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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) ii 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. iii 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. iv 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 vi 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 vii 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 ix 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. x 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 xi 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 1 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 2 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. 3 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. 4 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. 6 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. 7 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. 8 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). 9 10 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 11 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). 12 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) 13 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. 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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