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THE INFLUENCE OF ADVERTISING AND PERSONAL SELLING ON NEW PRODUCT OF COMMERCIAL BANKS

CHAPTER ONE

INTRODUCTION

1.1 Background of the Study

Advertising and personal selling are critical components in the marketing strategies employed by commercial banks, especially when introducing new products. In today’s competitive banking environment, the efficacy of these strategies can significantly impact a bank's market share and profitability. Advertising encompasses various channels, including print, television, online media, and social media platforms, aimed at creating awareness and promoting new products. Personal selling, on the other hand, involves direct interaction between bank representatives and potential customers, providing a personalized approach that can enhance customer relationships and foster trust.

The banking industry is experiencing rapid changes driven by technology, customer preferences, and regulatory shifts. These dynamics compel banks to adopt innovative marketing strategies to attract and retain customers. According to Baker (2020), effective advertising not only communicates product benefits but also shapes consumer perceptions and attitudes towards the brand. This aligns with the assertion by Kotler and Keller (2019) that advertising plays a pivotal role in informing potential customers about new products and persuading them to consider these offerings.

The introduction of new banking products, such as digital accounts, mobile banking apps, and financial advisory services, necessitates strategic advertising and personal selling efforts. Research indicates that well-executed advertising campaigns can lead to increased product awareness and trial among consumers (Smith, 2021). For instance, a study by Choudhury and Jahan (2022) found that banks that invested in comprehensive advertising strategies experienced a 30% increase in new account openings compared to those that relied solely on traditional word-of-mouth marketing.

Personal selling complements advertising by providing a face-to-face opportunity to address customer inquiries, demonstrate product features, and create a connection that can significantly influence purchasing decisions. As noted by Johnson et al. (2019), personal selling can help mitigate the perceived risk associated with new banking products, as customers often feel more secure making decisions based on personalized interactions rather than impersonal advertisements.

In the context of commercial banks, the influence of advertising and personal selling is particularly pronounced. Banks are increasingly utilizing digital marketing strategies, integrating social media and mobile marketing to reach tech-savvy consumers. According to a report by the Global Banking Association (2023), nearly 70% of new bank products are now marketed through digital channels, underscoring the shift towards online engagement.

Moreover, personal selling is evolving in response to technological advancements. For instance, banks are leveraging customer relationship management (CRM) systems to enhance the effectiveness of their sales teams, enabling them to tailor their approach based on individual customer data and preferences (Davies & Smith, 2020). This personalized approach not only improves customer satisfaction but also boosts conversion rates.

The interplay between advertising and personal selling in the banking sector illustrates a crucial aspect of modern marketing strategies. Effective integration of these two approaches can lead to significant competitive advantages, as evidenced by the success stories of banks that have strategically aligned their marketing efforts (Khan, 2022). However, challenges persist, particularly in measuring the effectiveness of these strategies and understanding their long-term impact on customer loyalty and brand equity.

In summary, the influence of advertising and personal selling on new products of commercial banks is a multifaceted topic that warrants comprehensive investigation. Understanding how these strategies interact and contribute to the success of new product launches can provide valuable insights for banking professionals and marketers alike.

1.2 Statement of the Problem

Despite the critical role of advertising and personal selling in introducing new products, many commercial banks struggle to effectively integrate these strategies. This results in suboptimal product awareness and lower-than-expected customer acquisition rates. Moreover, there is a lack of empirical data on how these marketing strategies influence customer perceptions and behaviors in the context of new banking products. Understanding these dynamics is essential for banks to enhance their marketing efforts and improve product success rates.

1.3 Objectives of the Study

The main objective of this study is to determine the influence of advertising and personal selling on new products of commercial banks. Specific objectives include:

i. To evaluate the impact of advertising on customer awareness of new banking products.

ii. To determine the effectiveness of personal selling in facilitating customer adoption of new banking products.

iii. To find out the relationship between integrated marketing strategies and customer satisfaction in the banking sector.

1.4 Research Questions

i. What is the impact of advertising on customer awareness of new banking products?

ii. What is the effectiveness of personal selling in facilitating customer adoption of new banking products?

iii. How does the integration of advertising and personal selling strategies influence customer satisfaction in the banking sector?

1.5 Research Hypotheses

Hypothesis I
H0: There is no significant impact of advertising on customer awareness of new banking products.
H1: There is a significant impact of advertising on customer awareness of new banking products.

Hypothesis II
H0: There is no significant effectiveness of personal selling in facilitating customer adoption of new banking products.
H2: There is a significant effectiveness of personal selling in facilitating customer adoption of new banking products.

Hypothesis III
H0: There is no significant relationship between integrated marketing strategies and customer satisfaction in the banking sector.
H3: There is a significant relationship between integrated marketing strategies and customer satisfaction in the banking sector.

1.6 Significance of the Study

This study is significant for several reasons. First, it provides insights into the effectiveness of advertising and personal selling in the banking sector, which can guide banks in developing more effective marketing strategies. Second, the findings will contribute to the existing literature on marketing in the banking industry, particularly regarding new product introductions. Lastly, the research will have practical implications for banking professionals seeking to enhance customer engagement and satisfaction.

1.7 Scope of the Study

The study will focus on commercial banks operating in [specify the geographical area, e.g., Nigeria], examining the influence of advertising and personal selling on the adoption of new banking products. The research will be limited to products launched within the last two years to ensure the relevance of the findings. Additionally, the study will consider various advertising channels and personal selling techniques used by banks.

1.8 Limitations of the Study

The study may face limitations such as a limited sample size, which may affect the generalizability of the findings. Additionally, potential biases in self-reported data from bank customers could influence the results. Furthermore, the rapidly changing nature of the banking industry may impact the relevance of the findings over time.

1.9 Definition of Terms

Advertising: A marketing communication strategy that involves promoting products or services through various media channels to create awareness and persuade consumers.

Personal Selling: A direct form of communication between a sales representative and a potential customer aimed at selling products or services.

Commercial Banks: Financial institutions that offer a range of banking services, including deposit accounts, loans, and investment products, to individual and business customers.

New Banking Products: Financial services or products that are newly introduced to the market, including digital accounts, mobile banking applications, and credit facilities.

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