Download 4.3 techniques of marketing loan services in equity bank wandegeya

MAKERERE
UNIVERSITY
COLLEGE OF BUSINESS AND MANAGEMENT
SCIENCE
MARKETING OF LOAN SERVICES AND PERFORMANCE
OF BANKS IN UGANDA
A CASE STUDY OF EQUITY BANK
PRESENTED BY
KABERI MOLLY WANJIKU
08/K/16596/EXT
208018137
SUPERVISED BY: MS. NANYANZI MARION
A RESEARCH PROPOSAL SUBMITTED TO MAKERERE UNIVERSITY
AS A REQUIREMENT FOR THE AWARD OF BACHELOR OF
COMMERCE DEGREE
JULY, 2012
DECLARATION
I Kaberi Molly Wanjiku declare that the content of this research is original and has never been
presented by any other person to any institution of higher learning for any academic award.
Signature………………….
Date………………….
KABERI MOLLY WANJIKU
08/K/16596/EXT
(STUDENT)
i
APPROVAL
This research was read and approved and is now ready for submission under my supervision as a
university supervisor.
Signature…………………
Date…………………
MS. NANYANZI MARION
(SUPERVISOR)
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DEDICATION
I dedicate this work to the best mother in the world Teresiah Watati Kaberi for her endless love
and support both financially and morally, To my two brothers George Kaberi and sweet Sospeter
Karu Kaberi, my cousin who is like a sister Mary Wanjiku Kaberi all who have inspired me j
couldn’t have done this without you may the almighty God bless you abundantly. And to my
latest surprise Ronald Sokoro thanks for everything you are.
I also dedicate this work to all those people out there trying to fulfill their dreams and to make it
in one way or the other, may this dedication be a source of encouragement to you to work
through life’s obstacles putting God first.
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ACKNOWLEDGMENT
I would like to acknowledge God Almighty for his sustaining grace, strength, love and
knowledge for guiding me through this dissertation, for providing the finances and all that was
needed to complete the work.
I would also like to acknowledge the contribution of my sweet mother Teresiah Watati Kaberi
for her tireless love, support and encouragement thank you mom and also my two brothers
George Kaberi and Sospeter Karu Kaberi, my cousin Mary Wanjiku Kaberi for their inspiration.
I acknowledge my supervisor Ms Nanyanzi Marion for her tireless contribution and her articulate
and effective guidance in the formulation, execution and presentation of this report.
I would also like to acknowledge my friends Emily, Tosh, Linda, Kate, Gene, Miriam, Lydia,
Joyce, Carol, Ronny, Jane, Wangari and many others God bless you for all you have been has
made an impact in my life.
Lastly, I thank the staff at Equity Bank Wandegeya branch especially Mr. Apollo Njoroge, Miss.
Mercy and Mr. Ken the operations manger. Thank you to all of you and may the almighty God
bless u amazingly.
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TABLE OF CONTENT
DECLARATION ............................................................................................................................. i
APPROVAL ................................................................................................................................... ii
DEDICATION ............................................................................................................................... iii
ACKNOWLEDGMENT................................................................................................................ iv
TABLE OF CONTENT ................................................................................................................. v
LIST OF TABLES ........................................................................................................................ vii
LIST OF FIGURES ....................................................................................................................... ix
ABSTRACT .................................................................................................................................... x
CHAPTER ONE: INTRODUCTION ......................................................................................... 1
1.1 Background of the study ........................................................................................................... 1
1.2 Statement of the problem .......................................................................................................... 2
1.3 Purpose of the study .................................................................................................................. 3
1.4 Research objectives ................................................................................................................... 3
1.5 Research Questions ................................................................................................................... 3
1.6 Scope of the study ..................................................................................................................... 3
1.7 Significance of the study........................................................................................................... 4
1.8 Figure 1. : Conceptual framework ............................................................................................ 5
CHAPTER TWO: LITERATURE REVIEW ............................................................................ 8
2.1 Introduction ............................................................................................................................... 8
2.2 Marketing of loan services ........................................................................................................ 8
2.3 Performance ............................................................................................................................ 17
2.4 Relationship between marketing of loan services and performance banks ............................ 20
2.5 Other factors affecting both marketing loan services and performance of banks ................... 22
2.6: Conclusion ............................................................................................................................ 24
CHAPTER THREE: METHODOLOGY ................................................................................ 26
3.1 Introduction ............................................................................................................................. 26
3.2 Research design ...................................................................................................................... 26
3.3 Area of study ........................................................................................................................... 26
v
3.4 The study population............................................................................................................... 26
3.5 Sample size ............................................................................................................................. 27
3.6 Sampling design ...................................................................................................................... 27
3.7 Investigative procedure ........................................................................................................... 27
3.8 Data collection tools ............................................................................................................... 28
3.9 Data presentation and analysis ................................................................................................ 29
CHAPTER FOUR: PRESENTATION, INTERPRETATION AND DISCUSSION OF
FINDINGS ................................................................................................... 31
4.1 Introduction ............................................................................................................................. 31
4.2 Personal information ............................................................................................................... 31
4.3 Techniques of Marketing Loan Services in Equity Bank Wandegeya Branch ....................... 34
4.4 Performance of Equity Bank Wandegaya Branch in Term Of Loans .................................... 39
4.5 Other Factors Affecting both Marketing of Loan Services and Performance ........................ 42
4.6 Relationship Between Marketing of Loans Services and Performance of Equity Bank ........ 45
CHAPTER FIVE: SUMMARY OF FINDINGS, CONCLUSION AND
RECOMMENDATION ................................................................................ 51
5.0 Introduction ............................................................................................................................. 51
5.1 Summary of Findings .............................................................................................................. 51
5.2 Conclusion .............................................................................................................................. 53
5.3 Recommendations ................................................................................................................... 53
5.4 Areas for Further Study .......................................................................................................... 54
REFERENCES ............................................................................................................................ 55
APPENDIX I: Staff Questionnaire .............................................................................................. 57
APPENDIX II: Customer Questionnaire ...................................................................................... 62
APPENDIX III: Interview Guide.................................................................................................. 67
APPENDIX IV: Introductory Letter ............................................................................................. 69
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LIST OF TABLES
Table 1: showing classification of respondents ........................................................................... 27
Table 2: Gender............................................................................................................................. 31
Table 3: Age .................................................................................................................................. 32
Table 4: Marital Status .................................................................................................................. 32
Table 5: Education level ............................................................................................................... 33
Table 6: Category.......................................................................................................................... 33
Table 7: Service level.................................................................................................................... 34
Table 8: Marketing technique ....................................................................................................... 35
Table 9: Loan extensions review .................................................................................................. 35
Table 10: Effects of marketing ..................................................................................................... 36
Table 11: Loan extensions review ................................................................................................ 36
Table 12: Accounting Systems ..................................................................................................... 37
Table 13: Marketing techniques review ........................................................................................ 38
Table 14: Ways of encouraging marketing ................................................................................... 38
Table 15: Methods of marketing ................................................................................................... 39
Table 16: Profitability levels ......................................................................................................... 40
Table 17: Revenue levels .............................................................................................................. 40
Table 18: Products and services .................................................................................................... 41
Table 19: Market share ................................................................................................................. 41
Table 20: Cash inflow and outflow ............................................................................................... 42
Table 21: Government intervention .............................................................................................. 43
Table 22: Tax rates and interest rates ........................................................................................... 43
Table 23: Legal registration and credibility .................................................................................. 44
Table 24: Economic conditions and loan demand ........................................................................ 45
Table 25: Marketing and loan extensions ..................................................................................... 46
Table 26: Loans and performance................................................................................................. 46
Table 27: Increased customers ...................................................................................................... 47
Table 28: Improved profitability................................................................................................... 47
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Table 29: Marketing efficiency..................................................................................................... 48
Table 30: Loan extensions ............................................................................................................ 49
Table 31: Pearson’s correlation co- coefficience .......................................................................... 50
viii
LIST OF FIGURES
Figure 1: Conceptual Framework. .................................................................................................. 5
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ABSTRACT
The purpose of the study was to establish the effects of marketing of loan services on the
performance of equity bank Wandegeya branch as the case study. The objectives of the study
were; to examine the techniques of marketing loan services in equity bank Wandegeya branch, to
assess the performance of equity bank Wandegeya branch in term of loans and to establish the
relationship between marketing of loans and performance of equity bank Wandegeya branch.
The study population constituted of 30 respondents. The researcher used stratified method where
different groups were created in the population sample then random sampling was used to choose
respondents from each stratum. The main data collection tools used were questionnaires,
interviews, observation and document review.
Findings from the study established that marketing of loan services had a great effect on the
performance of Equity bank Wandegeya and also to other banks as well. Marketing enabled the
bank to reach more clients and also sensitize the public on the existence of the bank and the
products that they offer. This led to improved performance of Equity bank making it a higher
ranking bank.
Pearson’s correlation co-efficient obtained (0.608) indicated that there was a strong positive
relationship of 60.8% between marketing of loan services and performance of Equity bank
Wandegeya. However the correlation further showed a gap of 39.2% that needed to be closed by
the bank in order to increase their performance due to marketing of their loan services. Hence the
need to ensure that there was efficient and extensive marketing of loan services by implementing
the best marketing techniques like market segmentation so as to improve on their performance.
Conclusively the researcher observed that marketing of loan services has a great effect on the
performance of Equity bank Wandegeya bank and also to other banks as well. Marketing has
enabled the bank to reach more clients and also sensitize the public on the existence of the bank
and the products that they offer. This has improved performance and made Equity bank a higher
ranking bank.
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The researcher recommends that Equity bank Wandegeya should come up with marketing
techniques that can reach more people in a short period of time at the same time covering more
bases
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CHAPTER ONE
Introduction
This chapter comprises of the background of the study, statement of the problem, purpose of the
study, objectives of the study, research questions, scope of the study, significance of the study
and the conceptual framework.
1.1 Background of the study
Loan services refer to written or oral agreement for a temporary transfer of a property (usually
cash) from its owner (the lender) to a borrower who promises to return it according to the terms
of the agreement with interest for its use.
Loans can be classified as customer loans, commercial loans, industrial loans, secured loans,
unsecured loans and many more.
Loans are a critical aspect of any bank since most of the banks returns are attributed to interest
earned from loans issued. Most banks in Uganda have liquidity level of more than 40% which
translates that 40% of its capital is idle a very common scenario this is because most of them are
not involved in intensive marketing of their loan services.
Performance is defined as the increase in the size, number, strength and quantity (Yoshidah,
2008). Therefore performance of a business enterprise is a clear measure of success which is
measured in terms of revenue, profitability, return on investment, market share, number of
employees, number of products and cash flow (katy, 2002). Overall performance of banking
system in Uganda has been unsatisfactory (Oola, 2002). This is reflected in the low loan
performance due to shallow marketing.
Marketing refers to satisfying needs and wants through an exchange process. (Marketing
management Phillip Kotler 1980 forth edition)
Marketing also refers to the management process responsible for identifying, anticipating and
satisfying customer requirements. (Chartered institute of marketing)
Marketing connects producers of goods and services with customers. It facilitates the process
through which goods and services move from concept to consumer.
Banks which have applied marketing in their product distribution have had improved results in
terms of an increase in their gains due to vast sensitization to the consumers in regard to the
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services offered by the banks. Hence indulging in intensive marketing helps in achieving
business goals through increased returns hence higher profitability levels. Marketing of loan
services is an essential aspect of ensuring growth in a banks returns, leads to more employment
due to available means of paying employees and also leads to economic development due to
readily available capital in terms of loans nurturing a culture of entrepreneurship fostering
development.
Equity bank is a subsidiary of Equity bank Kenya. Equity bank Uganda has a total of 47
branches with its headquarters located in the capital city of Uganda Kampala. It serves a client
base of 400,000. The case study Wandegeya branch is located in Wandegeya which is 2
kilometers from the capital city Kampala along Bombo road. Equity bank’s registration
commenced in 1984 and it began its operations in 2008 when equity bank purchased Uganda
microfinance limited and from there on has been expanding to presently 47 braches countrywide
and also listed in Uganda Security Exchange. Its main fund source is grant loans from mainly
Oxfam novib fund. Equity provides innovative products like loans, voluntary savings, insurance
and fund transfer. It also provides superior services for instance, training and consultation.
Equity’s global partners include, the master fund foundation, Citi foundation and Oxfam novib
fund. (Equity Bank Group History)
As at 31st December 2009 the bank had total assets equal to Ksh 10.08 million and Ksh 14.30 as
at 31st December 2010 when their respective total liabilities were Ksh 17.90 and Ksh 11.58
(Equity bank group audited report as at 31ts December 2010). It is against this back ground that
the researcher was compelled to investigate marketing of loan services and performance of
equity bank Wandegeya branch.
1.2 Statement of the problem
Despite the remarkable growth of loan returns in equity bank where the group’s consolidated
loan book reached UGshs 1,100 billions from UGshs 544 billions the previous year a growth of
102%, it continues to reflect a liquidity of 47% (Equity bank’s Financial statement as at February
12th 2009) Equity bank has diversified its loans to business loans, development loans,
agricultural loans, personal loans and salary advances.
They have also offered attractive interests ranging from 1.25% to 1.5% per month and set
reasonable repayment deadlines depending on the type of loan in question. The continued
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reflection of 47% liquidity was most probable attributed to improper marketing of loan services.
This led to low profitability levels, unemployment due to the banks failure to pay salaries which
greatly affected the banking sector. It’s against this problem that the researcher was compelled
to establish for the poor performance of banks due to failure in marketing their loans. (Equity
Bank’s Financial Statement as at February 12th 2009)
1.3 Purpose of the study
The purpose of the study was to establish the effects of marketing of loan services on the
performance of equity bank Wandegeya branch.
1.4 Research objectives
1. To examine the techniques of marketing loan services in equity bank Wandegeya branch.
2. To assess the performance of equity bank Wandegaya branch in term of loans.
3. To establish the relationship between marketing of loans and performance of equity bank
Wandegeya branch.
1.5 Research Questions
a) What are the techniques of marketing loan services in equity bank Wandegeya branch?
b) What is the performance of equity bank Wandegeya branch in terms of loans?
c) What is the relationship between marketing of loans and performance of Equity
bank Wandegeya branch?
1.6 Scope of the study
1.6.1 Subject scope
The study covered marketing of loan services and performance of Equity bank Wandegeya
branch where marketing of loan services is the independent variable and performance of banks
was the dependent variable using equity bank Wandegeya branch as the case study. This was
because the researcher identified poor performance of the bank attributed to poor marketing of
loan services.
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1.6.2 Geographical scope
The study was carried out in Equity bank Wandegeya branch located in Wandegeya two
kilometers from Kampala, along Bombo road Northwest of Kampala. Because the branch was
experiencing problems in marketing their loans thus leading to poor performance.
1.6.3 Time scope
The study covered the banks operations between the years 2006 to 2011. Since the problem of
marketing loans that led to poor performance of the bank occurred during this time.
1.7 Significance of the study
The study intends to benefit the following people;
The researcher;
The study will help the researcher gain knowledge on marketing of loans services and its effects
on the banking sector. The study will also enable the researcher to gain skills in data collection
and data analysis.
Future researchers;
The study findings will help to highlight the weaknesses in marketing of loan services which will
help future researchers in improving the marketing techniques. The study will also help build on
the existing knowledge of future researchers and will provide some preliminary information on
future academic and non-academic research.
Equity bank;
The study will help highlight the weaknesses in marketing of loan services and hence help in
improving the marketing techniques and eventually performance. The study will also help in
creating awareness of the benefits of marketing of loan services to the bank.
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1.8 Figure 1. : Conceptual framework
INDEPENDENT VARIABLE
DEPENDENT VARIABLE
Marketing loan services
Performance of banks
-Customer loans.
- Profitability.
-Commercial loans.
- Revenue.
-Industrial loans.
- Number of products.
-Secured loans.
- Market share.
-Unsecured loans.
-Cash flow.
EXTRANEOUS VARIABLE
- Government policies
(Taxation, Registration)
- Economic conditions
(Recession, depression)
Source: Adapted from William A. Cohen PhD (2006) The entrepreneur and small business
problem solver, Published by John Wiley and sons, Inc. Hoboken, New-Jersey. Third Edition.

Customer loan;
Refers to the credit extended to the client by the bank to be repaid before a pre-determined time
in installments as agreed upon by the bank and the client with interest. For instant, personal loan
and school fees loan.

Commercial loan;
Refers to credit offered to clients with the intention of using the funds for business with an aim
of making profits. For instance small business loans for businesses that are small in nature like
retail businesses and business loans for big and established businesses.

Industrial loans;
Refers to the credit extended to manufacturing industries for their development, purchase of new
equipments and purchase of raw materials. These types of loan involve large sums of money and
their repayment period is also longer than that of customer loans.
5

Secured loans;
Refer to credit offered by the bank with collateral against them. Collateral offers security in that,
incase of failure of loan recovery, the bank is entitled to acquire the collateral and recover their
money by selling the collateral. Collateral may be a house, land title or a car.

Unsecured loans;
Refers to credit that do not have collateral against them hence unsecured. This was designed for
clients who are risk averse who view collateral as a risk. By doing this the bank diversified their
client base. To the bank an intense process before qualifying for the loan is undertaken to reduce
the risk not being able to recover the loan.

Profitability;
Refers to the level of money the banks gain in the course of business, obtained by arriving at the
difference between the amount earned and the amount spent.

Revenue;
Refers to income generated by a bank in its operations especially the total annual income of a
bank in our case Equity bank Wandegeya branch.

Number of products;
Refers to anything that equity bank offers or provides to a market to satisfy a want or a need
measured by its quality (in terms of their delivery) and quantity (in terms of the customer base it
serves.) for instance loans, savings, insurance and fund transfer.

Market share;
Refers to the percentage of the market that Equity bank serves, out of the total percentage of the
available market. For instance serving a client base of 400,000 people out of the total potential
client base in Uganda.

Cash flow;
Refers to the movement of money in and out of a bank, as products and services are offered. For
instance cash in flow as a result of loan repayment and cash outflow due to issue of a loan to a
client.

Government policies;
Refers to the statement of ideals proposed and adopted by the government intended to influence
and determine decisions, actions and other matters for instance rate of taxation.
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
Taxation;
This is a system of raising money, which has to be paid to the government by its citizens
according to their income and profits yielded from business.

Registration;
Refers to the action of making something known officially or publically so as to be recognized
legally therefore making its contract with the government biding.

Economic condition;
These are conditions related to production and distribution of goods and services and the
development of wealth.

Recession;
Refers to a period of economic decline in a country, with reduced trade and industrial activity
indicated by massive unemployment.

Depression;
A period where there is little economic activity and many people are poor or with no jobs.
There is a positive relationship between the independent variable (marketing of loan services)
and the dependent variable (performance of Equity bank Wandegeya branch) in that marketing
of loans increases the number of loans granted hence increasing the level of revenue generated.
Also increases the profitability level of the bank brought about by the interest rates on loan
repayment. The relationship of marketing of loan services and performance of a bank is also
evident due to the increase in market share, increased cash flow and increase in number of
products that Equity bank Wandegeya bank is offering.
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CHAPTER TWO
LITERATURE REVIEW
2.1 Introduction
Findings by prior authors were reviewed in this chapter under the general heading of marketing
of loan services and performance of banks in Uganda. The scholars through different study cases
and experiments came up with various analysis and conclusion. The chapter will be a way of
documentary analysis of data which will provide the basis of the study.
2.2 Marketing of loan services
Loans services
Refer to the transfer of financial recourses from one person or a group of persons to another or
others at a specific cost and time. Van Bourne (1999). It establishes the relationship between the
borrower and the lender and a promise to pay based on the trust by the parties. Banks give credit
to customers on either short-term basis or long-term basis depending on the policies established
as regard s credit.
Banks extend loans for different motives. According to Robinson I.R (1962), the following are
some of the motives;
In order to maintain the market share of the bank in the declining market, banks give out loans to
overcome effects of competition and recess conditions, so as to build long term relationship with
clients or as a reward for loyalty, banks also extend loans to meet their client’s requirements.
This is because some clients can hardly operate without credit and finally, banks offer loans to
the customers since its one of the industrial practices. Early recognition of problems in loan
performance is crucial. The origin of such problems may be due to lack of adequate internal
controls. The bank based causes include, dishonesty of employees and a poor and deficient
process that encourages default by the borrower. Muyunga A. (1997). There has been some
literature on the causes of non-performing loans. Not so many studies have been carried out on
this topic in Uganda. However the literature both in Uganda and elsewhere tends to agree as far
as the general causes of non-performing loans are concerned. For instance, macro-economic
conditions and poor marketing techniques of loans.
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
Loan operations
Credit terms
These are the conditions attached to the loan after a borrower’s loan application has been
favorably appraised. It’s an agreement between the lender and the borrower having details on the
broad framework for the granting/acquisition, operations and liquidation of the advance facility.
It also cuts the extent of liability. Brigham and Louis (1997)
Interest rates
Refers to the price of accessing and utilizing credit recourses. Interest rate can be looked at from
the borrower (customer) and the lender (bank) point of view. To the customer interest rate is the
cost of borrowing money expressed as a percentage of the amount borrowed. To the lender
interest rate is determined by factoring in costs such as costs of production, the inflation rate,
cost of product delivery and many more. Martin J. (1996)
Collateral
Commercial banks predominantly request for collateral before extending loans to their
customers. The collateral is of higher value than the loan taken to ensure that the loan is paid
back. Institutions have embarked on the use of group guarantee system as collateral substitute in
extending loans to individual members of the group. If one member fails to pay the other
members must pay on his behalf. This approach makes it possible for group members to monitor
one another thus leading to improved loan repayment. Yunus (1996)
Size of the loan
Small initial loans are provided the gradually increase the amount as relationship of trust
between borrower and the institution grows Okech (1998). This approach helps the borrower to
learn on the loan before a bigger loan is extended. Webster and Matovu (1996)

Loan appraisal
Loan portfolio performance depends on the effect of the loan on the beneficiaries business and
the repayment of the principle. Assessing effective credit demand based on the repayment
potential skills in an institution. The success or failure of a loan depends to a large degree on an
accurate appraisal of the customers’ repayment capacity Hartmut S. (1997).
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
Loan disbursement
Commercial banks disburse loans based on cash flow requirements of the borrower. However
from lessons derived from micro finance programs UNDP (1997), short-term loans are intended
to test the client’s commitment to repay and allow clients to learn on the loan. Disbursement is
designed to offer on the loan training for the borrower. Kagwa P. (2003)

Loan monitoring
As correctly pointed out in a paper on universal banking and the future of small business lending,
small loans require a strong bank-borrower relationship and are more information intensive.
There is thus need for close monitoring in small loan than it is in the case of big loans. Allen N.
Berger and Gregory F. Udell

Repayment mechanism
Each bank has a different repayment mechanism based on the specifics of the enterprise, a
borrower can choose to repay weekly by weekly or in monthly installments. Uganda
microfinance union (2001)

Follow up actions
The success of any institution depends on its ability to adapt to changing circumstances.
Institutions should have a culture of handling funds that must be repaid. They should be prepared
to seize the client’s collateral if necessary. The organization should have a system of tracking
late payment and real losses, deploy staff to maximize return of recourses.
2.2.1 Marketing Techniques
Marketing is the process of planning and executing the conception, pricing, promotion and
distribution of ideas, goods and services to create exchanges that satisfy individual and
organization s objectives. Phillip K. (1984)
Building upon the features embodied in these definitions marketing can be characterized by five
essential features. They are; Philosophy of consumer orientation, a number of analytical
procedures and concepts used to develop the philosophy, data-gathering techniques which act as
the tools for operationalising the procedures and concepts and also a sequence of strategic
decision areas and planning. In view of the above definition, marketing has led to the
development of techniques which gear and catalyze the process of selling a particular product or
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service. It has led to the need of establishing policies, programs and activities aimed at satisfying
the desires, needs and wants of the customer. Kotler’s definition widely accepted internationally
shifts the paradigm by stressing the modern need to balance between the company’s profits and
customer satisfaction and stressing the overall goals of society’s well being. He uses the term
“societal marketing concept” societal includes the wider interests of all shareholders to staff and
residents of the local community.
The role of marketing is to generate the flow of income from sales by stimulating and then
satisfying customer’s interests. To achieve this, marketers require support from other
management functions including financial institution staffing and training. Laws (1991)
Marketing techniques include;

Marketing mix
Kotler (1984) defined marketing mix as the mixture of controllable marketing variables that the
firm uses to pursue the level of sales in the target market. Target is defined as a specific group of
customers that is people or organizations for whom a seller designs a particular marketing mix. It
consists of product, promotion, price and distribution (place). This are the tools commercial
organizations use to manage their segments of demand in the relation to products they supply at
destinations. Etzel (1998). Marketing is not new in its basic elements, managers have always
had to manage the variables of price, place, product and promotion and to do so with some
understanding of both consumers and market in order to prosper. Musabe K. (2004)
Product is defined as anything that is offered to a market to satisfy a want or need. This item
therefore includes tangible goods, services, people, places and ideas. Price refers to the total of
what it costs for customer’s choice of components, products and participation in a range of
selected services. Promotion is an element of marketing mix used to manage customers’
demands. The bulk of promotion efforts are designed to increase product awareness and the
number of possible buyers in a potential market who are favorably disposed to purchase.
Distribution involves the selection and operation of channels by which a seller communicates his
product to the consumer. Marketing and especially its promotional aspects is based on the
assumption that there is some relationship between the amount of promotion and number of
loans offered. It entails communication with the present and potential customers. Phillip K
(1998).
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The marketing communication mix consists of advertising through various media,
sales
promotion (short-term incentives to encourage purchase or sale of a product or service) personal
selling (oral presentation in a conversation with potential clients) and publicity (non-personal
stimulation of demand of a product, service or business unit) Phillip K. (1998) It is important to
point out the essence of these four elements of marketing mix in loan services, product design
and pricing are aimed at satisfying the wants and the needs of targeted customers at
economically viable prices. Promotional services are aimed at answering awareness and
motivation in sufficient numbers to absorb capacity.

Market segmentation
The art of marketing comprises experience, imagination and creativity. Both art and science must
go into choosing market segments. Market segmentation is the most basic marketing strategy it
helps an institution to prioritize. After segmenting the market into different segments the
institution chooses a target segment. Targeting is picking the actual market segment you want to
go after. The benefits of choosing target segments are, identifying the media that best reach your
target segments. It also helps build referral business and increasing the potential return of your
marketing. Evelyn E. (2004).
The different methods of segmentation are;
Objective methods
Under the objective methods of segmentation there is demographic segmentation it’s based on
observable, measurable characteristics. For instance Wells Fargo has made its online services
more accessible to the blind and visually impaired. The other type of objective method is
geographic segmentation which is a measurable segmentation variable and specifies in creation
of geographic sales territories. There is also lifecycle segmentation which is under objective
method of segmentation. Customer needs change in different phases of the life cycle for example
young married buying homes. Evelyn E. (2004).
Psychographic clusters
This method of segmentation is based on attitudes and behaviors. Under this there is benefit
based segmentation, this looks at which benefits appeal to customers. Another type is life style
segmentation, this operates on the principle that birds of a feather flock together. Similarities of
interest, attitudes and activities are common among people in the same neighborhood. Evelyn E.
(2004)
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Customer value segmentation
Where life style characteristics are combined with profitable data organizations can developdeep knowledge of their customers. Customer relationship management systems have become
capable of predicting and projecting segmentations schemes that can increase lifetime customer
value. Evelyn E. (2004)

Positioning
Positioning is determining how an institution or an organization wants other to view it, its
products or services in relation to its competition. It defines who an organization is, what values
it wants to communicate and how different they are from other organizations and institutions
offering the similar products and why its constituencies should prefer that particular organization
and not its competitors. Positioning is the easiest way to define who you are as an institution or
an organization, by comparison and contrast with your competitors. Institutions position
themselves against competitors to come up with new and better products and services. There are
many ways of differentiating an organization. Tangible methods are; price selection, terms and
delivery. Intangible methods in clued; quality of service, expertise, image and status. Positioning
strategies are examine strengths for in stance experience in international hedging strategies, deter
mining target market that is whether there is a need that has not been met adequately and also
annualizing the competition that is what are each group’s strengths and weaknesses. Evelyn E.
(2004).

Branding
There are many words used ton describe different aspects of this important concept for instance
image, reputation, identity and brand value. All this words refer to the same concept Branding
attempts ton create a unique perception, an emotional and intellectual bond between pro duct and
end user. All companies are positioned some even by default but not all for them can be branded.
An example is Visa and Master Card have similar positioning in the minds of their target
markets, they are both perceived as mass market. However they have different brand images.
The elements of branding are tied to the company’s vision, mission and values. These are terms
most often used to define the central building block for the brand. A brand can be created for a
new company or product, the starting point is naming which has an enormous impact on
businesses. A brand can also be borrowed this is be cause it is difficult to make a financial
14
company stand out from it competitors. Some companies have had success by associating with a
better known brand name for instance many credit card companies co-brand with airlines, car
companies online retailers like Amazon and many more. Evelyn E. (2004)

Marketing strategy
Marketing strategy is a set of objectives, policies and rules guiding the firms marketing effort, its
level of mix and allocation partly independent and in response to changing environment and
competitive conditions. It is therefore a consistent set of principles through which a particular
company hopes to achieve its long-run customers and profit objectives. Kaganda R. (2005)
Middleton (1998) states that, marketing strategy must be the most important single element in
overall business strategy. It identifies and largely determines future sales revenue generation by
specifying the segments products and associated action programs required to achieve sales.
A banks target market is derived from its strategic plan. This refers to a fundamental nonfinancial aspect that is very important to the success of any business. It should be developed at
managerial level and should establish the basic direction of the business for the future. Gardner
(1996). For a bank, the strategy should be outlined in terms of risk concentration commitments to
particular areas of marketing, the extent of desired asset liability exposure and the need to hedge
against systematic risk of a particular type. In order to affect the strategy, management should
have properly drawn out credit policies, procedures and directives that are consistent with
preferred credit risk levels. Santomero (1996)
The fundamentals of marketing are indicated in the marketing management process. Firstly the
organization sets adjustments basing on the environmental forces and then managers set target
markets. Kaganda R. (2005).

Marketing implementation
In marketing image is the expression of all objective knowledge, impression, prejudice
imaginations and emotional thoughts an individual or a group have of a particular object or
place. That image forms part of the consumer’s decision making process in that they will
influence the choices they make. Provided an advertiser knows which market he seeks to
influence the ‘reach’ part of the process is relatively simple. It requires money to buy spaces in
the press, television, posters and so on. Burden E. (1997)
15
There is a great deal of expertise in the buying process, but reach is not the principal concern for
advertisers. The main problem is to design and express chosen managers in a form that is most
likely to communicate with the targeted audience. If there is no reach there can be no
communication. But even with maximum reach and wide exposure of an advertisement, no
communication can occur unless the message is actually received, understood and is of interest
to the receiver then he may take action in response to the message. Burden E. (1997)
2.2.2 Types of loans

Customer loans
Refers to the credit extended to the client by the bank to be repaid before a pre-determined time
in installments as agreed upon by the bank and the client with interest. For instant, personal loan
and school fees loan. Customers apply for consumer loans for household purposes, buying a
home, refinancing and making home improvements. Since each client has a unique situation,
consumer loans are designed in such a way that they fit all situations. They are mostly extended
to people with less than perfect credit. Klein J. (1998)

Commercial loan
Refers to loans offered to clients with the intention of using the funds for business with an aim
of making profits. For instance small business loans for businesses that are small in nature like
retail businesses and business loans for big and established businesses. They are tailored to fit the
middle market and corporate customers. It serves purposes such as, real estate development,
equipment financing, factoring and purchase order financing. Commercial loans are also
applicable to non-profit financing. This are businesses which are not profit motivated for
instance, public schools, public clinics, public projects and public works like road construction.
Kagwa P. (2003)

Industrial loans
Refers to the loans extended to manufacturing industries for their improvement, development,
purchase of new equipments and purchase of raw materials. These types of loan involve large
sums of money and their repayment period is also longer than that of customer loans. They are
made to businesses and corporations which lead to increased employment opportunities hence
improving the economy. The industrial loan department is responsible for licensing and
regulation of the small loan industry. Klein J. (1998)
16

Secured loans
Refer to credit extended to clients with collateral against them. Collateral refers to the guarantee
to the repayment of amount borrowed by linking it to something of significant value that the
client owns. It offers security in that, incase of failure of loan recovery, the bank is entitled to
acquire the collateral and recover their money by selling the collateral. Collateral may be a
house, land title or a car. It is a viable and economic way of obtaining capital reducing risk to the
lender. Kagwa P. (2003)

Unsecured loans
Are loans that do no have collateral against them hence they are unsecure. This was designed for
clients who are risk averse who view collateral as a risk. By doing this the bank diversifies their
client base. To the bank an intense process before qualifying for the loan is undertaken to reduce
the risk of not being able to recover the loan. Kagwa P. (2003)
Much as the different authors have discussed marketing techniques, much of their focus is on the
external strategies. The researcher is of the view that there should be more focus on the internal
strategies for instance the employees attitude towards loans extended and the terms of those
loans this is because employees are the face of the bank and if they do not approve of the loans
they are extending this may lead to misrepresentation of the banks interests towards the clients.
However a convinced employee represents the bank in a positive way which according to the
researcher is a powerful tool of marketing. Another internal strategy is offering incentives to the
clients to payback the loans or example a bonus for the client who finishes paying first. Besides
marketing loans, there are other factors influencing loan extensions that can lead to an increased
number of loan customers. These are factors like individual targets and personal goals of the
customers that may drive them to borrow loans another one is emergencies for instance sudden
health problems leading to immediate need of loan, marketers should identify these gaps and
help improve their marketing.
2.3 Performance
Performance is normally measured to check whether there is need to reinforce action to devise
alternative courses of action. Traditionally financial performance has been based on the income
17
statement and the balance sheet. However the difference in accounting practices has led to a
major problem concerning the financial performance of a firm. Its bottom lie can be enhanced by
creativity designing the contents of the income statement Bittlestone (1998) the income
statement and balance sheet also report historic data about the performance and do not provide
any indication of the threats of the firm.
Given the above limitation, Kaplan and Norton (1992) identified the balanced score card, a set of
measures that try to address the above concern. The indicators in clued financial aspects,
customer perspectives, innovations, learning and internal business processes.
The performance of commercial banks in loan extension and allocation of recourses has been
generally deemed unsatisfactory because of large non-performing loans in their portfolios. They
have been saddled with poor quality loans with agriculture being the leading sector in the
economy receiving little credit mainly due to the high risk associated with it. Kansiime (1996).
The sectoral breakdown reveals that short-term lending for trade and services still account for the
largest share of loans and advances at 50% followed by manufacturing at 23% and agriculture at
18%. BOU (1996).
The useful measures of financial performance are as follows;
2.3.1 Profitability
Profitability is the organizational ability to generate income. It must be reflected in the income
statement of the organization to satisfy that the income generated is greater than the input cost.
Hermanson (1987). Profit means an increase in capital which is obtained by enlarging the gap
between the value of assets and the value of liabilities. A firm ought to be able to sell its output
at a higher price than the total cost if its to make profits. Kemper (1971).
Profit is an important distinguishing feature of a business which like a human activity is directed
towards the acquisition of wealth it involves in vestment and expectation to gain more than it
invested. It’s the driving force that maintains the continuity of business transactions. Balunywa
W. (1992). It’s the best indicator for a financial institution performance as regards the credit lines
AMFIU (2004). This loan performance indicates the extent to which money lent out by a
financial institution is being recovered. Bad debts both insiders and outsiders are the commonest
indicator of loan performance. Such debts maybe actual write offs or provisions incase of
default. Ochieng (1998).
18
2.3.2 Revenue
The continued variability of a bank depends on its ability to earn an adequate return on assets
and capital, favorable earnings performance enables a bank to fund its expansion, retain
competition and replenish or increase its capital. Rogers (2005). The evaluation of earnings
performance relies heavily upon comparisons of key profitability measures such as return on
assets and return on equity to industry bench mark and peer group norms. Federal Reserve Bank
(2002).
According to Kagalwala and Ram (2003) banks that must survive need,

Higher return on assets (ROA).
This is a net after tax profits divided by total assets. It’s a crucial indicator of gain in revenue,
companies which use their assets efficiently will tend to show a higher than the industry norm.
ROA= Net Income/ Total Assets.

Better Return on Net worth/ Equity (ROE).
This is the bottom line measure for the shareholders measuring the profits earned for each dollar
invested in the firms stocks.
ROE= Net Income / Shareholders equity.
Kagalwala and Ram (2003)
2.3.3 Market share
Market share refers to the portion of the entire customer population that a company commands as
defined by a number of customers or the share of the total deposits. The Uganda commercial
banking industry is dominated by a few banks that either have a wide branch network or have
access to huge capital recourses. Juuko (2006). Financial outreach is the extent to which services
can be accessed by the population. it covers both the physical outreach and the extent of product
variety. Most of the commercial banks branches in Uganda are located in Kampala leaving the
rural population with limited banking facilities. Product variety however is attracting attention
hence minimization of cash transactions. Slasches (2000).
2.3.4 Number of products
Refers to the products that Equity bank provides, measured by their quality (in terms of their
delivery) and quantity (in terms of the customer base it serves.) for instance loans, savings,
insurance and fund transfer. Each product is designed with the member in mind. The more the
19
number of products the more improved the performance. Many provide diversification and a
product that is performing well may compensate for the loss of another product which may be
performing poorly.
2.3.5 Cash flow
Cash flow is a good indicator of liquidity shortfalls and excesses at different in time. Banks
should establish a process of measuring and monitoring net funding requirements by assessing
the banks cash inflows and outflows. Banks need to establish their liquidity so numbers of
approaches have been developed for use by bans in an effort to measure, monitor and control
liquidity. Such approaches include the sources and uses of fund approach, the liquidity indicator
approach and in all maturity ladder is a useful device to compare cash inflows and cash outflows
for different time periods. Nathan Waburuko (2010).
With regards to the above author, the researcher’s view on measures of performance the true
measure and indicator of performance is the satisfaction of the client base. A bank may have the
largest market share but this measure may be inaccurate since if the clients are not satisfied by
the services offered to they most certainly shift their interests to other banks hence they become a
one time client which does not translate to improved performance. However if bank work at
satisfying and hence retaining customers
making them loyal this leads to massive and
guaranteed profits hence improved performance. This performance measures are all theoretical
the researcher is of the view that the banks should try a practical approach for instance the views
of the customers as regards performance in other words the public opinion which formulates the
outside reputation of the bank.
2.4 Relationship between marketing of loan services and performance banks
There is a positive relationship between marketing of loan services and performance of banks. In
marketing image is the expression of all objective knowledge, impression, prejudice,
imaginations and emotional thoughts an individual or a group have of a particular object or
place. That image forms part of the consumer’s decision making process influencing the choices
they make. Hence in marketing of loans the above marketing technique leads to increase in the
number of loans granted hence increasing the level of revenue generated. Burden E. (1997)
20
If there is reach there is communication. But even with maximum reach and wide exposure of an
advertisement, no communication can occur unless the message is actually received, understood
and is of interest to the receiver then he may take action in response to the message which
translates to increase in the profitability level of the bank. Burden E. (1997).
The role of marketing is to generate the flow of income from sales by stimulating and then
satisfying customer’s interests. To achieve this, marketers require support from other
management functions including financial institution staffing and training. And on achieving this
flow of income is increased. Laws (1991).
Consequently marketing is not new in its basic elements, managers have always had to manage
the variables of price, place, product and promotion and to do so with some understanding of
both consumers and market in order to prosper and improve the bank’s performance. Musabe K.
(2004).
Marketing and especially its promotional aspects is based on the assumption that there is some
relationship between the amount of promotion and number of loans offered. It entails
communication with the present and potential customers. This leads to cash in flows in terms of
loan repayment and interest leading to higher liquidity levels. It is an element of marketing mix
used to manage customers’ demands. The bulk of promotion efforts are designed to increase
product awareness and the number of possible buyers in a potential market who are favorably
disposed to purchase. Phillip K (1998).
Product is defined as anything that is offered to a market to satisfy a want or a need. This item
therefore includes tangible goods, services, people, places and ideas which when perfected leads
to favorable loans increasing loan extensions and eventually improved performance. Price refers
to the total of what it costs for customer’s choice of components, products and participation in a
range of selected services, while setting the price of loans in this case the interest rates the bank
should consider their customers preferences so as not to set interests too high so that they are
unfavorable for the customers nor too low so that the bank incurs losses. Hence favorable interest
rates and payment terms lead to profitability of the bank.
Distribution involves the selection and operation of channels by which a seller communicates his
product to the consumer in our case loans this eventually defines the total market share the bank
possesses which is a crucial aspect in the performance of the bank because the wider the market
share the higher the profits.. Phillip K (1998).
21
A banks target market is derived from its strategic plan. This refers to a fundamental nonfinancial aspect that is very important to the success of any business. When it’s developed at
managerial level and the basic direction of the business established for the future, it leads to
increased revenue. Gardner (1996).
Also marketing strategy as a set of objectives, policies and rules guiding the firms marketing
effort, its level of mix and allocation is partly independent and is in response to changing
environment and competitive conditions. Therefore through this consistent set of principles a
bank will achieve its long-run customers and profit objectives. Kaganda R. (2005).
Publicity (non-personal stimulation of demand of a product, service or business unit) leads to
increased market share hence more revenue to the bank. Phillip K. (1998).
Consequently the success of any institution depends on its ability to adapt to changing
circumstances so as to implement relevant marketing strategies. Institutions should have a
culture of handling funds that must be repaid they should be prepared to seize the client’s
collateral if necessary. The organization should have a system of tracking late payment and real
losses, deploy staff to maximize return of recourses in order to avoid losses.
The researcher is of the view that the relationship between marketing of loans services and
performance of banks is not extensively researched. However this relationship should not be
complicated by the authors who come up with too many theories on factors that affect loan
performance. It should be maintained at a simple level concentrating on the market conditions
and monitoring their changes affecting the relationship between marketing and performance
2.5 Other factors affecting both marketing loan services and performance of banks
2.5.1 Government policies
Refers to the statement of ideals proposed or adopted by the government. It’s a plan or course of
action intended to influence and determine decisions, actions and other matters that concern a
particular country. They govern and guide a country in its activities mainly economic. This
affects the bank in that they are restricted by the policies in their loan operations which in turn
affect the banks general performance.
22
2.5.2 Taxation
This is a system of raising money, which has to be paid to the government by its citizens
according to their income and profits yielded from business. It’s a financial charge or other levy
upon a tax payer, an individual or legal entity by a state or the functional equivalent of a state
such that failure to pay is punishable by law. Taxes are imposed by many sub national entities.
They consist of direct tax and indirect tax, they maybe paid in money or as its labor equivalent.
There is an inverse relationship between taxation and performance of banks. The higher the
taxation the lower the performance of the bank in terms of loans since the bank will be forced to
raise their interest rates on loans to cater for the high taxes leading to less loans borrowed
affecting the performance. And the lower the taxation the higher the performance of the bank.
2.5.3 Registration
Refers to a formal and official recording of items, names, or actions. Thus being the action of
making something known officially or publically so as to be recognized legally therefore making
its contract with the government biding. Registration is a long process and costly to the bank.
However a registered bank is more credible to the public and people prefer to transact with the
since they are less risky, this increase in client base leads to more loans issued hence improved
performance.
2.5.4 Economic condition
Is the status of the economy at a particular time meaning the conditions related to production and
distribution of goods and services and the development of wealth. Economic conditions may be
rated as excellent, good, fair or poor. These characteristics describe the state of the economy in
terms of financial position at a specified time defined through statistics. Favorable economic
condition lea d to favorable interest rate hence increased borrowing which translates to improved
performance of the bank. During poor economic condition there is poor performance due to
fewer loan clients. (National Bureau of Economic Research).
23
2.5.5 Recession
Refers to a period of economic decline in a country with reduced trade and industrial activity
indicated by massive unemployment. This is the time when business activity has recorded its
peak and starts to fall due to general slow down and business cycle contraction. During recession
interest rates go up so the banks can cope with the slowing own economy this leads to less
borrowing an d thus reducing the performance of the bank. (National Bureau of Economic
Research).
2.5.6 Depression
A period where there is little economic activity and many people are poor or with no jobs. Unlike
recession at this point the economy is no longer on a slow down rather its performing at its
lowest performance. According to economist Richard C. K. ideal conditions of a countries
economy should be have the household sector as net savers and corporate sector as net
borrowers, government budget balanced and net imports near zero when this conditions are
imbalanced, recession can develop and eventually depression. (National Bureau of Economic
Research).
The researcher is of the view that the relationship of marketing loan services and performance of
bank should be concentrated on the relationship between the bank and the clients. For instance
the way the loan officers appraise the loans, how the employees market the loans to the clients
while giving them information, the repayment procedures and the incentives the banks offer the
client. Much as the extraneous variables should be put in consideration as regards the
relationship between marketing loans and performance, the researcher feel that more emphasis
should be on relationship between the client and the bank since effects in performance are more
direct that is caused by the clients than indirect by the extraneous variables.
2.6: Conclusion
From the above literature review, much as writers have analyzed performance of loans in
Uganda, very few have paid particular attention on the relationship that exists between the two
variables. Consequently the researcher intends to establish more about the relationship between
marketing of loan services and performance of banks from the field study.
24
25
CHAPTER THREE
METHODOLOGY
3.1 Introduction
This chapter presents the framework in which data collection and analysis of the study was
conducted. It involved the design of the study, source of data, data collection methods, data
processing, analysis and the limitations which were expected to be encountered.
3.2 Research design
The research design intended to be used was be descriptive, descriptive design refers to
explaining and representation of observed facts that is characterized by a picture in words giving
more information. This helped in understanding the characteristic of the variable and offered
ideas for further research while case study design helped to understand the phenomenon in depth.
The purpose was to obtain qualitative data based on the theoretical data focusing on marketing of
loan services and performance of banks with Equity bank Wandegeya branch as the case study.
A case study design refers to the certain scenario adopted with the intention of starting out on a
specific course by the researcher. This means the area which the researcher decided to focus
his/her research on in this case equity bank Wandegeya branch.
3.3 Area of study
The study covered the field of marketing of loans services and performance of equity bank
Wandegeya branch with major emphasis on the extent of marketing of loans, benefits, loan
extensions and performance management.
3.4 The study population
The researcher’s study population included marketing staff who market loans, the internal
control department who monitor loan extensions and accountability of the funds and improve the
efficiency of services so that effects of marketing is clearly identified in the output, employees
who represent equity bank acting as the face of the bank through service delivery to the bank.
26
3.5 Sample size
The sample size constituted 30 respondents of whom 5 were from the top management, 8 from
marketing department, 5 from internal control departments and 12 from the customers.
Table 1: showing classification of respondents
Respondents
Top management
Marketing department
Internal control department
Customers
Total
Frequency
5
8
5
12
30
3.6 Sampling design
The researcher used the stratified method. Stratified design is a statistical sample obtained by
breaking the universe down into smaller parts made up of relatively homogeneous units (stratum)
and taking a sample from each part. A stratum refers to one of a series of layers, levels or
graduations in an ordered system which is divisions into which a population is divided in
statistical stratification. In this case the researcher created different groups in the population
sample that is; top management, marketing department, internal control department and the
customers. After stratifying the researcher used random sampling method which refers to an act
of obtaining a sample which is a representative portion of a whole without a definite aim,
direction, rule, method restraint or attention. Random sampling was used to choose respondents
from each stratum.
3.7 Investigative procedure
The researcher obtained a letter from Makerere University addressed to Equity bank Wandegeya
branch which is the case study. The researcher booked an appointment with Equity bank
Wandegeya then at the appointed time visited the bank to carryout the interview and distribute
questionnaires to be filled by the sample size which was divided into groups comprising of the
top management, marketing department, internal control departments and the customers. The
researcher then requested the respondents to fill in the questionnaires and to also answer the
27
interview questions. After this the questionnaires and the answers from the interviews were
collected and analysis followed.
3.8 Data collection tools
The main data collection tools used were: questionnaires, interviews, observation and document
review.
3.8.1 Questionnaires
The researcher used structured questionnaires to collect data. Questionnaires refer to a set of
questions set with the intention of obtaining statistically useful information from an individual
written or printed with spaces for answers. This tool was used to create focus on the area of study
and also to enable to get accurate and all relevant data that was required for the research. The
questionnaires were distributed to the chosen sample size and once filled the researcher collected
them and analyze the data obtained.
3.8.2 Interview method
Interview refers to a scheduled meeting between an interviewer and the person who is to be
interviewed for purposes of getting answers, obtaining information or ascertaining personal
qualities. This method collected data directly form respondents through face to face question and
answer process. The researcher used an interview guide which refers to a piece of paper
containing the relevant questions which the interviewer needs answers for. This interview guide
helped guide the researcher during the interview on the follow up of the questions that she was to
ask.
3.8.3 Observation method
Observation refers to an act of taking notice, recognizing and noticing some facts or occurre
ncies using naked eyes to see. In this method the researcher watched carefully the proceedings at
the bank and by this the researcher was able to understand more about the banks operations first
hand. This method was used for both collecting data and report writing.
28
3.8.4 Document review
Document review refers to proper scrutiny of the banks records to obtain the required
information. This method was used to examine the bank’s reports, journals, newsletters and other
documents relevant to the area of marketing of loans and performance of the bank. From this
relevant information was collected and analyzed.
3.9 Data presentation and analysis
3.9.1 Data processing
Data was sorted, tabulated, summarized, edited and coded. Sorting refers to putting in a given
place or rank according to kind, class or nature arranging according to characteristics. This was
done to get rid of irrelevant information. Tabulation refers to relating or arranging in a table,
setting up in columns and putting in tabular or summary form. This was used to summarize the
data in order to have consistent statistical analysis for purposes of data presentation summarizing
data refers to concise formulation of a large situation in smaller terms covering the main points.
Editing refers to the process of selecting, amending, revising and compiling to make suitable
presentation. This was done to ensure accuracy of the information provided and also to get rid of
errors. Coding refers to classifying or categorizing in the form of symbols to facilitate tabulation
for instance putting words into numbers so that answers to questions maybe put into tabular
form. This was done to transform the available information into a more presentable form.
3.9.2 Data Analysis
The researcher analyzed and presented the data on the basis of the research objectives. The
researcher analyzed the data manually by using frequencies and percentages. The analytical tools
also involved qualitative explanations.
The major focus of the study was to identify gaps that exist between marketing of loan services
and performance of banks and add on to the available literature. Statistical Package for Social
Science (SPSS) analysis more specifically Pearson’s correlation co-efficiency this package was
used to measure the strength of the relationship between the two variables it ranges between -1 to
+1 between -1 to 0 there is a negative relationship and between 0 to +1 there is a positive
relationship between the two variables. Between a positive or a negative 0.1 to 0.3 is a weak
relationship, between a positive or a negative 0.4 to 0.6 is a moderate relationship, between a
29
positive or a negative 0.7 to 0.9 is a very strong relationship, positive or negative 1 is a perfect
relationship. This was used to support the analysis of the relationship between marketing of loan
services and performance of banks.
3.9.3: Limitations encountered
The study suffered the following limitations.
Financial constraint,
The research was costly in terms of typing, printing and editing the work every time after
corrections and other resources like time. The researcher solved the problem by asking for more
money from home and by reducing the cost by typing the work personally.
Uncooperative respondents,
Difficulties in getting information from various departments were encountered as it involved a
lot of bureaucracy in meeting the officers in those departments. The researcher solved the
problem by assuring the respondents on the high level confidentiality that the information was to
be treated with.
Unfriendly response by respondents was experienced since they were not willing to cooperate
and give the required information. The researcher solved this problem by being patient and
explaining the details of the research to the respondents so that they would understand.
30
CHAPTER FOUR
4.0 PRESENTATION, INTERPRETATION AND DISCUSSION OF FINDINGS
4.1 Introduction
This chapter presents findings of the study on the relationship between marketing of loan
services and performance of Equity bank Wandegeya branch.
Tables, graphs, figures
(frequency) and percentages have been used in the analysis, discussion and presentation of the
finding which is done in accordance with the objectives of the study as shown below;
1. To examine the techniques of marketing loan services in equity bank Wandegeya branch.
2. To assess the performance of equity bank Wandegaya branch in term of loans.
3. To establish the relationship between marketing of loans and performance of equity bank
Wandegeya branch.
4.2 Personal information
4.2.1 Gender Status
Both the staff and the customers of Equity bank Wandegeya were asked to state their gender and
below were their responses
Table 2: Gender
Valid
Male
Female
Total
Frequency
15
Percent
50.0
Valid Percent
50.0
15
30
50.0
100.0
50.0
100.0
Cumulative
Percent
50.0
100.0
Source: Primary data
The above table shows that 50% (15) of the respondents were male while the female respondents
were 50% (15). This shows that there is no gender discrimination on the employees of the bank.
4.2.2 Age category
Both the staff and the customers of Equity bank Wandegeya were asked to state their age and
below were their responses
31
Table 3: Age
Valid
20-30
Frequency
12
Percent
40.0
Valid Percent
40.0
Cumulative
Percent
40.0
31-40
11
36.7
36.7
76.7
41-50
5
16.7
16.7
93.3
Above 50
2
6.7
6.7
100.0
30
100.0
100.0
Total
Source: Primary data
The findings indicate that 40% (12) were in the age bracket of 20-30years, 36.7% (11) were aged
between 31-40 years, 16.7% (5) of the respondent in the bracket of 41-50years and 6.7% (2)
were above 50 years of age. This means that employees of the bank are still productive (young
and skilled) to handle the changing market conditions with regards to marketing. And the
customers are young hence Equity bank has to use the most current marketing techniques like
market segmentation.
4.2.3 Marital status
Both the staff and the customers of Equity bank Wandegeya were asked to state their marital
status and below were their responses
Table 4: Marital Status
Valid
Married
Frequency
15
Percent
50.0
Valid Percent
50.0
Cumulative
Percent
50.0
100.0
Single
15
50.0
50.0
Total
30
100.0
100.0
Source: Primary data
50% (15) of the respondents were married, those who were single were 50% (15). Married
employees tend to be more responsible and reliable due to their commitments to families which
is extended even to the work environment. Also married customers tend to be more stable and
long term since they are settled. Hence equity bank Wandegeya should strive to retain their
married staff and customers because of their stability.
32
4.2.4 Education background
Both the staff and the customers of Equity bank Wandegeya were asked to state their education
level and below were their responses
Table 5: Education level
Valid
Postgraduate
Frequency
10
Percent
33.3
Valid Percent
33.3
Cumulative
Percent
33.3
16
53.3
53.3
86.7
100.0
First degree
Diploma
Total
4
13.3
13.3
30
100.0
100.0
Source: Primary data
From the table above, the findings indicate that out of a total of 30 respondents 33.3% (10) are
post graduate, first degree holders are 53.3% (16) and diploma holders are 13.3% (4) no
certificate holders work with the bank. Giving a majority of the respondents as first degree
holders this means that employees of the bank are skilled or can be easily trained to handle the
changing marketing conditions and the customers fully understand marketing techniques hence
equity bank must be transparent with their marketing techniques.
4.2.5 Categorization of the respondents
The staff of Equity bank Wandegeya were asked to state their category and below were their
responses
Table 6: Category
Valid
Top management
Marketing department
Internal control
Total
Frequency
5
Cumulative
Percent
27.8
Percent
16.7
Valid Percent
27.8
8
26.7
44.4
72.2
5
18
16.7
60.0
27.8
100.0
100.0
Source: Primary data
Respondents from top management were 27.8% (5), marketing department were 44.4% (8) and
internal control were 27.8% (5) respectively. This shows that the study response was dominated
by marketers who deal with marketing of loans on behalf of the bank as the table reveals. This is
33
because the topic is on marketing so most of the information required is most likely to be
obtained from the marketing department.
4.2.6 Length of service
The customers of Equity bank Wandegeya were asked to state how long they had been served
and below were their responses
Table 7: Service level
Valid
Less than 2 years
2-5 years
Percent
10.0
Valid Percent
25.0
Cumulative
Percent
25.0
5
16.7
41.7
66.7
4
13.3
33.3
100.0
12
40.0
100.0
Frequency
3
5-10 years
Total
Source: Primary data
25% (3) have been with Equity bank for less than 2 years 41.7% (5) for 2-5 years and 33.3% (4)
for 5-10 years. Majority of the customers being under 2-5 years this is because Equity bank
Wandegeya bank was established not so long ago. Hence the bank should endeavor to maintain
them as they attract more so that with time they will have long lasting customer base.
4.3 TECHNIQUES OF MARKETING LOAN SERVICES IN EQUITY BANK
WANDEGEYA BRANCH
To study and evaluate the techniques of marketing loan services, the research focuses on the
techniques used and measurement of the effects of marketing loan services in terms of loan
extensions
4.3.1 Marketing techniques used in equity bank
Both the staff and the customers of Equity bank Wandegeya were asked which marketing
techniques were used in the bank and below were their responses
34
Table 8: Marketing technique
Valid
Frequency
1
Marketing mix
Market segmentation
Percent
3.3
Valid Percent
3.3
Cumulative
Percent
3.3
16.7
4
13.3
13.3
Branding and positioning
10
33.3
33.3
50.0
All of them
15
50.0
50.0
100.0
Total
30
100.0
100.0
Source: Primary data
The findings show that 3.3% (1) were for marketing mix, 13.3% (4) on market segmentation,
33.3% (10) on branding and positioning and 50% (15) on all of them. Majority of the responses
were on all of them, this shows that the bank has diversified their marketing techniques and it’s
not relying majorly on a single technique. Hence the bank should keep using diversified
marketing techniques to serve different kinds of customers.
4.3.2 Loan extensions review
The staff of Equity bank Wandegeya were asked how often loan extensions were reviewed in the
bank and below were their responses
Table 9: Loan extensions review
Valid
Semi-annually
Annually
Total
Percent
50.0
Valid Percent
83.3
Cumulative
Percent
83.3
3
10.0
16.7
100.0
18
60.0
100.0
Frequency
15
Source: Primary data
On loan extensions review 83.3% (15) were on semi- annually and 16.7% (3) were on annually
giving a majority of semi-annually which is a reasonable time since its not too long such that it’s
irrelevant neither is it too short a time such that it is expensive and unattainable. Hence Equity
bank should maintain this level of loan review system.
35
4.3.3 Effects of marketing
Both the staff and the customers of Equity bank Wandegeya were asked what the effects of
marketing were and below were their responses
Table 10: Effects of marketing
Valid
Increased loan extensions
Frequency
11
Percent
36.7
Valid Percent
36.7
Cumulative
Percent
36.7
26.7
26.7
63.3
Increased customer base
8
Increased cash flow
2
6.7
6.7
70.0
Increased profitability
9
30.0
30.0
100.0
30
100.0
100.0
Total
Source: Primary data
36.7% (11) of the respondents responded with increase in loan extensions, 26.7% (8) on
increased customer base, 6.7% (2) on increase in cash flow and 30% (9) on increased
profitability. The majority were on increased loan extensions followed closely by increase in
profitability and increase in customer base showing that marketing of loan services has many
positive effects on the bank hence Equity bank Wandegeya should keep marketing their loan
services so as to keep enjoying this benefits.
4.3.4 Review of loan extensions
The staff of Equity bank Wandegeya were asked who reviews loan extensions and below were
their responses
Table 11: Loan extensions review
Valid
Valid Percent
38.9
Cumulative
Percent
38.9
36.7
61.1
100.0
60.0
100.0
General Manager
Frequency
7
Percent
23.3
Finance manager
11
Total
18
Source: Primary data
38.9% (7) of the responses were on general manager and 61.1% (11) were on finance manager
majority being on the finance manager who is more favorable to deal with review of loan
36
extensions since they are more informed on the current financial position of the bank though the
general manager is also qualified they may be busy with other issues of the bank. Hence Equity
bank Wandegeya should assign this role to the finance manager.
4.3.5 Monitoring systems accounting
The staff of Equity bank Wandegeya were asked what the monitoring accounting systems were
and below were their responses
Table 12: Accounting Systems
Frequency
Valid
Percent
Valid Percent
Cumulative
Percent
Single entry system
of accounting
6
20.0
33.3
33.3
Double entry system
of accounting
12
40.0
66.7
100.0
Total
18
60.0
100.0
Source: Primary data
33.3% (6) responded single entry system and 66.7% (12) responded double entry system
majority of the responses were on double entry system which is more accurate as compared to
single entry system which is used incase of missing records lost in accidents like fire. Hence
Equity bank Wandegeya should use double entry system of accounting for more accurate results
and only use single entry system only if some of the records are missing.
4.3.6 Review of marketing technique
The customers of Equity bank Wandegeya were asked how often marketing techniques are
reviewed and below were their responses
37
Table 13: Marketing techniques review
Valid
Monthly
Frequency
1
Percent
3.3
Valid Percent
8.3
Cumulative
Percent
8.3
Semi-annually
1
3.3
8.3
16.7
Annually
Not sure
4
6
13.3
20.0
33.3
50.0
50.0
100.0
12
40.0
100.0
Total
Source: Primary data
8.3% (1) of the responses were on monthly, 8.3% (1) on semi- annually, 33.3% (4) on annually
and 50% (6) were not sure. Majority of the responses from the customers were not sure but those
who were informed majority were on annually which a reasonable time is since it’s not too short
a time such that it is expensive and unattainable neither is it too long such that it’s irrelevant
Hence Equity bank Wandegeya should review their marketing techniques annually and also work
on a mechanism of making their customers more informed.
4.3.7 Continuous marketing in equity
The customers of Equity bank Wandegeya were asked what the ways of encouraging marketing
were and below were their responses
Table 14: Ways of encouraging marketing
Frequency
Valid
Evaluating benefits of
Marketing
Targeting a larger
Market share
Recognizing marketing
as a competitive tool
Total
Percent
Valid Percent
Cumulative
Percent
3
10.0
25.0
25.0
3
10.0
25.0
50.0
6
20.0
50.0
100.0
12
40.0
100.0
Source: Primary data
25% (3) of the responses were on evaluating benefits of marketing, 25% (3) were on targeting a
larger market share and 50% (6) on recognizing marketing as a competitive tool. Majority of the
responses from customers were on recognizing marketing as a competitive tool so as to
38
encourage marketing. Hence Equity bank Wandegeya should use marketing as a competitive tool
so as to recognize the relevance of marketing.
4.3.8 Marketing strategies in equity
The customers of Equity bank Wandegeya were asked what the marketing strategies were and
below were their responses
Table 15: Methods of marketing
Valid
Advertisement
Percent
13.3
Valid Percent
33.3
Cumulative
Percent
33.3
8
26.7
66.7
100.0
12
40.0
100.0
Frequency
4
Door to door marketing
Total
Source: Primary data
On the strategies of marketing 33.3% (4) of the customers responded with advertisement 66.7%
(8) on door to door marketing. Majority being on door to door method of marketing meaning that
Equity bank Wandegeya should apply door to door marketing since it has more effect on
potential customers.
4.4 PERFORMANCE OF EQUITY BANK WANDEGAYA BRANCH IN TERM OF
LOANS
Under this objective, in order to assess the performance of Equity bank Wandegeya, the
researcher focuses on profitability, revenue generated, number of products offered, market share
and cash flow.
4.4.1 Favorable profitability levels
Both the staff and the customers of Equity bank Wandegeya were asked whether profitability
levels were favorable and below were their responses
39
Table 16: Profitability levels
Valid
Strongly agree
Frequency
4
Percent
13.3
Valid Percent
13.3
Cumulative
Percent
13.3
21
70.0
70.0
83.3
100.0
Agree
Uncertain
Total
5
16.7
16.7
30
100.0
100.0
Source: Primary data
13.3% (4) of the responses strongly agreed, 70% (21) agreed and 16.7% (5) were uncertain and
none of the respondents disagreed or strongly disagreed. Majority of the response being on agree
and strongly agree shows that Equity bank has favorable profits though a small percentage is not
informed on the profitability level of the bank. Hence Equity bank Wandegeya should work on
maintaining those favorable profits and come up with a mechanism of keeping their customers
informed.
4.4.2 Favorable revenue levels
Both the staff and the customers of Equity bank Wandegeya were asked whether revenue levels
were favorable and below were their responses
Table 17: Revenue levels
Valid
Strongly agree
Agree
Uncertain
Disagree
Strongly disagree
Total
Percent
33.3
Valid Percent
33.3
Cumulative
Percent
33.3
14
46.7
46.7
80.0
2
6.7
6.7
86.7
3
10.0
10.0
96.7
1
3.3
3.3
100.0
30
100.0
100.0
Frequency
10
Source: Primary data
33.3% (10) of the responses on revenue generated were on strongly agree, 46.7% (14) were on
agree, 6.7% (2) were uncertain, 10% (3) on disagree and 3.3% (1) on strongly disagree. Majority
of the responses being on agree and strongly agree shows that Equity bank Wandegeya is
experiencing favorable revenue. Hence they should work on maintaining that kind of revenue so
that the bank’s positive reputation is retained and improved.
40
4.4.3 Products and services offered by equity
Both the staff and the customers of Equity bank Wandegeya were asked whether products and
services offered were enough and below were their responses
Table 18: Products and services
Valid
Strongly agree
Frequency
9
Percent
30.0
Valid Percent
30.0
Cumulative
Percent
30.0
14
46.7
46.7
76.7
Agree
Uncertain
1
3.3
3.3
80.0
Disagree
6
20.0
20.0
100.0
30
100.0
100.0
Total
Source: Primary data
30% (9) of the responses on whether products and services offered are enough were on strongly
agree, 46.7% (14) were on agree, 3.3% (1) on uncertain and 20% (6) on disagree. None of the
respondents strongly disagreed. Majority of the respondents being on agree and strongly agree
reflects that Equity bank Wandegeya is offering enough products though a small percentage
seems to disagree. Hence the bank should continue offering those products and services and also
implement new services to cater for the percentage that disagrees.
4.4.4 Market share of equity
Both the staff and the customers of Equity bank Wandegeya were asked whether the bank has a
wide market share and below were their responses
Table 19: Market share
Valid
Percent
23.3
Valid Percent
23.3
Cumulative
Percent
23.3
17
56.7
56.7
80.0
Uncertain
4
13.3
13.3
93.3
Strongly disagree
2
6.7
6.7
100.0
30
100.0
100.0
Strongly agree
Agree
Total
Frequency
7
Source: Primary data
23.3% (7) strongly agreed that the bank has a wide market share, 56.7% (17) agreed, 13.3% (4)
were uncertain and 6.7% (2) strongly disagreed. Majority of the responses agreed and strongly
agreed showing that the bank has a wide market share however there was a percentage that was
41
uncertain. Hence Equity bank Wandegeya should work on informing some of their customers on
their market share status and maintain the level of market share so as to build customers
confidence due to the wide market base.
4.4.5: Favorable cash inflow and outflow
Both the staff and the customers of Equity bank Wandegeya were asked whether cash inflow and
outflow was favorable and below were their responses
Table 20: Cash inflow and outflow
Valid
Strongly agree
Frequency
13
Percent
43.3
Valid Percent
43.3
Cumulative
Percent
43.3
70.0
Agree
8
26.7
26.7
Uncertain
7
23.3
23.3
93.3
Disagree
2
6.7
6.7
100.0
30
100.0
100.0
Total
Source: Primary data
43.3% (13) of the responses on whether cash flow is favorable were on strongly agree, 26.7% (8)
were on agree, 23.3% (7) were uncertain and 6.7% (2) disagreed. None of the respondents
strongly disagreed. This shows that the bank is experiencing favorable cash flow since majority
of the responses were on strongly agree and agree, however there was a small percentage on
uncertain meaning that Equity bank Wandegeya should maintain the favorable cash flow and
also work on informing their customers more about cash flow to deal with the uncertainty.
4.5 OTHER FACTORS AFFECTING BOTH MARKETING OF LOAN SERVICES AND
PERFORMANCE
4.5.1 Government intervention
Both the staff and the customers of Equity bank Wandegeya were asked whether government
intervention had affected marketing of loans and below were their responses
42
Table 21: Government intervention
Valid
Strongly agree
Agree
Frequency
8
Percent
26.7
Valid Percent
26.7
Cumulative
Percent
26.7
7
23.3
23.3
50.0
Uncertain
9
30.0
30.0
80.0
Disagree
5
16.7
16.7
96.7
Strongly disagree
1
3.3
3.3
100.0
30
100.0
100.0
Total
Source: Primary data
26.7% (8) of the respondents on whether government intervention has affected marketing loans
strongly agreed, 23.3% (7) agreed, 30% (9) were uncertain, 16.7% (5) disagreed and 3.3% (1)
strongly disagreed. Majority of the responses were on uncertain and half of the responses were
on strongly agree and agree a small percentage was on disagree and strongly disagree. This
shows that most of the respondents are not informed on the effects of government intervention
on marketing but majority of those who are, agree that it has an effect on marketing. Hence
Equity bank Wandgeya should do extensive research on the effects of government intervention
on marketing and then inform both its customers and staff.
4.5.2 Taxation and interest rates
Both the staff and the customers of Equity bank Wandegeya were asked whether increase in tax
rates led to increase in interest rates and below were their responses
Table 22: Tax rates and interest rates
Valid
Strongly agree
Agree
Uncertain
Strongly disagree
Total
Percent
46.7
Valid Percent
46.7
Cumulative
Percent
46.7
13
43.3
43.3
90.0
2
6.7
6.7
96.7
100.0
Frequency
14
1
3.3
3.3
30
100.0
100.0
Source: Primary data
46.7% (14) of the respondents on whether increase in tax rate increase interest rates were on
strongly agree, 43.3% (13) agreed, 6.7% (2) were uncertain and 3.3% (1) disagreed. This gives a
43
majority of the respondents on strongly agree and agree showing that increase in tax rate led to
an increase in interest rate. Hence Equity bank should follow the tax rate trends so as to know
how to set their interest rates to avoid making losses.
4.5.3 Legal registration and credibility of equity
Both the staff and the customers of Equity bank Wandegeya were asked whether registration has
led to credibility and below were their responses
Table 23: Legal registration and credibility
Valid
Frequency
5
Percent
16.7
Valid Percent
16.7
Cumulative
Percent
16.7
Agree
11
36.7
36.7
53.3
Uncertain
12
40.0
40.0
93.3
Disagree
2
6.7
6.7
100.0
30
100.0
100.0
Strongly agree
Total
Source: Primary data
16.7% (5) of the respondents strongly agreed that registration has led to credibility, 36.7% (11)
agreed, 40% (12) were uncertain and 6.7% (2) disagreed. Majority of the respondents were
uncertain and slightly above half of the respondents agreed and strongly agreed that registration
has led to credibility. This shows that registration has led to credibility though most of the
respondents were not well informed on the effect of registration to the banks credibility. Hence
Equity bank Wandegeya should ensure that it has registered to enhance its credibility and also
come up with a way of informing their customers and some of the staff on the relevance of
registration.
4.5.4 Economic conditions and the demand for loans
Both the staff and the customers of Equity bank Wandegeya were asked whether favorable
economic conditions increased loan demands and below were their responses
44
Table 24: Economic conditions and loan demand
Valid
Strongly agree
Agree
Frequency
15
Percent
50.0
Valid Percent
50.0
Cumulative
Percent
50.0
10
33.3
33.3
83.3
Uncertain
3
10.0
10.0
93.3
Disagree
1
3.3
3.3
96.7
Strongly disagree
1
3.3
3.3
100.0
30
100.0
100.0
Total
Source: Primary data
50% (15) of the respondents strongly agreed that favorable economic conditions increased loan
demands, 33.3% (10) agreed, 10% (3) were uncertain 3.3% (1) disagreed and 3.3% (1) strongly
disagreed. Majority of the responses were on strongly agree and agree showing that indeed
favorable economic conditions increased loans demands due to favorable investment
environment though a small percentage was uncertain and disagreed. Hence Equity bank should
extend it’s marketing of loans during favorable economic conditions since they are bound to get
more customers then, they should also come up with a system of educating their customers on
the effects of economic conditions like recession and depression on loan extensions.
4.6 RELATIONSHIP BETWEEN MARKETING OF LOANS SERVICES AND
PERFORMANCE OF EQUITY BANK WANDEGEYA BRANCH
Under this objective to establish the relationship between marketing of loan services and
performance of Equity bank Wandegeya branch the study focuses on how marketing has affected
performance in terms of loans.
4.6.1 Marketing and improved loan extensions
Both the staff and the customers of Equity bank Wandegeya were asked whether marketing had
improved loan extensions and below were their responses.
45
Table 25: Marketing and loan extensions
Valid
Strongly agree
Agree
Uncertain
Total
Frequency
12
Percent
40.0
Valid Percent
40.0
Cumulative
Percent
40.0
13
43.3
43.3
83.3
100.0
5
16.7
16.7
30
100.0
100.0
Source: Primary data
40% (12) of the responses on if marketing has improved loan extensions strongly agreed, 43.3%
(13) agreed, 16.7% (5) were uncertain none of the respondents disagreed nor strongly disagreed
this shows that marketing has indeed improved loan extensions since a majority agreed and
strongly agreed though there was a small percentage that was uncertain. Hence Equity bank
Wandegeya should keep marketing their loans so as to improve on the extensions and also work
out a way of informing their customers on how marketing is affecting loan extensions.
4.6.2 Performance in terms of loans
Both the staff and the customers of Equity bank Wandegeya were asked whether performance in
terms of loans had improved and below were their responses.
Table 26: Loans and performance
Valid
Strongly agree
Agree
Uncertain
Total
Frequency
7
Percent
23.3
Valid Percent
23.3
Cumulative
Percent
23.3
16
53.3
53.3
76.7
100.0
7
23.3
23.3
30
100.0
100.0
Source: Primary data
23.3% (7) strongly agreed that performance in terms of loans has improved, 53.3% (16) agreed,
23.3% (7) were uncertain none of the respondents disagreed nor strongly disagreed. Majority of
the responses being on strongly agree and agree shows that performance in terms of loans has
improved though there is a small percentage that was uncertain. Hence Equity bank Wandegeya
should maintain that improved performance in terms of loans and inform their customers more
on the performance in terms of loans.
46
4.6.3 Increased clientele
Both the staff and the customers of Equity bank Wandegeya were asked whether there was
increase in customers due to good performance and below were their responses
Table 27: Increased customers
Valid
Strongly agree
Agree
Uncertain
Disagree
Total
Frequency
12
Percent
40.0
Valid Percent
40.0
Cumulative
Percent
40.0
12
40.0
40.0
80.0
5
16.7
16.7
96.7
100.0
1
3.3
3.3
30
100.0
100.0
Source: Primary data
40% (12) were on strongly agree, 40% (12) on agree, 16.7% (5) on uncertain and 3.3% (1)
disagreed. Majority of the responses were on strongly agree and agree showing that the bank has
received more clients due to good performance though some respondents were uncertain. Hence
Equity bank Wandegeya should maintain this level of performance so as to increase on their
clients and work on a mechanism of keeping their customers informed on increase in clients due
to favorable performance. This can be done by publishing a record of increase in customers.
4.6.4 Profitability level
Both the staff and the customers of Equity bank Wandegeya were asked whether profitability
level had improved and below were their responses
Table 28: Improved profitability
Valid
Frequency
4
Percent
13.3
Valid Percent
22.2
Cumulative
Percent
22.2
Agree
14
46.7
77.8
100.0
Total
18
60.0
100.0
Strongly agree
Source: Primary data
47
22.2% (4) of the staff strongly agreed that profitability level has improved, 46.7% (14) agreed
showing 100% agreement that profitability has improved. Hence Equity bank Wandegeya should
maintain the improved profitability by continuing to market their loans and if possible keep
improving it.
4.6.5 Marketing efficiency
Both the staff and the customers of Equity bank Wandegeya were asked whether marketing
efficiency had improved and below were their responses
Table 29: Marketing efficiency
Valid
Strongly agree
Percent
33.3
Valid Percent
33.3
Cumulative
Percent
33.3
14
46.7
46.7
80.0
5
16.7
16.7
96.7
100.0
Frequency
10
Agree
Uncertain
Strongly disagree
Total
1
3.3
3.3
30
100.0
100.0
Source: Primary data
33.3% (10) of the respondents strongly agreed that marketing efficiency has consistently
improved, 46.7% (14) agreed, 16.7% (5) were uncertain and 3.3% (1) majority being on agree
and strongly agree, this shows that marketing efficiency has consistently improved though a
small percentage is uncertain. Hence Equity bank Wandegeya should keep improving
consistently its marketing efficiency and also inform customers on their consistent improvement
so as to present the bank as a stable bank hence credible.
4.6.6 Increase in loan extensions
Both the staff and the customers of Equity bank Wandegeya were asked whether loan extensions
had consistently improved and below were their responses
48
Table 30: Loan extensions
Valid
Strongly agree
Agree
Frequency
14
Percent
46.7
Valid Percent
46.7
Cumulative
Percent
46.7
10
33.3
33.3
80.0
Uncertain
3
10.0
10.0
90.0
Disagree
2
6.7
6.7
96.7
Strongly disagree
1
3.3
3.3
100.0
30
100.0
100.0
Total
Source: Primary data
46.7% (14) of the respondents strongly agreed that loan extensions has consistently increased,
33.3% (10) agreed, 10% (3) were uncertain, 6.7% (2) disagreed and 3.3% (1) strongly disagreed.
A majority of the responses were on strongly agree and agree showing that loan extensions has
indeed consistently increased though there was a small percentage that was uncertain and also
that disagreed. Hence Equity bank Wandegeya should work on maintaining the constant increase
in loan extensions by continued extensive marketing of their loan services.
49
4.6.7 Relationship between marketing of loan services and performance of equity bank
Table 31: Pearson’s correlation co- coefficience
Correlations
Marketing of loan
services
Marketing of loan services
Performance
Pearson Correlation
1
Sig. (2-tailed)
.00
N
Performance
.608**
Pearson Correlation
30
30
.608**
1
Sig. (2-tailed)
.00
N
30
30
Correlation is significant at the 0.01 level (2-tailed).
Source: Primary data
Table 30 indicates that the Pearson’s correlation coefficient is 0.608 significant at the 0.01 level
(2- tailed). The Pearson’s correlation co-efficient obtained in the above table indicates that there
is a strong positive relationship of 60.8% between marketing of loan services and performance of
Equity bank Wandegeya. However the correlation further shows a gap of 39.2% that needs to be
closed by the bank in order to increase their performance due to marketing of their loan services.
The banks management should ensure that proper and effective marketing techniques are
implemented in order to improve on their performance. Study findings from the research
interview showed that the performance of the bank in terms of loans was dependent on the
marketing techniques applied other factors like efficiency of marketing loans and variety of
products the bank offered also affected performance. Hence Equity bank Wandegeya should
ensure that there is efficient and extensive marketing of loan services by implementing the best
marketing techniques like market segmentation so as to improve on their performance.
50
CHAPTER FIVE
SUMMARY OF FINDINGS, CONCLUSION AND RECOMMENDATION
5.0 INTRODUCTION
This chapter presents the summary of findings under personal information, each objective,
Conclusion and recommendations relevant to marketing of loan services and attempt to analyze
whether the introduction of marketing loans services has led to performance improvement in
Equity bank Wandegeya branch and area of further study. Conclusions are the researcher's
opinions depending on the outcome from the data analyzed as per the objectives of the study.
Recommendations are the researchers view on what should be done resulting from conclusions
and are very vital for policy making.
5.1 SUMMARY OF FINDINGS
5.1.1 Techniques of marketing loan services in equity bank Wandegeya branch
Findings in table 8 indicated that majority of responses were on all of the marketing techniques,
this shows that the bank has diversified their marketing techniques and is not relying majorly on
a single technique. Hence the bank should keep using diversified marketing techniques to serve
different kinds of customers. According to table 9 on loan extensions review majority of semiannually which is a reasonable time since its not too long such that it’s irrelevant neither is it too
short a time such that it is expensive and unattainable. Hence Equity bank should maintain this
level of loan review system. On effects of marketing table 10 shows that majority of the
respondents were on increased loan extensions followed closely by increase in profitability and
increase in customer base showing that marketing of loan services has many positive effects on
the bank hence Equity bank Wandegeya should keep marketing their loan services so as to keep
enjoying this benefits. Additionally table 11 revealed majority of the respondents being on the
finance manager who is more favorable to deal with review of loan extensions since they are
more informed on the current financial position of the bank though the general manager is also
qualified the may be busy with other issues of the bank. Hence Equity bank Wandegeya should
assign this role to the finance manager. Form table 14 majority of the responses from customers
were on recognizing marketing as a competitive tool so as to encourage marketing. Hence Equity
bank Wandegeya should use marketing as a competitive tool so as to recognize the relevance of
51
marketing. Also table 15 showed majority of the respondents being on door to door method of
marketing meaning that Equity bank Wandegeya should apply door to door marketing since it
has more effect. It was revealed that marketing of loan services has reached a good number of
the customers especially through door to door marketing and has also had positive effects like
increase in loan extensions, increase in customer base , increase in cash flow and also increase in
profitability. Also majority of the respondents agreed that due to the benefits marketing has that
it should be encouraged through targeting a larger market share, recognizing marketing as a
competitive tool and also by evaluating the benefits of marketing.
5.1.2 Performance of equity bank Wandegeya branch in term of loans
Findings from table 16 show that Majority of the response being on agree and strongly agree
shows that Equity bank has favorable profits though a small percentage is not informed on the
profitability level of the bank. Hence Equity bank Wandegeya should work on maintaining those
favorable profits and come up with a mechanism of keeping their customers informed.
Additionally table 17 shows that majority of the responses being on agree and strongly agree
shows that Equity bank Wandegeya is experiencing favorable revenue. Hence they should work
on maintaining that kind of revenue. And also table 18 reveals that majority of the respondents
being on agree and strongly agree reflect that Equity bank Wandegeya is offering enough
products though a small percentage seems to disagree. Hence the bank should continue offering
those products and also find out why there is a percentage who disagrees. Majority of the
respondents understood the measures of performance especially the staff and showed that the
bank is performing well. Most of the staff and the customers indicated that the bank’s
profitability level is favorable, the revenue generated is favorable and the products offered are
enough.
5.1.3 Relationship between marketing of loans and performance of equity bank Wandegeya
branch
Findings from table 25 shows that marketing has indeed improved loan extensions since a
majority agreed and strongly agreed though there was a small percentage that was uncertain.
Hence Equity bank Wandegeya should keep marketing their loan so as to improve no the
extensions and also work out a way of informing their customers on how marketing is affecting
52
loan extensions. Table 27 also shows that majority of the responses were on strongly agree and
agree showing that the bank has received more clients due to good performance though some
respondents were uncertain. Hence Equity bank Wandegeya should maintain this level of
performance so as to increase on their clients and work on a mechanism of keeping their
customers informed on increase in clients due to favorable performance. Additionally table 26
shows that majority of the responses being on strongly agree and agree shows that performance
in terms of loans has improved though there is a small percentage that was uncertain. Hence
Equity bank Wandegeya should maintain that improved performance in terms of loans and
inform their customers more on the performance in terms of loans. Majority of the respondents
consisting of the staff and customers of the bank agreed that there exists a relationship between
marketing of loan services and performance of Equity bank Wandegeya. This was evidenced by
their response regarding how marketing has improved loan extensions to which they agreed. The
other indicator of the relationship is improved performance in terms of loans due to marketing
and also increase in clients due to marketing which eventually translates to improved
performance.
5.2 CONCLUSION
From the findings of the study, it has been established that marketing of loan services has a great
effect on the performance of Equity bank Wandegeya bank and also to other bank a well.
Marketing has enabled the bank to reach more clients and also sensitize the public on the
existence of the bank and the products that they offer. This has improved performance and made
Equity bank a higher ranking bank.
5.3 RECOMMENDATIONS
Basing on the study finding, the following recommendations are forwarded;
The bank should conduct research on other possible marketing techniques that cost less than the
ones currently in use. They should also come up with techniques that can reach more people in a
short period of time at the same time covering more bases.
The bank should also come up with better channels of communications with their customers to
ensure that they are well informed on the bank’s current affairs and so that if a new idea or
product is introduced the customers can get to know about it in the shortest time possible.
53
The bank should also come up with a system of idea generation from customers who may be
having very good ideas on marketing techniques but have no way of communicating them to the
bank. The bank should also continue marketing even after acquiring new clients so as to retain
them for a long time.
5.4 AREAS FOR FURTHER STUDY
Having researched on the topic marketing of loan services and performance of Equity bank
Wandegeya, the researcher is of the view that further study should be done on the growth of
marketing techniques since the market conditions keep changing this will help develop the
marketing departments for the banking sector of Uganda
Further study should also be done on marketing for already existing customers so as to retain
them for a long time not just as a one time customer.
Research should also be done on ways of communicating better with customers so that they are
well informed on the importance of marketing and other banking aspects to avoid uncertainties
and mis-information.
Research should also be done on the rapidly changing marketing conditions so as to implement
marketing techniques that are relevant to the market. Also the trend of change in marketing
conditions should be established so as to determine for how long a marketing technique remains
relevant.
54
REFERENCES
AMFIU (2004) A study on governance needs of Uganda financial institution Kampala. MK.
Publishers (U) LTD
Elliot (1997). The Oxford Compact Dictionary and Thesaurus. United Kingdom: oxford
University Press.
Equity bank financial statements prepared by the bank’s certified accounting department
Evelyn Ehrlich (2004) The financial services marketing handbook Tactics and techniques that
produce results. Journal of Financial Advertising and Marketing. First Edition.
Garber C. (1997) Private investment as a financing source for microcredit. The north- south
centre, University of Miami.
Gardner D. C. (1996) corporate credit risk, Fair place financial publishing place London.
Middleton T. C. (1988) Marketing in travel and tourism.
Hartmut S.(1997) Micro finance for the poor. Development seminars.
Helen, V. Coult (1990). Business calculations for Bankers, Great Britain; Pitman
Publishers
Helen, V. Coult (1990). Business calculations for Bankers, Great Britain; Pitman
Publishers
Juuko S. (2006) Exports say banking sector on the rebound. New vision Tuesday January 31 st pp
39
Kansiime E. (1996) The role of commercial banks in the mobilization and allocation of resourses
in Uganda , The Uganda banker Vol. 1 March pp 23-28
Kasibante (2001) Interest rates for the micro finance banker Vol. 1 isue june 2001 pg. 26
Kagwa P. (2003) Finance and institutional loan performance in Uganda Accouting and finance
Makerere University Kampala.
Kaplan and Norton D. (1992)Measures that drive performance. Havard business reviewJan- feb
1992.
Kotler P. (1984) Marketing management: analysis, planning and control. Prentice-hall, Inc.
Englewood cliffs, N.S. 07632 Third Edition
Klein J.(1998) Money and the economy Harcourt Brace Jovanoviach inc.
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Muyonga M. A. (1997) Uganda Commercial bank non-performing loans: the role of the lending
process. Makerere University, Faculty of commerce Kampala.
Musabe K. (2004) Developing marketing techniques. Makerere University.
Martin J. (1996) Managing Credit for the rural poor . Lesson from Grameen Bank
Oola P. (2002) Good governance of public and private financial institutions the Uganda
Accountants News letter june 2002 pg. 68
Okumu and Matovu (1996) Credit Accessibility to the rural . EPRC publication.
Ochieng (1998) Commercial banks failure ,caes and remedies .The Uganda banker 6,4
Pandey I. M. (1997) Financial Management Vikas publishing 7th edition New Delhi
Phillip Kotler (1980) Marketing management. Prentice-hall, Inc. Englewood cliffs, Forth Edition
Phillip Kotler (1983) Principles of marketing. Prentice-hall, Inc. Englewood cliffs, N.S. 07632
Second Edition
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Slasches C. (2000) Review of the Uganda Commercial Banking sector Capital markets Journals
Vol. 4 pp 6-8
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Software Research Tool (2008). Accounting Software Evaluations and Comparison.
UNDP (1997) Micro start Aguide for planning, starting and managing a micro finance programe
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The life of Africa Foundation Uganda.
Van House James .C (1989), Financial Management and Policy. New Jersey , Prentice Hall Intl.
Eighth Edition
Van House James .C (1998), Financial Management and Policy. New Jersey , Prentice Hall Intl.
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by John Wiley and sons, Inc. Hoboken, New Jersey Third Edition.
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Webster L. (1996) World bank lending for small scale enterprises. World Bank Technical paper.
APPENDIX I
MAKERERE
UNIVERSITY
QUESTIONNAIRE
TOPIC: Marketing of loan services and performance of Equity bank Wandegeya branch.
(To be filled by the staff)
Dear Sir/ Madam,
My name is Kaberi Molly Wanjiku a forth year bachelor of commerce student finance option
Makerere University. Registration number 08/K/16596/EXT, Student number 208018137. Am
conducting research under the named topic which this questionnaire seeks information on.
Information acquired will purely be used for academic purposes only and will be treated with the
highest degree of confidentiality. I kindly request you to spare a few minutes of your time and
answer the questions provided. Your cooperation will be highly appreciated. Thank you.
Tick in the appropriate answer or fill in the spaces provided below
SECTION A: PERSONAL INFORMATION
1. Gender
a) Male
b) Female
2.
a) 20-30
b) 31-40
Age
c) 41-50
d) Above 50
3. Marital status
a)Married
b) Single
4. Education level
a)Post graduate
b) First degree
c) Diploma
d) Others specify………
5. From the following categories of respondents, tick what is appropriate.
57
Respondents
Top
Marketing
Internal control Attendants
management
department
department
Tick
SECTION B: MARKETING OF LOAN SERVICES.
6. What marketing techniques are used in your bank?
a) Marketing mix
b) Market segmentation
d) All of them
e) Non- of them
c) Branding and positioning
f) Others specify……………
7. What are the effects of marketing loan services?
a) increased loan extensions
c)increased cash flow
b) increased customer base
d) increased profitability
e) others specify………………
8. How often are loan extensions reviewed?
a) Monthly
b) Semi-annually
c) Annually
d) Not sure
e) Others specify……………
9. Who is responsible for reviewing loan extensions?
a) General Manager
b) Finance manager
c) Accountant
d) Others specify…………
10. What systems are normally carried out in monitoring accounting systems?
a) Cash accounting systems of accounting
b) Single entry system of accounting
c) Double entry system of accounting
d) Others specify…………
58
SECTION C: PERFORMANCE
Kindly tick only one option per question in the boxes provided.
Performance
Strongly
Agree
Uncertain
agree
Disagree
Strongly
disagree
11. The
profitability of the
bank is favorable
12. Revenue
generated by
Equity bank is
favorable.
13. The bank
offers enough
products to
customers in terms
of loans
14. Equity bank
serves a wide
range of the
market share
15. The cash
inflow and out
flow is favorable
giving the bank
reasonable
59
liquidity levels
SECTION D: RELATIONSHIP BETWEEN MARKETING OF LOAN SERVICES AND
PERFORMANCE OF EQUITY BANK WANDEGEYA BRANCH
Kindly tick only one option per question in the boxes provided.
Relationship between
Strongly
marketing of loan
agree
Agree
Uncertain Disagree
Strongly
disagree
services and
performance
16. Marketing has greatly
improved loan extension
17. Performance in terms
of loans has greatly
improved due to
marketing
18. New clients have been
received due to good
performance
19. The profitability level
of Equity bank has Greatly
improved
20. The efficiency of
Marketing loans has
consistently improved
21. Loan extensions
consistently increased
60
SECTION E: OTHER FACTORS AFFECTING BOTH MARKETING OF
LOANS AND PERFORMANCE OF EQUITY BANK WANDEGEYA
Kindly tick only one option per question in the boxes provided.
Other factors affecting
Strongly
both marketing of loans
agree
Agree
Uncertain
Disagree Strongly
disagree
and performance
22. Government intervention
has affected marketing loans
and therefore performance.
23. Increase in Tax rates has
led to increase in interest rates.
24. Registration has led to
credibility of the bank hence
long-term loan clients.
25. Favorable Economic
conditions have improved the
demand for loans.
26. Recession and depression
has lead to increased interest
rates leading to reduced loan
extensions.
THANK YOU
61
APPENDIX II
MAKERERE
UNIVERSITY
QUESTIONNAIRE
TOPIC: Marketing of loan services and performance of Equity bank Wandegeya branch.
(To be filled by the customers)
Dear Sir/ Madam,
My name is Kaberi Molly Wanjiku a forth year bachelor of commerce student finance option
Makerere University. Registration number 08/K/16596/EXT, Student number 208018137. Am
conducting research under the named topic which this questionnaire seeks information on.
Information acquired will purely be used for academic purposes only and will be treated with the
highest degree of confidentiality. I kindly request you to spare a few minutes of your time and
answer the questions provided. Your cooperation will be highly appreciated. Thank you.
Tick in the appropriate answer or fill in the spaces provided below
SECTION A: Personal information
1.
Gender
a) Male
b) Female
2.
Age
a) 20-30
b) 31-40
c) 41-50
d) Above 50
3. Marital status
a)Married
b) Single
4. Education level
a)Post graduate
b) First degree
d) Others specify………
5. how long have you been a client of Equity bank Wandegeya branch?
a) Less than 2 years
62
b) 2 to 5 years
c) Diploma
c) 5 to 10 years
d) above 10 years
SECTION B: MARKETING OF LOAN SERVICES.
6. What marketing techniques are used in Equity bank?
a) Marketing mix
b) Market segmentation
d) All of them
e) Non- of them
c) Branding and positioning
f) Others specify……………
7. What are the effects of marketing loan services?
a) increased loan extensions
b) increased customer base
c)increased cash flow
d) increased profitability
e) others specify………………
8. How often are marketing techniques reviewed?
a) Monthly
b) Semi-annually
d) Not sure
e) Others specify……………
c) Annually
9. How is marketing of loans done?
a) Orally
b) Advertisement
c) Door to door marketing
d) Others specify…………
10. What do you think should be done to encourage Equity bank to market their loans more?
a) Evaluating the benefits of marketing
b) Targeting a larger market share
c) Recognize marketing as a competitive tool
d) Others specify…………
63
SECTION C: PERFORMANCE
Kindly tick only one option per question in the boxes provided.
Performance
Strongly
Agree
Uncertain
agree
Disagree
Strongly
disagree
11. The
profitability of the
bank is favorable
12. Revenue
generated by
Equity bank is
favorable.
13. The bank
offers enough
products to
customers in terms
of loans
14. Equity bank
serves a wide
range of the
market share
15. The cash
inflow and out
flow is favorable
giving the bank
reasonable
liquidity levels
64
SECTION D: RELATIONSHIP BETWEEN MARKETING OF LOAN SERVICES AND
PERFORMANCE OF EQUITY BANK WANDEGEYA BRANCH
Kindly tick only one option per question in the boxes provided.
Relationship between
Strongly
marketing of loan
agree
Agree
Uncertain Disagree
Strongly
disagree
services and
performance
16. Marketing has greatly
improved loan extension
17. Performance in terms
of loans has greatly
improved due to
marketing
18. Clients have increased
due to good performance
19. The efficiency of
Marketing loans has
consistently improved
20. Loan extensions
consistently increased
65
SECTION E: OTHER FACTORS AFFECTING BOTH MARKETING OF
LOANS AND PERFORMANCE OF EQUITY BANK WANDEGEYA
Kindly tick only one option per question in the boxes provided.
Other factors affecting
Strongly
both marketing of loans
agree
Agree
Uncertain
Disagree Strongly
disagree
and performance
21. Government intervention
has affected marketing loans
and therefore performance.
22. Increase in Tax rates has
led to increase in interest rates.
23. Registration has led to
credibility of the bank hence
long-term loan clients.
24. Favorable Economic
conditions have improved the
demand for loans.
25. Recession and depression
has lead to increased interest
rates leading to reduced loan
extensions.
THANK YOU
66
APPENDIX III
MAKERERE
UNIVERSITY
INTERVIEW GUIDE
TOPIC: Marketing of loan services and performance of Equity bank Wandegeya branch.
(To used by the researcher)
a) What are the techniques of marketing loan services in equity bank Wandegeya branch?
b) What is the performance of equity bank Wandegeya branch in terms of loans?
c) What are the effects of marketing loans on performance of Equity
bank Wandegeya branch?
67
68
APPENDIX IV
69