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