   Many strongly believe that the Boko Haram insurgency is religiously induced.  The activities of this terrorist group as well as the militants in the Niger Delta region are in no small measure taking a negative toll on the financial service sector. Most banks have closed shop in the war torn North eastern part of the country leading to the layoff of workers. Many workers equally resigned on their own due to risk to lives and properties.

Concept of Marketing Strategy

To better get a grasp of the subject matter of Marketing Strategy, it is pertinent  that  the  two  words  inherent  in  it  are  first  considered  in isolation, that is marketing and strategy.

There are varying definitions of marketing all re-emphasizing the subsisting controversy, as to what marketing really is.  However, in all modern and widely acceptable definition of  marketing, one thing is common; that the main focus of the marketing function is consumer/customer satisfaction at a profit; leading to the triple C vision of modern marketing, namely, consumer orientation, consumer satisfaction and consumer sovereignty. However, more recent marketing management philosophies now encompasses assurance of society‘s welfare (social marketing) and environmental friendliness (green/environmental marketing) as part and parcel of the marketing function.   Given the above, marketing is here defined as “The performance of  all  individual  and  organizational activities  that  are targeted at the anticipation of consumer’s and society’s needs, provision of goods and services and the facilitation of exchanges for customer and society’s satisfaction at a profit to the organization.”

This  definition  underscores the  fact  that  while  the  profit  motive  is important to the life of an organization, only those organizations that best satisfies customers and the society would make profit in the long run.

Strategy

On the other hand, has been defined as the planning and adjustment of efforts in order to achieve a predetermined goal.  This goal of course is the attainment of optimum customer satisfaction and society‘s welfare which is the primary objective of modern marketing.  Agbonifoh et al (2007) defined strategy as a road map that specifies the direction of an organization‘s decisions.

Marketing strategy defined

Marketing strategy is defined here as ―the strategic planning and adjustment of marketing efforts in order to achieve customer satisfaction and society‘s welfare at a profit to the organization. A marketing strategy should be proactive not reactive in order to enable the organization take advantage of anticipated opportunities in the market place.  For instance, the ban on motorcycle (Okada/Inaga) as a means of transportation brought  about  a  wind  of  change  in  the  business  and marketing environment in some States in Nigeria.  Companies who had a functional marketing strategy took advantage of it to import tricycles (Keke), and are telling the success story.  Marketing strategy has equally been defined as a ―process that can allow an organization to concentrate its limited resources on the greatest opportunities to increase sales (not necessarily in  the  short  run)  and  achieve  a  sustainable  competitive advantage (UK/Australian Business Guide, 2010).  It should be centered around  the  key concept  that  customer satisfaction is  the  main  goal (Baker, 2008).

This definition goes a long way to buttress the point that marketing strategy should be market oriented and that is the only way it can ensure sustainable competitive advantage.

A marketing strategy revolves around the four main decision areas in marketing  management namely product,  price,  promotion  and  place (marketing mix).  For, it is the efforts of marketers on these that need t be  planned  and  adjusted  until  marketing  and  corporate  goals  are achieved.

Types of Marketing Strategies

The classifications of marketing strategy could be as many as there are authorities in the field.  For our purpose, efforts at categorization will be narrowed down to competition based strategies and marketing mix based strategies.

Competition Based Strategies

Among the competition based strategies are market leader, market challenger, market follower and market nicher strategies.

1. Market  Leader:  The  market  leader  in  any  industry  is  that company that presently enjoys the largest share of the industries market and therefore strives to maintain it or at best increase its share of the market by subduing or frustrating competition, (e.g. MTN, NBC, NB, PLC in Nigeria).  Some of the strategies that could be adopted by a market leader are:

i. Expansion Strategy:   Diversifying its   market   and   product categories.

Innovation Strategy: constant and valuable improvement on its existing offers and methods of product/service delivery in order to add value.

Defensive Strategy: This has a military connotation and entails the leader being satisfied with maintaining the status quo, this is however very dangerous.   The market leader must lead in the development  of  new  business;  new  ideas  and  new  customer value.  He must have a customer proposition that offers superior solution to customers‘ problems and differentiated products (Koltinikov, 2010).

2. Market Challenger: A market challenger is one who presently occupies the second largest share of an industry‘s market but is desirous of over taking the market leader (e.g. 7up Bottling Company). Among the options available to the market challenger are:

i. Frontal Attack: Competing with the leader head on by doing whatever the leader is doing or better still trying to surpass it in terms of product offering, innovation, price, promotion and distribution strategies. This sometimes leads to a price war like the one that existed between Nigerian Bottling Company and 7up Bottling Company some few years back. A price war though advantageous to consumers, it very detrimental to both the leader and the challenger. For a market challenger to adopt a frontal attack approach, it must be sure that has the technological propriety, financial power and manpower to equal that of the leader.

ii. Rear Attack: Here, the market challenger tries to identify areas of weakness of the market leader and then capitalizes on it to take over  the  leadership  of  the  market.  This  entails  a  serious application of the outcome of a firm‘s SWOT analysis, marketing research and environmental scanning.

iii. Guerrilla Warfare: Here, the market challenger pulls a stunt or surprise that will throw the leader off balance. The use of this tactics entails strategic thinking and proactiveness. A market challenger anticipates an action that a leader wants to take and beasts him to it with better action. For instance, a challenger firm may closely monitor a leader‘s innovation process and then launches the innovation before the leader does.

4. Market Follower: Market followers are more comfortable with maintaining the status quo and they simply apply tactics that will ensure same, what we might call follow the leader strategies.

5. Market Nicher: Is one that decides to carve out a nich for itself instead of joining in the intense competitition. A nicher discovers a smaller segment of the market to serve and does everything to protect and satisfy it.  A nicher can carve out a geographical nich (e.g. Owerri   Market),   customer   type   nich   (small   users), Demographic nich (Men‘s market etc.

The truth is that a market nicher is not interested in the total market but in a small segment where he will be king. (A big fish in a small Ocean).

Other authorities may prefer to use the terms prospector, analyzer, defender and reactor to refer to the four competitions based marketing strategies (Miles, 2003).

Marketing mix based strategies

The second way of classifying marketing strategies is to put them under the mix elements. There are four traditional elements of the marketing mix most often referred to as the four P‘s of marketing, for the obvious fact that all begins with the letter P.  They include Product, price, Place and Promotion.

The marketing mix elements are marketing variables that are at the disposal of the marketer for the satisfaction of the needs/wants of his target market.  They are variables in the sense that the marketer could keep changing them until the whole meets with the expectations of the customer/market and by extension satisfies them (customers). In reality, different target markets may require different mix elements. This makes market segmentation strategy a very important one except where they marketer is doing mass marketing.

A  support for  blending or  managing the  mix elements in  line  with individual customer groups requirements or expectations is encapsulated in  Cannon  (1996:270)  assertion  that  successful  mix  management depends on the fit between management controllable resources (mix elements) and the needs of specific customer groups and that a mix created without targeting or focusing on a market segment has no value. He went further to state that the mix elements are designed to:

1.        Create a combination meeting customer needs

2.        Achieve competitive advantage

3.        Stratify legal requirements

In furtherance of the idea of ensuring that the mix elements fall in line with customer needs, Driver (1990) as contained in Cannon (1996:270) opined that any conception of marketing in terms of the four P‘s which largely excludes competitive and legal considerations, has tended to isolate marketing from a context which is a matter of practical and public importance.

On the final belief of Kotelnikov (2010:1) that marketing strategies are generally concerned with the four P‘s; Product strategies, pricing strategies, promotional strategies and placement strategies and that the focus of marking strategies must be the objectives to be achieved not the process of planning itself, this chapter goes further to explore the marketing mix based strategies.

Product related strategies

A product is anything that is capable of satisfying human want/needs. It may not be for immediate consumption (finished product) but for further production (Raw material).  The use of the word ―anything may sound high handed to casual observers but the truth is that no matter what it is, once it is capable of satisfying a given human want/need, it constitutes a product.    Again, cocaine might be a banned drug but its use in the manufacture of health maintaining drugs makes it legally capable of satisfying human wants/needs.

A product might be an idea, place, man, and good or service which possess utility (i.e. ability to satisfy human wants/needs).   Onah and Thomas (2004) believe that product policy decisions are central to any company‘s competitive advantage and therefore central to its marketing efforts.    They went further to  say that  product decisions determine the  pattern of  marketing operations, sales and advertising strategies and distribution channel policies.   Products are broadly categorized into goods (physical/tangibles) and services (intangibles).

Goods are further classified as consumer goods e.g. convenience goods, shopping goods and specialty goods and industrial goods i.e. raw materials, installations, standardization, branding and rebranding.

Innovation strategy

An innovation is not just a new product but one that others new and improved value to customers.  An innovation becomes necessary when an existing product no longer meets with the acceptance of the market place. To be successful, innovation must not be viewed from the eyes of the organization but that of  the customers/consumers.   Therefore, it should be market oriented (i.e. it must be seen by the consumer to have added value to him).

Lack of market orientation has been a principal reason for failure of most innovative ideas. Organizations have gone ahead to commercialize without first test marketing because they have considered value from their own view rather than from the point of the market or marketer who incidentally has contact with the market and therefore understands it better.  Customer value most times is perceived and not real, therefore, there is great need for effective perception management for there to be a successful innovation.

Some authorities have concluded that  competitiveness is  not simply based on cutting costs and that new growth and increased market share comes from product innovation. They went further to posit that innovation I manufacturing means looking at new ways of doing things and that it must adapt based on public (customer) demand.

It is also their strong belief that producer innovation is futuristic and therefore is concerned with future trends in competition and market share (about the next product, the next product launch) and that it will need to address new features due to new customer needs.

Innovation might necessarily be an entirely novel product and in which case requiring a complete change in consumer consumption pattern/behavior. The most popular classification of innovation of marketing scholars, are as follows:

(a) Customer  Innovation:  Mild  review  in  the  features  of  old existing products in order to take case of certain customer/market characteristics. For instance, a change in the colour of a product or its package is a continuous innovation since it takes case of the colour psychology of consumers. Daye, Van Auken and Asacker (2008) identified colour as a critical element in developing a product and that colour and not enhances the appearance of the item but also influences consumer behavior toward being favourable disposed to a firm‘s product. A change in the colour of a firms product might become imperative because the effect and consumer perception for colour differ from culture to culture e.g. white is death in China but purple means the same thing in Brazil. Yellow in sacred to the Chinese but signifies sadness in Greece and jealousy in France (Daye, Van Auken and Asacker, 2008).

(b) Dynamically Continuous Innovation: This is one that requires a greater review in the old existing product more than the continuous innovation and therefore requires a change in consumer mode or pattern of consumption. For instance, a change from manual clipper to electric clipper or manual typewriter to electric typewriter.

(c) Discontinuous  Innovation:  Is  a  novel  product  requiring  a complete change in consumer behavior e.g. the invention of air transportation.

BRANDING/REBRANDING

Branding has  been  described as  a  very importance aspect  of  every product‘s  strategy.  Branding  refers  to  the  imaginative  process  of creating a unique relevant and harmonious name, term, sign, symbol or its combination in order to identify a company‘s product and to differentiate it  from  those  of  competitors (Okpara, 2002) while rebranding gives a definite idea that a product has reached its maturity or is loosing grip in the market and therefore requires a change of these identified  factors  (i.e.  name,  etc).  The  branding  strategy  improves market positioning, market share ad market size of a company, serves as a guarantee of consistency in quality and standard, aids advertisement, forestalls product brand piracy and is used to gain differential advantage over competitors.

Kotelnikov  (2010)   sees   differentiation  as   a   key  to   successful marketing. In his words, ―if  consumers don‘t perceive your brands as being different (unique selling proposition) from those offered by the competition, you won‘t win the marketing war. The battle for consumer minds is a battle of perception, not product.‖ Branding ensures differentiation which leads to positive perception.

A  company  can  either  adopt  the  manufacturers  branding  strategy, private branding strategy or Generic branding strategy. In the words of Anyanwu (2003), these categories of brads are derived based on the nature of decisions faced by producers of goods when choosing a branding option. He went further to say that generally; producers are faced with such decisions as to:

Market products exclusively under manufacturers‘ brand name.

Market  products  solely  under  a  distributors‘  brand  name  lie Taiwanese manufacturers do (Adirika, et al, 1997).

Under the manufacturer‘s branding strategy, two options exists namely; the family branding option, where a firm uses one brand name for all or a good number of its products like Sony TV, Sony Radio, Sony Fan, Sony VCD, etc. In Nigeria Adebowale Electronics (AEI) produces a wide range of electronics using the brand name DEBO (Adirika, et al, 1997). According to Aake (200) one merit associated with the use of a  family  brand  is  that  it  enables  any  outlay  in  advertising  and promotions to benefit each product in the family hence minimizing the promotional expenditure.

Agbonifoh, Ogwo, Nnolim and Nkamnebe (2007) suggest that the family brand should be used only when the products are of comparable quality, so as to avoid damaging any of the product‘s image and leading to sales difficulty.

On the other hand, a firm may adopt different names for its products which are  even related, and  this  is  the  individual branding strategy (Adirika, et al, 1997). For instance, Unilever Nig. Plc produces Omo, Surf and PZ Industries Plc produces Elephant and Drum detergents.

However, when  a  producer uses  that  brand  name  of  distributors or dealers, it is called private branding option while the use of the universal name of a good by a producer as a brand is called generic branding strategy, for example Dog food, Egg yoke, paper, etc.

Standardization/customization

Another set of product related strategies are standardization and customization. Standardization refers to a situation where a firm offers the same product without any medications to its various market segment or customer group. This has the disadvantage of likely not ensuring customer   satisfaction   in   all   the   markets.   Given   the   varying characteristics of customer groups, there is no way the same product will meet their needs.

Customization is  a  more  appropriate  strategy in  modern  marketing. Here, products are tailored to suit individual customers or customer groups. There is better assurance of customer value delivery and satisfaction with the adoption of customization.

Price related strategies

Price has been described as the only revenue yielding element of the marketing mix. In the words of Ogbuji and Okeke (2008), of all the elements of marketing strategy, price is the most intriguing. It is at the heart of industrial marketing strategy. They went further to say that pricing (process of fixing price) is very much like play draught in that in both cases, one makes moves in the absence of complete information based on expectation regarding competitive responses.

The Internet Centre for Management and Business Administration (ICMBA), Inc. (2007) sees pricing as an important strategic issue because it is related to product positioning and they went further to says that pricing affects other marketing mix elements such as product features, channel decisions and promotion. In determining the pricing strategy, they advised that the following steps may be followed; develop marketing strategy, make marketing mix decisions, estimate demand curve, calculate cost, understand environmental factors, set pricing objectives and then determine price.

The price related strategies to be discussed here penetration, skimming, and  price  discriminating and  standard  pricing.  We  shall  proceed  to discuss all of them.

Penetration strategy

This is a pricing strategy for new products in a given market. In this strategy, the marketer sets an initial low price on his product in order to enter the market and maximize sales turnover. The marketer may then gradually increase the price.

ICMBA (2007) suggests that this strategy is most appropriate when demand is expected to be highly elastic; that is, customers are price sensitive and the quantity demanded will increase significantly as price decreases, large decreases in cost are expected as cumulative volume increases; the product is of the nature of something that can gain mass appeal fairly quickly and there is a threat of impending competition.

Skimming pricing strategy

In this case, the marketer fixes an initial high price on the new product and eventually lower it a bit in due cause. It attempt to ―skim the cream‖ off the top of the market by setting a high price and selling to those customers who are less price sensitive. It is used to pursue the objective of profit margin maximization (ICMBA, 2007)

They further suggested that this strategy should be adopted when:

1. Demand is expected to be inelastic, that is, the customers are not highly price sensitive.

2. Large cost savings are not expected at high volumes or it is difficult to predict the cost savings that would be achieved at high volumes.

3. The company does not have the resources to finance the large capital expenditure necessary for high volume production with initial low profit margins.

Price discrimination/standard price

In  price  discrimination,  products  sell  their  products  to  different customers at different prices according to the customer ability to pay. It is sometimes referred to as status pricing while standard pricing entails a situation whereby producers sell their products at the same price to all customer groups.

Place related strategies

Place is considered a very importance element of the marketing strategy because it ensure that goods that are produced, eventually get to the final consumers or buyers. The fact that the end of production is consumption and without which profit objective cannot be achieved, underscores the importance of the place element. This element entails storage, transportation, warehousing, inventory management, etc.

The  strategies to  be  discussed under  here  are  selective distribution, intensive distribution and exclusive distribution strategies.

Selective distribution strategy

Here, the marketer uses very few intermediate (retailers, wholesalers, etc.) in the distribution of his products. This has the advantage of cutting cost and controlling market prices but is only advisable in a situation where the firm‘s market is not so widespread or is not a national market. This strategy equally enables easy control of the distribution network by the company. A firm should adopt this strategy is it desires a large geographical spread and consumers are willing to shop around.

Intensive distribution strategy

This entails the act and process of a company using all available intermediaries to distribute its products. Though this strategy sometimes leads to the loss of control of the distribution channel on the part of the firm however, it has the advantage of wider reach and greater sales turnover. It also does not give room for any middleman to become monopolistic. This type of strategy is normally more appropriate for convenience goods that  have low  prices and  most  times  bought on impulse e.g. chewing gum and chocolate.

Exclusive distribution strategy

In   exclusive   distribution,   the   marketer   uses   only   one   type   of intermediary who is given the license to distribute the firms‘ product to other intermediaries. In some cases, the exclusive distributor ends up being more power and having greater control on the distribution channel than the producers and can therefore begin to exhibit monopolistic tendencies.

One major advantage of this strategy however, is that it relieves the producer the burden and cost of distribution of its products and therefore gives ample time for them to concentrate on other mix elements.

Again, most exclusive distributors have the financial power to sponsor production thereby sharing the business risk with the producers. The strategy is more often than not used for high priced items like motor vehicles, tractors, etc.

Promotion related strategies

Promotion is the communication arm of marketing, without which the buyers or consumers may never know of the need satisfying offerings or value  delivering  products  of  markets  and  their  firms.  The  major objective of promotion is to inform, educate and persuade current and potential consumers and of the three, persuasion is the most important in that it encompasses elements of information and education.

The importance of promotion is made more manifest in an imperfect market situation just as we have the real world due to the need for differentiation. Advertising, sales promotion, personal selling, publicity and public relations as well as direct marketing, constitutes the basic elements of promotion in marketing and each could be used in isolation or as an integrated whole (integrated promotional strategy). However, it must be pointed out that an integrated approach in promotion is more apt than the isolated use of any of these elements.

However, in choosing the mix of promotional elements to use, one must consider  the  following  factors  namely,  amount  of  money available, nature of the market concentration of market, nature of the product and stage of the product in the life cycle.

Two strategies in promotion will be discussed here namely push and pull strategy. These strategies are both applicable in promotion and in distribution.

Push/pull strategy

In  the  words  of  Cannon  (1996)  effectively  moving  a  product through the channels and managing the various flows of information, title, etc., is a combination of push and pull strategies. According to him, the push is the manufacturer‘s or first – level intermediaries efforts to persuade other channel members to stock or promote the product while the pull is the pressure exercised b customers on the trader to stock the item.

As is consistent with the marketing concept, the pull strategy should best guide the promotion focus of the firm since it bests describes the need of the market and their demand level to avoid excess stocking and production of goods.

In the push strategy, promotional efforts is targeted at the intermediaries who in turn push it down to the market while in the use of the pull strategy, promotional efforts are targeted at the market who now makes demand on the intermediaries.