DETERMINANTS OF CUSTOMER BRAND SWITCHING BEHAVIOUR IN THE BANKING SECTOR IN BENIN CITY
ABSTRACT
This study examined the determinants of customer brand switching behavior in the banking sector in Benin City. The study specifically determine the rate of brand switching behaviour among bank customers in Benin City; establish the reasons for brand switching behaviour among bank customers in Benin City; and ascertain the influence of demographic variables (namely: gender, marital status, age, highest education qualification, income level) on customer brand switching behaviour  in the banking sector in Benin City.
Survey research design was adopted for the study. The population comprises all the customers of the twenty two deposit money banks (DMBs) in Benin City. The sample size consists of three hundred and thirty (330) customers of the twenty two banks that were conveniently selected, that is, fifteen (15) customers from each bank. The model for the study relates customer brand switching behavior as a function of customer service quality, distance, price, switching cost, reputation of a service provider, promotion, competitive offer and customer dissatisfaction of the banks.  Statistical tools such as percentages, frequency, mean, Chi-square and binary logit regression were used to analyze the data obtained. All analyses were done using Statistical Package for Social Sciences (SPSS 22.0 Version) software at 5% level of significance.
The study found that the rate of customer brand switching in the banking sector is high. Competitive offer, customer dissatisfaction, price, promotion and switching costs are the significant factors that influence customer brand switching behavior from one bank to another. Also, demographic variables do significantly influence customer brand switching behaviour from one bank to another. It is recommended that management of banks should devised means to improve their service quality in order to retain customers or reduce defection to competitors.
TABLE OF CONTENTS   
CHAPTER ONE: INTRODUCTION    
1.1    Background to the Study    
1.2    Statement of the Research Problem    
1.3    Research Questions    
1.4     Objectives of the Study    
1.5     Research Hypotheses    
1.6     Scope of the Study    
1.7     Significance of the Study    
1.8     Limitations of the Study    
CHAPTER TWO: LITERATURE REVIEW    
2.1     Introduction    
2.2    Concept of Brand Switching    
2.3     Types of Brand Switching    
2.4    Factors Influencing Customer Brand Switching Behaviour    
2.5    Previous Studies on Customer Brand Switching Behaviour    
2.6     Theoretical Framework    
CHAPTER THREE: METHODOLOGY    
3.1     Introduction    
3.2    Research Design    
3.3     Population of the Study    
3.4    Sample Size    
3.5    Sampling Technique    
3.6    Model Specification    
3.7     Operationalization of Variables    
3.8    Research Instrument    
3.9    Validity and Reliability of the Research Instrument    
3.10    Source of Data    
3.11    Methods of Data Analyses    
CHAPTER FOUR: DATA PRESENTATION, ANALYSES AND INTERPRETATION    
4.1    Introduction    
4.2    Rate of customer brand switching in the banking sector    
4.3    Factors influencing customers brand switching behaviour    
4.4     Influence of demographic variables on customer brand switching in the banking sector    
4.5    Hypotheses Testing    
4.6    Discussion of Findings    
CHAPTER FIVE: SUMMARY OF FINDINGS, CONCLUSION AND RECOMMENDATIONS    
5.1    Introduction    
5.2    Summary of Findings    
5.3    Conclusion    
5.4    Contributions to Knowledge    
5.5    Recommendations    
5.6    Suggestions for Further Studies    
REFERENCES    
APPENDICES    
LIST OF TABLES
Table 3.1:  Operationalization and Measurement of Variables                 
Table 3.2: Reliability test for determinants of customer brand switching behavior using Cronbach’s Alpha Method                                    
Table 4.1: Rate of customer brand switching                            
Table 4.2: Factors influencing customer brand switching behaviour             
Table 4.3: Binary logit regression for three years switching                  
Table 4.4: Demographic variables of respondents and their influence on customer brand switching                                            
CHAPTER ONE
 INTRODUCTION
1.1    Background to the Study
Brand switching behavior has been defined as decisions to terminate a relationship with a particular service provider and start a relationship with other service provider(s) (Mouri, 2005).  In the context of the banking industry, switching means customers’ shift from one bank to another (Gerrard & Cunninham, 2004). The reasons for customer brand switching include pricing issues (fee, charges, interest rate), service failures (mistake, inflexible, inaccessible, unprofessional), and denied services (Colgate & Lang, 2001). According to Adeleke and Aminu (2012, p.215), “switching in the Nigerian banking industry is more intense than in any other industry.” The longer a bank can retain a customer, the greater revenue and cost savings it can make from that customer. Maintaining an existing customer is five times cheaper than obtaining a new one (Clemes, Gan & Zheng, 2007; Reichheld & Sasser, 1990).
 A detailed understanding of customers’ switching behaviour can enhance long-term relationship between service providers and customers (Gerrard & Cunninham, 2004). Some researchers have extolled the benefits of preventing customers from changing service providers (Arnold, Ganesh & Reynolds, 2000; Keaveney, 2001). These authors share a common view that switching reduces revenue and profits. Furthermore, it costs more to acquire new customers than to prevent them from defecting (Lassar, Mittal & Sharma, 1995; Zeithaml, Berry & Parasuraman, 1996).   
Anderson and Srinivasan (2003) assert that poor service quality is the root cause of bank switching, whereas Barrett (2003) maintained that price is more influential than service quality when switching banks. In general, dissatisfaction is a main factor influencing customers to switch in any industry (Gotlieb, Grewal and Brown 1994). In view of this subject matter, this study aims to investigate the determinants of brand switching in the Nigerian banking sector.   
1.2    Statement of the Research Problem
The Nigerian banking industry has experienced considerable changes in response to deregulation, technology, and more sophisticated and demanding customers (Ashill, Davies & Thompson, 2003). In recent years, the Nigerian banking industry has witnessed remarkable changes (Abdullahi, Abubakar, Aminu, Kabiru & Nik, 2012). Since 2005, a year after the Central Bank of Nigeria (CBN)’s consolidation of the banking industry, competition among the Deposit Money Banks (DMBs) has been increasing due to the customers’ financial awareness and high expectation in terms of quality of services they require from banks (Soludo, 2006). In addition, traditional lines of demarcation amongst banks have largely disappeared and several banking institutions compete more aggressively over a wider product range (Michael, Christopher, & Li, 2007). Many banks in doing this have employed customer retention strategies to compete aggressively in a more competitive banking environment in order to avoid switching among their customers. This is crucial since research supports that it is five times cheaper to maintain existing customers than to get new ones (Clemes, et al., 2007; Reichheld & Sasser, 1990).
However, in spite of the customer retention strategies that organisations employ, customer switching has become prevalent and a major concern of both service providers and academics (Abdullahi et al, 2012). For example, in a global survey of customer behaviour in retail banking, Ernst and Young (2011) reported that worldwide, 36% of customers have changed their main bank to another in the past two years, and another 7% of customers are planning to switch to other banks. Avkiran (1994) also found that the New Zealand banking industry had an annual switching rate of 4%, however at any one time, 15 percent of personal retail banking customers claimed they intended to switch banks. Meanwhile, customer switching rate in European, North American, and East Asian countries is reported to be around 20% to 40% (Barret, 2003; Keaveney, 2001). Information relating to switching in the banking sector in Benin City is scarce. This study therefore seeks to ascertain rate of switching in the Nigerian banking industry.
In addition to the above, Michael, et al., (2007) opined that there is need to analyse the changes in the importance of factors that contribute to switching among bank customers. This study seeks to fill this gap by ascertaining the relationship between selected demographic variables and switching behaviour as well as to ascertain other factors outside demography that encourage switching behaviour among bank customers in Benin City.
1.3    Research Questions
Flowing from the statement of research problem, this study seeks to proffer answers to the following research questions:
i.    What is the rate of brand switching behaviour among bank customers in Benin City?
ii.    What are the reasons for brand switching behaviour among bank customers in Benin City?
iii.    What is the relationship, if any, between demographic variables (namely: gender, marital status, age, highest education qualification, income level) and customer brand switching behaviour in the banking sector in Benin City?
1.4     Objectives of the Study
The main objective of this study is to examine the determinants of brand switching behavior in the banking sector. The specific objectives of this study are; to:
i.    determine the rate of  brand switching behaviour among bank customers in Benin City;
ii.    establish the reasons for brand switching behaviour among bank customers in Benin City; and
iii.    ascertain the relationship between demographic variables (namely: gender, marital status, age, highest education qualification, income level) and customer brand switching behavior in the banking sector in Benin City.
1.5     Research Hypotheses
The research hypotheses that were tested in this study are as follows:
H1:    There is no significant relationship between customer brand switching and service quality, distance, price factor, switching cost, reputation of service provider, promotion, competitive offers and customer dissatisfaction.
H2:    There is no significant relationship between customer brand switching behaviour and gender, marital status, age, highest education qualification and income level.
1.6     Scope of the Study    
 In this study, we associate brand with banks. The study examines the determinants of brand switching behavior in the Nigerian banking sector. Customers who patronize one or more brands (banks) are the subject of this study.  Geographically, this study is limited to consumers of different banks in Benin City, Edo State. With respect to time frame, the questionnaires were administered within a period of one month to different bank customers in the City.
1.7     Significance of the Study
For many years, the issue of brand switching among customers has not been properly handled or managed in most of the organizations in Nigeria (Abiodun & Oyeniyi, 2008). If retention is not properly managed, customer’s loyalty may be lost. The outcome of this study will be significant to chief executive officers (CEO), captains of industry and policy makers in business organizations especially in the banking sector on the need to put in place an effective management system in handling customers’ complaints in order to avoid brand switching behaviour among customers. This research contributes to existing knowledge by equipping bank managers to gain understanding of the factors that could lead to brand switching behavior among their customers.
1.8     Limitations of the Study   
  The major limitation in this study was the tendency of some respondents not to be sincere in providing honest and accurate information. Some very loyal customers may respond positively to certain items which they feel may be prejudicial to the image of the bank if they did otherwise; even if they know that they are not saying the truth. However, this constraint was minimized by using a fairly large sample size. As the number of respondents becomes fairly large, it is expected that the true position about a particular bank would be known.