Innovation , Number 65 June 2021

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The role of marketing strategies on sales performance of commercial bank of

Ethiopia
Minda Yirga Beyene
Shimelis Zewude
1Lecturer in Management, Wolkite University, Ethiopia.
1 Associate Professor, Addis Ababa University, Ethiopia

Abstract
The purpose of the study was to determine the role of marketing strategies on sales
performance of commercial bank of Ethiopia.The researchers employed both
quantitative and qualitative (Mixed) research approaches. Commercial Bank of
Ethiopia is operating in 15 districts and it has more than 1600 branches throughout
the country and branches in South Sudan and Djibouti.Both probability and non-
probability sampling methods were adopted in this study. Non- probability or
judgmental sampling technique was used to select four districts among fifteen districts
of commercial bank of Ethiopia and Proportional Stratified Probability sampling
techniques was used to select appropriate sample size from each stratum (districts)
finally the researchers used simple random sampling to select each respondent using
lottery method. The total theoretical populations are 34,879 whereas; the accessible
populations are 301 and sample size from these accessible populations is 172. The
analysis was done by the help of SPSS version 20 and presented using descriptive
statistics. Tables and pie charts were used to provide information on the variables.
Interpretation is made on the mean, frequency, and percentage of the data. The results
are investigated in terms of descriptive statistics followed by inferential statistics on
the variables.The result of regression analysis revealed that 65% of sales performance
of the bank could be explained by seven service marketing strategy considered in this
study. The prediction ability of independent variables is considerable enough to
improve sales performance of the bank. From this result, the researcher concluded that
using all seven-service marketing mix strategy interactively facilitate higher sales
performance of the bank. This research indicated that service marketing mix strategy
directly affect the sales performance of the bank. Bankers should understand the
benefit of each service marketing mix strategy and choose the best marketing mix
strategy which enhances higher sales performance of the bank.

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Key words: 1. Product 2. Price 3. Place 4. Promotion 5. Process 6. People 7.

physical evidence and sales performance.

1. Introduction

Marketing is the direct way in which an organization tries to reach its public. This is
performed through the seven elements of the marketing mix. With the growing
importance of the financial sector, pressures are escalating for more effective
marketing management of the financial services. Effective marketing strategies are the
key to frontline sales performance. Financial institutions typically use a variety of sales
tools and processes to achieve their sales goals. Among the best practices of those with
highly successful sales programs is having the marketing strategies provided to
management and front line staff at all branches that describes tools and processes in
detail, helping to ensure that everyone involved in sales, no matter how remotely,
operates on a coordinated basis (Hopp and Spearman ,2013).

Due to competition, banks in Ethiopia have tried to come up with new strategies so as
to improve their performances. The Ethiopia Banking sector has demonstrated a solid
growth over the past few years. The industry continues to offer significant profit
opportunities for the major participants. Ethiopia has attracted worldwide acclaim by
expanding financial services to millions of poor households especially via mobile
phones. This has compelled banks to adopt new marketing strategies so as to diversify
the bank products and services (Eleni Eshetu, 2014).
The banking industry in Ethiopia faces the challenges of fluctuating demand and stiff
competition (CBE, 2016). The competitive environment in the banking industry is
widely recognized as being complex, dynamic, and highly segmented which makes
customers acquisition an uphill task. Increasingly banking companies are competing
directly with one another in the same locations (Walsh and Lipinski, 2009). The
banking industry is characterized by price competition, customer sophistication,
perceived product equality and also changing market growth rates and shifting market
shares are key determinants of the competitive environment in in banking industry
(Oyewale, 2013).
Odunlami (2011) did a study on effects of sales promotion as a tool on organizational
performance, a case study of sunshine plastic company in Kenya. The study found that
sales promotion has significant effect on organizational performance. Kiprotich (2012)
carried out a research on effects of marketing mix on sales performance of automotive
fuels of selected services stations in Nakuru Town and found out that marketing mix
enhances sales performance. Munyole (2015) carried out a research on marketing
strategies adopted by veterinary pharmaceutical firms in Kenya to enhance
performance and he found out that marketing strategies improve performance.
Hence this particular research sought to address the knowledge gap by focusing on the
role of marketing strategies on sales performance of commercial bank of Ethiopia.

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1.1. Objective

The study has the following aims;

 To examine the relationship between pricing strategy and sales performance of
Commercial bank of Ethiopia.
 To determine the extent of promotional strategy on sales performance of
Commercial bank of Ethiopia.
 To describe major factors in place strategy that affect sales performance of
Commercial bank of Ethiopia.

2. Material and methods / experimental details / methodology

This research employed both quantitative and qualitative (Mixed) research approach.
The research adopted sequential explanatory research design. Morse (1991) suggested
that sequential explanatory design is typically used to explain and interpret
quantitative results by collecting and analyzing follow-up qualitative data. It can be
especially useful when unexpected results arise from a quantitative study.
This research also employed both descriptive and explanatory research design
techniques. Descriptive research is used to describe the phenomena as it was in the
organization setting, to describe the major practices applying to enhance effective
marketing strategies. On the other hand, explanatory research used to create
relationship among variables.

2.1. Sampling and Sample size

The total theoretical populations of the study are 34,879 whereas; the accessible
populations are 301. The characteristics of target populations’ are homogeneous. All
districts of commercial bank of Ethiopia implement the strategy suggested by head
office. Therefore, taking appropriate sample size from a certain district can represent
the whole districts. From the accessible population identified, the researchers have
taken representative and appropriate sample size using valid sampling technique. A
sample of 172 has been drawn using the formula suggested by (Slovin, 2006);

n= N
1+ N (e) 2
n= 301

1+ 301 (0.05)2 = 172

Non- probability or judgmental sampling technique was used to select four districts
among fifteen districts of commercial bank of Ethiopia. These four districts selected
because of geographical proximity and convenience to the researchers and

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homogeneity nature of the districts or all districts follow the same policies, strategies
and procedures directed by the head office. Proportional Stratified Probability
sampling techniques used to select appropriate sample size from each stratum
(districts) finally the researcher used simple random sampling to select each
respondent using lottery method.

Table1: Distribution of target population and assigned sample size

S.no Accessible population from
HO/District HO/District Sample
size
1 Head office 55
32
2 West Addis Ababa 65
district 37
3 North Addis Ababa 63
district 36
4 East Addis Ababa 60
district 34
5 South Addis Ababa 58
district 33
Total 301
172

2.2. Source and Method of Data Collection

Primary source of data was collected from employees of the selected districts of
commercial bank of Ethiopia from different directorates and departments (i.e.
business network support directorate, payment service directorate, deposit
mobilization directorate, resource mobilization department, HR business partnering
department, internal control department, operation and logistics department) at a
head office and district levels.
Data was collected by questioners and interviewing marketing department staffs and
managers of commercial bank of Ethiopia. Structured questionnaire was administered
with the selected sample respondents (employee of CBE). The questionnaire was
designed to have both open-ended and close-ended questions, to let the respondents
reflect their opinions.

Finally, the quantitative data which was gathered through structured questionnaire
was analyzed by using computerized software designed for statistical aid for social
science fields or SPSS (Statistical Package for Social Science) version 20, and the data is
organized using frequency tables, percentages, Mean and pie charts.

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3. Results and discussion

3.1. Descriptive statistics

Convenience strategy
The respondents were asked to rate the level of their agreement/ disagreement on five
convenience strategy parameters. As clearly shown by table 4.2.1, the result revealed
that (Grand Mean = 3.96) commercial bank of Ethiopia uses effective convenience
strategy. It is clear that the value of standard deviation shows there is low (SD = 0.54)
response variation between respondents which means all respondents alike accepts
the grand mean value of convenience strategy that means commercial bank of Ethiopia
utilizes effective convenience strategy.

The value of standard deviation shows there is low (SD = 0.54) response variation
between respondents which means all respondents alike accepts the grand mean value
of convenience strategy that means commercial bank of Ethiopia utilizes effective
convenience strategy.
Table 4.2.1: convenience Strategy

Convenience strategy Mean Std.

Deviation

Commercial Bank of Ethiopia has convenience strategy to be

4.01 .665
nearer to customer’s home/office

Commercial Bank of Ethiopia has convenience strategy to be fast

3.90 .772
to acquire state of the art technology

Commercial Bank of Ethiopia has convenience strategy to Set

3.89 .872
Convenient banking hours based on customer’s need

Commercial Bank of Ethiopia has convenience strategy to be

4.13 .897
Leader on Number of branches in different area of city

Commercial Bank of Ethiopia has convenience strategy to be

3.85 .838
Leader in providing banking service through agents

N=164 , Grand mean of convenience strategy 3.9573 .54571

4.2.2 Promotion strategy

As clearly indicated in table 4.2.2 grand mean of promotion strategy is grand Mean =
3.79 , SD=.67 The grand mean value of promotion strategy fall within the range 3.67-

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5.00 value which signifies effective promotion strategy in commercial bank of Ethiopia.
The value of standard deviation also confirms there is small response deviation
between respondents and within different promotion strategy parameters. Frequently
using above the line advertising techniques (M=4.24, SD=1.056), participating in
socially desirable corporate social responsibility programs (M=3.97, SD=.868) and
frequently using through the line advertising techniques (M=3.84, SD=.846) have
registered higher mean value greater than grand mean value compared with
frequently using indirect promotion techniques and strategy of frequently using below
the line advertising techniques M=3.49, SD=.896 and M=3.42, SD=1.027 respectively.
Table: 4.2.2 promotion strategy
Promotion strategy Mean Std. Deviation

Commercial Bank of Ethiopia uses promotion strategy of frequently

4.24 1.056
Using Above the line advertising ( TV , RADIO…) method

Commercial Bank of Ethiopia uses promotion strategy of frequently

3.84 .846
using Through the line advertising ( social media , web pages) method

Commercial Bank of Ethiopia uses promotion strategy of frequently

3.42 1.027
using below the line advertising (Exhibition/Trade Shows) methods

Commercial Bank of Ethiopia uses promotion strategy of frequently

3.49 .896
using indirect promotion techniques ( press release , public relation)

Commercial Bank of Ethiopia uses promotion strategy on participating

3.97 .868
in socially desirable corporate social responsibility programs

N=164 , Grand mean of promotion strategy 3.7915 .67355

4.2.6 Pricing strategy

The grand mean of pricing strategy is Grand mean = 2.98, SD = 0.794 which is between
the range of Mean value 2.334 and 3.667 signifies moderate pricing strategy. Product
strategy registered lower grand mean and higher SD value compared with other
service marketing mix element included in this study. Higher response variation
indicates higher disagreement among respondents on the parameters asked to rate the
level of their agreement. From different items enlightening pricing strategy setting
competitive price for all product (M=3.57) , Introducing different incentive scheme to
promote bulk sales (M=3.55), charging industry’s minimum price when facing fierce
competition (M=3.02) registered relatively higher mean value while, items like
assigning different price quote for the same product based on certain criteria
(M=2.86), Charging higher price during new product introduction (M=2.45) and paying
lucrative interest rate for potential customers than others (M=2.41) registered
minimum mean value which indicates the bank doesn’t choose to use such kind of

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pricing strategy.

According to interviewees there is strict central bank intervention and there are rules
and regulations that prohibit or control pricing issues. Other reasons are government
priority, country’s economic policy, the issues of bargaining power of the bank and
consumer and competition etc. are the major bottlenecks to determine appropriate
pricing strategy.
Table 4.2.3: Pricing Strategy
Pricing strategy Mean Std.
Deviation

Commercial Bank of Ethiopia adopts suitable pricing strategy

3.57 1.173
of Charging competitive price for all product

Commercial Bank of Ethiopia adopts suitable pricing strategy

2.45 1.098
of Charging higher price during new product introduction

Commercial Bank of Ethiopia adopts suitable pricing strategy

Assigning different price quote for the same product based on 2.86 1.050
certain criteria

Commercial Bank of Ethiopia adopts suitable pricing strategy

to Charging industry’s minimum price when facing fierce 3.02 1.303
competition

Commercial Bank of Ethiopia adopts suitable pricing strategy

to Paying lucrative interest rate for potential customers than 2.41 1.405
others

Commercial Bank of Ethiopia adopts suitable pricing strategy

of Introducing different incentive scheme to promote bulk 3.55 1.142
sales

N= 164, Grand mean of pricing strategy 2.9776 .79396

4.3 Inferential statistics

There is moderate positive relationship (r=0.454 and r=0.472) between place

strategy and sales performance and promotion strategy and sales performance
respectively. Except pricing strategy all service marketing mix element
registered positive relationship at moderate and strong correlation is significant
at the 0.01 level (P=.000).

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Table 4.3.1 Correlation matrix result

Correlations PLACE PROMO PRICE

PROMO Pearson C. .442** 1

PRICE Pearson C. -.122 -.128 1

Pearson C. .454** .472** -.058

PERFOR
Sig. .000 .000 .458

4.3.1 Regression Analysis

Table 4.3.2 Correlations (1-tailed)

PERFOR PLACE PROMO PRICE
PERFOR 1.000
Pearson
PLACE .454** 1.000
Correlation
PROMO .472** .442** 1.000
PRICE -.058 -.122 -.128 1.000
**. Correlation is significant at the 0.01 level (1-tailed). , N= 164
Outlier assumptions: outliers as those with standardized residual values above
about 3.3 (or less than –3.3 multiple regressions are very sensitive to outliers
(very high or very low scores). This research screened out the strange data from
the response in the initial stage of the research. The result as indicated by table
4.3.3 and table 4.3.4 presented below guarantees there is no threatening case for
outliers. Threatening cases occurs when cooks distance value greater than 1 but,
this research has maximum of 0.214 at cook’s distance which is at safe zone.
There for the result of this study is free from outlier responses.
Table: 4.3.3 Model summery
Model Summaryb
Mo R R Adjuste Std. Change Statistics
del Squar d R Error
e Square of the R Square F df1 df2 Sig. F
Estimat Change Chang Change
e e
.807
1 a
.651 .635 .41383 .651 41.593 7 156 .000

As clearly indicated by table 4.3.3, the model summery provides the R, R 2, adjusted R2,

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and the standard error of the estimate, which can be used to determine how well a
regression model, fits the data. The value of R represents the correlation coefficients. It
is seen from the table that the value of R = .807 indicates a high level of prediction. The
R2 value represents the coefficient of determination which is the proportion of
variance in the dependent variable that can be explained by the independent variables
and the value of R 2 is equivalent to .651which means that 65% of the variance in sales
performance can be accounted for by a variation in the independent variables.
The F-ratio in the ANOVA table 4.3.4 tests whether the regression model is a fit for the
data. The table shows that the independent variables of this study provide statistically
significant prediction ability in order to predict the dependent variable, F (7, 156) F=
41.59, P = .000 indicates the regression model is a good fit for the data. The coefficient
is significant at α=0.01.

Table: 4.3.4 ANOVA

ANOVAa
Model Sum of Df Mean F Sig.
Squares Square
Regression 49.862 7 7.123 41.593 .000b
1 Residual 26.716 156 .171
Total 76.578 163
a. Dependent Variable: PERF
b. Predictors: (Constant), People, Price, Place, Promo, Phe, Prod, Proce

4. Conclusion and recommendation

This study tried to analyze the role of marketing strategy on sales performance of
commercial bank of Ethiopia.The result revealed that except pricing strategy all other
(convenience strategy, product strategy, promotion strategy, people strategy, physical
evidence strategy and process strategy) strategies were effectively utilized in
Ethiopian banking industry. Pricing strategy registered the lowest mean value
compared with other service marketing mix strategies or it applied at a moderate level
in Ethiopian banking industry.

The result of the correlation analysis indicated that except pricing strategy all service
marketing strategies included in this study registered positive relationship with sales
performance of the bank. Based on this result the researcher concluded that pricing
strategy has little or no contribution for improvement of sales performance in
commercial bank of Ethiopia.
The result of regression analysis revealed that 65% of sales performance of the bank
could be explained by the three service marketing strategy considered in this study.
The prediction ability of independent variables (place strategy, promotion strategy,
and pricing strategy) is considerable enough to improve sales performance of the
bank.Bankers should understand the benefit of each service marketing mix strategy

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and choose the best marketing mix strategy which enhances higher sales performance
of the bank.

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