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Full Project – The impact of new product development on the performance of commercial banks in Nigeria

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CHAPTER ONE

1.0 INTRODUCTION

1.1 BACKGROUND OF THE STUDY

A major purpose of every manufacturing or service oriented organization is to fill a need that exists within its market and the success or failure of any organization is dependent of how best the product fills these needs. Commercial banks are constantly carrying out searches for new products which will fill both the actual and potential needs of their customers and which will give them competitive edge over their competitors.

According to Oyeoku (2001:3) product development begins where research leaves off. In this regard the creative ideas are harnessed and made practical for market place and commercial banks operations in other words ideas are given fresh and bones.

New product of commercial banks can therefore be seen in the light of various services offered by banks to the generality and government. Opening accounts and mobilization of funds from the surplus unit to the deficit unit which is regarded as the major function of the commercial banks use new product development as a growth strategy. Some dread it because of the losses it incurs if the product fails.

1.2 STATEMENT OF PROBLEMS

In the developed countries, banks have generally made financial transactions simpler than ever before. Bills can easily be settled without physical cash exchanging hands. Funds can be transferred through electronic media in minutes. Financial deals are concluded in seconds through banks as intermediaries and banking profession is given its right place in the society. Back home in Nigeria, the banking industry is becoming dynamic banks are borrowing a leaf from their foreign counterparts by introducing some of these products into the industry.

Nigeria banks face one of their greatest challenges in the area of customer’s services. The ultimate aim of any organization is to constantly satisfy the need and wants to its customers with the right product at the right price using the right promotion and making it available in the right place and at the right time.

New products are frequently described as the “raison” d’ etue” of business enterprises. The issue then is that much interest is not given to these new products by customers because of ignorance and the fear of the high incidence of distress in the banking industry. This research therefore is propelled by the need of customers to the various new products rendered by commercial banks, as well as various causes of customer’s poor perception of these new products.

1.3 OBJECTIVES OF STUDY

From the above statements about the problem, this study intends to ascertain:

To determine how well these products were run and whether or not, the goals on which they were set are being achieved.
To determine the relationship between customers perceptions of new bank products and their level of patronage of these products
To determine the impact of the new banks products on the overall profitability of the banks
To determine how new products are introduce into the market by the banks and how successful are they
To determine whether the huge amount spent on advertisement in introducing these products are justified
Examine the impact of these new products in the enhancement of the country’s technological capabilities in banking services and identify the extent to which these products are certainly creating employment opportunities in the banking industry.

1.4 RESEARCH QUESTIONS

A research questions on the study of the new product development on performance of the commercial banks in Nigeria.

To what extend has the new product development facilitate financial transaction?
Will the new product development increase profitability?
In what ways can the new product development satisfy or meet the customers demand?
Does the new product development as a growth strategy create a positive impact as regards to other banks
Does the impact of the new product helps the commercial banks to maintain their position in the banking industry?
How does the bank introduce new products to the market and how successful are they?

1.5 SCOPE OF THE STUDY

The scope of the study that is the impact of new product development covers all those services which commercial banks introduce to their operations as relates to three banks under the study:

United Bank for Africa (UBA)
First Bank of Nigeria

The areas the study covers are the mobilization of funds from the surplus to the deficit unit. The facilitation of financial transaction and the expansion of sales so as to maintain the position in the banking industry, meet customers demand with the new product development.

1.6 LIMITATIONS OF THE STUDY

Lack of finance and time constraint made it impossible for the attainment of some facts needed for this research work.

Some of the bank officers who are in position to give information were not being too open and fire with releasing or complying with the researcher.

1.7 SIGNIFICANT OF THE STUDY

It is believed that this work will serve the need of many interest groups operating in the economy. The research work will go a long way to appraising the government’s introduction of structural adjustment program (SAP).

The government will at the end of this study discover how (SAP) have encouraged banks to be innovative in their marketing difficulties.

This research will also serves as a basic further research by other researchers. it will give the main insight into the need for further work, which will help many banks customers to learn of the available new products in the banking industry.

This research works will enhance the efficiency of banks management of a new product towards profit target other banks, which have not discovered the impact of new products on their profit performance will find the need to introduce one in their range of product (service) state (Brown A.J. 1997).

1.8 DEFINITION OF TERMS

BANK: A bank can be defined as a financial house established for the purpose of accepting deposits and lending out funds in addition to other services. It can also be any person who carries on banking business and this includes a commercial bank, acceptance house discount house and financial institution.

BANK CUSTOMER: Is the person who must have open an account with banker and have at least one transaction on the account.

COMMERICAL BANK: This can be defined as a financial institution which deals in money and credit, and which receives deposits from public, institutions and organization, some of which are repayable on demand by cheque.

PERCEPTION: This is the complex process by which people receive, select, organize and interpret stimulation (information relating to the product) in meaningful picture.

NEW PRODUCT: It is the modification of existing product an innovation or the complete invention an entirely new product or concept.

PROFIT LEVEL: This is defined as difference between total bank revenue and expenditure measured in naira per year.

EFFCIENCY: This is the degree of effectiveness with which something is done to produce a satisfactory result without wasting resources or time.

PRODUCT POSITIONING: This is the decisions and activities that are directed towards trying to create maintain a firms intended product concept in customers mind.

PRODUCT: These are those services rendered to the customer by a bank for the satisfaction of a customer. It is also a tangible attributes that are assembled into an identifiable form for the satisfaction of the customer.

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