CHAPTER 1

INTRODUCTION

1.1 Background of the Study

Within service marketing literature, the term service quality has experienced a great attention by many scholars and practitioners (Glaveli, and Liassides, 2007). So far, International Consumer Movement is an organized social movement that attempt to sustain customer protection through defending the consumers’ rights, particularly when these rights are violated by the activities of firms that provide products or services to the clients’. Service quality has been widely discussed since its inception in term of getting positive results; due to its important role of firm’s performance. According to Zeithaml (1988) perceived quality is defined as: “Consumers’ appraisal of a product’s overall excellence or superiority” Previous researchers agreed that perceived service quality can be recognised as matching the customer service actual performance perceptions with the service performance expectations (Gronroos, 2006). Customers’ expectation in the post-consolidation era of the Nigerian banking sector is very high. This is justified by the belief that the exercise had crowded out incompetent banks and left only those ones which are able to compete in both domestic and global marketplace. However, in recent times, most Nigerian banks have fallen short of this expectation. Customers have experienced challenges ranging from delay transaction notification, stock out, non-availability of staff at service points, unprofessional conduct or rude behaviours by the staff of the banks, poor standard of records or improper information, failed promises among others.

As Nigerian banks are venturing on global expansion and many foreign banks are looking at Nigeria, the banking system is all set to further evolve to a higher level. Since the financial sector reforms, banks are functioning increasingly under competitive pressures emanating from within the banking system, from non-banking institutions and from the domestic and international capital markets. In this era of intense competitive pressures, it is imperative that the banks maintain a loyal customer base. In order to achieve this and improve their market and profit positions, many retail banks are directing their strategies towards increasing customers’ satisfaction and loyalty through improved service quality.

In a fiercely competitive market, non-price factors like customer service become more important (Kotler, 2003). Hence, it is desirable for banks to develop a customer-centric approach for future survival and growth. The awareness has already dawn that prompt, efficient and speedy customer service alone will retain the existing customers to continue and induce new customers to try the services offered by a bank. Nigerian banks have already taken lot of initiatives in this regard. Further, it has been realised that Nigerian banks have miles to go to capture the recent trends and to be at par with the Western counterparts. Hence this study seeks to investigate the relationship between quality service delivery initiatives on customer patronage of Union Bank PLC, Bori.

 1.2 Statement of the Problem:

The inability to deliver quality services is a threat to investors in a business. Almost every Nigerian bank encounters similar problem in meeting customers’ expectation of services and customer satisfaction. For instance, the issue of delay in posting transactions such as money transfer and payments made between customers is a major problem that customers of Nigerian banks have been made to experience. In most cases, the customer hardly receives the notification that an account has been credited or debited immediately. The account holder may have to wait endlessly before seeing the notification or in worse cases, may have to visit the bank to confirm such transaction.

Also, the long queues and huge crowds in the banking halls can be highly devastating and discouraging, especially when the weekend is near. Most times, these long queues are as a result of the breakdown of the networks on the computers used for operation. Sometimes, it occurs as a result of the cash officers pushing duties to one another, as to who is to attend to the customer or not. Consequently, there is a problem of quality service delivery initiatives and customer patronage. One of the major requirements for banks’ efficiency is to match their service facilities with the needs of customers without much delay but in most Nigerian banks today the reverse is the case. Most customers complain of poor service quality delivery, poor customer service response, unreliable service and poor network. However, the common experience in Nigeria is that most banks do not have the facilities and capacities to service the number of customers without much delay on the part of the customers.

This situation has led to poor efficiency in banking service delivery in Nigeria and has thus caused low customer satisfaction. Many Nigerian banking public has thus wondered when the endless desires of spending the least possible time for banking transactions will be met by banks in the country. Although one of the strong objectives of banks is to attract, retain customers and at the same time optimize profit, however, profit maximization in banking industry is a function of the management’s ability to provide efficient services to customers at little or no time wastage. It is against the above backgrounds that necessitate the desire to undertake this research, to systematically examine the relationship between quality service delivery initiatives and customer patronage of union Bank Plc in Bori.

1.3 Objectives of the Study

The purpose of this study is to examine the relationship between quality service delivery initiatives and customer patronage of Union Bank Plc in Bori, Khana LGA, Rivers State.

In specific terms, the study shall examine:

1.       The relationship between service reliability and customer patronage of Union Bank Plc in Bori.

2.       The relationship between service assurance and customer patronage of Union Bank Plc in Bori.

3.       The relationship between service responsiveness and customer patronage of Union Bank Plc in Bori.

1.4 Research Questions

The following research questions were stated. To what extent does:

1.       Service reliability influence customer patronage of Union Bank Plc in Bori?

2.       Service assurance enhance customer patronage of Union Bank Plc in Bori?

3.       Service responsiveness play a significant role in enhancing customer patronage of Union Bank Plc in Bori?

1.5 Research Hypotheses and Operational framework:

In course of this research, the following hypotheses were formulated:

HO1: There is no significant relationship between service reliability and customer patronage of Union Bank Plc in Bori.

HO2: There is no significant effect of service assurance on customer patronage of Union Bank Plc in Bori.

HO3: Service responsiveness does not influence customer patronage of Union Bank Plc in Bori.

1.6 Significance of the Study

From the foregoing, it is believed that the completion of this work will provide empirical material on the relationship between quality service delivery initiatives and customer patronage. Also, the work is believed will serve as a stepping stone for future researcher as it will provide useful materials for their studies.

In another development, the result of this study will also guide marketers on the relationship between quality service delivery initiatives and customer patronage of Union Bank Plc. This simply means that it will enable them to develop strategies that can lead to customer’s loyalty which will enhance the Nigerian banking sector performance.

 1.7 Scope of the Study:

Content Scope: This study is delimited in two perspectives; firstly it is delimited contextually to examining the relationship between service quality delivery and customer patronage. The independent variable, quality, service delivery has assurance, reliability and responsiveness as its dimensions while the measure of customer patronage is Patronage intention, Patronage Action and repeat purchase.

Geographical Scope: The study is made to concentrate on Union Bank Plc, Bori.

Unit of Analysis: The unit of analysis for this study is both senior and junior staff of Union Bank PLC in Bori at the time of the study.

1.8 Limitations of the Study

In course of carrying out this research, the researcher met with a lot of constraint. Among these constraint is: The duration for which this research was expected to be completed was too short.

Secondly, the cost in carrying out this research work act as a barriers as we were not financially buoyant to carry out all investigation.

Finally, assembling the relevant materials needed this work was a problem. It is difficult due to the fact that some of materials are not available.

1.9 Definition of Terms

Sales volume: Sales volume is the number of units sold within a reporting period.

Profit Margin: Profit margin is part of a category of profitability ratios calculated as net income divided by revenue, or net profits divided by sales.

Customer retention: Customer retention refers to the ability of a company or product to retain its customers over some specified period.

Service quality (SQ): It a comparison of perceived expectations of a service with perceived performance.

Customer Patronage:  It is the share of an individual consumer’s expenditures in an industry or retail sector that is spent at one company.

Responsiveness: It is the quality of reacting quickly and positively.

Service assurance: It is the application of policies and processes Provider to ensure that services offered meet a pre-defined service quality level for an optimal experience.