See discussions, stats, and author profiles for this publication at: https://www.researchgate.

net/publication/378496094

The Role of Marketing on Commercial Banks Performances in Mogadishu

Somalia

Article in Jurnal Ilmiah Peuradeun · December 2023

CITATIONS READS

0 242

1 author:

Mohamed Garane Osman

University of somalia
1 PUBLICATION 0 CITATIONS

SEE PROFILE

All content following this page was uploaded by Mohamed Garane Osman on 27 February 2024.

The user has requested enhancement of the downloaded file.

Journal Name
2022;11(1):1-7
Published online MM DD 2022
(http://www.www.kesmondsuniversity.org)ISSN:2328-
7543(Print);ISSN:2328-756X(Online)

The Role of Marketing on Commercial Banks Performances

Mohamed Garane Osman
Master of Business Administration MBA, Kesmonds International University (KIU) with Collaboration Green Hope University
Email address:
Email 1: Garane80@Gmail.com
Email2:Mohamedgarane@kesmondsuniversity.org

To cite this article:

Mohamed Garane Osman, Role of marketing on commercial bank performance International Journal

Abstract: Marketing in banking should enable target market identification, determining the needs and desires that govern
service creation and pricing, developing an effective marketing communication plan, and bringing the service closer to
customers through an appropriate distribution network. These problems include the bank losing credibility due to customers
ceasing to use their accounts and a growing number of customers switching to other commercial banks, which could result in
the bank performing poorly financially. The bank's subpar performance presented a risk to the development of the banking
sector to examine the role of product strategy on commercial bank performance in Mogadishu. to investigate the role of price
strategy on commercial bank performance in Mogadishu. to establish the role of promotion strategy on commercial bank
performance in Mogadishu.
The study's target population one hundred 100 respondents from a few private banks in Mogadishu make up the study's
population. One hundred 100 personnel, comprising top management, middle management, supervisors, and non-managerial
staff, were the study's accessible population the sampling the survey included 80 respondents from various branches of
commercial banks in Mogadishu the primary data collection method for this study was a questionnaire
the researcher received a letter of authorization from the Kesmonds International University, KIU America School of business
Management Science (SBMS)Following the study's data collection, there are multiple steps in the data analysis process,
including data cleaning and explanation Data entry, followed by data preparation, analysis, and interpretation (steps three
through four) The correlation analysis between the two variables and the independent three particular objectives—price
strategy, promotion strategy, and product strategy—is displayed in Table 4.9 below. The findings indicated a favor able
correlation (r=.807and p<0.00) between marketing and bank performance. The study also discovered that there was a positive
correlation between marketing and bank performance at (r=.909 and p<0.00), and finally, it found that there was a positive
correlation at (r=.935 and p<0.00). the dependent variable (bank performance) and the independent variable (marketing).

Keywords: Role Marketing Commercial Banks performance

1.0 Introduction

utilize a good or service because they need it or

A company with a market-focused approach first
because they believe it will benefit them is the
ascertains the needs of potential customers before
foundation for marketing theory and practice
developing its offerings. the idea that consumers
(Kotler and Keller, 2006).The acquisition of new
clients and the maintenance and growth of
relationships with current clients—known as base
management—are two of the primary components
of marketing. The four "Ps" must be combined in a
way that best represents the needs and preferences
of the target market's customers for the marketing
plan to be effective. It is very costly and rarely
successful to try to get a certain portion of the
market to purchase something they do not desire.
To find out what customers want and are ready to
pay for, marketers rely on formal and informal
insights from marketing research. Marketers
anticipate that this procedure will provide them
with a long-term edge over their competitors
(Meldan, 1984).
Marketing strategies determine where and when to
sell, distribute, market, and set prices for goods,
1.1 Statement of Problem
In developing nations, commercial bank
performance may encounter significant obstacles
and may not operate effectively. Given the high
costs and inadequate financial frameworks, it may
not be possible for these economies to foster
economic progress. The banking industry's inferior
marketing tactics and lack of innovation in digital
marketing compound these issues. The bank sector
is viewed by the Somalia government as being
essential to the country's long-term economic
success. The main issue facing the bank business is
the small number of commercial banks that are
listed This makes it one of the most important
elements for the growth and sustainability of any
financial system.
One of the most important tools that commercial
banks can use to increase their market share of bank
customers is marketing approaches. Numerous
studies have examined the connection between
marketing and bank performance, highlighting the
critical role that marketing tactics play in the
competitiveness and response that support
services, and ideas. They also match products and
services with the requirements and wants of clients.
Whether the company is attempting to reach out to
current clients or draw in new ones, as well as
whether the product or service is brand-new or
well-established, will determine the strategic
approach.
As middlemen in the financial system, commercial
banks move money from ultimate savers to ultimate
users. In order to perform this duty, banks must
retain financial assets for one type of customer and
invest those assets in other types of consumers in
order to generate further wealth. Commercial banks
typically operate in three different business
categories: deposit taking, loan making, and capital
movement services.
commercial banks' performance. Numerous articles
and studies that have been published recently
(Hassan, 2000; Suleiman et al., 2020; Sandra, 2019)
reflect this. The precise mechanism by which a
strong fit between marketing and bank performance
enhances the advancement of the banking sector as
a whole and sophisticated marketing tactics is not
sufficiently explored by the studies that are now
available.
Some commercial banks, however, consistently
struggle with poor financial performance; as a
result, their financial performance is still subpar
compared to Performa Financial Statement, and the
results are predictable given the rising concerns
about employee turnover, poor pricing strategies, a
lack of product innovation strategies, and improper
management of promotion strategies. The bank's
marketing efforts are driven by problems that could
result in underperformance. These problems include
the bank losing credibility due to customers ceasing
to use their accounts and a growing number of
customers switching to other commercial banks,
which could result in the bank performing poorly
financially. The bank's subpar performance
presented a risk to the development of the banking
sector. Thus, the purpose of this study was to look
at how marketing affected bank performance in
1.2 Research objectives
1- To examine the role of product strategy on
commercial bank performance in Mogadishu.
2.0 Literature Review
The foundation of this study was the Marketing Mix
hypothesis, which was developed by Borden (1965)
and expanded upon by Kotler & Keller (2006). The
approach is predicated on the idea that the target
market's behaviours, wants, and psychology inform
every element of the marketing strategy. To make
crucial choices that result in the implementation of
a marketing strategy, the idea is still applied today.
The Marketing Mix Theory integrates several
elements to fortify and establish a product's brand
and facilitate its sale. The elements that come
together to make the Four Ps are products, pricing,
promotion, and place. Subject to the internal and
external limitations of the marketing environment,
the marketing manager can control these four Ps. In
order to produce perceived value and elicit a
favourable response, the objective is to make
decisions that centre the four Ps on the target
market's clients.
When physical goods made up a bigger share of the
economy in the early days of the marketing idea,
the marketing mix framework was very helpful
(Gronroos, 1994).
Some authors have tried to expand the utility of
marketing by putting out a fifth P, such as
packaging, people, process, etc., in light of the
greater diversity of products and markets as well as
the increased integration of marketing into
businesses today. Nonetheless, the 4 Ps are still
Mogadishu, Somalia, specifically in relation to
product pricing, product strategy, promotion plan
development, and the performance of commercial
banks.
2- To investigate the role of price strategy on
commercial bank performance in Mogadishu.
3- To establish the role of promotion strategy on
commercial bank performance in Mogadishu.
typically the foundation of the marketing mix today.
Its simplicity and its limitations notwithstanding,
this framework is still widely used, and numerous
marketing textbooks are structured on it.
This viewpoint takes the "4 Ps" philosophy of
marketing into account. The first P is product,
which considers its features, design, and rivals.
Price, the second P, is a variable that may be
changed to control market share, regulate demand,
and establish profit margin. The third P is
promotion. It looks for the correct media to work
with to spread the word about the advantages of the
product to the appropriate audiences as well as the
slogans, taglines, and logos that appeal to the target
market.
The fourth P, placement, decides how and where
potential buyers can obtain the goods. The younger
generation could wish to shop, pay, and browse
online. Some might favour the one-on-one attention
of a skilled salesman. (Išoraitė, 2016).
A more consumer-focused variant of the four Ps,
the four Cs categorization was later proposed by
Robert (2000) in an effort to better reflect the shift
from mass marketing to niche marketing. The Cs
stand for customer, cost, communication, and ease
of use. First of all, a business should only sell items
that customers specifically want. Therefore, in order
to draw customers one at a time with products they
wish to buy, marketers need research the needs and
wants of their target audience. Second, the price
only represents a portion of what it will cost to
fulfill a need or a want. The entire cost included
expenses such as time spent finding a good or
service, guilt from consuming it, or even expenses
related to "not treating the kids. The whole cost of
ownership is reflected. Cost is influenced by a
variety of elements, such as the customer's expense
for altering or implementing the new good or
service and the customer's expense for passing on a
good or service offered by a rival (Richard, 2009).
Thirdly, communication is cooperative and comes
from the buyer with the intention of starting a
conversation with potential customers based on
their needs and lifestyles; it reflects a broader
emphasis, whereas advertising is manipulative and
comes from the seller. Public relations, personal
selling, viral promotion, advertising, and any other
type of contact between the business and the
customer are all considered forms of
communications.
According to Matan (2016), Businesses who want
to offer their goods or services for less than their
typical cost do so by using the penetration pricing
approach. By doing this, a company can broaden its
market share, win over new customers, or deter new
rivals from joining the market. According to Marn
et al. (2003), using extremely cheap prices forces
businesses to pass up possible profits and gives
consumers the impression that the product is of
poor quality, making it difficult for businesses to
raise the price of a product. Furthermore, extremely
cheap prices for goods or services make it harder
for them to become popular.(Golder &Tellis, 2004).
Mwaawaaru (2019) According to her, money-off
coupons, penny-off flash sales, buy one, get one
free offers, and extra fill packs are examples of
price promotions. Additionally, clients that are
sensitive to price are becoming more proactive in
their hunt for price promotions and more conscious
of promotional activity. Zoellner and Schaefers
(2015) assert that price promotions have a
significant impact on consumers. It persuades
consumers to buy a specific brand over another and
to acquire it in larger numbers. However, Wang-
ondu (2016) clarifies that a price discount is the act
of providing customers with things at a lower cost
than the standard price of the product.
The author makes the argument that businesses
utilize price breaks to entice consumers—both new
and old—to try new products and make repeat
purchases.
According to Taylor (2018), Businesses in urban
areas outperform those in rural areas in terms of
returns. According to Paulin et al. (2018), an
organization's geographic location is crucial to its
ability to survive. The impact of clusters on the
performance and innovation of small and medium-
sized technology enterprises in Europe was studied
by Edidijus and Per Von (2015). It was determined
that performance and a firm's geographic proximity
were positively correlated. A study on the
relationship between customer patronage and
business location was carried out by Eze et al.
(2015). The research design was survey-based. A
sample of 100 responders was used. Utilizing a
standardized questionnaire, data was gathered. The
findings showed that a company's performance is
significantly impacted by its location. The study
found that a company's closeness to its clients
affects their likelihood to make additional
purchases. Kotler and Armstrong (2012) contend
that in order to ensure accessibility, retailers ought
to be situated close to their intended clientele.
Customers' propensity to make a purchase is
negatively impacted by retail locations that are
remote from them. It lessens the number of times
people visit a store.
Krüger et al., (2011) carried out a study on location
decision-making techniques to enhance the
performance of SMEs. The Nelson Mandela
Metropole's SMEs were the focus of the study. ever-higher revenue targets. These factors make it
According to study result number 23, location and necessary to take a more rigorous and data-driven
business success were positively correlated. approach to basic sales procedures including
Festus (2016) also studied how Ghana Breweries strategic planning, territory allocation, resource
Limited's organizational effectiveness was affected planning, and pay programming in order to
by sales promotion. It was discovered that maximize sales success in the economy.
performance and sales promotion had a strong and
Increasing sales and gaining a long-lasting
favourable correlation. Likewise, Tandoh and
competitive advantage are the main objectives of
Sarpong (2015) conducted research on how sales
marketing strategy (Silva, 2016). All fundamental,
promotions affected Auto-Mobile Industries'
short- and long-term marketing activities that deal
performance in Ghana. It has been demonstrated
with analyzing a company's strategic starting
that sales marketing improves the performance of
position and developing, assessing, and choosing
organizations. Furthermore, Dangaiso (2014)
market-oriented strategies that support the
studied how sales promotion tactics affected the
organization's goals and marketing objectives are
performance of Auto-Mobile Industries in Ghana.
included in marketing strategy. (Gituma, 2017).
The study's findings showed that using sales
Businesses can create a plan using marketing
promotional tactics like prizes, bonuses, and contest
strategy that enables them to provide the right
sweepstakes had a favourable impact on the
product to the right market in an effort to obtain a
performance of the company. 27, In their 2019
competitive edge. According to Heiner and
study, Ibojo and Ogunsiji examined the impact of
Muhlbacher (2010), a marketing strategy offers a
sales promotion as a tool on organizational
broad overview of how to appropriately position
performance and discovered that it positively
items in the market while taking both internal and
affects both the organization's sales volume and
external restrictions into consideration.
performance. Syeda et al., (2018) carried out
Marketing strategy, according to Muthengi (2017),
research on how sales promotions affect Pakistani
is a way to concentrate an organization's efforts and
consumers' perceptions and the profitability of
resources on a course of action that can result in
businesses. According to the study, sales promotion
higher sales and market dominance in a specific
increases brand loyalty, which in turn boosts
niche. A marketing strategy describes the
organizational profitability. Additionally, Adeniran
company's marketing goals and explains how they
(2016) conducted research on the impact of sales
were attained, ideally within a certain timeline. It
promotions on sales turnover in Nigeria's aviation
incorporates product development, promotion,
sector. It has been determined that incentives for
distribution, pricing, and relationship management,
sales promotions have a favourable effect on sales
among other components. Furthermore, Kasiso
turnover in the airline business.
(2017) contends that the selection of target market
A study on the impact of advertising on segmentation, positioning, marketing mix, and
organizational profitability was undertaken by resource allocation are all influenced by marketing
Osogbo (2014). According to the study, advertising strategy. It works best when it is a crucial part of
affects an organization's profitability. the company's overall strategy, outlining how the
Businesses are becoming more bullish about growth company will engage clients, prospects, and rivals
prospects, which put pressure on sales teams to hit in the marketplace through corporate strategies,
 missions, and goals.
Since sales are a company's primary source of
income, marketing strategy and sales are intimately
related. Maintaining marketing alignment with a
company's main purpose statement is frequently a
crucial aspect of marketing strategy (Pembi et al.,
2017).
Since many exchanges, especially in the service
industry, are by their very nature relational,
3.0 Methodology
relationship marketing emerged in the 1980s as an
alternative to the dominant view of marketing as a
series of transactions (Berry, 1983; Dwyer et al.,
1987; Grönroos, 1994; Gummesson, 1994; Sheth
and Parvatiyar, 2000). Relationship marketing in
the context of retail banking is defined by Walsh et
al. (2004) as "the actions taken by banks to draw in,
engage with, and keep more profitable or high net-
worth customers."
circumstances. This type of study is suited for the
questionnaireapproach since it offers a quantitative

Research Design account of the attitudes, experiences, and views of

the sample population. Additionally, the design was
This study usedquestionnaire the arrangement of
cross-sectional, which examines individuals who
conditions for data collection and analysis in a
vary on a single, important attribute at a particular
manner that aims to combine relevance to the
moment in time. Nonetheless, this study employed
research purpose with economy in procedure" is the
a quantitative strategy, which is defined as any
definition of research design. This study used a
method of gathering data (like a questionnaire) or
questionnairedesign, which is concerned with
method of analyzing data (like graphs or statistics)
features specific to the study population. According
that results in or makes use of numerical data
to Saunders et al. (2003), a descriptive study
(Saunders et al, 2009)
accurately presents a profile of people, things, or
Table3.3.1PopulationandsampleSizedistributiontable
N Categories PopulationSize SampleSize
o
1 Salam Bank 30 24
2 IBS Bank 20 16
3 Premier Bank 20 16
4 Dahabshiil Bank 30 24
Total 100 80

Table4.6Product strategy

Std.
Statement Mean Deviatio Interpretation
n

Effective product strategy leading to increase profitability

of the bank. 3.44 1.590
Very Good
Innovation of banking product which have appositive
Significant on the banks ‘profits. 3.66 1.414 Very Good
Products strategies in commercial banks are developed
from customers need perspective. 2.69 1.279 Good
The base the product strategy on making the customers
happy with their purchases by satisfying their needs 2.81 1.323
Good
 Product designing strategy reduces operational cost for
3.45 1.606
both the client and the banks. Very Good

3.21 1.442 Good

Total Average
Source :( Primary Data, 2022)

The level of product strategy's impact on bank
performance was evaluated as follows: average
mean (M=3.21) overall and standard deviation
(SD=1.442) overall, as shown in table 4.6 above.
This suggests that the overall impact of product
strategy on bank
performance in these commercial banks was
good. The first objective one question, "Effective
product strategy leading to increase profitability
of the bank," had a mean score of 3.44, indicating
extremely strong performance.
The second objective one question, "Innovation
of banking product which have appositive
Significant on the banks 'profits," has a mean
score of 3.66, indicating Very good performance.
from customers need perspective" was the third
question in Objective 1. The typical score for this
question is 2.69, which is good. "The base the
product strategy on making the customers happy
with their purchases by satisfying their needs"
was the fourth question in Objective 1. The mean
score for this question was 2.81, indicating a good
result.

Table4.7Price strategy

Std.
Statement Mea Deviatio Interpretatio
n
n n
Competitive pricing technique was implemented by
commercial banks. 3.51 1.441 Very Good
The bank's performance is positively impacted by the
price of its financial services.

Pricing is thought to have an impact on the bank's market

share. 3.74 1.430 Very Good
Pricing is considered as a factor that affects the market
share of the bank. 2.81 1.397
Good
Pricing strategy improves client satisfaction and the
efficacy and efficiency of volume service delivery for the 2.81 1.323
Good
bank. .
Solution personalization for specific buyer personas is
facilitated by the focus product approach.. 3.44 1.590 Very Good
3.26 1.436 Good
Total Average 2

Source :( Primary Data, 2022)

The level role of price strategy on bank strategy on bank performance in these commercial
performance was scored as follows: average mean banks was positive. The first query in goal one was,
(M=3.262) overall and standard deviation "Commercial banks implemented a competitive
(SD=1.436) overall, as shown in table 4.6 above. pricing strategy." The mean score for this question
This suggests that the overall impact of price is 3.51, which is considered very good. "Pricing
 financial services of the bank has positively effect
on the performance of the bank" was the second
objective one question. It had a mean score of 3.74,
indicating Very well. "Pricing is considered as a
factor that affects the
Market share of the bank" was the third question in
objective one.This question had a mean score of
2.81, which is good. "Pricing strategy increases
4.0 Discussion
The role of marketing on commercial bank
performance In Mogadishu – Somalia" was the
subject of this study. The statistical software for
social science, SPSS version 20.0, was used as the
data analysis tool for the analysis of the data. The
analysis's findings are shown in this chapter's tables,
which also include the types of responses, their
frequencies, percentages, and the study participants'
actual responses to the statements in the
questionnaire. The focus of this chapter is on the
presentation, analysis, and interpretation of data. the
analysis and interpretation of data depending on the
goals and research objectives. The full research data
obtained from the target population was then used
5.0 Conclusion
According to the input from the respondent’s
comments, this study assumes that marketing
strategies this study looked at how marketing
affected the performance of four commercial banks
in Mogadishu: Salam Bank, IBS Bank, Premier
Bank, and Dahabshil Bank. The study's target
population consisted of 100 different employees from
each of these four banks. The sample size was also
eighty employees. This study had a questionnaire as
its instrument, and it was carried out using both a
5.3 Recommendations
The researcher offers the following suggestions in
light of the study's findings and conclusion in
order to guarantee that the financial innovation
used by Mogadishu's commercial banks,
 Commercial banks should create unique, efficient
marketing plans that complement their
effectiveness and efficiency of volume service
delivery and satisfaction of the bank's customer"
was the fourth question in objective one.This
question had a mean score of 2.81, which is
good."The focus product strategy helps personalize
solutions for particular buyer personas" was the
final goal one question. It had a mean score of 3.44,
indicating really nice
for data representation and analysis under this
heading.
The background information of the respondents who
took part in the study is presented in this section
with the aim of identifying the characteristics of the
respondents. In addition, the respondents guaranteed
that their identities would be kept private and that
any information they submitted would only be
utilized for academic research. Eighty people in all
responded to the survey, which was distributed to
private banks in Mogadishu, Somalia. The
demographic component of the questionnaire looks
at factors including gender, age, marital status,
degree of education, and experience.
cross-sectional and descriptive design.
Lastly, the analysis shows the relationship between
the two variables—banking and marketing. The
two-tailed Pearson's correlation approach is used
to quantify performance, and the results showed a
substantially positive connection between the two
variables: marketing and bank performance. by R-
value (r=.935)andp-value(p= 0.000).
overarching bank strategy.
 The findings of this study suggest that commercial
banks should implement phonological digital
marketing. In order to promote performance,
commercial banks are advised to implement new
financial services products.
 The report suggests that since new products
influence commercial banks' performance, they
should implement new product strategies. The
study has specifically shown a positive correlation
between digital marketing and commercial banks'
performance. Commercial banks must therefore
implement new pricing and product strategies.
Since clients no longer need to visit banking
halls to obtain financial services, digital marketing
helps commercial banks reduce expenses.
References [15] P.Kotler,etal.PrenticeHall's9theditionofmarketingmanageme
[1] Ali, B. (2021). Website: www.investopedia.com nt.
MarketingStrategy
[16] Saheed, S.; Constantine, S. K.; and Leonidas, C. L. (2002).
[2] T. V. Bonoma and B. P. Shapiro, 2005. Industrial Ameta-analysis of the factors that influence export
MarketingManagementJournal,13,357- performance.55, 51–67, Journal of Business Research.
367.Evaluatingmarketsegmentation approaches.
[17] T.Proctor,2000.MarketingStrategyfortheIntroductionRutledg
[3] K. J. Clancy and J. Trout (2002). Brand confusion, in e.
myopinion.
[18] K.J.Ringim(2012).Organisationalperformanceandtheeffectsofb
[4] C.Clarke(2004).Progressinleadership'sfourareas,Managemen usinessprocessreengineeringfactorsoninformation and
t Today, March 86–68. technology capabilities. Unpublished doctoraldissertation
from Malaysia's University Utara.
[5] Rodriguez-Hernandez,N.;Verdu-Jover,A.;Gomez-Gras,J.
M.(2020);Estrada- [19] R. Roslender and R. M. S. Wilson (2008). The link
Cruz,M.CompetitiveIntensity'sImpactontheAssociationbetwee betweenmarketing and accounting, Journal of Marketing
nStrategicEntrepreneurshipandOrganisationalOutcome.Journal Management24 (7-8), 659–876.
ofInternationalEntrepreneurship Management.
[20] Zeithaml, V. A., Lemon, K. N., and Rust, R. T. (2004).
[6] Doyle, P. (2002) [6]. Third edition of Marketing Returnon Marketing: Focusing Marketing Strategy Using
Managementand Strategy, London: Prentice-Hall. CustomerEquity. Publication for marketing.

[7] (2007) Doyle, P., and Stern, P. Fourth edition of

MarketingManagement and Strategy by Pearson, Upper
Saddle River,New Jersey.
[8] Hartline, M. D., and Ferrell, O. C. (2007). Gruca, T. S.
andRego, L. L. (2005). Customer Satisfaction, Cash Flow
andShareholder Value. Journal of Marketing 69(3), 115-130.
[9] AccordingtoHomburg,Jensen,andKrohmer(2008).Ataxonomy
formarketingandsalesconfiguration.https://dio.org/10.1509/jm
kg.72.2.133 Journal of Marketing
[10] Jay,E.(2005).CreatingaPowerfulMissionandVisionStatement
, Inc.
[11] Y. Kamyabi and S. Devi (2012). Iranian Small and
MediumEnterprise Performance and the Effect of Advisory
Services:AnEmpiricalInvestigationoftheRoleofProfessionalA
ccountant. 43 (2), 75–85 of the South African Journal
ofBusiness Management.
[12] KellerandLehmann.ResearchFindingsandFuturePriorities
for Brand and Branding. 25(6), 740-759. MarketingScience.
[13] Armstrong,G.andKotler,O.P.(2013).fundamentalofMarketing,
6th Edition, New key harry: Education Inc.
[14] P.Kotler,2007.Marketing:AnOverviewJersey,NewPrentice
Hall Inc..

View publication stats