IMPACT OF MARKET ORIENTATION PRACTICES ON ORGANISATIONAL PERFORMANCE IN NIGERIAN BANKING INDUSTRY
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IMPACT OF MARKET ORIENTATION PRACTICES ON ORGANISATIONAL PERFORMANCE IN NIGERIAN BANKING INDUSTRY
ABSTRACT
The study’s goal is to gain a better understanding of the theoretical and empirical relationship between market orientation practices (intelligence generation, intelligence dissemination and responsiveness, customer focus, competitor orientation,
and inter-functional coordination) and some measures of organisational performance (profitability, customer satisfaction, long term objectives, and short term objectives) in Nigerian banks.
The research design was a cross-sectional survey, with structured questions used to gather data. Aides were distributed to employees of the following selected banks in Lagos: First Bank, FCMB, Sterling Bank, DBA, and Zenith Bank.
The study had a ninety percent (90%) response rate from two hundred questionnaires distributed.
The survey responses were statistically analysed with SPSS, which included simple frequency %, descriptive statistics, factor analysis, and Pearson product moment correlation.
The study’s findings show that the banks under consideration were highly market-oriented. The findings show that banks prioritise getting relevant market knowledge and responding properly in order to achieve a competitive advantage.
The study also found a substantial association between banks’ market orientation strategies and the aforementioned performance measures.
Finally, conclusions, recommendations, and proposals for future investigations were highlighted to demonstrate the generalizability of the study’s findings.
INTRODUCTION
1.0 Background of the Study
An organisation is primarily founded to fulfil specific predetermined goals, one of which may be the creation and distribution of products and services that meet the demands and satisfaction of its customers.
As a result, organisations must properly identify consumer wants in order to provide items and services that will please consumers while also generating sales and profit. This argument emphasises the fundamental role of marketing in value creation and organisational performance.
Marketing academics have long emphasised the importance of the marketing idea and viewed it as a foundation of the marketing discipline. Recent researchers give the much-needed theoretical framework for the effect of marketing orientation on business success and demonstrate some empirical support (e.g., Jaworski and Kohli 1993, Narver and Slater 1990, Tung-Zougchan and Su s.c. 2004).
Kotler (2002) identified five business principles for the marketplace. These ideas include: production concept, which states that consumers will purchase those things that are available in the greatest amount and at the lowest price; and product concept, which states that consumers will prefer goods that are superior to others in quality or features.
The se1ling approach changes the emphasis from the product to aggressive selling and promotions, with the goal of closing sales, whereas societal marketing emphasises the need for organisations to offer a large quantity of items in order to maintain or promote customer and societal well-being.
Finally, the marketing concept, also known as the production of market orientation according to Kotler, rejects the premise that the most significant aspect in business philosophy is either production capability, capacity, or aggressive sales. Instead, this approach focuses on potential customers’ current and future requirements and wants.
Kotler clearly said that “selling focuses on the needs of the seller; marketing on the needs of the buyer” (Kolter 2002; Juffery D. Derrick 2002).
In the same vein, Kolterand Jaworski, who have extensively researched on market orientation, defined the concept as the “implementation of the marketing concept.”
They also emphasised three basic elements of market orientation, which include Intelligence Generation (includes demand assessment, examination of external factors, competitors, and customer needs);
Intelligence Dissemination (Sharing the data secured among functional units); and Responsiveness (selecting the target Thus, responsiveness can be considered the springboard to becoming a more market-oriented organisation.
As a result, Geoff Lancaster et al. (2000) emphasised the importance of adopting a market-oriented organisational structure in order to become a marketing-focused firm.
According to them, while proper organisational structure is a key component in becoming market-oriented, such orientation cannot be attained merely by implementing an organisational chart. Management must accept and apply the marketing concept as a company philosophy.
As a result, in a marketing-oriented corporation, marketing must permeate the entire organisation, not just the marketing director and marketing department.
A change in labels and titles will not result in the essential fundamental shift in organisational attitudes.. The primary concern is the company’s overall approach to business difficulties.
It is the adoption of a corporate philosophy that places customer pleasure at the forefront of management thought across the organisation. It is the understanding, identification, appreciation,
and delivery of client value and desired outcomes that surpasses rivals’. This distinguishes a market-oriented firm from one that is focused on manufacturing or sales.
The importance of market orientation strategies in the Nigerian banking sector cannot be overstated, given the volatility and competitive character of the Nigerian business climate.
However, there is a significant difference in the degree of market orientation practices in Nigerian banking before and after consolidation.
In the pre-consolidation era, the dominant corporate concept was best summarised as “Quasi Marketing.” This approach was distinguished by little competition, little or no customer service, and poor service delivery; most importantly, clients were thought to be at the mercy of banks.
In contrast, the post-consolidation period has seen an unparalleled turnaround in the marketing of banking products and services in Nigeria. The pre-consolidation phase saw over a hundred banks reduced to twenty-five (25) megabanks with a minimum capital basis of twenty-five billion naira.
The development has significantly improved market orientation practices among banks, to the point where new banks are beginning to redefine their scope, vision, mission, orientation, and business focus by identifying people’s basic banking needs and designing products, services, strategies, and processes to facilitate superior service delivery.
Thus, the banking sector has taken on a new look, driven by intense competition, business re-engineering, customer focus, continuous product improvement,
a customer-oriented organisational culture, precision, information technology, total quality management, and impeccable operational speed, among other variables and determinants of economic (business) and non-economic performance.
1.2 Statement of the Problem
The Nigerian banking system has matured, and the central bank has implemented a variety of reforms to reposition and reenergize the sector to meet new challenges, improve performance domestically and internationally, and for other socioeconomic reasons.
Today, most Nigerian banks are expanding at a rapid pace, and their performance and service delivery have significantly improved.
However, the challenge of this study is to evaluate whether this performance is influenced by market orientation methods. Thus, in light of the foregoing, and considering the current volatility, competitiveness, and dynamism of the Nigerian business environment, banks must undoubtedly consolidate their market oriented policies.
To this purpose, it is critical to conduct an informed, methodical, objective, and holistic assessment of the extent of market orientation practices in Nigeria’s banking sector. The study will focus on the following banks as case studies: First Bank, First City, Sterling Bank, UBA, and Zenith Bank.
1.3 RESEARCH QUESTIONS.
The study aims to address the following salient research questions:
1. How can market orientation techniques affect Nigerian bank performance (profitability, company growth, market share, etc.)?
2. Is there a relationship between market orientation and customer satisfaction in Nigeria’s banking sector?
3. To what extent do environmental dynamics influence market orientation in Nigeria’s banking sector?
4. Is there a link between market orientation’s antecedents and its overall efficacy in Nigeria’s banks?
1.4 Research Hypotheses
Based on the research questions, the study’s hypotheses are as follows.
Hypothesis one.
Ho: An organization’s performance suffers as its market orientation tactics increase.
Hello: The more market-oriented procedures an organisation has, the better its performance.
Hypothesis two
Ho: An organization’s market oriented tactics lead to poor customer satisfaction.
Hello: The more market-oriented procedures an organisation has, the higher its customer happiness.
HYPOTHESIS 3.
Ho: The environmental dynamics of market turbulence, competitive intensity, and technology turbulence would have a negative impact on the link between market orientation and organisational performance.
Hello: The environment dynamics of market turbulence, competitive intensity, and technology turbulence would have a favourable effect on the link between market orientation and organisational success.
HYPOTHESIS 4.
Ho: The higher the antecedents to market orientation (top management attention, interdepartmental dynamics, and organisational structures), the lower the total market orientation of the organisation.
Hello: The stronger the antecedents to market orientation (top management attention, interdepartmental dynamics, and organisational systems), the more market-oriented the organisation.
1.5 Object of the Study
The study’s objectives are as follows.
1. To assess the influence of market orientation practices on the performance of Nigerian banks.
2. To investigate the link between market orientation strategies and customer satisfaction in Nigerian banks.
3. The purpose of this study is to look at the relationship between the factors that lead to market orientation and the effectiveness of market orientation in Nigerian banks.
4. To determine the extent that environmental dynamics affect the market.
The orientation practices of Nigerian banks.
1.6 SCOPE OF THE STUDY.
The study would address several dimensions or characteristics of market orientation of the selected banks (First Bank, First City, Sterling Bank, UBA, Zenith Bank).
The study will investigate the processes of intelligence production and distribution, as well as the banks’ responsiveness to consumer needs, product/service enhancement, and service.
The study will also address other aspects of market orientation, such as competitor orientation and profitability. The study will look into how competition intelligence is obtained, analysed, and used to gain a better understanding of new ways/approaches to enhancing banking operations, as well as facilitating customer satisfaction and organisational profitability.
1.7 IMPORTANCE OF THE STUDY.
The work will be important to the extent that it has theoretical and practical implications.
On the one hand, marketing practitioners, particularly those in the banking sector, will benefit from this research since it provides a better understanding of the impact of market orientation on business performance.
The study will help them improve their existing marketing strategy and become more customer-focused while remaining aware of their competitors’ marketing methods.
On the other hand, marketing academics (students, researchers, scholars, and tutors) will profit from this study because it will not only serve as a reference point for future research, but will also provide an empirical knowledge of the idea of marketing orientation.
1.8 Operational Definition of Terms.
To help comprehend the study, certain key operational words and ideas are explained here:
1. MARKET: This term refers to a group of potential and present buyers of a product or service.
2. BUSINESS PHILOSOPHY: This refers to the core principles and ideals that organisational members are supposed to follow when conducting business.
3. MARKET ORIENTATION (MO): This term refers to an organization’s overall generation, dissemination, and responsiveness to market intelligence.
4. BANKS CONSOLIDATION: This term refers to a strategic alliance of banks formed via mergers and acquisitions to improve service delivery and international competitiveness.
5. ANTECEDENTS OF MARKET ORIENTATION: These are organisational variables that either help or hinder the application of the company philosophy represented by the marketing idea.
6. PRODUCT CQNCEPT: The premise that customers will prefer products with the highest quality, performance, and features.
7. PRODUCTION CONCEPT: The assumption that consumers prefer things that are readily available and reasonably priced.
8. SELLING CONCEPT: The belief that consumers will not purchase enough of the organization’s products unless the organisation executes a large-scale selling and promotion campaign.
9. SOCIETAL MARKETING CONCEPT: The idea that an organisation should identify the requirements, wants, and interests of its target market and supply the desired satisfactions more effectively than competitors in a way that maintains or promotes the well-being of its customers and society.
10. MARKETING INTELLIGENCE: This is the day-to-day information on events or developments in the marketing environment that helps managers formulate and alter marketing strategies.
11. CUSTOMER LOYALTY: This is the behaviour that occurs when customers make frequent repeat purchases of a specific brand, resulting in brand additive.
12. ORGANISATION CULTURE: This is a collection of common understandings around which action is organised in a clearly distributed manner by members of a group organisation.
13. INTERNAL MARKETING: A service firm’s marketing efforts to train and effectively encourage its customer employees as well as all supporting service personnel to work together to provide customer happiness.
14. CUSTOMER SATISFACTION: The degree to which a product’s perceived performance matches the buyer’s expectations.
15. CUSTOMER VALUE: The customer’s judgement of the product’s total ability to meet his or her requirements.
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