Banking Industry : Consumer Behaviour Assignment

Banking Industry : Consumer Behaviour Assignment

This Consumer Behaviour Assignment is based on the banking industry in UAE. This assignment describes the consumer behaviour what they expect and how they can be fulfilled.

Introduction

Customers are the key drivers of the business in today’s dynamic environment. And the business which can understand and satisfy customer can only survive in today’s competitive markets (Brandford, L. 1990). So customer retention has become an important marketing types for the marketers all around the world. According to customer retention-profitability chain model, profitability of the business increases as the customer retention rate for the firm increases.

This report will give modified service quality assessment model i.e. SERVQUAL model and important parameters for determining the service quality will be explored (Kotler, P. 2003). This report will help the commercial banks in UAE to enhance their service to make it best quality in order to attract customers (Boller, G.W. 1991).

Literature review

Consumer Behavior matrix

To understand the consumer behavior in financial product like banking service a matrix has been developed which shows the various consumer behaviours (Boller, G.W. 1992). A consumer behavior matrix has been developed which takes into account two factors which are: Involvement level of the consumer with the product or services and consumer confidence on the seller (Howcroft, B. 2000). The consumer behavior matrix is as given below:

Consumer behaviour index for UAE Banking industry

The above matrix takes into account involvement and consumer confidence as the factor which decides the consumer behavior in badminton industry (Peter, J.P. 1993). This matrix shows the four ideal types of consumer behavior which are as explained below:

  1. Repeat passive: As shown in the matrix above that in this quadrant customers are having low involvement and high customer confidence since the customers are fully aware about the financial products well in advance hence their involvement factor is low and their confidence is high (D.M. 1994),). Due to these customers behaves as the passive customers since they do not think very much while making the repurchase decision since they are satisfied and contended (Price, B. 1991). These customers are also said to be the time saving customer and do not look for alternatives in making a decision about the services (Bateson, J. 1977). These customer shows the bounded rational and brand loyalty for the particular brand they use (Bateson, J.E.G. 1989).
  2. Rationale active: In these of customer both involvement level as well as the confidence level of the customers is high (Berry, L.L. 1983). These customers believe into the competitive markets and hence they always hopeful for some better product available into the market (Bettman, J.R. 1979). Hence before making a purchase these customers looks for the better alternative available into the market. Hence these customers are not considered to be as very brand loyal customers (Betts, E. 1994)). These customer looks for efficiency in terms of cost as they tend to reduce the transaction cost for themselves and buy from the seller who gives more value to them (Bloch, P. 1982).
  3. No purchase: These quadrant customers are having the low confidence and the low involvement level (Richins, M.L. 1983). As the name suggest these customers do not make any purchase decision since they have very low involvement and do not have any confidence with them so they do not make any kind of purchase (Cowles, D. at al 1990). These kinds of customer are also assumed to be as the risk adverse customers.
  4. Rational-Dependent: These customer groups have high involvement level but they are not confident customers (Cannon, J.P. 1997). Though these customers are highly involved but the confidence is low due to the complexity of the decision (Blackwell, R.D. 1968). Hence these customers do not have confidence to make decision and these customers are generally considered to be as the help taking customers (Binks, M.R. 1996). These customers take help from their friends and third party for buying decision so these are said to be as the dependent customers.
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Research objective

The objectives of carrying out this research are as follows:

  1. To find out the factors affecting the customer purchase in banking industry.
  2. To know source of information to customer while deciding a purchase.

Target audience and utility

The target audience for the research carried is the banks which want to know the decision making process of the customer in banking in order to affect the customer buying behavior. After knowing the factors affecting customer buying behavior banks can improve upon these factors in order to make themselves as the choice of customers. Other target audience for the research would be the academicians who are working on the consumer behavior in banking industry (McKechnie, S. 1998). The utility driven from the research will help the banks to know customer decision making factors and process along with those banks will be able to know the source of information customer take into account while making a purchase and banks can use these sources to persuade the customers (Fishbein, M. 1967).

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Research methodology

The current research would be exploratory in nature and will explore for the decision-making criteria’s of the customer and sources of information to consumer. Research will make use of the primary data in order to get the research findings. For collecting the primary data questionnaire would be used in order to get the responses from the customers.

Sampling method

For getting the responses from the customer questionnaire would be used. And this questionnaire would be filled by the banks customers. The sample size taken would be 50 and the non probabilistic sampling would be used in the process.

Questionnaire

Consumer behavior in banking industry

Q.1 do you have a bank account?

Ans

Q.2 what factors you take into account while choosing a bank?

  1. a) Good services
  2. b) Brand name
  3. c) Place convience
  4. d) Interest rate
  5. e) High technology
  6. f) Innovative Products/ Variety of services
  7. g) Others please specify………………………………

Q.3 what all services you are using currently?

  1. a) Saving account
  2. b) Insurance services
  3. c) Net banking
  4. d) Debit, Credit card
  5. e) Mobile banking
  6. f) Mutual funds
  7. g) Others please specify…………………………

Q.4 Do you think a good brand names of the bank affects you choice of the bank?

  1. a) Strongly agree b) Agree c) neither agree nor disagree d) Disagree e) Strongly disagree

Q.5 what factors affects the bank services?

  1. a) Co-operative staff
  2. b) Knowledge of staff
  3. c) Responsiveness of staff in terms of grievance handling
  4. d) Bank environment and physical appearance
  5. e) Others please specify……………………………

Q.6 Rate the following on 1 to 5 scale according to your preferences (where 1 as most preferred and 5 as least).

What factor is important in making decision about choosing bank?

  1. a) Good services …………………
  2. b) Brand name …………………
  3. c) Place convience …………………
  4. d) Interest rate …………………
  5. e) High technology …………………
  6. f) Innovative Products/ Variety of services …………………

Q.7 what are the sources of collecting information about bank before choosing the bank?

  1. a) TV advertisement
  2. b) Newspaper and magazines
  3. c) Friends referrals
  4. d) Online advertisements
  5. e) Website
  6. f) Any other…………………………

Q.8 On what parameters you compare two banks?

  1. a) Service provided
  2. b) Products
  3. c) Brand name
  4. d) Convience provided
  5. e) Others………………………………

Q.9 Rate the following factors according to your preference of information gathering source?

  1. a) TV advertisement
  2. b) Newspaper and magazines
  3. c) Friends referrals
  4. d) Online advertisements
  5. e) Website

Q.10 How you came to know about your bank?

  1. a) TV advertisement
  2. b) Newspaper and magazines
  3. c) Friends referrals
  4. d) Online advertisements
  5. e) Website

Name of respondent…………………………………………

Age………………………. Gender…………………………

Data Analysis

The data gathered from the primary research paper i.e. questionnaire would be analyzed through statistical tool like Excel and at the same time for the qualitative questions analysis content analysis would be done. In order to analyze the data gathered the primary focus of the research would be on to know the factors affecting customer purchase behavior and to know the source which customer make use of while making a purchase.

Results and findings

After gathering the data from the respondents about their purchase behavior on the banking services certain findings has been received. In response to the question about the factors which customer makes use of while deciding the banking services various factor came out which are: Brand name/ reputation of the bank, interest rate given by the bank in case of saving accounts and other accounts, service and responsiveness of the bank in handling customer problems, variety of services provided by the bank and high technology used in the bank which provide customer with faster transaction time. The following graph shows the customer response in for the factors affecting their purchase behavior in banking services.

customer behaviour assignment

Convience44
Variety of service32
Brand name40
Interest rate27
Technology21
Good services42
Others13

As clear from the graph that the customers have given importance to the good services and brand name as the important factor for making purchase decision. Variety of service, place convience and interest rate are among the other factors which help customers making a purchase decision.

In response to the question about the effect of brand name on consumer behavior most of the customer have responded favourably. The average score (mean) received for the response was 4.1 means that customers are more than agree with the statement that the brand name affect the customer purchase behavior.

In response to the question about the rating given to the various factors which are important to the customer in making a purchase, the customers response were as follows:

customer purchase in customer behaviour assignment

Convience18
Variety of service8
Brand name7
Interest rate6
Technology5
Good services5
Others1

18 customers out of 50 has given first preference to place convience while deciding about the bank, 8 to variety of services, 7 to brand name, 6 to interest rate, 5 to technology, 5 good services and 1 to others. Hence according to customer place convenience is the prime factor of importance for them.

Customer thinks that the co-operative and knowledgeable staffs affect the services of the bank. According to respondents sources of collecting the information about the bank are TV media, print media, online media, friend referrals, and website and employees of the bank. And among all these sources customer thinks that the TV media and friend referrals are the most important factors for them to get the knowledge about the bank services.  {See more : Pervasive Systems Mobile Computing Assignment}

Managerial Implication

From the current research after collecting the primary data about the buying behavior of consumer on the banking services it has revealed that the customer give importance to the place convience most while deciding the bank for them (Sheth, J.N. 1969). After place convience customer look for good brand name of the bank and interest rate while deciding the bank. Hence implies that the banks with wider reach have more favourable customer choice. About the sources of information accessed by the consumer for getting the information about the bank customer says that the TV media affect their choice most along with the referrals and feedback they got from their friends and family (Johnson, M.P. 1982). Hence managers should create the positive word of mouth publicity for their banks in order to get more customers.

Recommendations

The following recommendations can be given based upon the results of the research:

  1. Marketers should try to increase the reach of the bank in order to acquire more number of customers as their prime importance factor is place convenience.
  2. Marketers should try to build strong brand image among the customer mind about their bank in order to get favourable customer response.
  3. TV media is the most suitable media for the advertisement as revealed from customer response hence banks should invest more in that for promotion purposes. but make sure it not creates advertisement controversy.

Conclusion

Research which was aimed at finding the parameter affecting customer purchase and sources of information concluded that the customer give importance to place convience and the brand name of the bank. And among the sources of information customers give importance to TV media advertisement and referrals.

References

  • Albrecht, K. nad Brandford, L. (1990) The Service Advantage: How to Identify and Fulfil Customer Needs, UK: Irwin, Inc.
  • Beilharz, G. and Chapman, R. L. (1994) Quality Management in Service Organisations, Melbourne: Longman Professional
  • Booms, Bernard H. and Bitner, Mary Jo, (1981) Marketing Strategies and Organizational Structure for Service Firms in Marketing of Services, edited by Donnelly, J. and George, W.R., American marketing Association, Chicago, pp. 47-51
  • Gaster, L., (1995), Quality in Public Services, Open University Press, Buckingham
  • Gerson, R.F. (1993) Measuring Customer Satisfaction: Kogan Page, UK