Individual Customer’ Attitudes, Buying Behavior and Satisfaction of Mutual Fund Customers
Service Mix and Customer Satisfaction in the Banking Industry
by Amit Gajbhiye*,
- Published in Journal of Advances and Scholarly Researches in Allied Education, E-ISSN: 2230-7540
Volume 1, Issue No. 1, Jan 2011, Pages 0 - 0 (0)
Published by: Ignited Minds Journals
ABSTRACT
The banking industry has very high impact upon the performance of the different economic sectors and the quality of people’s life in general. The banking industry has always been witnessing continuous developments andimprovements. One of the industry aspects, which went, and is still going, through a number of such developments is the “Service Mix” in terms of types, quality and range of services to be provided. Importance of this aspect stems from its noticeable impact upon satisfying market needs and enhancing the competitive position of the bank in the market place atthe same time.
KEYWORD
individual customer, attitudes, buying behavior, satisfaction, mutual fund customers, banking industry, economic sectors, quality of life, continuous developments, improvements, service mix, types of services, quality of services, competitive position, market needs
INTRODUCTION
Planning the proper “Service Mix” is not however an easy task. For this task to be proper done, it should be based on full understanding of, and thorough analysis of, the current mark conditions and customers’ behavior. Therefore, decision makers in banks should be equipped wi sufficient, reliable and up to date information that can help in this regard. Equipping decision makers with such information which can help in designing and implementi effective policies and programs for successfully marketing “Mutual Funds” as an importa investment service is the main objective of this study.
Objectives of the Study are:
1. To explore the market awareness of mutual funds as an investment service and to assess perceived relative importance as well as the extent to which the degree of perceiv importance is different according to differences in customers’ demographics. 2. To evaluate customers’ knowledge of the key aspects or attributes of mutual funds and t differences in this respect according to differences in customers’ demographics. 3. To profile the current users of mutual funds in terms of their demographics. 4. To identify the sources of information that customers consult or rely upon in making the decision to invest in mutual funds, and the role that the financial adviser plays in this regard. . To evaluate Customers’ Satisfaction with financial institutions in providing mutual fun investment service and differences in the degree of satisfaction according to differences demographics. 6. To predict the future usage behavior of mutual funds and to profile potential users in terms their demographics. 7. To determine potential users’ preferences as for type of mutual funds to invest investment’s time duration, amount of money to be invested, the preferred level of return realize, and the risk to tolerate. Data Collection Methods The study relied upon both, secondary and primary sources for collecting the required informatio The secondary sources included the previous studies as well as the published data regardi mutual funds investment service. These sources were used mainly for designing the field stud identifying the key factors and variables of the study, determining the population und consideration and selection of the required sample. The primary sources were the individu customers of banks who have dealings with at least two of the services they offer, and from who data were collected. The main primary data required for this study included customers’ awareness of mutual funds an investment service, the pattern of their present and potential use of this service, their attitud towards the decision to invest in mutual funds, the problems they encounter in making the investment decision, and their expectations as for the role of banks to overcome these problems. The primary data were collected via a questionnaire specially designed for this study. T questionnaire consisted of 18 types of questions in addition to the demographic data question The construction of the questionnaire was based upon various types of measurements includi the Likert type scale and multiple choices questions. Data were collected through person interviews by experienced interviewers at the selected sites according to the sampling plan. Data Analysis The data collected for this study were carefully reviewed and then coded for the purpose analysis. The analysis was done by using SPSS Statistical Package. Simple techniques f analysis were chosen based upon the nature of the data and objectives of the study. The techniques include weighed averages, percentage analysis and cross-tabulation. Awareness of Mutual Funds and of its importance Awareness of mutual funds as an investment service or investment alternative proved to very high among customers. Almost 95% of the sample indicated that they are aware of th service. Despite this high awareness rate, mutual funds as an investment alternative, is evaluat however to be of moderate degree of importance, compared specifically with fixed deposi Whereas 81% of customers viewed fixed deposits as an important investment alternative, on 65% of them viewed mutual funds from this perspective. The weighted average for the mutu funds’ degree of importance was 3.66 out of 5. Importance of mutual funds proved to be different among customers due to differences in the demographics of gender, nationality, age, marital status, income and education level. Customers’ Knowledge about Mutual Funds Customers indicated low level of knowledge about the main aspects of mutual funds. T weighted average for customers’ level of knowledge is 2.75 out of 5. This average reflec obvious lack of information about mutual funds among customers. Level of customers’ knowledge about mutual funds tended to be relatively lower as for t following aspects: The expected return from the fund and how it is calculated. How and where the bank invests the fund’s money. Buying and selling fees of funds. Risks associated with the investment in the fund. Consequences of the decision to sell the fund. Time duration or the fund’s life span. Customers are different in their level of knowledge about mutual funds according to differenc in their demographics, especially these which are related to gender, age, education an income (male are more knowledgeable, and level of knowledge increases level of age, education and income). Current usage behavior of mutual funds The mutual funds’ current use is still very limited as only 17% of customers are investi their savings in mutual funds. Typical users of mutual funds as their profile indicate are male (96%), (92%), aged 36 years a above (80%), monthly income higher than 1500KD (74%), education level high school and abo (87%), and knowledgeable of English in addition to Arabic language (88%). banks come at the top as a source of providing mutual funds investment service. 82% current customers already deal with these banks as their preferred source. Brokers and financial advisors played only a limited role in guiding mutual funds investme decisions. Only 19% of current customers asked for their advices. Amount of money invested in mutual funds ranged between 5,000 KD to 20,000KD as for 75 of customers. The amount of money invested exceeded 50,000KD for about 5% of customer The return customers gained from investing in mutual funds ranged between 6% to 10% f almost 50% of the investors. Investment in mutual funds yielded 11% to 15% return for 22% customers and more than 15% for 6% of them. On the other hand investing in mutual fun resulted in no return for 5% of customers.
Potential usage behavior of mutual funds Customers indicated in general high willingness or inclination to invest in mutual funds in t future. This is quite illustrated as: 75% of the total customers under study are planning to buy mutual funds as an investme alternative. 91% of the current customers are considering reinvesting in one or another types of mutu funds. Potential customers are looking for achieving “Capital Growth” from their decision to invest mutual funds in the first place. The objectives that customers seek to realize as arranged descending order are: Capital Growth Securing steady income. Purchasing real estate Facing retirement requirements Educating children Potential customers are different with regards to their preferences to the type of funds to invest Funds that customers favor highly are arranged in descending order as follows: Equity funds. Islamic investment funds. Principal guaranteed funds Traditional type funds. Global funds US funds Local funds Bond funds. Potential Customers are in support of short / medium rather than long term investment. This quite evident as 81% of them prefer funds of investment time duration from one to thr years. Investment amounts up to KD 10,000 is the most preferred option by 63% of potential custome On the other hand, there are 27% of the customers who plan to invest from 10,000 to KD 20,000 mutual funds. Only 10% of customers have the tendency to invest more than KD 20,000 in funds. Funds of moderate return and moderate risk are preferred by 63% of potential custome Funds of high return and high risk were preferred by 18% of the customers, whereas the remaining customers (almost 20%) are planning to invest in lo return and low risk funds. banks ranked first compared with other sources that potential customers are going to deal wi concerning mutual funds service. Other two most preferred sources are: Investment Companies Islamic Financial Institutions. Main Problems in the funds investment decision: The main problems customers are currently facing or are expecting to face in the funds investme decision as ranked are: Uncertainty about the expected return and risk of the fund. Selecting the proper type of funds. Liquidating the fund when it is needed. Amount of commissions, fees and expenses of the fund. Feedback about the funds performance Period of commitment of the investment in the fund. Trust and confidence in the bank and/or advisors. Customers indicated differences in their level of concern about each of these problems accordi to differences in their demographics. Customers’ general attitude towards funds investment decision. Customers have negative attitude towards the role that banks play in guiding funds investme decision. This is particularly true as for: The role of banks in providing sufficient information about funds. The role of banks in providing valuable advisory services. Based on the previous experience, funds investment decision is considered as: A risky adventure (53% of customers) Of main value to the financial institutions rather than customers (51% of customers) Of no real differences from the return point of view if compared with the decision to invest fixed deposits (30% of customers). On the other hand customers indicated positive attitude towards the role of banks in providing t market with variety of funds sufficient to satisfy investment needs (56% of customers).
