ABSTRACT
The banking sector in Ghana has undergone tremendous change
over the years as a result of keen competition among the players. Banks are
constantly adopting dynamic customer service practices and strategies in order
to retain customers. Intense competition has led to decrease in firm’s profit,
switching customer behaviour and spreading negative word of mouth if services
do not meet client’s expectation resulting in the need to investigate customer
satisfaction in retail banking within Dunkwa Catchment area. The study focused
on assessing determinants of customer satisfaction in retail banking at Dunkwa,
Ghana. The survey was conducted on a total of 500 respondents out of
which 406 responses were received representing 81.2% response rate. The study
collected data using questionnaires. The study adopted convenience and
purposive sampling technique in selecting customers. Statistical Package for
Social Sciences software was used to run the descriptive statistics. Regression
analysis was used to estimate the relationships among variables. Findings
revealed that, employees at the Retail Banking are always ready to response
quickly to customers’ needs and further assist customers with any challenges
they encounter during the banking hours. The findings further revealed that
high services quality and standards are very crucial to them and therefore
prepared to pay any amount to receive or enjoy the quality services. Competitive
products are most often than not considered to be of high quality with
increased performance. The study records a positive impact of sympathetic
staffs and operational hours on customer satisfaction. Sympathetic staffs and
operational hours are statistically significant and are making a unique
contribution to the prediction of customer satisfaction. The study recommended
improvement on the banks system of service delivery to its customers, most
especially the customer service practices, constantly engagement of both the
internal and external customers of the bank in order to achieve optimum
satisfaction as well as other stakeholders in decision making so as to identify
their pressing needs.
CHAPTER
1
INTRODUCTION
1.1 Background of
the Study
One of the important theoretical issues for most consumer
researchers and marketers is Customer satisfaction. To be at the highest peak
of success in this modern world of business is to give significance to customer
satisfaction. Customer satisfaction has become one of the corporate goals as
most firms strive for quality services to match their quantity on demands. For
some years now, Ghana’s banking industry have gone beyond transactional to
customer relationship management techniques with the aim of attracting and
nourishing long-term dealings with their clients. According to Owusu-Frimpong
(2008) and Blankson (2009), in spite of these strategic implementations, it is
difficult to accomplish customer loyalty due to forces including the
introduction of information technology, globalization, deregulation and
continual changes to state laws which have brought extreme competition to the
banking sector.
According to most research scholars, in some cases where a
retail bank tries to increase its client retention rates by 5% also increases
its gains upwards to 85% (Choudhury, 2015). Enhancing customer satisfaction,
and its retention rates, can come from a variety of services performed by the
bank. Empirical research suggests that massive advantages in customer
satisfaction are likely to be derived from enhancements in service quality,
service features and adequate handling of client complaints (Ashill et al)
Firms including banks that have a loyal customer base established, have their
rewards well documented. (Ali & Raza,2015). Basically, they bring to light
the understanding that increased customer loyalty reduces costs of servicing a
firm’s clientele, marketing expenses and also improves businesses from the
established client base at improved profit. These profits are mostly found in
the retail banking sector (Consuegra et al). A retail bank decides to minimise its services cost by
retaining customers that is accounts do not have to be opened and closed, and
credit ratings do not have to be established. A retail bank must gain the
knowledge of the financial matters and essentials of its customers and thereby
allowing operative and effective goals as a way of increasing loyalty gains and
also the prospect to sell existing and new products and services well to
customers.
This report is set to unravel the determinants of customer
satisfaction in retail banking especially in the remote areas where they are
less privilege of infrastructure and other modern facilities to enhance their
way of life. The remote area for this research was Dunkwa-on-Offin in the
Central Region of Ghana where I work. Prior to that, it outlines a set of
secondary literature which will be used to critically analyse the results for a
more appropriate and coherent discussion of the findings (result). The sample
participants (n=120) solely focused on a number of retail banking clients
including that of commercial banks, savings and loans as well as rural banking
clients in other to achieve the aim and purpose of this research. This is a
quantitative research and it will utilizes the use of an ethnographic approach
which includes interviews conducted with each recruit by various means, mainly
a face-to-face mode within a 20 to 30 days period. Such approach provided a
more voluntary way for unveiling the important of merit of each participant,
hence providing a more detail and in-depth results and findings (Hesse-Biber,
2010). Particularly, this research aims to investigate the role of service
quality, service features, service problems and situational factors as
indicators of customer satisfaction and future intentions with their main
financial institution. The results aims at provide retail bank managers with a
better understanding of the drivers of customer satisfaction in this service
industry.
Despites Gwinner et al. (1998) calls for more research in
the areas of customer perceptions and satisfactions, there are but a small
number of empirical studies in retail banking including the works of Colgate et
al. (2005) and Consuegra et al. (2006). Currently, with the increased number of
retail and commercial banks in the country and a high competitive market
sector, most of these new banks enter into the market as a result of
acquisition from nonperforming banks with moderate asset range especially in
the case of Amalgamated bank been acquired by Bank of Africa. Many questions
are being raised as to what causes the bad performance and folding of these
banks. As previously mentioned, the significance of customer satisfaction and
customer retention in strategic development for a market oriented and customer
focused firm cannot be underestimated. If a firm, in this case a bank, decides
to adopt a more customer oriented approach in its business it is believed to
succeed progressively and not think of folding. In this case, many of these
banks in the country end up establishing branches in urban and semi-unban
communities and not focusing on most strategic rural areas such as Dunkwa, a
gold mining town. These banks can provide reasons such as high cost
effectiveness, longer periods of break-even as well as less patronising of
other banking services and products as reasons as to such decisions but
technically ignore to set their strategic operations around the needs of their
clients in such remote areas. In order to meet such needs, research of this
nature needs to be conducted.
In order to achieve
success in this study, the following objectives need to be achieved
i.
Examine the factors and their
relative importance that influence client’s decisions to switch among banks in
Dunkwa-on-Offin.
ii.
Identify key factors which lead to
high customer satisfaction and the ways in which they could be improved in the
retail banking in Dunkwa-on-Offin.
iii.
Evaluate the effect of customer
service practices in retail banking on customer satisfaction
1.4 Research
Questions
The following
questions must be answered and critically analysed in order to achieve the main
objectives of this research.
i.
What are the customer satisfaction
determinants that influence client’s decision in maintaining their banks
without switching among them in Dunkwa?
ii.
Which key factors contribute to high
customer satisfactions in retail banking and how could they be improved?
iii.
What are the effects of customer
service practices in retail banking on customer satisfaction?
1.5 Significance of
the Research
The significance of this study lies on relationship
marketing, quality of services and consumer satisfaction as the essential
fundamentals for the accomplishment of financial businesses facing increasing
competitive and gradual market dynamics. Despite the fact that previous
researches have delivered prior knowledge in relation to the nature and
significance of banking relationships from a customer’s point of view (Narteh, 2013), there are
some vital questions which still remain unanswered. In this day and age, most
financial institutions belief that a meticulous customer service will serve to
be more significant to consumer satisfaction rather than lower prices in areas
of businesses where there is a direct relationship between companies and their
clients in particular. The marketing literature has recognized the importance
of developing and maintaining such enduring relationships with customers of
service (Narteh, 2013). Also, a review of literature has revealed that studies
focusing on relationship marketing, service and satisfaction already exist.
Nonetheless, there is an essential amount of lack of
practical and empirical works analysing the actual consequences for individual
consumers of maintaining long-term relationships with service providers. In
addition, a review of the literature has also shown that there are only a few
studies which have dealt with business efforts to establish stable and
long-lasting relationships with consumers, as well as with the connection
between relational benefits and customer satisfaction which regular customers
enjoy. Despite having a lot of research been carried out on the determinants of
customer satisfaction in retail banking and how companies can use them to
influence consumer satisfaction this study also contribute immensely towards
literature for customer satisfaction. As important as this study is, it will
contribute to both theory and practice.
These can be seen
from the following:
Firstly, the research will help Banks operating in
Dunkwa-on-Offinin improve their customer satisfaction. Secondly, this research
will serve as a guide for potential entrepreneur and organizations that want to enter the banking to know the
value of determinants of consumer satisfaction.
Thirdly, it will be relevant for academic purposes. The
study will serve as a base for further research for students, consultants,
researchers and others who are interested in studying similar topic. It will
also serve as an academic reference in marketing and management disciplines.
Finally, it is more significant because the world is going
towards the global competition and businesses try to understand the
determinants of customer satisfaction in retail banking on different variables
like cost, cycle time, service, and quality. By understanding determinants of
customer satisfaction, organizations would re-direct their activities towards
achieving their objectives in a meaningful manner.
1.6 Scope of the
Study
The focus of the study is on determinants of customer
satisfaction in Retail Banking: A Quantitative perspective at Dunkwa-on-Offin,
Ghana. The research was limited to residents of Dunkwa-on-Offin, Central Region
of Ghana.
1.7 Overview of
Research Methodology
The population of this study comprises of residents of
Dunkwa-on-Offin within the Central Region of Ghana. For the purpose of this
study, 500 customers were selected from Dunkwa-on-Offin. The study will rely on
primary sources of data. Data was collected from respondents through
administering of questionnaires. The study adopted convenience sampling method
to select customers. Descriptive analyses including regression analysis, mean and standard deviation and simple
percentage were used in analyzing the data which was presented in tables and charts.
1.8 Limitation of
the Study
Some of the questionnaires were not received; 500
questionnaires were distributed but in all 406 questionnaires were collected.
Some of the respondents were not willing to participate to respond to the
questionnaires. There was difficulty in gaining the exact population of the
residents of Dunkwa and its environs.
1.9 Organisation of
the Study
The study is divided into five (5) chapters. Chapter One captures the background and introduction of
the study, problem
statement, objectives of
the study, research
questions, significant of the
study, summary of research methodology, scope of the study, limitation of the study and organization
of the study. Chapter Two reviews
existing literature on marketing channels and consumer satisfaction. Chapter Three discusses the methodology used to accomplish the
study. Chapter Four presents research analysis, findings and discussion. Chapter Five looks at the
summary of findings, recommendations and conclusion of the study.
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