Abstract
Despite widespread liberalization of savings mobilization marketing systems in African economies, consumers continue to rely more heavily on informal financial services than formal financial services, within these systems. The authors draw on habit theory and the strategic marketing framework to develop a rural, customer-centric marketing (CCM) model for promoting rural savings programs in the Sub-Saharan African (SSA) context. Results based on data from Ghana’s savings mobilization program show that under the current, liberalized policy regime, formal financial institutions generate a more significant relative advantage than informal financial arrangements. Of the four customer-centric marketing activities (i.e., service affordability, accessibility, acceptability, and awareness), consumers only viewed service affordability as generating a relative disadvantage. Relatedly, only service affordability positively influenced savings likelihood, while service accessibility negatively influenced the bank usage habit. The results confirm that the customer-centric marketing approach effectively identifies which service inducements promote the bank usage habit in Africa’s savings mobilization programs.
Introduction
For the past several decades, many emerging and developing market economies (EDMEs), especially those in sub-Saharan Africa (SSA), have replaced state-controlled policies with market liberalized-regulations within their savings mobilization marketing systems (Vignieri and Santos 2009; Williams 2009). However, as of 2017, only 14 percent of adults in sub-Saharan Africa reported saving with formal financial institutions (FFS), while an additional 40 percent reported saving with informal financial arrangements (IFAs) such as rotating savings and credit associations (i.e. ROSCA) (Klapper et al. 2019).
The continued under-utilization of FFS in Africa’s savings mobilization marketing systems limits policy makers from achieving their social inclusion growth goals. That is, policy makers seek to incorporate FFS in order to increase access to affordable financial services for the quintessential, rural consumer. Accordingly, we address the potential of marketing intervention policies for successfully integrating formal and informal savings in Africa’s savings mobilization marketing systems.
Investigating the role of marketing systems in Africa’s economic development and poverty alleviation efforts is a long-established research prerogative of marketing scholars. To this end, previous scholarship has addressed savings mobilization in Ghana (Dadzie, Akaah, and Dunson 1989), the market orientation of smallholders in Ghana (Blankson, Cowan, and Darley 2018), indigenous African businesses (Babah-Doudah, Barth, and Ingenbleek 2019), export marketing policies (Arnould 1989), and the adaptability of pineapple marketing systems in Benin (Hounhouigan et al. 2014). More recently, the Journal of Macromarketing published a special issue on marketing systems in African economies (Dadzie and Sheth 2020). Relatedly, development scholars have also investigated the relative advantage of FFS versus IFAs in Africa’s savings’ mobilization marketing systems (Adams 1978; von Pischke, Adams, and Donald 1983; Allhassan, Reddy, and Guppati 2019; Aryeetey and Udy 1997; Fernando 1991; Hoffman 1990; Meyer et al. 1989; Sanches Barrios et al. 2015; von Pischke, Adams, and Donald 1983).
The present study builds on this prior work by investigating two primary research objectives. The first research objective examines how consumers respond to formal savings mobilization programs following the transformation from a state-led to a market-driven system, in sub-Saharan Africa. In particular, the study investigates how marketing system integration shapes consumers’ responses to savings mobilization programs. The second objective is to investigate how the socio-cultural context or normative beliefs further impact consumers’ response bank usage habit and savings behavior in mobilization programs.
This study addresses the research objectives by drawing on habit theory (Quinn and Wood 2005; Wood and Neal 2007) to explain how rural consumers respond to savings mobilization programs following the implementation of market-liberalized regulations. Habit theory posits that under certain conditions, consumers adopt new behaviors despite being hardwired to repeat past behaviors (Quinn and Wood 2005; Wood and Neal 2007). We propose that more consumers will use formal savings habitually if liberalization generates a substantial relative advantage of using FFS over IFAs for consumers. To generate a sustainable relative advantage in the formal savings programs, savings mobilization promotions must adopt a rural customer-centric marketing strategy. The proposed strategy must be based on consumers’ preferences for both formal and informal financial services. Accordingly, the study adopts the 4As customer-centric marketing framework (i.e. service affordability, accessibility, acceptability, and awareness (Sheth and Sisodia 2012)) which is increasingly recognized as the appropriate marketing mix framework for marketing strategy implementation in EDMEs (Abendroth and Pels 2017; Dadzie et al. 2013; Pels and Sheth 2017).
The study addresses the research objectives using two independent samples of consumers from Ghana’s savings mobilization marketing system. Using a two-sample approach allows us to compare changes in bank use habits and savings decisions as a response to the dramatic shift in Ghana's savings mobilization intervention policy, implemented in the late 1990s.
Ghana is a suitable SSA country for this study because it has historically utilized the cocoa production and payment system as a vehicle for savings mobilization and poverty alleviation (Blankson, Cowan, and Darley 2018; Brown 1986; Dadzie, Akaah, and Dunson 1989; Mikell 1989). In 1981, Ghana launched one of the developing world’s first large-scale savings mobilization programs (Dadzie, Akaah, and Dunson 1989). Policymakers initiated the program using a “mandatory bank use” state-led intervention policy framework consistent with the expansion of government programs worldwide, at the time (Goodman and Loveman 2013). However, by the late 1990s, policymakers in Ghana dramatically transitioned to a “voluntary bank use” intervention program by privatizing specific aspects of the bank savings program.
From a macromarketing perspective, the study offers several insights into ways policymakers can formulate intervention policies to increase rural consumers’ participation in formal savings mobilization programs. First, policymakers and poverty alleviation researchers must acknowledge the potential positive and negative impact of customer-centric marketing intervention policies under market-driven regulations. Under the previous, state-controlled savings mobilization program, FFS had a marginal relative advantage over IFAs in the domain of financial service accessibility and acceptability. However, under the current market-led savings mobilization program, consumers perceive a greater relative advantage in using FFS than in using IFAs in all customer-centric marketing activities, except in service affordability. These differences in rural consumer’s preferences for customer-centric marketing activities suggest that policymakers and development planners should design intervention policies based on rural consumers’ preferences. Acknowledging these differences in service preferences allows for the promotion of intervention policies that are more likely to attract rural consumers to use both formal and informal savings. Thus, there is support for integrating characteristics of IFAs into the formal savings mobilization programs as claimed by some development scholars (Adams 1978; Aryeetey 2008, Dadzie, Akaah, and Dunson 1989; Miracle, Miracle, and Cohen 1980; Porter 1966; Shaw 1973; von Pischke, Adams, and Donald 1983; World Bank 2015). This integration policy is currently being practiced in some SSA countries (Economic Commission for Africa 2016) and is a useful framework for marketing technology transfer in SSA (Dadzie, Akaah, and Dunson 1989).
The second macromarketing implication suggested by the study pertains to the bank savings behavior impact of customer-centric marketing intervention policies. Findings show that a lack of service affordability decreases the likelihood of rural consumers’ willingness to use formal savings. In contrast, the relative advantage of service awareness increases the likelihood of formal savings. The policy implication of these different savings behavior impacts suggests that integrating IFAs into the formal savings program to enhance affordability would not be enough to increase participation rates. Instead, policymakers should simultaneously implement educational campaigns to increase FFS awareness.
The third contribution to the macromarketing literature is the evidence that as FFS become affordable, bank usage habit strength also increases. This finding suggests that increasing the affordability of savings mobilization through the integration of IFAs or other incentives would both attract new savers and strengthen the banks usage habit among existing users. Such additional incentives could include farm subsidy payments channeled through consumers’ bank savings accounts. Further, subsidies in the form of mobile phone devices and connectivity access could help reduce transaction costs and distribute financial information to create more awareness among rural consumers.
At the micromarketing or managerial level, the study provides further evidence that the customer-centric (4As) marketing framework is a useful tool for identifying the service inducements that incentivize formal savings in Africa’s savings mobilization promotion programs. The findings suggest that three of the four elements of the customer-centric marketing activities are significant service incentives for rural consumers to save with formal banks. In contrast, affordability is a more significant service incentive for informal savings. This study provides systematic empirical evidence of the heterogeneity in the 4As marketing mix (Dadzie et al. 2017).
This paper is structured as follows. The first section discusses the transformation in SSA’s financial systems and its impact on FFS and IFAs in savings mobilization programs. Next, the paper examines empirical research on the macro and micro roles of marketing systems in encouraging the utilization of formal savings mobilization programs within the economic development and poverty alleviation literature. The following section provides contextual information about Ghana’s savings mobilization program, describes the research methodology, and presents the findings. Finally, we discuss the impact of the study’s findings on macromarketing/public policy research and practice in Ghana and other SSA countries.
Economic Development/Poverty Alleviation and Savings Mobilization Programs
Since the 1960s, development planners in SSA countries have sought to create strategies for economic development and poverty alleviation (Kotler, Roberto, and Leisner 2006). Planners focused on social programs that would increase access to healthcare, education, and general social services (Economic Commission for Africa 2016). Many scholars and government officials identified savings mobilization programs as a promising source of poverty alleviation and economic development (Adams and Vogel 1986; McKinnon 1973; Miracle, Miracle, and Cohen 1980; Shaw 1973).
At the individual level, bank savings mobilization programs arguably promote the savings habit among rural households, enabling them to save for their financial well-being and, thus, reduce the incidence of poverty (Adams 1978; Aryeetey 1998; Miracle, Miracle, and Cohen 1980). Savers also gain access to higher-yield investments, greater security for their savings, and a broader portfolio.
At the institutional level, scholars argued that bank savings enable different forms of banking systems (e.g., rural, commercial, credit unions, cooperatives) to accumulate individual small deposits for lending to rural entrepreneurs (Danquah, Quartey, and Iddrisu 2017). Consequentially, increased entrepreneurship activity creates employment opportunities that help alleviate poverty and economically develop rural communities (Dadzie, Akaah, and Dunson 1989; Miracle, Miracle, and Cohen 1980; von Pischke, Adams, and Donald 1983).
At the national level, FFS channel funds from outside the banking system into the monetary economy. As a result, governments can generate tax revenue and increase monetary control, thereby generating capital on the scale needed to fund national economic development and poverty alleviation programs (Adams 1978; Dadzie, Akaah, and Dunson 1989; Miracle, Miracle, and Cohen 1980; Porter 1966; Shaw 1973; von Pischke, Adams, and Donald 1983; World Bank 2015). However, some scholars contend that the growth of FFS ultimately weakens IFA systems, to the detriment of the poor (Aryeetey 2008). Nevertheless, as IFAs have been growing in number and importance to rural communities over the years, some scholars are investigating ways to integrate both the FFS and IFAs (Alesane, Yussif, and Anang 2020; Ouma, Odongo, and Were 2017; Steinert et al. 2018).
Savings Mobilization Approach to Poverty Alleviation/Economic Development in Africa
Paralleling these transformations in national savings mobilization policies, scholars in various disciplines have examined saving behavior in SSA in the context of economic development and marketing systems (Aidoo Mensah 2017; Amponsah 2017; Aryeetey 1998; Aryeetey 2008; Dadzie, Akaah, and Dunson 1989; Dadzie, Winston, and Afriyie 2005; Danquah, Quartey, and Iddrisu 2017).
Economics and finance studies of rural savings adopt an integrated perspective acknowledging that rural consumers consider both formal and informal financial services a means to achieve their economic goals, raise their living standards, and improve their quality of life (Amponsah 2017; Danquah, Quartey, and Iddrisu 2017). Recent scholarship by Alesane, Yussif, and Anang (2020) is consistent with the premise of the current research and recognizes the importance and growth of informal financial systems in Ghana. In a study of the determinants of village savings, loan association membership, and savings amounts in Ghana, Alesane, Yussif, and Anang (2020) conclude that the increased public confidence in the informal financial structure in Ghana, coupled with the ubiquity and prevalence of IFAs, bode well for future savings activity. Specifically, the authors point to these factors as a savings stimulus for the poor who use IFAs. Furthermore, they recognize that IFAs can effectively complement savings mobilization programs marketed by formal financial institutions.
Ksoll et al. (2016) provide additional support for the notion that local financial market intermediation positively impacts household well-being and economic accomplishments in remote and isolated rural areas of developing countries. In a study of the impact of village savings and loan associations, the authors conclude that informal financial institutions enhance household welfare, while also creating credit opportunities for members. Similarly, Steinert et al. (2018) provide a systematic review and meta-analysis of saving promotion programs in SSA, including those that use formal and informal financial institutions. This review demonstrates that savings promotion interventions assist households in amassing savings and positively impact household income and expenditures.
In a study promoting financial inclusion in Africa, with Nigeria as the focal point, Ngwu (2015) highlights the significance of amalgamating formal and informal systems to develop effective policies for sustainable financial inclusion. Additional evidence buttressing the development and promotion of formal and informal financial systems in SSA can be found in Lee et al. (2017), which focuses on the “Youth Save Experiment” in Ghana. Based on the concept of youth financial inclusion as a means to cultivate saving, their findings show that low-income youth can be linked to FFS and learn to save if the opportunity exists.
In the economic development and development finance literature, savings mobilization research has long acknowledged the existence of a dual system of formal and informal financial markets attributed to information asymmetry in both systems' markets and regulation (Armendariz de Aghion and Murdoch 2005; Bell 1990; Varghese 2005). However, scholars disagree on the appropriate strategy for integrating both systems to leverage their comparative strengths. To this end, Aryeetey (2008) provides a systematic review of these discussions. Relatedly, Aryeetey (2008) identifies three distinct strategies available to policymakers seeking to integrate FFS and IFAs.
First, imitation strategy encourages FFS to emulate IFAs’ most desirable features. Aryeetey (2008) highlights that this approach may not be feasible because FFS lack the cost structure to operate on a small scale and are subject to more regulation than IFAs. This infeasibility concern was supported, in part, by Ghana’s savings mobilization experience in the early 1980s. The country’s savings mobilization approach was later liberalized, infusing more private sector participation in order to meet increasing demands for better service delivery (Vignieri and Santos 2009; Williams 2009). Second, Aryeetey (2008) argues that the formalization of the structure and performance of IFAs may strengthen their operations but may not be a feasible strategy. Third, according to Aryeetey (2008), the final intervention strategy emphasizes the development of linkages between the FFS and IFAs to leverage their unique relative advantages. Of the three intervention options, the third is most practical given that it does not require competition between both systems (Aryeetey 2008; Ghate 1990; Seibel 1989). Hence, this study explores the feasibility of this third strategy for voluntary savings mobilization programs in the SSA context.
Marketing Systems and Savings Mobilization
Marketing scholars have long acknowledged the critical role of marketing systems in promoting economic development and poverty alleviation (Cundiff 1982; Dadzie and Sheth 2020; Goetke 1987; Ingenbleek, Tessema, van Trijp 2013; Peterson 2006). These systems are primarily “a network of individuals, groups, and entities; embedded in a social matrix; linked directly or indirectly through sequential or shared participation in economic exchange, which jointly and/or collectively creates economic value with and for customers, through the offering of assortments of products, services, experiences, and ideas, and that emerge in response to or in anticipation of customer demand” (Layton 2011, p. 259). Further, marketing systems occur at various levels, from two-transaction partners in a micro-system to aggregate systems that capture entire sectors in a country (Layton 2007).
At the micro-level of marketing systems, the strategic marketing literature has been foundational in designing and implementing social programs in developing economies such as India (Dholakia 1984) and in Ghana (Dadzie, Akaah, and Dunson 1989). The strategic marketing paradigm embodies segmenting, targeting, and positioning products and services on unique attributes, using the marketing mix (Kotler, Roberto, and Leisner 2006). The traditional marketing mix comprises the 4Ps of product, price, promotion, and place/distribution. However, given that developing economies consist of fragmented markets and consumers with low purchasing power, scholars propose the use of the 4As or customer-centric strategic marketing framework over the traditional transactional 4Ps marketing framework for implementing marketing strategies and practices in developing markets (Anderson and Billou 2007; Prahalad and Hammond 2002; Sheth 2011; Sinha and Sheth 2018). While the customer-centric perspective defines the marketing goals on the basis of individual customers’ needs and wants, product-centric approaches target the average customer in a segment with the same product or service. Prahalad (2002; 2012) first proposed the 4As framework. Since then, Sheth and Sisodia (2012) have reconceptualized it as a multidimensional customer-centric marketing framework. This framework is more suitable for aggregating fragmented markets to establish scale economies that support products and services at prices that all consumers can afford, access, accept, and develop awareness of (Sheth 2011). Some scholars argue that demand aggregation advantage is achieved by standardizing and aggregating some marketing mix elements to achieve economies of scale (Sheth 2011). This approach starts with creating a standardized product/service that all consumers can afford and access, leading to scale economies, enabling firms to achieve demand aggregation advantage (Dadzie et al. 2013; Sheth and Sisodia 2012). The customer-centric framework’s operationalization is discussed in the research methodology section and the questionnaire (Appendix A).
Of the four CCM strategy elements, the Affordability element is the most challenging to apply in emerging markets and African economies given the average consumer’s low purchasing power (Abendroth and Pels 2017; Dadzie et al. 2013). Some scholars argue that offering a product/service at prices that all consumers can afford is challenging when firms lack the scale economies required to provide low consumer prices (Sheth and Sisodia 2012). Next, the Acceptability element pertains to the firm’s efforts to ensure that consumers view the product or service as useable within their prevailing cultural norms and social context (Dadzie et al. 2017). Sheth and Sisodia (2012) emphasize that Acceptability is about meeting or exceeding customers’ needs for a product or service. Accessibility relates to the spatial and temporal dimensions of service in developing and emerging economies, given the lack of distribution and logistics infrastructure. Customers incur high transaction costs from long travel distances to rural markets. Hence, it is important to make products/services conveniently available and at the right time. Finally, the Awareness marketing mix activity pertains to the firms’ efforts to inform or educate customers about how to use the product or service in conjunction with its benefits (Sheth and Sisodia 2012). Some scholars speculate that some of the 4As activities may be less important than others in the EDMEs because of the social and cultural conditions in rural communities in these countries (Abendroth and Pels 2017). Accordingly, this study develops a conceptual framework that explores the different influences of the 4As customer-centric marketing (CCM) activities on rural consumer savings decisions.
Empirical Studies of Savings Mobilization Marketing System
One of the first systematic, comprehensive macromarketing studies of savings mobilization in SSA was conducted in Ghana when the country’s savings mobilization program was first launched in 1982 (Dadzie, Akaah, and Dunson 1989). The study examined cocoa farmers’ response to a new marketing system for savings mobilization that integrated the country’s cocoa export system with the formal financial network to increase FFS access in rural areas. Using the strategic marketing planning framework, the authors investigated the impact of the savings mobilization system on initial savings behavior. They concluded that over 70% of customers saved with the new savings program at an average rate of 15% of their annual farm income (Dadzie, Akaah, and Dunson 1989).
Dadzie, Winston, and Afriyie (2005) also examine the impact of normative beliefs on savings behavior in Ghana’s savings program, concluding that these local beliefs generally decreased the likelihood of saving with the savings mobilization programs. This finding may explain why consumers under-use savings mobilization programs. Another study in Kenya (Ouma, Odongo, and Were 2017) examined mobile phone users’ savings behavior. The findings showed that mobile phone usage increased the likelihood of savings and the amount saved at the household level. The authors attributed these findings to transactional convenience (accessibility) created by the use of mobile phones.
These studies provide insight into how SSA countries may address the underutilization of savings mobilization programs. However, they do not adequately consider the role of IFAs and, accordingly, do not provide full insight into the utilization challenge facing savings mobilization programs in SSA.
Accordingly, this study examines how rural consumers evaluate the relative advantage of FFS versus IFAs. The results will enable policymakers to determine which financial services formal banks should delegate to IFAs when undertaking collaboration between both systems. The next section of the paper discusses a conceptual framework for assessing FFS’s relative advantage versus IFAs for rural consumers within the 4As framework, beginning with a review of habit theory, the conceptual framework for the study, and testable hypotheses.
Habit Theory and Consumer Response to Savings Mobilization Programs
Habit theory indicates that repeating a behavior in a stable environment creates the conditions for automatic behaviors or habits (Verplanken and Arts 1999; Verplanken and Wood 2006). It posits that through the course of repeated action, decision making is reduced because environmental factors, rather than effortful choices, initiate behavior (Verplanken and Wood 2006). In addition to environmental cues, the presence of other individuals with whom one has interacted also initiates habitual behaviors (Ji and Wood 2006; Ouellette and Wood 1998; Wood, Tam, and Guerrero Witt 2005). Extant research on habit indicates that 45% of human behavior can be explained by the execution of habits (Wood, Quinn, and Kashy 2002). However, habits are not immutable. When environmental cues that initiate firmly engrained habits are removed from the performance environment, habits may break. Conversely, adding new features to the habit performance environment creates the necessary conditions for adopting new or discarding old habits (Verplanken and Wood 2006; Wood, Tam, and Guerrero Witt 2005). Thus, policymakers seeking to change consumer behavior through habits can successfully design interventions that focus on the environment (e.g., Verplanken 2005; Wood, Tam, and Guerrero Witt 2005). Habit theory suggests such interventions may be designed to occur either downstream or upstream of the intended behavior (Verplanken and Wood 2006).
Downstream interventions include information that informs or educates consumers to change behavior. For example, in Vietnam, another developing and emerging economy, national media channels were effectively used to encourage positive consumer behaviors: smoking cessation, helmet use, drunk driving prevention, and nutrition (Truong 2017). However, these types of behavior change campaigns are often unsuccessful (Verplanken and Wood, 2006). Downstream strategies, such as informational campaigns, work best when paired with changes in the physical or social environment (Verplanken and Wood 2006). On the other hand, upstream interventions seek to prevent undesirable behaviors or sustain positive consumer behaviors, addressing societal ills before they occur (McKinlay 1975; 1993). Upstream interventions are best suited for societal level policy changes designed to maintain individual consumer habits that contribute to the collective good (Verplanken and Wood 2006). For example, the proliferation of and government support for mobile financial services in sub-Saharan Africa give consumers increased access to savings vehicles and utility payments, increasing the likelihood that they will continue to engage in this behavior.
Consumer habits related to the use of financial services have been shown to benefit from interventions (Loibl, Kray, and DeMay 2011). For example, Chu et al. (2015) demonstrate that rural consumers’ migration to a new, urban consumption environment, coupled with information about financial services result in the adoption of debit cards and online banking (i.e., a downstream plus context change intervention). In contrast, upstream policy interventions, such as economic disincentives, have been shown to effectively reduce traffic congestion and sustain the habit of increased public transportation use (Litman 2006). In the context of Africa’s savings mobilization programs, upstream interventions include policies related to the mandatory versus voluntary use of FFS or the relative emphasis on rural versus commercial banks in savings mobilization programs.
Second, habit theory indicates that the key to changing or creating habits is to disrupt the environmental factors that serve as behavioral cues (Verplanken and Wood 2006). In the context of the rural savings programs, CCM activities serve as cues that automate the bank savings habit. For example, consumers who consistently find FFS to be accessible will be cued to save more than consumers who do not (Verplanken and Wood 2006). The next section highlights the development of the conceptual model and elaborates on how the CCM elements serve as cues to automate consumer savings behavior.
Conceptual Model
This study proposes a conceptual model in Figure 1 to describe the relationships among FFS’ service attributes, bank usage habit formation, and duration of bank savings accounts as a proxy for the duration of savings behavior. These relationships are contingent upon environmental cues, namely the voluntary use of cash, checks, and control variables, including normative beliefs.
A Customer-centric marketing perspective of bank savings habit in savings mobilization programs in a voluntary-use intervention policy environment.
Impact of CCM on Bank Usage Habit Formation
A major premise of this study is that consumers must first experience FFS’ credence before forming their bank savings decisions, consistent with the view that services consist of credence attributes (Bitner 1992). Past research has documented that four service attributes shape bank usage in Africa’s savings mobilization programs: customer service, general bank features, savings rewards, and proximity (Dadzie, Akaah, and Dunson 1989). This research also documents that customer service performance accounts for slightly over 41% of the variance in the data, followed by general banking features (21%), savings rewards (15%), and proximity (12%). Based on this research, bank service attributes arguably correspond to the 4As of CCM activities: affordability, accessibility, acceptability, and awareness. Past research has posited that all 4As CCM activities are essential to customers (Sheth and Sisodia 2012). From a habit theory perspective, all 4As constitute downstream habit environmental factors that serve as cues to automate behavior as a function of the relative advantage of FFS over IFAs. For example, regarding service affordability, banks offer interest on deposits while informal savings arrangements do not. This relative advantage of FFS may serve as a cue to use banks repeatedly. By contrast, IFAs are perceived as more affordable and flexible to use (i.e., accessible). Thus, in comparison to IFAs, FFS must offer a more substantial, relative financial service affordability advantage (incentive cues) to attract new users to use banks on a routine basis. A similar argument can be made for service accessibility. IFAs have an accessibility advantage over FFS (Aryeetey 2008). Thus, FFS can be expected to generate a relatively higher service accessibility advantage, inducing repeated bank use. Regarding the relative advantage of service acceptability, FFS offers rural consumers the opportunity to accumulate their meager savings without the knowledge of greedy next-of-kin, a vital incentive given the significance of the extended family system in African societies (Dadzie, Akaah, and Dunson 1989; Klapper et al. 2019; Miracle, Miracle, and Cohen 1980). Finally, FFS are better equipped to provide information and education about the financial benefits of savings and other means of attaining one’s financial goals. Consequently, repeated interactions with bank personnel may serve to increase awareness regarding the benefits of saving with banks rather than IFAs. Based on the preceding discussion, this study proposes that consumer experience of the relative advantages of the 4A CCM activities creates the necessary conditions for automatic, repeat usage of FFS. As a result, the bank usage habit arises per the following: H1a: The relative advantage of FFS’ customer-centric marketing activities positively influence the formation of rural African consumers’ bank usage habits. H1b: The relative advantage of FFS’ customer-centric marketing activities positively influence the formation of rural African consumers’ bank savings habits. H1c: The relative advantage of FFS’ customer-centric marketing activities positively influence rural African consumers’ savings account duration.
CCM and Variation in Habit Strength
Despite the importance of all four CCM activities to customers, there is disagreement on whether the activities vary in importance given the differences between urban and rural consumers in developing markets (Abendroth and Pels 2017). Habit theory suggests variation in the impact of CCM activities on bank usage habits for new versus experienced customers. New customers can be expected to have weak savings habits, while experienced customers are more likely to have strong savings habits. For example, experienced customers are expected to have greater access to FFS in terms of proximity to banks. New customers who live in inaccessible villages may be using banks for the first time due to the bank expansion program. Therefore, the relative advantage of CCM activities will be greater among new customers than experienced customers. Habit theory posits that consumers with strong habits are more likely to resist a policy change than consumers with weak or no habits (Verplanken and Wood 2006). Hence, this study proposes that experienced users will not change their savings behavior following the liberalization of savings mobilization programs. At the same time, new customers would be encouraged to save with banks based on the relative advantage of CCM activities. Therefore, the following hypotheses are proposed: H2a: The influence of FFS’ customer-centric marketing activities on rural African consumers’ bank savings behavior will be stronger for new customers than for experienced customers. H2b: The influence of FFS’s customer-centric marketing activities on rural African consumers’ bank savings habits will be stronger for new customers than for experienced customers. H2c: The influence of FFS’ customer-centric marketing activities on rural African consumers’ bank savings account duration will be stronger for new customers than for experienced customers.
Given that the formation of the bank usage habit is correlated with repeated use of banking services, this study extrapolates that: H2d: The bank use habit will have a stronger influence on experienced customers’ savings behaviors than on new customers’ savings. H2e: The bank use habit will have a stronger influence on experienced customers’ savings account duration than on new customers’ savings account duration.
Moderating Influence of Normative Beliefs
Past research has observed that rural consumers hold locally embedded, negative beliefs about FFS as objects of non-local origin, incompatible with local consumption norms and habits (Dadzie, Winston, and Afriyie 2005). For example, regular banking hours may conflict with rural consumers’ farming hours (Dadzie, Akaah, and Dunson 1989). Further, rural consumers are often intimidated by formal banks’ “office” environment and literacy and numeracy requirements (Dadzie, Akaah, and Dunson 1989; Kamran and Uusitalo 2019; Miracle, Miracle, and Cohen 1980). Moreover, formal banks are primarily located in urban areas, fueling the perception that they are incompatible with rural consumers’ financial needs (Danquah, Quartey, and Iddrisu 2017; Miracle, Miracle, and Cohen 1980). Hence, the impact of all CCM activities on rural consumers’ bank savings behavior, bank usage habits, and savings account duration is expected to be contingent on their perceived compatibility with local normative beliefs. Thus, this study proposes the following hypotheses: H3a: Normative beliefs have a positive moderating influence on the rural African consumers’ bank savings behavior. H3b: Normative beliefs have a positive moderating influence on rural African consumers’ bank savings habits. H3c: Normative beliefs have a strong positive moderating influence on rural African consumers’ bank savings account duration.
Methodology
Research Context
Ghana, West Africa, is the empirical context for the present study. Despite having one of the the highest living standards in Africa (after South Africa), poverty is pervasive in Ghana, with 25% of the population living on $2 per day (World Bank 2015). Cocoa production for export to the world market has dominated Ghana's economy for several decades (Vignieri and Santos 2009; Williams 2009). Relatedly, cocoa exports accounted for more than 25% of the country’s money supply and 30% of its labor force in the 1980s, declining to 15% and 10%, respectively, in 2015 (World Bank 2015). Scholars argue that policymakers’ attempts to transition Ghana’s economy from a mono-crop to a modern, diversified economy entailed policy intervention errors reflected in the cocoa industry’s organization and regulation (Mikell 1989). However, this study’s focus is not on how the cocoa marketing system has adapted to the changes in the regulatory environment (Owusu-Frimpong 2008; Pearce 1992), but on how cocoa farmers, as rural entrepreneurs, have adapted to one specific intervention: the savings mobilization program. This program was designed to reduce the liquidity requirements of the nation’s cocoa export marketing channel while encouraging rural entrepreneurs to save with banks to increase their financial well-being and fund national economic development programs (Aidoo Mensah 2017; Dadzie 2016; Dadzie, Akaah, and Dunson 1989; Vignieri and Santos 2009; Williams 2009).
Figure 2 provides a spatial map of the current savings mobilization marketing system in Ghana concerning two dimensions of social mechanisms. The first dimension corresponds to regulatory institutions, social beliefs, and customs that govern institutional practices and consumption decisions in the rural, African context. The second dimension corresponds to the extent of the formalization of financial institutions in rural financial markets. On this second dimension, the formal financial institutions (state commercial banks, private commercial banks, and rural banks) are distinguished from semi-formal (cooperatives, credit unions, NGOs, and micro-finance) and informal (rotating savings and credit associations, susu, money lenders, family, and friends) financial institutions (Amponsah 2017; Biggart 2001; Klapper et al. 2019). The roles of these financial institutions in the bank savings mobilization process in rural markets vary in their ability to generate scale economies.
Mapping the rural savings mobilization marketing system in Ghana.
Immediately below the formal financial institutions are the marketing companies or cocoa merchants who initiate the flow of funds or cash for payment to cocoa producers. The efficient cash flow for exchange transactions is essential for cocoa exports to global markets in Europe, the United States, and Asia. The third component of the system comprises regulatory institutions (i.e. Central Banks and Ministries of Agriculture) that regulate the savings mobilization system’s activities (e.g., enforcing regulatory mandates and making decisions about the structure of the savings mobilization program). The fourth social mechanism in the savings mobilization system includes cocoa producers and other subsistence farmers (i.e. coffee, pineapple, maize, yam, and corn). As shown in Figure 2, cocoa producers’ bank savings behavior is influenced by their normative beliefs, values, and experiences with bank savings.
The most recent history of Ghana’s savings mobilization system may be traced to the early 1980s when policymakers and development planners launched a large-scale savings mobilization program to amalgamate the savings potential of rural entrepreneurs, mostly cocoa farmers in Ghana (Danquah, Quartey, and Iddrisu 2017). Since other authors have already documented the early state-controlled intervention policy environment of the program (e.g., Aryeetey 2008), this study only discusses the relevant program changes during the late 1990s, when the system transitioned to a market-led voluntary program.
Policymakers have focused on increasing consumer participation in the savings mobilization program through policies, including the mandatory use of banks to pay farmers for their produce sales (Vignieri and Santos 2009; Williams 2009). The current research focuses on transitioning from the mandatory system to the voluntary intervention policy and ensuing system. The new system allowed consumers to either use banks or be paid in cash for their produce, bypassing the savings mobilization program. Additionally, in the new system, private firms and commercial banks increased their participation in the financial intermediation process. Both systems served the same target market: export commodity farmers who produced cocoa, coffee, and other cash crops. Importantly, the long-standing farmers’ check system, which mandated the use of banks for cashing produce payment checks, was terminated, allowing consumers to sell their produce to buying agents and accept payment in cash or check. Figure 3 illustrates the changes in the flow of the payment system concerning cash versus formal financial systems in the savings mobilization programs.
Fund flow channels serving cocoa producers.
Questionnaire, Data Collection, and Sample
The study’s questionnaire was translated into two local languages (Twi and Fanti) following past practices (Dadzie, Akaah, and Dunson 1989) and pretested six months before the primary survey using a sample of 40 cocoa entrepreneurs in Ghana’s eastern region. The pretest enabled assessment of the face validity of the 4A CCM measures within the current, competitive market-driven bank savings mobilization program.
Consistent with past research (Barrientos et al. 2008; Dadzie et al. 2013), a random sample was obtained in 2017 from three of the five cocoa-producing regions in Ghana: Eastern, Western, and Ashanti. These areas represent the three primary cocoa-producing regions in Ghana (Ghana Cocoa Board 2019). This study sampled towns and villages from the same districts used by previous authors resulting in a sample of 36 towns and villages. At the village level, every other household was omitted, when feasible, to minimize the effect of convenience sampling, following past research (Dadzie et al. 2013). Each survey was preceded by a qualitative interview of different respondents from the same village or town as part of the scale development effort.
A team of three co-authors, four undergraduate seniors, and a local informant proficient in local dialects and protocol collected the data. In each village/town, the team sought permission from the village chief to conduct the survey. The instruments were administered to respondents in their homes. The process entailed reading the questions to each respondent and recording his/her responses. Each field interview lasted approximately 45 minutes. The respondent profile is reported in Table 1.
Respondent Profile.
Table 1 shows that 70% of the respondents are aged 40 years or more, which is in line with the study’s goal of interviewing heads of households and farm owners. Approximately half the sample is classified as poor entrepreneurs, according to the World Bank’s threshold of $2 per day (2015). About 70% of the sample was using banking services at the time of data collection. However, only 45% had savings accounts. Slightly more than half the sample indicated they were using rural banks.
Construct Measurement and Validation
The focal constructs measured in this study are (1) the 4A CCM activities; (2) bank usage savings behavior and habit; (3) normative beliefs; and (4) control variables (i.e., age, income, and the number of children). Other than normative beliefs, these constructs are measured with items used by Dadzie et al. (2013).
All study constructs were measured using a five-point Likert scale. Affordability was measured as the extent to which consumers perceived savings mobilization programs as charging fees that are affordable for all consumers (Sheth and Sisodia 2012) relative to informal savings arrangements. Sample questions include the following: the bank where I transact my business “offers low service fees,” “offers interest on deposits,” and “accepts farmers’ small deposits.” The accessibility construct was captured by asking respondents to evaluate the extent to which bank services were readily available and convenient relative to informal savings. Sample questions included: the bank where I transact my business “offers services conveniently available when you need it,” and “operates at convenient hours and days.” Acceptability reflects the extent to which FFS were judged to be suitable for rural consumers’ unique savings and credit needs. At the same time, awareness was measured by asking respondents to evaluate the extent to which FFS generated awareness of how to use formal banks and their benefits.
Bank usage habit was measured on a five-point Likert scale to capture bank use frequency for transactions ranging from 0 = never, 1= at least once a year, 2 = occasionally (between 2-3 times a year), 3 = somewhat frequently (once a month), 4 = frequently (almost every week), and 5 = almost daily.
Normative beliefs were operationalized as community values and beliefs about individual versus family or collective welfare (Dadzie, Winston, and Afriyie 2005). The Appendix presents the specific items measuring each construct as well as the measurement model.
Common Method and Retrospective Biases
This study attempted to minimize common method bias from the same respondent’s use to complete questions about both the study’s dependent and predictor variables. First, the predictor variables and dependent variables were placed at polar ends of the questionnaire to minimize single source error (Mitchell 1994). Second, respondents were given very few recall-based questions. In cases where questions did require recall, respondents were encouraged to use their bank savings book to verify information regarding their bank savings records. This step effectively minimizes recall bias and enhances information accuracy (Dadzie et al. 2013).
The Measurement Model
Confirmatory factor analysis of the multi-item study constructs was used to assess the study’s measurement properties using the PROCALIS Procedure in SAS 9.4. The analysis and the factor covariance model yielded robust results (see Appendix). The t-values for the factor loadings of the observed variables on each latent variable exceeded 1.96 (significant at p<.05; see Appendix) for all but 4 of the 18 items among the CCM constructs. Moreover, the measurement model shows a relatively good fit χ2 (45) = 135.4, p<.01) and yields a ratio of 3.0 for the CCM mix constructs. RMR = .06, SRMR = .09, and RMSEA = .08 are close to the .05 threshold. The CFI = .90 and NFI = .87 and NNI = .93 are close to or above the .90 thresholds (Hair et al. 2015). These results suggest that the data provide significant evidence of relationships among the CCM activities and rural African consumers’ bank usage and savings habits.
Analysis and Results
Assessing the Relative Advantages of FFS versus IFAs
This study explored the impact of a marketing intervention on formal financial service improvements. Respondents were asked to assess the relative advantage of using the FFS over IFAs for their savings needs. The results were then compared to a similar survey conducted in 1994. The data were examined across different banking institutions (state commercial, private commercial, and rural banks) for the current versus the previous state-controlled program (see Table 2 and Figure 4). The construct means show that a rural consumer’s experience with the savings mobilization program under the state-controlled program had a marginal relative advantage overall (mean 2.99/5.0). These marginal comparative financial service advantages include accessibility (mean 3.16) and acceptability (mean 3.18). By contrast, savings mobilization programs under the current market-driven environment were judged to have a strong relative advantage overall (mean 3.80/5.0). The most significant improvement was in service acceptability (mean: 4.57 versus 3.18), followed by service awareness (mean: 4.03 versus 2.90) and accessibility (mean: 4.05 versus 3.16). Service affordability declined slightly (mean: 2.51 versus 2.75).
Comparing Customer-Centric Performance of Financial Services under Voluntary Use versus Mandatory Use Intervention Policies.
*** p<.001, ** p<.01, * p<.05
Source: Adapted from Dadzie et al. (2013)
Comparison service performance of financial institution under mandatory versus voluntary bank usage policies.
A comparison of service performance levels in both data reveals no differences among all three types of banking institutions under the current market-led system. By contrast, under the past state-controlled system, the differences were statistically significant for all except the acceptability service. This finding suggests that under the state-led intervention policy, rural banks slightly outperformed state commercial banks on service affordability and accessibility. In contrast, state and private commercial banks slightly outperformed rural banks on service awareness. These results suggest that the transition to a market-driven savings mobilization program has substantially improved service experience except service affordability. The lack of improvement in service affordability may be explained by the fixed price policy that regulates buying companies’ pricing practices (Vigneri and Santos 2009) or maybe a manifestation of the common marketing challenge during both the state-led and market-led intervention savings mobilization policy regimes in Ghana. Interestingly, offering financial services that rural consumers view as affordable may have been exacerbated during the market-driven savings mobilization program (see Figure 4).
Hypotheses Testing Results for H1 (CCM’s Influence on Bank Usage Habit Formation)
H1a posits that the relative advantage of FFS’ customer-centric marketing activities positively influences rural consumers’ bank usage habits. Using ordinary least squares (OLS) regression, the results (see Table 3) indicate a robust model (F=17.36, p<.001) with an acceptable explained variance (R2=.30). These results do not support H1a because bank usage habit is significantly but inversely associated with service affordability (β=-.53, t=-2.12, p<.01) and service accessibility (β=-.65, t=-2.27, p<.01), but not with service acceptability (β=.21, t=0.04, ns) or service awareness (β=-.06, t=-0.27, ns). Next, cash usage positively influences bank usage habit strength (β=.43 t=9.86, p<.001). In contrast, normative beliefs are also inversely associated with bank usage habits (β=-.49, t=-3.67, p<.01) while the influence of income level is also significant and positive (β=.17, t=3.86, p<.01).
Regression Results: Impact of Marketing Activities on Bank Use Habit Strength.
*** p<.001, ** p<.01., * p<.05
Standardized estimates in OLS regression model for the dependent variable Bank Usage Habit. t-values are in parentheses
Next, H1b posits that the relative advantage of FFS’ customer-centric marketing activities positively influences rural African consumers’ bank savings behavior. This second hypothesis is tested using a binary logit model given that the dependent variable (saved/did not save) is binary. The chi-squared values for the likelihood ratio (288.3, p<.001) and the score statistic (277.8, p<.001) are highly significant, indicating a robust model.
Regarding the decision to save or not save with banks for the total sample (column 2, Model 2) the results show that the strongest positive influence on the save/not save decision is cash transactions (β=.62, χ2=6.670, p<.001), followed by the influence of normative beliefs (β=.91, χ2=14.60, p<.001) and income level (β=.281, χ2=4.79, p<.01). Interestingly, none of the CCM activities is significantly associated with the bank savings decision.
Next, H1c posits that the relative advantage of FFS’ customer-centric marketing activities positively influences the duration of rural African consumers’ bank savings accounts. Testing this hypothesis also involved treating savings account duration as the dependent and CCM activities as the independent variables in an OLS regression. Summarized in Table 4, the results of the OLS regression analysis indicate a robust model (F=4.36, p<.001). The explained variance (R2=.21) is acceptable in explaining the duration of bank savings accounts among this sample of rural consumers.
Logit Regression Results: Impact of Marketing Activities on Bank Saver Behavior Formation.
*** p<.001, ** p<.01, * p<.05
Regarding the determinants of bank savings account duration, the results show that accessibility has the strongest positive influence (β=.59, t=3.35, p<.01) followed by lack of service affordability (β=-.48, t=-3.35, p<.01) and lack of service awareness (β=-.57, t=-1.97, p<.05). These results support the contention that CCM activities (excluding service affordability) contribute to FFS’s relative advantage over IFAs. Collectively, these results lend partial support for H1c.
Hypothesis Testing Results for H2 (CCMs’ Influence on Variation in Consumer Savings Habits)
H2a posits that the influence of FFS’ use of CCM activities on rural African consumers’ bank usage habits will be stronger among new customers than among experienced customers. The additional analysis across these consumer categories (see Table 4) provides partial support for H2a.
Among new customers (i.e., customers with fewer than an arbitrary cut-off point of five years of banking experience), the use of banks for cash transactions and service acceptability have the strongest positive influence on the bank use habit. By contrast, service accessibility and lack of service affordability have the strongest negative influence on the formation of the bank use habit. Among experienced customers (i.e., those with over five years of banking experience) who have a strong bank usage habit, the strongest positive influence, the formation (retention) of bank use habits are service awareness, cash transactions, and income level. By contrast, the strongest negative influence among experienced customers is the lack of financial service accessibility.
H2b predicts that the influence of CCM activities on the bank savings behavior of rural African consumers will be stronger among new customers than among experienced customers. Table 5 summarizes the results of the additional analysis across customer categories (new versus experienced customers).
Regression Results: Impact of Marketing Activities on Duration of Bank Savings Accounts.
*** p<.001, ** p<.01, * p<.05
Note: the model for new customers was not sufficiently robust to be included in this analysis.
Among the new customers’ sub-sample, all CCM activities have a strong negative influence on the savings decision. At the same time, cash usage and normative beliefs are positively associated with the savings decision. In contrast, among experienced customers, the savings decision is primarily associated with cash transactions and income levels. One implication of these findings is that rural consumers fail to save with FFS because of the lack of relative advantages of FFS customer-centric marketing activities. However, CCM activities do not influence the savings behavior of experienced customers with well-entrenched banking habits. This finding is consistent with the habit theory, which suggests that consumers’ habitual behavior change occurs primarily when the habit performance environment changes (Leonhardo and Chu 2017; Wood and Neal 2007).
H2c predicts that the influence of FFS’ customer-centric marketing activities on the duration of bank savings accounts will be stronger among new customers than among experienced customers. The additional analysis results across customer categories (i.e., new customers and experienced customers) are summarized in Table 5 (Columns 2 & 3). As the analysis did not yield significant results for the new customer group, Table 5 only presents the experienced customer group results. These results show that among experienced customers, financial service acceptability exerts the strongest and the only positive influence on savings account duration (β=.55, t=2.53, p<.05), while service awareness (β=-.92, t=-2.18, p<.05), service affordability (β=-.59, t=-2.77, p<.01), and cash transactions (β=-.19, t=2.16, p<.05) exert the strongest negative influences. Results demonstrate that three of the four CCM activities (service affordability, accessibility, and awareness) have strong influences on the duration of bank savings accounts among experienced customers. In contrast, only two of the four CCM activities (affordability and accessibility) have a strong influence on the aggregate sample’s bank savings account duration. Overall, these results provide strong, though partial support for H2c.
H2d predicts that the bank usage habit will have a stronger influence on experienced customers’ savings than new customers. The results in Table 4 lend support to this hypothesis, demonstrating a stronger influence of the bank usage habit on experienced customers’ savings behavior (β=.84, χ2=5.90, p<.001) than new customers’ savings behavior (β=.48, χ2=4.50, p<.01).
H2e predicts that the bank usage habit will have a stronger influence on experienced customers’ savings account duration than on new customers’ savings account duration. The results for new customers’ savings account duration are marginally significant (β=.21, χ2=1.95, p <.057). However, no estimate is provided for new customers, given that the model is not significant (β=.84, χ2=5.90, p<.001).
Hypothesis Testing Results for H3 (Moderating Influence of Normative Beliefs)
According to H3a, normative beliefs have a positive moderating influence on the association between CCM activities and the formation of the bank usage habit for rural African consumers. The results in Table 3 reveal that only the accessibility x beliefs interaction had a significant, positive (β=98, t=2.48) association with the formation of the bank usage habit.
Next, H3b stated that normative beliefs have a positive, moderating influence on the association between CCM activities and rural African consumers’ bank savings behavior. The results in Table 4 show no significant influence of the CCM activities on savings decisions at the aggregate sample level. However, among new customers, there were three significant interaction effects: affordability x normative beliefs (β=.36, t=2.06, p<.05), accessibility x normative beliefs (β=.27, t=3.02, p<.01), and awareness x normative beliefs (β=-.18, t=-1.97, p<.05).
H3c posits that normative beliefs have a positive, moderating influence on the association between CCM activities and bank savings account duration. The results in Table 5 show no significant interaction effect of normative beliefs at the aggregate sample level. However, there is a negative moderating effect of accessibility x normative beliefs (β=-.49, t=-2.60, p<.01) as well as a positive effect of awareness x normative beliefs interaction (β=.68, t=2.70, p<.05).
These findings collectively suggest that repeated experiences with CCM activities, especially affordability and accessibility, have stronger influences on the formation of the bank savings habit and duration of the savings accounts under the current market-driven savings mobilization program than during the mandatory system.
Discussion
Over the past three decades, many African countries have expanded FFS to include rural populations. This expansion’s goal has been to increase consumers’ access to affordable financial services in line with poverty alleviation and economic development objectives. The current study investigated the influence of CCM activities on rural consumers’ patronage of savings mobilization programs, using the Ghanaian savings mobilization program as an empirical backdrop. The study’s findings confirm the argument that when rural savings mobilization programs are designed to generate relative advantages over IFAs using the CCM approach, rural consumers in different categories are attracted to use FFS on a routine basis. At the same time, experienced customers increase their habitual use of banks. The study, thus, builds on past research that examines the application of strategic marketing approaches to generate service incentives for promoting the bank savings habit in an African milieu (Dadzie, Akaah, and Dunson 1989) by applying habit theory (Verplanken and Wood 2006) and using a more contemporary CCM mix framework-the 4As marketing mix (Prahalad 2002, 2012; Sheth 2011).
Macromarketing and Public Policy Implications
The current research contributes to the literature on the development of effective marketing system interventions (Babah-Doudah, Barth, and Ingenbleek 2019; Claudy and Peterson 2014; Dholakhia 1984; Hounhouigan et al. 2014) at both macromarketing and micromarketing levels.
From a macromarketing perspective, the study offers four specific insights into the formulation of effective intervention policies to increase rural consumers’ participation in Africa’s savings mobilization programs. A primary macromarketing insight is the evidence that customer-centric marketing intervention policies have more pervasive positive impact on rural consumers’ financial service preferences for formal savings than informal savings following the liberalization of savings mobilization programs. Under the previous, state-controlled savings mobilization program, FFS had a marginal relative advantage over IFAs in financial service accessibility and acceptability. However, under the current market-led savings mobilization program, consumers perceive a greater relative advantage in using FFS than in using IFAs in all customer-centric marketing activities, except service affordability. These differences in rural consumer’s preferences for customer-centric marketing activities suggest that policymakers and development planners should design intervention policies based on rural consumers’ preferences. Acknowledging these differences in service preferences allows for the promotion of intervention policies that are more likely to attract rural consumers to use formal savings or informal savings. Thus, there is support for past research suggesting integration of IFA characteristics into the formal savings mobilization programs in SSA countries (Aryeetey 2008, Dadzie, Akaah, and Dunson 1989; Miracle, Miracle, and Cohen 1980; Porter 1966; Shaw 1973; von Pischke, Adams, and Donald 1983).
Another important macromarketing implication suggested by the study pertains to the evidence that a lack of service affordability decreases the likelihood of rural consumers’ participation in formal savings. In contrast, the relative advantage of service awareness increases the likelihood of formal savings. The policy implication of these different savings behavior impacts suggests that integrating IFAs into the formal savings program to enhance affordability would not be enough to increase participation rates. Instead, policymakers should simultaneously implement educational campaigns to increase FFS awareness.
The next macromarketing implication derides from the evidence that as FFS become affordable, bank usage habit strength also increases. This finding suggests that increasing the affordability of FFS through the integration of IFAs or other incentives would have the dual effects of attracting new savers and strengthening the bank’ usage habit among existing users. Other incentives may include the provision of farm subsidies paid through consumers’ bank savings accounts. Additionally, subsidies in the form of mobile phone devices and connectivity could help reduce transaction costs and distribute financial information to create more awareness among rural consumers.
A final macromarketing/public policy implication suggested by the study is that voluntary intervention policies can be strengthened by grounding these activities within local belief systems. Framing intervention policies within the local beliefs setting encourages greater comfort and less dissonance when transitioning to a different financial services environment (Biggart 2001; Sanchez-Barrios et al. 2015). While affordability and accessibility negatively influenced the formation of the bank savings habit, consumers who perceived both activities to be compatible with their local norms and beliefs, responded positively by adopting the bank savings habit and maintaining their savings accounts over a more extended time. Thus, encouraging banks to modify CCM activities to be compatible with prevailing beliefs about FFS enhances the role of CCM activities in the formation of bank savings habits in rural Africa.
At the micromarketing (i.e. managerial) level, this study contributes substantively to the debate about the relative importance of the various CCM activities in developing and emerging market conditions (Abendroth and Pels 2017; Pels and Sheth 2017). The findings show that financial service accessibility, acceptability, and awareness are relatively more achievable than affordability in terms of consumer experience with FFS. However, the influences of all CCM were stronger among new customers than among existing customers. This evidence is consistent with the contention that while all CCM activities are essential in developing economies, there is a hierarchy of importance effects or stepwise process in which affordability is a precondition for all the other elements of CCM in the development of indigenous African product context (Babah-Daouda, Falylath, and Ingenbleek 2020).
Theoretical Implications
This study has important implications for the use of habit theory (Verplanken and Wood 2006) in examining CCM activities’ effectiveness. The study findings indicate that habit theory explains the effectiveness of promoting rural savings mobilization programs, a type of poverty alleviation and economic development initiative used in African and other developing economies. The significant influences of CCM activities on the formation of bank usage habits and other savings behavior documents the habit-theoretical tenet that changing environmental cues that automate behavior is an effective approach to create new consumer habits (Leonhardt and Chu 2017). The present study also indicates that changes in the relative advantage of CCM activities have the strongest influence on banking use habits and savings behavior for new customers rather than experienced customers. The fact that CCM activities had almost no influence on experienced consumers’ bank savings behavior is consistent with habit theory’s foundational premise that consumers with strong habits are unlikely to change hardwired behaviors (Wood and Neal 2007).
In this regard, our study extends the habit theory to the prevailing rural consumer’ s consumption context. Objects of non-local origin may be subjected to local interpretations as potential interference with local consumption norms and habits (Arnould 1989). We propose a two-stage contingency process of habit formation in a rural African consumption context. In the first stage, the perceived compatibility of FFS’ affordability and accessibility with normative beliefs fosters the automation or formation of the bank usage habit among new customers (those with less than five years of bank usage experience). In the second stage or approximately five years after the first usage, the bank usage habit’s automation is strengthened by the normative beliefs’ compatibility of financial service affordability. However, it decays with normative beliefs incompatibility of financial service accessibility and financial service awareness (benefits).
Limitations and Opportunities for Future Research
The marketing system underpinning Ghana’s savings mobilization program is uniquely integrated with the cocoa industry (Dadzie, Akaah, and Dunson 1989; Mikell 1989; Vignieri and Santos 2009; Williams 2009). Ghana is the only country among the world’s leading cocoa producers that uses a minimum fixed price system for regulating cocoa purchases (Anang, Adusei, and Mintah 2011; Williams 2009). Hence, the role of the CCM activities that incentivize rural consumers to use banks on a routine basis is unique. This fact may explain the low level of service affordability experienced by rural consumers in Ghana. Thus, future research should explore the influence of the 4A CCM activities in other industries and rural contexts in which a minimum fixed price national policy does not constrain the program.
This study was not designed to investigate informal savings behavior but rather investigate rural consumers’ assessments of the relative benefits of using formal savings versus informal savings. Therefore, a fruitful avenue for future research could be to investigate informal savings. Scholars should consider investigating how the various informal savings arrangements influence savings habit formation and the likelihood of rotating savings club and association members adopting formal savings. A case study approach may be more suitable for future research.
Emanating from the current research stream, another opportunity for future research pertains to the limitations of the CCM activities’ role, in the formation of bank usage and savings habits. Future research can investigate whether habit formation also enhances rural savings programs’ performance on other measures such as the volume of savings mobilized, the profitability of savings programs, and bank credit access.
Finally, this study’s measure of the duration of the bank savings accounts as a proxy for habit depends on the bank savings accounts’ age. While this simple duration measure is suitable for the current study, future research should seek to measure duration not only as of the bank savings account’s age but also as a function of the likelihood that a savings account was closed. This simultaneous measure of duration and likelihood of discontinuation/disadoption would provide additional insight into the savings habits in rural contexts.
Footnotes
Appendix
Confirmatory Factor Analysis of Multi-Item Study Variables.
| Determinants | Cronbach’s Alpha | Factor Loading | t-value |
|---|---|---|---|
| Rural Consumer Bank Usage Habit | .72 | ||
| 1. I use banks for most of my financial needs | .72 | 12.50 | |
| 2. Banking is now a part of my financial transactions | .77 | 10.70 | |
| 3. I use banks for my financial needs whenever I can | .72 | 13.60 | |
| 4. I have never used banks but I will be willing to use them in the future | .69 | 11.20 | |
| AVE = .75 | |||
| Financial Service Affordability | .70 | ||
| 1. Provide financial service with low fees | .86 | 15.48 | |
| 2. Provide loans at affordable interest rates | .70 | 10.26 | |
| 3. Add interest to savings account every month* | .58 | 7.10 | |
| 4. Provide other services that are affordable | .72 | 11.20 | |
| AVE = .80 | |||
| Financial Service Accessibility | .82 | ||
| 1. Provide services that are reliable | .80 | 18.28 | |
| 2. Provide service promptly | .84 | 21.60 | |
| 3. Provide service that are easy to access | .93 | 22.43 | |
| 4. Services are accessible in times of emergency | .58 | 4.60 | |
| 5. Services are at proximity to rural people* | .60 | 5.20 | |
| AVE = .77 | |||
| Financial Service Acceptability | .71 | ||
| 1. Services are suitable for rural community | .94 | 25.20 | |
| 2. Provide procedures for those who cannot write | .82 | 24.43 | |
| 3. Treats me how I expect to be treated* | .57 | 6.71 | |
| 4. Procedures are easy to understand | .93 | 23.43 | |
| 5. Treats all customers equally | .60 | 5.40 | |
| AVE = .82 | |||
| Financial Service Awareness | .84 | ||
| 1. Builds awareness of savings and investments | .84 | 21.60 | |
| 2. Builds awareness of security of banking services | .61 | 8.50 | |
| 3. Builds awareness of the financial benefits of savings | .84 | 22.70 | |
| 4. Informs customers about new developments* | .59 | 8.20 | |
| AVE = .79 | |||
| Normative Beliefs | .82 | ||
| I believe that: | |||
| 1. Individuals should stick with the family/community | .95 | 10.40 | |
| 2. Individuals should sacrifice self-interest for the family/community | 78.82 | 9.90 | |
| 3. Family/community success is more important than individual success | 79.60 | 8.50 | |
| 4. Being an accepted member of the family/community is not important (Reverse coded) | .82 | 5.50 | |
| 5. Individuals should not be expected to give up their goals* | 5.50 | ||
| 6. Individuals should be expected only pursue their goals after considering the welfare of the family/community goals | 5.50 | ||
| AVE = .61 | |||
| Model Fit Diagnostics: χ2 (45) = 1350.4 | |||
| RMR = .06 | |||
| SRMR =.009 | |||
| RMSEA = .08 | |||
| CFI =. 91, NFI = .90, NNI = .93 |
Declaration of Conflicting Interests
The author(s) declared no potential conflicts of interest with respect to the research, authorship, and/or publication of this article.
Funding
The author(s) disclosed receipt of the following financial support for the research, authorship, and/or publication of this article: The authors acknowledge the useful comments and suggestions of the past editor, the current editor, and three anonymous reviewers from the Journal of Macromarketing. The University of South Alabama’s Mitchell College of Business Summer Research Grant provided partial financial support for data collection. The authors also acknowledge the help of Charles Blankson, Grace Amihere, Benjamin Ekyem, and Bernard Ackah in the field data collection. This study is a continuation of a long-term study of savings mobilization in Ghana funded by USAID Grants: No. PCE-5053-G-00-4016 and No. DAN 5053-G-SS-7062-00 and the Ghana Cocoa Board with the collaboration of Bruce Dunson, Kojo Menyah, and the late Ishmael Akaah. DAN 5053-G-SS-7062-00 and the Ghana Cocoa Board with the collaboration of Bruce Dunson, Kojo Menyah, and the late Ishmael Akaah.
