1.9        Background to the Study

In Nigeria, the banking industry has been experiencing cyclical movements in its development patterns right from independence in 1960 to date. As a result of the importance of the banking industry in the economic development of the country, successive governments in the nation came up with different policies, programmes, regulations and strategies in the form of financial guidelines with the aim of improving the performance of the industry. These guidelines include: regulation, deregulation, liberalization, globalization, paging of interest rate, consolidation and the like.

In essence, the relevance of any business organization lies in its ability to develop new product in line with the needs, wants, interests and or aspirations of the society or community within which it operates. However, changes in the consumer taste, preferences and aspiration, as well as technological innovations, open market economy, challenges of globalization coupled with the new banking consolidation policy aimed at sanitizing the fragmented and crowed banking industry in the country, have brought in discipline and orderliness in the sector. However, there is no guarantee that a successful product today will remain relevant or success in the near future.

However, with deregulation and liberalization policies, the central bank of Nigeria was able to reduce the number of small indigenous banks from 89 to about 25 mega-sized banks, solely to provide a wide range of new product lines, including retail and whole sale banking as well as project financing and other investment services. With stiff competition in the industry, banks must do their best to meet the challenges; hence they must come up with projects or programme that includes: researching new products and or services in order to prosper because it is risky for banks to rely only on their existing products in the face of ever changing technological innovations.

Despite all the financial regulations and policies in the industry, its performance or contributions to the economy and customer satisfaction is still quite discouraging and for banks to grow, they must, from time to time, produce new products that lead to customer satisfaction vis-à-vis huge profit attainment within the industry. Sanusi, (2010) gave five measures of enhancing quality of banking in Nigeria. These measures are industry remedial programmes to fix the key causes of the crises; implementation of risk based supervision; reforms to regulation and regulatory frame work; enhancing provision for consumer protection; and internal transformation of Central Bank of Nigeria (CBN).

The survival and growth of commercial banks in Nigeria depend solely on their ability to develop new product and or service in order to cope with the global market challenges, but in the process, care must be taken in order to avoid producing “dogs” which are neither profitable nor satisfying customer needs.

1.10     Statement of the Problem

The introduction of Structural Adjustment Programme (SAP) in 1986 led to the proliferation many of commercial banks in Nigeria. As pointed by Nigerian Deposit Insurance Corporation (2009) that by then there were 89 active banks. The presence of these banks led to intense competition among different banks within the industry (both old and new generation ones). Also with the coming of the new generation banks into the scene, their new and sophisticated products posed a challenge for the old generation banks to adopt to new banking method in order to survive and grow in the new competitive environment.

Competition in the industry makes the old system of “Arm-Chair” banking impossible where bankers normally sit waiting for customers to come. For banks to survive now, they must embrace the “principles of marketing” if at all they want to survive and remain relevant in industry. They must encourage, persuade, motivate, attract and influence both existing and potential customers. They must engage into different promotional efforts such as personal selling, advertising, sales promotion, publicity, mass selling, public relation, branding, packaging and offer variety of products in order to capture large share of the market.

As a result of severe competition, marketing is currently occupying a prominent position in the Nigerian commercial banks where every banker is a “marketer”. This is the reason that led this study of the Assessment of New product development as a strategy for sales growth in UBA Plc, with the aim of finding out how new product development may lead to sales growth in the banking industry of Nigeria by taking UBA (Nigeria) Plc as a case.

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