Journal of Internet Banking and Commerce ISSN: 1204-5357
ISSN: 1204-5357
+44-175-271-2024G. Panygirakis, Professor of Marketing, The Athens University of Economics and Business
Web: http://www.aueb.gr/users/panigirakis/
Email: pgg@aueb.gr
Pr. Theodoridis, PhD Researcher,The Athens University of Economics and Business
Email: Theodoridis.Prokopis@aueb.gr
Ir. Rigopoulou, Adjunct Lecturer, The Athens University of Economics and Business
Email: erigop@aueb.gr
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Half of the European population still lives outside major urban areas. However, the quality of life and employment opportunities in the remote areas of Europe are under threat. The social role of companies is manifested by the improvement of the living standards. In some cases the lack of the provision of financial services becomes unjustified having in mind the opportunities provided by information technology. This piece of research reveals the correlation between the geographical and financial exclusion concerning two isolated areas in Greece and identifies the banking attitudes of an excluded customer segment. Companies have to be repositioned in order to create a profile, in tune with the needs of regional and local communities and in line with their well-being evolution. It seems necessary, a certain re-thinking of some basic marketing concepts like segmentation and targeting, according to a more socially responsible strategic view.
Consumer Exclusion, Social Responsibility, Globalisation, Services, Banking Sector, Greece
The radical changes occurring in the micro and macro environment, which dynamically affect the marketplace and its participants, are widely known. Both the industrial and the academic communities have to realise the need of a re-determination and re-evaluation of many basic and traditional concepts of the strategic marketing plan. The defenders of the concept of globalisation argue that it ideally leads to a multi/cross cultural and without boundaries world. In this context, there is a need of a worldwide community to capitalise effectively and efficiently the opportunities based on the principles of the "system".
It is certain that technology has a pivotal role in the context of globalisation. Moreover, technology is being presented as the magic "stick" that could eventually overcome any obstacle or problem and create a worldwide community to sharing equal opportunities in progress, education, communication and information. This is of great importance only when it is clear that technology has to be user/citizen oriented and publicly accessible.
Considering the implementation of eventual globalisation it is crucial to remember some of the basic axis of the concept. For example, the creation of a global community has to underline and incorporate local and regional social characteristics. In practice this can be translated into specific directions for public and private organisations and their various orientations in order to provide opportunities at local and regional levels.
What happens in the real world when attempting to create the "global community"? Is there any reorientation of the aims and objectives instigated by industries? How do companies target the market in terms of geographical dispersion? Which are the main criteria when evaluating the selected target markets? Is there any "space" to serve small or isolated communities? Is there any possibility, that the traditional marketing concepts as well as global management principles and foundations, have been used as a cover in various decisions concerning the selection of target markets, in contradiction to the new role they have to play in the adoption of the globalisation concept?
The focus of this paper is on the companies' role in the implementation of globalisation under their social responsibility's point of view and the re-thinking about some basic marketing concepts, as a direct consequence. Moreover, the authors argue that companies have to be re-positioned in the society as well as in front of their selves, in order to create a new contemporary profile, in tune with the needs and evolution even of the regional and local communities. It is known that companies often underline their role within the society as the meaning of their new profile and orientation. However, the concept of societal marketing having as its core theme the company's orientation toward the well-being of the customer and generally the society, creates at the same time a field of dialog between the academic community and the industry.
Marketing should always be addressed to customers in order to gain the answers it looks for, to all its inquiries. Therefore, we are going to base our argument on a field research which was conducted in Greece and more precisely in two rural and remote, with limited access, areas of Greece (Panigyrakis et al, 2002).
Remote Customer Segments and Financial Exclusion
Half of the European population still lives outside major urban areas. However, the quality of life and employment opportunities in the remote areas of Europe are under threat. Remote areas have experienced or are experiencing a steady decline in the younger population, quality of education, provision of health-care and commercial services as people have relocated to find to better paid and more varied jobs in towns and cities. A decline in traditional manufacturing employment in urban areas has been partly compensated by growth in new industries, which strongly rely on information and communications. If the necessary telecommunication infrastructure is installed these technologies may offer an opportunity for remote areas to compete on an equal basis in new markets.
Marketing ethicists have long criticized some marketers for making non-socially responsible or even unethical decisions in the market selection. These issues have been referred to as the ethical issues of inclusion and exclusion (Smith and Quelch, 1993) and these are the basic axis that marketers have to follow in order to adopt a new orientation in the context of globalisation (An example of an exclusion decision is not providing a needed product / service to a segment of the population which needs it ).
It is widely accepted that the social role of companies is manifested by the improvement of the living standards of the society. But this is to ascertain that when social exclusion occurs, then the living standards become even lower. (Lee, R. 1996; Ford and Rowlingson, 1996).
Financial exclusion could be experienced in many different ways. Its key characteristic is the inability of some customers to access necessary financial services in an appropriate form (Sinclair, 2001).
It might be caused by macro-economic factors and facts or, of course, as the result of decisions made by the management of a specific company or even by the whole industry. Particular conditions related to the marketing mix factors (marketing exclusion), strongly related to a previous experience (condition exclusions), such as a high - not affordable price (price exclusion), the lack of accessibility, due to a certain distribution-related decision (access exclusion), not matching image (as a result of false or "correct" perceptions), may create barriers between the customer and the company that do not support a further relationship. However, not all customers experiencing financial exclusion are of no interest for a company.
Financial exclusion also is accepting self-exclusion. A decision made by the customer as a result of dissatisfaction from a previously related experience. (Kempson and Whyley, 1999). Referring to the specific example of bank services, offered in isolated areas in Greece, we can see that in the vast majority of the small isolated islands in Greece, not only technology aided banking services, but even traditional local bank branches are not provided. In these cases, when this kind of exclusion occurs, the local post office branches are servicing customers. However, as probably expected, they are providing only the most common banking transactions, and of course, from the strategic point of view, any mentioning about "corporate identity building" and "corporate / brand equity building" is to be avoided. This because exclusion decisions have already been taken and implemented.
In any case, particularly when talking about service provision, the customer is definitely an integral part of the marketing and delivery process. However, the service provider via the implemented processes and the humans involved is the one with the determining role in its implementation (Berry et al, 1983, Gronroos, 1990, McKenna, 1991). Services are becoming more and more a major competitive tool, even in the physical goods industries, necessitating a close relationship, often called a strategic partnership (T. S.Aijo, 1996).
Financial exclusion is strongly related to service providing. In some cases the lack of the provision of financial services becomes unjustified having in mind the opportunities provided by information technology. This is exactly the case, when referring to the banking industry.
This piece of research reveals the correlation between the geographical and financial exclusion concerning two geographical remote areas in Greece. The study identifies the banking attitudes of a customer segment that hasn't been investigated in the past; those who have never been included. It examines the expectations and the satisfaction of the banking services, the use of banking technologies and the usage of available banking products, by the inhabitants of two remote and isolated islands in Greece. In these islands fully developed financial services have never been offered.
Financial exclusion is often largely attributed to structural changes in the financial services sector, including increased competition from new entrants in the markets, mergers and information technology. All these characteristics, resulted in the development of a combination of tactics related to the adoption of cost cutting activities and increased emphasis on market segmentation and appropriate targeting, are present in the banking sector in Greece.
The inhabitants of isolated areas cannot satisfy their banking needs although they have a healthy income profile and financial strength. Only few financial services were traditionally offered in these areas. Nowadays, due to the increased competition in the market, these neglected customer segments can be of interest to the banking industry.
There are many small isolated islands with no traditional local bank branches in Greece. In the vast majority of them, no technology aided banking services are provided. When available, the most common banking transactions are often provided by the local post office. In summer, tourists with a different profile and number visit each one of them. Their only contact with the outside world is by boat. During winter, boats might be able to dock on the port as rarely as once a month, depending on the size of the island and the weather conditions. The situation often results in a shortage of cash, forcing small local companies (i.e. grocers, restaurants etc) to provide credit to their customers. These islands are isolated, have sparse populations and have always experienced financial exclusion.
Banking needs, the familiarity with banking services and the use of technology for the consumption of these services have been the subject area of previous research. However, little is known about the above and the elements contributing to satisfaction for people who have always experienced financial exclusion and are not familiar with technology. Lack of awareness in the use of technology and limited contact with payment systems, such as cheques and credit cards is the norm in isolated areas. Contrary to common belief, these conditions can accelerate the use of new technologies and modern financial products.
This study was designed to focus on a distant, isolated population and:
" Investigates the banking services currently used by customers.
" Explores their banking needs.
" Identifies their perceptions of the existing banking services.
" Investigates the usage of virtual banking services.
" Investigates their attitudes towards the provision of unmanned banking services via Information Technology.
This piece of research is exploratory, as the available information in relation to customers living in isolated areas, is insufficient on these elements. However, this paper attempts to examine the issues further.
Sampling Frame
Two of the most isolated islands, Sikinos and Psara, were chosen as collecting data from all the remote Greek islands is almost impossible, due to resource limitations . Sikinos is a very small island and attracts mostly foreign tourists. In 1991 it had a population of 267, living in two villages (National Statistics of Greece, 1991). The island of Psara is somewhat bigger, has a long tradition in shipping and attracts mostly tourists from Greece. In 1991 it had a population of 438, living in five villages (National Statistics of Greece, 1991). In both places there is a post office, offering a limited range of financial products.
It is worthy to mention that, it rarely happens to the citizens of those areas to be selected as respondents to surveys. The inhabitants experience a certain kind of "exclusion" by both the private sector and the public sector, not only as customers or as audience but even as citizens that "their opinion counts". So, they feel excluded not only from what is happening but even from what is being planned or prepared by almost all sectors. As expected, this kind of exclusion leads them to a greater disappointment in conjunction with the other forms of exclusion.
A total of 359 people (representing approximately 51% of the inhabitants of the islands) were interviewed (table 1). Of those, 190 were interviewed in Psara and 169 in Sikinos. The men had stayed in areas other than the island the most; furthermore they were significantly better educated than women. It is not surprising to find that a quarter of the inhabitants are retired as the population of these islands is ageing, and. The education of the sample is representative of the educational levels of isolated areas, but not of the whole of Greece, where most people graduate from high school and the majority continue a higher education. Almost 59% of the respondents never went to High school, while only 12.5% of the sample had a higher education qualification. The educational profiles were more extreme in those that never left the islands.
Data Collection, Research Instrument and Procedures
The actual study was conducted over a period of five months in winter and early spring 2000, in three stages.
A draft questionnaire was developed during the first stage. The questionnaire was pre-tested in Athens, the capital of Greece. Since the sampling frame contained respondents, who were quite different from Athenians, it was decided that the questionnaire should be pre-tested for a second time, under real circumstances. In addition, it was appreciated that identifying and approaching the inhabitants of these isolated areas was very difficult and contacts with the local opinion leaders should be developed to overcome these problems.
During the second stage, the final research instrument was developed and links with the local communities were established. Ten semi-structured in depth interviews were conducted with local opinion leaders (i.e. the mayor, the priest, teachers in the local schools) on each island by senior researchers, offering some basic information and support in reaching the general population. Five focus groups with inhabitants of each island, helped in the development of a general understanding of the situation and attitudes towards both technology and banking, followed. During the focus groups, the questionnaire was pre-tested. It was apparent that the prospective respondents, although helpful and very interested to express their opinions, had difficulties in understanding and filling it in. This was mostly due to their limited experience in participating in research and answering closed questions. To overcome this problem and in order to capture the true perceptions of this particular sample, it was clear that data should be collected by person-administered interviews. The final instrument consisted of a number of closed questions, most of them using a five-point scale.
During the last stage, the quantitative data was collected via in-home interviews and interviews in public places that locals tend to visit on a regular basis. The fieldwork for this part of the study was conducted in four days. In total 17 researchers (9 in Sikinos and 8 in Psara) collected the quantitative data. All researchers were trained in Athens, to avoid bias during the interview process.
Data Analysis
Research on the inhabitants' views in isolated areas is relatively limited. Because of the exploratory nature of all the issues examined, descriptive statistics are displayed. As a next step in our analysis, we performed a series of extensive statistical analysis, using T-Tests, chi-square statistics, in order to identify the exact relationships. More precisly, in order to examine the hypotheses that the opinion of people in the two samples and the fact that the one group has experienced living away from the island, was not related, independent samples t-test was used. To assess the ranking of different variables, by examining the mean rank differences, Friedman two-way ANOVA test was conducted. Pearson x2 was also used in order to examine comparisons of categorical data,. For all tests, for observed significance level of the test (p) less than 0.05, the hypothesis that the variables under investigation are independent was rejected.
A primary objective of this study was to investigate the banking services currently used by customers, in order to reveal the provision of those services in the particular areas. In addition, the study highlights their perceptions about the provided services. In this section, we discuss the key findings of this study, in order to provide also a new perspective on companies' social responsibility issues combining those with "exclusion", particularly social and financial one.
As expected, the population of those remote areas are not denied access to financial services, as long as they make the effort to obtain them. As shown on table 2, almost all respondents have some sort of bank account. An interesting finding is that a high percentage of the sample (56.57%), are banking with more than one financial institution. Those respondents who have lived away does not presents any clear differentiation of those who have spent all their lives in the island regarding the use a different number of financial institutions from those (Pearson x2= 8.97, p= 0.06).
As far as the conditions of use is concerned, it is clear however that 30.37% of the sample claim that they need to travel to another island at least once every two weeks to make their required transactions. Only 5.29% of the sample cited that they are able to make them all in the island they live on (table 3). The results highlight that it is almost compulsory for someone who wants to satisfy banking needs to visit another island, while all residents travel with a similar frequency (Pearson x2= 2.11, p=0.72). This cause additional costs to them associated with banking transactions, since staying away overnight or even for a longer period is often necessary due to the frequency of the islands' connection by boat and the weather conditions.
An interesting finding regarding a related topic, i.e. technology and its contribution to those areas wellbeing, is that all respondents identified technology as a key factor in the development of their area (table 4), since it was revealed that they believe that unless the area develops, more qualified young people will stay there. Similarly to banking services availability, technology was also found to be far from being adequate. Those that have lived away were even more disappointed with the services provided, although the observed difference was not statistically significant.
Respondents provided low scores regarding their ability to access to the various banking services in their area (table 5). Only when referring to the most basic services (withdrawal/deposit) this is not the case. More precisely, the people feel that payment of bills is the service to which they have the most access to in their region, followed by withdrawal/deposit (x2=1108, a=0.00).
Particularly, those respondents that have been away for a long time, and therefore they have experienced ATM and other technologies usage in the past, they feel that they do not receive the quality of service they perceive as standard.
The great majority of the respondents (67%) claim that they perform bank transactions at least once a month. Again, the basic banking services (withdrawals/deposits and payment of bills) are those that are used the most in the area (x2=1158, a=0.00) (table 6). Those that have lived away, appear to use the basic bank services more than the others and make more stock exchange transactions, although the latter is still one of the least used services. Only a small % of respondents, indicated to make use of any kind of credit cards for their transactions. It seems that it is the custom of the area to pay in cash.
As shown on the following table (table 7), the respondents all shared the same perceptions in relation to the standards of the banking services offered in their region. They did not express any major concerns in terms of the security of the banking services and were reasonably content with the reliability of the systems. However they all expressed some discomfort in relation to the speed of the system. But, their major concern refers to the coverage of the banking networks. When compared with the others criteria measured, the findings imply that they all agree that the quality of the service provided was not what they expected.
Among all requirements of the banking services in the region, only "personal contact" received a slightly lower mean score, implying that all respondents agreed that reliability, speed, security and convenience are most important features of the provided banking services (table 8). Those that have spent some time away from the island, believed that this feature is of less importance than those that have stayed on the island for most of their lives and are used to doing business through personal contact. When paired sample tests were performed, it was revealed that there was no difference in the perception of the importance of all these elements (a=.00).
The use of ATM services are not at all popular, as 71% of the sample cited to be non users of ATM services, or even in the past "they have never used" an ATM (table 9). However, this finding was somewhat supported by the views expressed during the personal interviews and the focus groups, where the participants linked their desire to have some personal contact with the bank employees with the fact that they have to make an actual journey to visit the bank. This could be a plausible explanation, since they use other technology. For example, more than 44% of the respondents reported that they own and use a mobile phone.
Although all respondents appear to have limited experience in using ATMs, the results indicated slightly differences among those who have lived away and those who have stayed for their whole lives on the island, (Pearson x2=8.691, a=.00). Once again, it seems that the experience of living in other, more technologically developed areas, or in other words, not excluded areas, appears to influence positively the potentiality of ATMs.
In the in depth interviews, it was revealed that the inhabitants of these islands were experiencing difficulties in using most of the highly sophisticated equipment, and ATMs were perceived as such. Some of the people interviewed felt that using an ATM machine is risky, and were not willing to trust the equipment. This is mainly due to problems with the telephone connections used at present to support the ATM network.
It was not surprising, after all, that less than 2% of the respondents have ever used a bank's web site. When they were asked, it was clear that the Internet was only used for information gathering. None have used the Internet for banking. The inhabitants of these islands were security conscious, and believed that using a computer to perform financial transactions is highly dangerous.
Taking the several stakeholders and the financial exclusion they are facing, in this particular case it can be said that financial exclusion does not "touch" only the local population of these islands, but also the tourists who select these areas for summer vacations.
Moreover, the exclusion of these islands entail also very important social and political implications, since the only contact the citizens have with the "outside world" is by boat. As mentioned, previously, in winter as rarely as once a month due to weather conditions.
By explicitly considering these issues, one can argue, based not only on their intention but also on their potential, that many of the respondents could (and therefore should) be among the target-customers of the major banks of the country. However this does not occur. Is that the "real world" bank deny their social role, or it is the result of their interpretation of some basic marketing concepts?
Setting socially responsible Marketing Objectives and Strategy
In the last decade some authors claimed very clearly that the business field is business not charity; and that companies hold not provide social services (Hunter, 1993). But, what is meant by "social services" and why business people are some times so sceptical when asked to adopt those services into their corporate strategy and tactics?
In the free market economies, business organizations are free to choose what goods and services they produce, the processes by which they produce as well as the markets they aim to serve. So, social services does not necessarily mean the offer of specific additional services to particular customers. It means the company's orientation in offering its products/services in a more "social way".
In market economies where companies do have a high degree of autonomy, the manner in which organizations make strategic decisions, taking into consideration the Social Responsibility notion, becomes in itself a matter of discretion. As Frederick et al, (1992) suggests there are 3 broad views of the social contribution of the company. The so called "social obligation", which is adopted by companies which are acting basically, according to what the law requires. The 'social responsiveness", where the companies are more open to moral issues and influence by involving the acting social groups. Finally, "social responsibility" under which companies recognize a wider spectrum of relationships with the different stakeholders and the companies enhance a certain interaction with those groups.
So, it is important to recognize that the concepts of "social responsibility" and "any kind of exclusion" are not theoretical claims or even new, "smart" ways of new determination of "competitive advantage. (See also the prevailing perspective of "strategic marketing", which gives emphasis to competitive advantage), (Sheth et al, 1988). Instead, this is a certain philosophy of doing business with serious consequences to society's well being. The real importance of companies' social responsibility has not to do with companies' reactions to particular facts or events, but to their view to their contribution and role to the society. Therefore, the subject of social responsibility of a particular company shouldn't be left to ones managers hands, but it should be the core concept behind company's existence.
Apart from Societal Marketing (Abratt and Sacks, 1988), which should also focused on a long-term orientation towards consumer satisfaction (Sirgy et al, 1982) without excluding of course profitability and stable growth (Shani and Chalasani, 1992), Relationship Marketing focuses on the creation of long-term relationship between the various participants - members of the particular network, involved in a process based on the axioms of "mutual exchange and fulfilment of promises" (Gronroos, 1994, p.52.).
Moreover, as Kantner claims (1994, p.96, 2) a "successful partnership manage the relationship, not just the deal". Therefore, the new emerging marketing paradigm could thus be called relationship orientation, where strength and quality of the relationship (Liljander and Standvik, 1995) as well as the quality and profitability of the relationship (Storbacka et al., 1994) play significant role (the Nordic literature, which contribution on the subject is of great importance). But the question arises exactly there, i.e. in the definition / identification of the "various participants-members of the particular network who are going to become involved in the relationship"! Who decides the criteria under which somebody will become member of the "network"?
Even, the societal marketing concept holds that the organization's task is to determine the needs, wants and interests of target markets and to deliver the desired satisfaction more effectively and efficiently than competitors in a way that preserves or enhances the consumer's and the society's well-being So, it is already clear, that the societal marketing concept requires, the promotion of "proper consumption values" in order that "long-run consumer welfare" may be attained. Thus, it requires that the business organisation includes social, ethical and ecological considerations in its product and market planning. But, how much emphasis has been given to the particular target markets and what balance with society as a whole?
Referring to the traditional Marketing concepts of "segmenting - targeting - positioning", one could claim that the "focused targeting" is among the most successful strategic options. The question is about the criteria this strategic decision will be implemented. The main purpose of segmenting is to create substantial, measurable, accessible customer segments in order afterwards to target effectively and efficiently.
Nowadays, "customer valuation" forces to a more rationalised way of making use of the above mentioned strategic tools, since the customer of the company becomes the "consumer of the wealth of the organization". As a result, value is seen as something that have to be extracted from customers to create shareholder value and all customers must be made to show a sufficient return to the organization.
Therefore, we strongly believe that under the scope of re-formulating the companies' roles in society, one should re-define the segmentation criteria as well. Although traditionally, this has been implemented based on product-related variables (i.e. product usage and product benefit) and consumer related variables (i.e. demographics, lifestyle, self-concept etc), communities' "well being" has to become the "compass" of segmentations criteria setting.
The traditional marketers claim that "consumer/customer is the focus" and that consumer's needs and desires are the raison-d'etre for marketing (the marketing concept can be described as an integrated effort aimed at providing customer satisfaction). Is it not the appropriate time to focus on the consumers' well being and make use of the several variables according to this notion of well being? Otherwise, the claim "consumer is the focus" is not totally truth and it should modified to "consumer of our convenience is the focus".
The authors would like to acknowledge the valuable contribution and fruitful comments of Dr. C. Veloutsou.
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