PROJECT REPORT ON BANK MARKETING BACHELOR OF COMMERCE (BANKING AND INSURANCE) SEMESTER V UNIVERSITY OF MUMBAI In Partial Fulfillment For the Award Of The Degree Of Bachelor Of Commerce- Banking And Insurance PREPARED BY: MANISH .V. BHATIA T.Y.B.C.B.I. (SEM V) ROLL NO.50 UNDER THE GUIDANCE OF PROF. KAJAL BHOJWANI
SMT. CHANDIBAI HIMATHMAL MANSUKHANI COLLEGE ULHASNAGAR-421003
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DECLARATION
I, MR. MANISH .V. BHATIA STUDENT OF SMT. CHANDIBAI HIMATHMAL MANSUKHANI COLLEGE, TYBCBI (SEMESTER V) HEREBY DECLARE THAT I HAVE COMPLETED THE PROJECT ON ³BANK MARKETING´ FOR THE ACADEMIC YEAR 2010-2011 THE INFORMATION SUBMITTED IS TRUE AND ORIGINAL TO THE BEST OF MY KNOWLEDGE.
MANISH .V. BHATIA (T.Y.B.C.B.I.)
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SMT. CHANDIBAI HIMATHMAL MANSUKHANI COLLEGE ULHASNAGAR-421003
CERTIFICATE THIS IS TO CERTIFY THAT MR. MANISH .V. BHATIA ROLL NO.50. HAS SATISFACTORY CARRIED OUT THE PROJECT ON ³BANK MARKETING´ FOR THE V SEMESTER OF T.Y.B.C.B.I. IN THE ACADEMIC YEAR 2010-2011
Course Co-cordinator (Prof.Mahesh Gurdasani)
Principal (Dr. Bhavna Motwani)
Project Guide (Prof. KAJAL BHOJWANI )
Internal examiner
External examiner
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ACKNOWLEDGEMENT
The urge and need to complete this project successfully was not possible without the helping hands of erudite people. I take this opportunity to thank all of them who played a major role in completing this project. I express my deep gratitude towards Prof Mahesh Gurdasani course Coordinator, Prof. Jaya Gemnani, Prof. Kajal Bhojwani,
Prof.Bharti Valecha, Prof. Murli Rohra, for encouraging me to work on this project. I profusely thank Mr. Pankaj ICICI bank branch operations manager for providing me the needful information on this project. I also thank our Principal Dr. Bhavna Motwani for his continuous encouragement to our activities. I must especially record my sincere thanks to my family members and all my friends for their constant support. Finally, my heartfelt appreciation to all those who worked behind the curtains to make this project a success.
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RESERCH METHODOLOGY
PRIMARY SURVEY:1. FOR PRIMARY SURVEY PEOPLE INTERVIEWED WERE :y MR. PANKAJ BHALERAO OFFICE OPERATION MANAGER :-
ICICI BANK (KALYAN BRANCH) y MRS. S.R. BELLWANI ASSISTANT MANAGER :IDBI BANK (AMBERNATH BRANCH)
SECONDARY SURVEY:REFERENCE FROM BOOKS, WEBSITES, AND MAGAZINES.
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PREFACE
As we know that marketing job is highly competitive. it is very necessary for a bank to market their product as well as their services To make awareness about the creativity without marketing any product or services, whether it is existing or modified one, it is not going to work / survive. Marketing is that pillar of the enterprise which is located exactly middle which can expand the business or which can also destroy the business.
It was a nice experience while working on project, which is favorite of mine. The tings which I was expecting easy but all those were highly competitive. While working on project work I come to know what we read and expect from bookish knowledge is much more different from the practical management. Bookish knowledge provides base for the practical work, which is very necessary to face the competition.
In the coming days there is expectations that the importance of service will increase in such way that the product will remain the same but the service on it became the most & innovative one .so, far make the product or service available survive & preferred by the customers as well as consumers should build the marketing strategies in such a way that they should get a good market share. This is my object to attempt and present, the project on ³BANK MARKETING´. I hope this will equip you with all related information related.
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OBJECTIVES
1) To gain practical knowledge relating to important to marketing. 2) Understand operation of marketing in Banks. 3) New technology adopted by them. 4) To study how Marketing Strategies effects the business of Banks. 5) To study how Banks design their marketing mix. 6) To study how Banks can face competition through effective marketing.
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EXECUTIVE SUMMARY:
With the change in business environment from a seller¶s market to a buyer¶s market, the concept to a buyer¶s market, the concept of marketing also changed in its demand the focus. Originally marketing concept was developed around a physical product but later on as services sector grew in importance and competition intensified marketing concept was also applied to the services. But services are unique in their characteristics. They differed from physical production the ground that are intangible, inseparable from the provider, inconsistent depending upon the skill and efficiency of the provider and they cannot be stored. Traditionally marketing is the marketing mix of 4 Ps, i.e. Product, price, place and promotion. It is a judicious blend of the tools and techniques of marketing to meet the customer¶s needs in an effective manner.
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INDEX CHAPTER NO. 01. 02. NAME OF THE TOPIC The Financial System. INTRODUCTION OF BANKING IN INDIA BANKING SYSTEM TYPES OF BANKS MARKETING MEANING CONCEPT OF MARKETING DIFFERENCE BETWEEN SALES AND MARKETING SERVICES MEANING CHARACTERISTICS CLASSIFICATION SERVICE MARKETING EVOLUTION OF MARKETING CONCEPT CONCEPT OF SERVICE MARKETING THE IMPORTANCE OF MARKETING IN THE SERVICE SECTOR BANK MARKETING INTRODUCTION CONCEPT OF BANK MARKETING APPLICATION OF MARKETINGCONCEPT IN BANKS NEED FOR BANK MARKETING TYPES OF MARKETING 7PS OF BANK MARKETING Consumer behavior in Banks IMPORTANCE OF CUSTOMER SERVICE IN BANKS. CONCEPT OF CUSTOMER SATISFACTION. CHALLENGES FACED BY BANK IN MARKETING THEIR PRODUCTS. RECENT TRENDS IN BANK MARKETING. FIELD STUDY ON ICICI BANK ANNEXURE Page No.
03.
04.
05.
06.
07. 08. 09.
10. 11. 12. 13.
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CHAPTER No. 1 FINANCIAL SYSTEM
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FINANCIAL SYSTEM
In Finance, the Financial System is the system that allows the transfer of money between savers and borrowers. It comprises a set of complex and closely interconnected financial Institutions, Markets, Instruments, Services, Practices, and Transactions. Financial systems are crucial to the allocation of resources in a modern economy. They channel household savings to the corporate sector and allocate investment funds among firms; they allow Intertemporal smoothing of consumption by households and
expenditures by firms; and they enable households and firms to share risks. These functions are common to the financial systems of most developed economies. Yet the form of these financial systems varies widely. The word "system", in the term "Financial system", implies a set of complex and closely connected or interlined institutions, agents, practices, markets, transactions, claims, and liabilities in the
economy. The financial system is concerned about money, credit and finance-the three terms are intimately related yet are somewhat different from each other. Indian financial system consists of financial market, financial instruments and financial intermediation
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Components/ Constituents of Indian Financial system:The Following are the Four main Components of Indian Financial system: Financial Institutions Financial Markets Financial Instruments/Assets/Securities Financial Services.
Role/ Functions of Financial System:
A financial system performs the following functions:
1) It serves as a link between savers and Investors. It helps in utilizing the mobilized savings of scattered savers in more efficient and effective manner. It channelizes flow of saving into productive investment. 2) It assists in the selection of the projects to be financed and also reviews the performance of such projects periodically. 3) It provides payment mechanism for exchange of goods and services. 4) It provides a mechanism for the transfer of resources across geographic boundaries. 5) It provides a mechanism for managing and controlling the risk involved in mobilizing savings and allocating credit. 6) It promotes the process of capital formation by bringing together the supply of saving and the demand for investible funds.
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7) It helps in lowering the cost of transaction and increase returns. Reduce cost motives people to save more. 8) It provides you detailed information to the operators/ players in the market such as individuals, business houses, Governments.
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CHAPTER NO -2 INTRODUCTION TO BANKING IN INDIA
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INTRODUCTION TO BANKING IN INDIA
The word ³Bank´ is originated from the German word ³Bank´ which means heap or mound or joint stock fund. From this, the Italian word ³banco´ meaning heap of money was coined. The English meaning of ³bank´ is prevalent today, i.e., as an institution accepting money as deposits for lending.
A bank is an institution, which deals in money and credit. Thus, bank is an intermediary, which handles other people¶s money both for their advantage and to its own profit¶s but bank is merely a trader in money but also an important manufacturer of money.
For a common person it may be just a storehouse where he may store his money; for a businessman it may be a financial institution and a day-to-day customer it may be an institution where he can deposit his savings.
Bank plays an important role in the economy of any country as they hold the saving of the public. Provides a means of payment for the goods and services and provide necessary finance for the development of business and trade. Bank may also be defined as a financial institution that links the flow of funds from savers to the users. Customers Relationship Management, on the other hand, is an individualistic approach which concentrates on certain select customers from the homogeneous groups, and develops sustainable relationships with them for adding value to the bank. This may be termed as a
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"Selective"
approach.
Thus,
bank
marketing
concept,
whether
"collective" approach or "selective" approach, is a fundamental recognition of the fact that banks need customer oriented approach. In other words, bank marketing is the design and delivery of customer needed services worked out by keeping in view the corporate objectives of the bank and environmental constraints.
Definition:
According to Oxford English Dictionary, Bank is, ³An
establishment for custody of money received from or on behalf of, its customers. Its essential duty is the payment of the orders given on it by the customers, its profit mainly from the investment of money left unused by them´. Bank is also defined as ³one who in ordinary course of business honors the cheques drawn upon him by person from and for whom he receives money on current accounts´ ³Banking means accepting for the purpose of lending or investment, of deposits of money from the public, repayable on demand or otherwise and withdraw able by cheques, drafts, order or otherwise´. A banking company may be defined as ³any company which transacts the business of banking´
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BANKING SYSTEM
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BANKING SYSTEM
INTRODUCTION:Bank safeguards money and valuable and provide loans, credit, and payment services such as checking accounts, money orders, and Cashiers checks. Banks also may offer Investment and insurance products, which they were once prohibited from selling. As a variety of models for co operation and integration among finance industries have emerged, some of the traditional distinctions between banks,
insurance companies, and securities firms have diminished. In spite of these changes, banks continue to maintain and perform their primary role accepting notes and lending funds from these deposits. There are several types of banks which differ in the number of services they provide and the clientele they serve. Although some of the differences between these types of banks have lessened as they begin to expand the range of products and services they offer, there are still key distinguishing traits.
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DIFFERENT TYPES OF BANKS
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DIFFERENT TYPES OF BANKS
All types of banks in India are governed and regulated by central bank called Reserve Bank of India that stands at the apex of the banking structure. All major decision are taken at these level. Other types of banks are placed below.
PUBLIC SECTOR BANKS
PRIVATE SECTOR BANKS
COOPERATIVE BANKS
1) PUBLIC SECTOR BANKS :- All Government banks falls under this variety. Besides the Reserve bank of India, the State Bank of India and its associate banks and about 20 nationalized banks, all comprises of the public sector banks. Many of regional rural banks that are funded by the government banks can also be clubbed in this genre.
2) PRIVATE SECTOR BANKS:- A new wave in the banking industry came about with the private sector banks in India. With policies of liberalization being generously taken up, these private sector were established in the country that also contributed heavily towards the growth of economy and also offering numerous services to its customers. Some of the most popular banks in India are AXIS BANK, ICICI BANK, HDFC BANK, ING VYSYA BANK. The foreign banks in India like HSBC, Citibank, Standard Chartered Bank etc are also clubbed here.
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3) COOPERATIVE
BANKS
:-With the aim to cater to rural
population, the cooperative banks in India were set up through the country. Issues like agricultural credit and likes are taken care of by these banks.
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CHAPTER NO- 3 Marketing
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Meaning of Marketing:
Marketing is the process by which companies create customer interest in goods or services. It generates the strategy that underlies sales techniques, business communication, and business
development. It is an integrated process through which companies build strong customer relationships and create value for their
customers and for themselves. Marketing is used to identify the customer, to keep
the customer, and to satisfy the customer. With the customer as the focus of its activities, one of it the can be concluded that Marketing of business
Management is
major
components
management. Marketing evolved to meet the stasis in developing new markets caused by mature markets and overcapacities in the last 2-3 centuries. The adoption of marketing strategies requires businesses to shift their focus from production to the perceived needs and wants of their customers as the means of staying profitable. The Term Marketing Concept holds that achieving organizational goals depends on knowing the needs and wants of target markets and delivering the desired satisfactions. It proposes that in order to satisfy its organizational objectives, an organization should anticipate the needs and wants of consumers and satisfy these more effectively than competitors. Modern marketing is global in Character. Customer is the most important person in the whole marketing process. He is the cause and the purpose of all marketing activities.
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In the most simple and not-technical language marketing may be defined as a business function entrusted with the creation and satisfaction of customer to achieve the aims of business itself.
According to Philip Kotler, ³Marketing is a human activity directing at satisfying needs and wants through exchange process.´
This idea may be stretched a little further to structure the term marketing as one that is directly concerned with demand: its recognition, anticipation, creation. Stimulation and finally satisfaction. Thus marketing is, therefore, eyes and ears of the business. It is responsible for keeping the business in close contact with its environment and informed of events that can influence its operations. Because of changing emphasis it is no easy task to define the term marketing. However, it may be defined ³as a social and managerial process by which individuals and groups obtain what they need and want through creating and exchanging products and value with others´. It is concerned with identifying consumer µneeds¶ and determining ways in which the organization is able to meet those needs in a profitable manner. In general, marketing activities are all those associated with identifying the particular wants and needs of a target market of customers, and then going about satisfying those customers better than the competitors? This involves doing market research on customers, analyzing their needs, and then making strategic decisions about product design, pricing, promotion and distribution.
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DEFINITION OF MARKETING
According to William Stanton, ³Marketing is a total system of business activities designed to plan, price, promote and distribute want satisfying products to target markets in order to achieve organizational objectives.´
According to Philips kotlar, ³Marketing is a human activity directed at satisfying needs and wants through exchange process.´
CHARACTERISTICS OF MARKETING:
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1) Regular and Continuous Activity:- Marketing is a continuous activity in which goods and services are manufactured and distributed to the consumers. Assembling, grading, packaging, transportation, warehousing etc are the activities which are supplementing marketing and are useful for the smooth conduct of the marketing operations.
2) Satisfaction
of Human Wants:- Marketing activities are
basically for the satisfaction of consumer needs. Identification of consumer needs should be the starting point of marketing activities.
3) Transfer of Ownership:- Marketing of goods brings transfer of ownership and services and facilities physical distribution production acts as a base of marketing.
4) Crates Different Utilities:- Marketing activity creates different utilities like time, Place, and Possession through which human wants are satisfied.
5) Relates to goods and services:- Marketing is concerned with the exchange of goods and services with the medium of money between the buyer and seller of the goods.
6) Importance of 4ps:- Marketing is the sum total of product, price, promotion and physical distribution which are often termed as the 4ps of marketing. Large scale marketing is possible through appropriate combination of four Ps called the marketing mix.
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7) Wide in Scope :- The concept of marketing is comprehensive. It is not concerned merely with selling of goods. It is concerned with other functional areas of business such as production, finance, personnel. 8) Evolutionary
Concept
:- The concept of marketing has
undergone significant changes. It is not only for profit maximization but it has social significance too. Marketing is now treated as consumer oriented.
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Concepts of Marketing:
1) Production Concept:The product philosophy was the dominant marketing philosophy prior to the Industrial Revolution and continued to the 1920s. The product philosophy holds that the organization knows its product better than anyone or any organization. The company knows what will work in designing and producing the product and what will not work. For example, the company may decide to emphasize the low cost or high quality of their products. This confidence in their ability is not a radical concept, but the confidence leads to the consumer being overlooked. Since the organization has the great knowledge and skill in making the product, the organization also assumes it knows what is best for the consumer. In much of the product philosophy era, organizations were able to sell all of the products that they made. There was also a demand for those goods, and the slow production could not fill the demand in many cases. The importance for management of this shortage was that very little marketing was needed.
2) Product Concept :The product concept holds that consumers favour those products that offer the quality, performance and features and therefore the organizations should devote its energy to making continuous product improvements. The product concept Leads to marketing myopia because it presumes that customers will continue to buy the product as long as the quality of the product is good but it overlooks the fact that customers are interested in their need
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satisfaction not in the product. Any other unproved product of a competitor may satisfy the need of the customer better.
3) Selling Concept:This concept was based on the idea that the customer will either not buy or not buy enough of the organization¶s products unless the organizations make effort, to stimulate customer's interest in their products. It was assumed that the products are soldnot bought. Under this approach, which dominated 1950s, the entire focus of organizations was shifted to gearing up their sales
department. Their attitude was that the sales department has to sell whatever the organization produced.
4) Marketing Concept:The marketing concept is a more recent philosophy, which brought about a significant change in the approach of organizations towards their products and customers, in marketing; the attention is focused on producing such goods which are wanted by the customers rather than selling whatever goods have been
needlessly produced. Thus the marketing concept holds that the key to achieving organizational goals consists in determining the needs and wants of target-markets and delivering the desired satisfaction more effectively and efficiently than competitors.
5) Societal Marketing Concept:In deterioration, resource shortages, the age of environmental growth, explosive population
worldwide inflation and neglected social services, it is expected that firms that senses, serves and satisfies individual wants should gear
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themselves to act in the best long run interest of consumers and society. Therefore there is emergence of societal marketing. Thus, this concept connotes that the organizations task is to determine the needs, wants and interest 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 society's well-being.
6) Production Concept:The production concept holds that consumers favor those products that are available and highly affordable. Where the demand of a product is more than its supply or where the product's cost is higher, it is natural that one will concentrate on finding ways to increase production to make the product available and affordable to consumers. Thus, the emphasis was on the production and manufacturing and making the process as efficient as possible, seeking to achieve the greatest output at the most economic levels of cost.
7) Exchange Concept :The exchange concept of marketing was the traditional concept. According to this concept, the exchange of goods and services is the essence of marketing. Customers will accept whatever design, quality etc. of the product offered to them in order to fulfill needs. The exchange concept takes the customers for granted as the customers are expected to buy, whatever it is produced in order to meet their needs. However, this is a outdated concept.
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8) Relationship Marketing Concept:A new concept of marketing emerged in 1990s, called the relationship marketing concept. It involves creatings, maintaining and enhancing profitable and long term relationship with valued customers, distributors, dealers, and suppliers, because customers help the firm through repeat purchases and favorable recommendations to others about the product and services. The distributors help to move the product on the time to dealers, the dealers push an promote the product and services at the marketplace, and lastly, the suppliers supply the right quality of the material at the right time and place.
WHAT IS SALE ?
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A sale is the pinnacle activity involved in the selling products or services in return for money or other compensation. It is an act of completion of a commercial activity. The seller - the provider of the goods or services - completes a sale in response to an acquisition or to an appropriation or to a request. There follows the passing of title (property or ownership) in the item, and the application and due settlement of a price, the obligation for which arises due to the seller's requirement to pass ownership. Ideally, a seller agrees upon a price at which he willingly parts with ownership of or any claim upon the item. The purchaser, though a party to the sale, does not execute the sale, only the seller does that. To be precise the sale completes prior to the payment and gives rise to the obligation of payment. If the seller completes the first two above stages (consent and passing ownership) of the sale prior to settlement of the price, the sale remains valid and gives rise to an obligation to pay.
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THE DIFFERENCE BETWEEN SALES AND MARKETING
Many people mistakenly think that selling and marketing are the same - they aren't. You might already know that the marketing process is broad and includes all of the following: 1) Discovering what product, service or idea customers want. 2) Producing a product with the appropriate features and quality. 3) Pricing the product correctly. 4) Promoting the product; spreading the word about why customers should buy it. 5) Selling and delivering the product into the hands of the customer. 6) Selling is one activity of the entire marketing process. Selling is the act of persuading or influencing a customer to buy (actually exchange something of value for) a product or service. Marketing activities support sales efforts. Actually, they are usually the most significant force in stimulating sales. Oftentimes, marketing activities (like the production of marketing materials and catchy packaging) must occur before a sale can be made; they sometimes follow the sale as well, to pave the way for future sales and referrals.
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CONTRASTING THE SALES CONCEPT WITH MARKETING CONCEPT
The concepts surrounding both selling and marketing also differ. There is a need for both selling and marketing approaches in different situations. One approach is not always right and the other always wrong - it depends upon the particular situation. In a marketing approach, more listening to and eventual accommodation of the target market occurs. Two-way communication (sometimes between a salesperson and a customer) is emphasized in marketing so learning can take place and product offerings can be improved. A salesperson using the sales concept, on the other hand, sometimes has the ability to individualize components of a sale, but the emphasis is ordinarily upon helping the customer determine if they want the product, or a variation on it, that is already being offered by the company. In the sales approach, not much time is spent learning what the customer's ideal product would be because the salesperson has little say in seeing that their company's product is modified. Furthermore, they aren't rewarded for spending time listening to the customer's desires unless they have a product to match their desires that will result in a sale. (Note, however, that sales people aren't restricted to the use of the sales concept; oftentimes they use the marketing concept instead.)
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At the heart of the sales concept is the desire to sell a product that the business has made as quickly as possible to fulfill sales volume objectives. When viewed through the marketing concept lens, however, businesses must first and foremost fulfill consumers' wants and needs. The belief is that when those wants and needs are fulfilled, a profit will be made. Do you see the difference? The selling concept, instead of focusing on meeting consumer demand, tries to make consumer demand match the products it has produced. Whereas marketing encompasses many research and promotional activities to discover what products are wanted and to make potential customers aware of them.
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CHAPTER NO- 4 SERVICES
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Meaning of Service:
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A service is an activity or benefit that one party can offer to another which is essentially intangible and does not result in the ownership of anything. Its production may or may not tied to a physical product. "Thus services are separately identifiable: essentially intangible activities which provide want satisfaction and that are not necessarily tied to the sale of a product or service. To produce a service may not require the use of tangible goods. However, when such use is required there is no transfer of title [permanent ownership] to those tangible goods."
According to ³American Marketing Association´ ³Services are the activities, benefits or satisfactions which are offered for sale or are provided in connection with the sale of goods.´
When a customer buys a service in the service market, he buys the time, knowledge, skill or resources of someone else who is the provider or supplier of the service. The buyer receives only satisfaction or benefits from the activities of the provider who may be an individual, a firm or a company specializing in selling certain benefits or satisfaction.
CHARACTERISTICS OF SERVICES:
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Services have four important characteristics which make them so different from physical products.
INTANGIBILITY
The distinguishing feature of a service is its dominant intangible aspect. Some intangible features as listed by µJ.Bateson¶ are:
A service cannot be touched. Precise standardization is not possible. There is no ownership transfer. A service cannot be patented. Production and consumption are inseparable. There is no inventories of the services, and. The consumer is a part of production-process, so the delivery system must go to market or the customer must come to delivery system.
Pre-testing the service is not possible as they cannot be seen, tasted, felt, heard and smelt before they are bought. When a prospective customer cannot experience the product in advance they are asked to buy what are essentially promises of satisfaction. The buyer has to have faith in the service-provider. Client's confidence in the service can be created by taking the help of celebrities, developing a brand name, increasing services tangibility, emphasizing services benefits rather than just describing its features.
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INSEPARABILITY
A service cannot be separated from its provider. This is in direct contrast to a physical product, which exists whether or not its source is present. As the provider only can render the service(s), it limits the firm's scale of operation. To overcome this limitation the service provider can learn to work with larger groups, to work, faster or the service organization can train more service providers.
VARIABILITY
In most cases human element is involved in providing service. Thus depending upon who provides them and when and where they are provided the quality of service is bound to vary. Standardization becomes a difficult task to achieve. So to ensure quality, service firms should take care to select proper personnel and give them adequate training for the work and should have a proper system to monitor customer satisfaction
PERISHABILITY
Services cannot be stored. So services not utilized are lost forever. Perish ability of service is not a problem as long as the demand for the same is steady. Number of service, providers (staff) can be planned in advance for expected demand. But it becomes a problem when it faces fluctuating demand. So, to overcome this problem, the service concerns should have
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proper product organization.
planning, pricing, and built-in flexibility in
the
OWNERSHIP
In the case of goods, after the completion of process, the goods are transferred in the name of the buyer and he becomes the owner of the goods. But in case of services, we do not find this. For e.g. a consumer can use hotel room or swimming pool, however the ownership remains with the providers.
CLASSIFICATION OF SERVICES
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There is wide variation in the nature of services rendered which makes it difficult to classify them in a particular manner. They can be classified from different angles.
Classification can be done on the following basis:1) Classification by Industry. 2) Classification by Target effect. 3) Skill level of service provider (professional/ Non Professional). 4) Labor Intensives (People based/ Equipments Based). 5) Degree of Customer Contact ( High/Low). 6) Goal of the Service Provider (Profit/Non Profit).
SERVICE MARKETING
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EVOLUTION OF SERVICE MARKETING:The marketing concept and philosophy is one of the simplest ideas in marketing, and at the same time, it is also one of the most important marketing philosophies. If we go back to the times before and after the nomads tried to settle down on the banks of rivers, we will find that there were no markets. This can be said as a µselfsufficient stage¶. Each family then was a self-sufficient unit as far as production and consumption were concerned. Barter system came into vogue giving rise to an µexchange oriented¶ stage. To facilitate this exchange process central market were developed. These
developments laid the foundation stone of marketing. The term marketing has changed and evolved over a period of time, today marketing is based around providing continual benefits to the customer, these benefits will be provided and a transactional exchange will take place. At its very core are the customer and his or her satisfaction. The marketing concept and philosophy states that the organization should strive to satisfy its customers' wants and needs while meeting the organization's goals. In simple terms, "the customer is king".
The implication of the marketing concept is very important for management. From top management to the lowest levels and across all departments of the organization, it is a philosophy or way of doing business. Wal-Mart's motto of "satisfaction guaranteed" is an example of the marketing concept. Whether the Wal-Mart employee is an accountant or a cashier, the customer is always first.
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CONCEPT OF SERVICE MARKETING
The concept of marketing discussed previously was initially developed to market a physical product. Now it becomes essential to find out if the same concept developed for marketing of physical products is applicable to the marketing of services. Before we come to this point, it is natural that we have no two meanings regarding services and their characteristics.
The Importance of Marketing in the Service-Sector:
Marketing was not that popular in services-industries as it was with manufacturing firms. The reasons are obvious. Many service businesses were small and were not using management techniques such as marketing which they thought would be expensive or irrelevant. There were also service businesses like law and accounting firms which believed that it is unprofessional to resort to marketing. They relied more on their knowledge and efficiency than marketing their services. Some service businesses like, educational institutions and hospitals had so much demand that they had no need for marketing. Diagram has shown, the employment elasticity [to GDP growth] in the services sector is higher than as in the case of both agriculture and manufacturing sector. Secondly, the services sector by providing complementary services to agriculture and industry, acts as a catalyst in the growth of the entire economy. Thirdly, with its greater flexibility in location, low capital intensity and personal nature is ideally suited for the small sector, which is the most important sector for overall development of Indian economy. Accordingly, the services sector has grown faster than the commodity sector.
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CHAPTER NO-6 BANK MARKETING
INTRODUCTION
In recent years, the banking industry around the world has been undergoing a rapid transformation. In India also, the wave of deregulation of early 1990s has created competition and greater risk for banks and other financial intermediaries. The cross-border flows and entry of new players and products have forced banks to adjust the product-mix and undertake rapid changes in their processes and operations to remain competitive. Over the years, Indian banks have expanded to cover a large geographic & functional area to meet the developmental needs. They have been managing a world of information about customers - their profiles, location, etc. They have a close relationship with their customers and a good knowledge of their needs, requirements and cash positions. Though this offers them a unique advantage, they face a fundamental problem. During the period of planned economic development, the bank products were bought in India and not sold. Marketing is a customeroriented Operation. What is needed is the effort on their part to improve their service image and exploit their large customer. Information base effectively to communicate product availability. Furthermore, banks need to have very strong in-house research and market intelligence units in order to face the future challenges of competition, especially customer retention. Marketing is a question of demand (customers) and supply (financial products & services, customer services through various delivery channels).
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Both demand and supply have to be understood in the context of geographic locations and competitor analysis to undertake focused marketing (advertising) efforts. Focusing on region-specific campaigns rather than national media campaigns would be a better strategy for a diverse country like India. Throughout much of the last decade, banks world-over have reengineered their organizations to improve efficiency and move
customers to lower cost, automated channels, such as ATMs and online banking but this need not be the case. As it is proved by the experience, banks are now realizing that one of their best assets for building profitable customer relationships especially in a developing country like India is the branch-branches are in fact a key channel for customer retention and profit growth in rural and semi-urban set up. However, to maximize the value of this resource, our banks need to transform their branches from transaction processing centers into customer-centric service centers. This
transformation would help them achieve bottom line business benefits by retaining the most profitable customers. Branches could also be used to inform and educate customers about other, more efficient channels, to advise on and sell new financial instruments like consumer loans, insurance products, mutual fund products, etc. We define bank marketing as ³Bank marketing is the aggregate of functions, directed at providing services to satisfy customer¶s financial (and other related) needs and wants, more effectively and efficiently than the competitors keeping in view the organizational objectives of the Bank.´
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CONCEPT OF BANK MARKETING
Marketing as it is viewed today is a way of managing a business so that each strategy is evolved with foreknowledge of the impact of such decision on the customer. Banks have broadly three dimensions, i.e., deposits, borrowings and other allied services. Anyone who interacts on any of these fronts is qualified to be a customer of a bank. Thus, a bank renders financial services as an intermediary. As it renders personalized services and the present emphasis in Marketing is customer satisfaction it will not be inappropriate here to observe that ³customer of a bank is king´. Therefore bank marketing implies that ³it is the creation and delivery of financial services suitable to meet the customer's needs at a profit to the bank´.
The concept of bank marketing encompasses: Identifying the most profitable markets now and in future; Assessing the present and future needs of customers; Setting business development goals and making plans to meet them; Managing the various services and promoting them to achieve the plans; Adapting to a changing environment in the market place. From the above discussion of the bank marketing it can be understood that the existence of the bank has little value without the existence of the customer. The key task of the bank is therefore not only to create and win more and more customer but also to retain them through effective customer service. Marketing as related to banking is to define an appropriate promise to a customer through a range of services
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(products) and also to ensure effective delivery through satisfaction. The actual satisfaction delivered to be a customer depends upon how the customer is interacted with. It goes on to emphasis that every employee from the topmost executive to junior most employee of the bank is marketer.
Application of Marketing Concept in BANKS
When we apply marketing to the banking industry, the bank marketing strategy can be said to include the following :1. A very clear definition of target customers. 2. The development of a marketing mix to satisfy customers at a profit for the banks. 3. Planning for each of the µsource¶ markets and each of the µuse¶
markets ( A Bank needs to be doubly market oriented ± it has to attract funds as well as were of funds and services.) 4. Organization and Administration. The Role of marketing in the banking industry continues to change. For many years the primary focus of bank marketing was public relations. Then the focus shifted to advertising and sales promotion. That was followed by focus on the development of a sales culture.
Although all the elements of the marketing concept- customer satisfaction, profit integrated framework, and social responsibility ± will remain important, customer satisfaction must receive the greatest emphasis in the years ahead.
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NEED FOR BANK MARKETING:-
Marketing concept is essentially about the following few thing which contribute towards banks success: 1) The bank cannot exist without the customers. 2) The purpose of the bank is to create, win, and keep a customer. 3) The customer is and should be the central focus of everything the banks does. 4) It is also a way of organizing the bank. The starting point of organizational design should be the customer and the bank should ensure that the services are performed and delivered in the most effective way. Service facilities also should be designed for customers convenience. 5) Ultimate aim of a bank is to deliver total satisfaction to the customer. 6) Customer satisfaction is affected by the performance of all the personal of the bank.
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CHAPTER NO-7 TYPES OF MARKETING:EXTERNAL MARKETING :The external marketing efforts are the traditional functions of marketing of the customers and make promises to the customer as to what to be delivered. Anything conveyed to the customer in any form before the delivery of service can be viewed as a part of external marketing function. The first step towards external marketing is to make the firm understand what makes a customer¶s want a particular type of service and what are their expectations of a certain type of service, since external marketing builds customer¶s expectations and beliefs about service delivery. The external marketing then gives promises that correspond with the personal needs of the target group. It becomes necessary to understand the needs of the customer for the services provider. This leads to market segmentation on a suitable basis i.e. demographic, psychographic and wage pattern. Once the market segment is identified, the next task is to find ways to compete in that segment. This can be achieved by using the right marketing mix after taking into consideration the external factors. According to Zeithaml and Bitner, the customer¶s expectation of the service can be derived from the following sources:
1. Past experience. 2. Corporate image. 3. Word of mouth communication.
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Care should be taken to maintain credibility while setting the promise because a very high expectation may lead to a highly dissatisfied customer.
INTERNAL MARKETING:The concept of internal marketing presumes the bank employees as its µinternal customers¶ and jobs offered to them as products. So effort should be made to offer a product mix that satisfies the needs and wants of these internal customers. The same marketing tools which are used to attract and retain customers (external) can gainfully be used to attract, retain and inspire the employees (internal customers.), particularly the best among them. The logic behind such type of thinking can be attributed to following facts. Customers buy products and services of the bank exchanging their financial resources. Similarly employees also buy jobs of the bank exchanging the human resource. As both are drawn from the same society the exchange process is found to be similar in many respects. It may be argued that in Indian context, a customer may have a better and wider option to change banks but employees do not have such opportunity. In future, it is expected that the liberalized scenario may provide, the best of the employees, with such
opportunity. But one thing for sure is that it remains the discretion of the employee to give his best or not. In a financial industry like banks the product differential and price competition is almost nil or the distinctiveness is difficult to maintain. The only area where a distinctiveness can be maintained is the quality of human resource. How far and to what extent the quality level of their performance would reach is solely the discretion of the employee. As a satisfied employee can deliver total satisfaction to a customer, it becomes
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important for banks to satisfy the needs and wants of its employees on priority basis. These activities can be further reinforced by certain promotional activities directed at them. A highly motivated workforce is a common trait of all successful organizations. Though it is difficult to ascertain what precisely motivates employees, a clue can be taken from Abraham Mallow¶s hierarchy of needs. Presuming that the physiological needs of the bank employees have by and large, been taken care of, greater emphasis should be laid on psychological and self-
actualizations needs such as: security, contribution to society, esteem and the need to reach one's full potential, etc. It is necessary to create an organizational climate where superior and extra-ordinary
contributions made by employees at various levels are noticed and acknowledged.
Advertising is a potent tool in making an employee aware, motivated, educated, and inspired. Though a poster at the branch with the headline such as ³you never hear our people say 'that's not my job´ or ³if you are not satisfied tell us, if satisfied tell others´ are directed towards external customer. Yet, it is clearly meant for the internal customers too and will have tremendous impact on them. Of course, before putting up a poster like that would need taking staff into confidence. It is needless to say that any advertising campaign which can originate from the staff themselves would have more credibility and acceptability. Or else it may be treated derisively and be counter-productive. Senior executives, in this regard, have a definite role to play.
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INTERACTIVE MARKETING (MOMENT OFTRUTH)
Moment of truth means that this is the time and place the service provider has the opportunity to demonstrate to the customer the quality of its services. Quality of service is dependent on the quality of buyer/ seller interaction. This is the point, which may lead to creation of a customer or not. Though, we may Win him at that point of time, but may not retain Him and may not come to us again if that interaction is not satisfying for him to leave a lasting impact on him. We may have a beautiful marketing mix of product, price, place and promotion, which bring the customer to us. We may still have a good internal marketing, which prepares a band of knowledgeable employees ready. But if we fail at this point all our effort so far will be futile. This is the reason, which makes interactive marketing so important. Thus interactive marketing describes employee¶s skill in handling customer Contact and involves the following: 1) Employee 2) Process 3) Customer Interactive Marketing As indicated in above it is the group of able and willing employees, They are to be aided by proper processes (systems and procedures) suitable vehicles to render best customer service, which in turn will result in satisfied and loyal customers. Internal marketing provides the required employees orienting them for the job.
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MARKETING STRATEGIES
Introduction:Marketing strategy consists of the analysis, strategy
development, and implementation activities in ³Developing a vision about the market of interest to the organization, selecting market target strategies, setting objectives, and developing, implementing, and managing the marketing program positioning strategies designed to meet the value requirements of the customers in each market target´. Strategic marketing is a market-driven process of strategy development, taking into account a constantly changing business environment and the need to deliver superior customer value. The focus of strategic marketing is on organizational performance rather than a primary concern about increasing sales. Marketing strategy seeks to deliver superior customer value by combining the customerinfluencing strategies of the business into a coordinated set of market55
driven actions. Strategic marketing links the organization with the environment and views marketing as a responsibility of the entire business rather than a specialized function. Because of marketing¶s boundary orientation between the
organization and its customers, channel members, and competition, marketing processes are central to the business strategy planning process. Strategic marketing provides the expertise for environmental monitoring, for deciding what customer groups to serve, for guiding product specifications, and for choosing which competitors to position against. Successfully integrating cross-functional strategies is critical to providing superior customer value. Customer value requirements must be transformed into product design and production guidelines. Success in achieving high-quality goods and services require finding out which attributes of goods and service quality drive customer value.
Marketing Strategy Process
The marketing strategy analysis, planning, implementation and management process is described in Exhibit. The strategic situation analysis considers market and competitor analysis, market
segmentation, and continuous learning about markets. Designing marketing strategy examines customer targeting and positioning strategies, marketing relationship strategies and planning for new products. Marketing program development consists of product, distribution, price, and promotion strategies designed and
implemented to meet the value requirements of targeted buyers. Strategy implementation and management consider
organizational design and marketing strategy implementation and control.
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CHAPTER NO -8 7 PS OF BANK MARKETING
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PRODUCT MIX:The banks primarily deal in services and therefore, the
formulation of product mix is required to be in the face of changing business environment conditions. Of course the public sector
commercial banks have launched a number of policies and programs for the development of backward regions and welfare of the weaker sections of the society but at the same time it is also right to mention that their development-oriented welfare programs are not optimal to the national socio-economic requirements.
A proportional contraction in the number of customers is found affecting the business of public sector commercial banks. psychology, expectation, The the changing increasing rising
the
income, the changing lifestyles, the increasing domination of Foreign Banks and the changing needs and requirements of the customers at large make it essential that they innovate their service mix and make them of worked class. The development of new generic product, especially when the business environment is regulated is found a difficult task. However, it is pertinent that banks formulate a package in tune with the changing business conditions. Against this background, we find it significant that the banking organizations minify, magnify, combine and modify their service mix.
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In the formulation of service mix, the banks can follow two guidelines, first is related to the processing of product to market needs and the second is concerned with the processing of market needs to product. In the first process, the needs to the target market are anticipated and visualized and therefore, we expect the prices likely to be productive. In the second process, the banks react to the expressed needs and therefore we consider it reactive. It is essential that every product is measured up to the accepted technical standards. This is because no consumer would buy a product, which contains technical faults. Technical perfection in service is meant prompt delivery, quick disposal, and presentation of right data, right filing,
proper documentation or so. If computers start disobeying, the command and the customers get wrong facts, the use of technology would be a minus point, and you don¶t have any excuse for your faults. Marketing aims not only offering but also at creating\innovating the services\schemes found new to the competitors vis -a vis to the customers. The enhanced customer patronage would be a reward to the bank. The additional attractions, the product attractiveness would be a plus point of your mix, which would help you in many ways. This makes it essential that the banking organizations are sincere to the innovations process and try to enrich their peripheral services much earlier than the competitors. We also find the product portfolio of the banks. While formulating the services mix, it is also pertinent that the bank professionals make possible affair synchronization of core and peripheral services. To be more specific, the peripheral services need an intensive care since the core services are found by and large the same. Innovating the peripheral services thus appears to be an important
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functional responsibility of marketing professionals. We can¶t deny the fact that if the foreign banks have been getting a positive response; the credibility goes to their innovative peripheral services. Thus, the formulation of product mix is found to be a difficult task that requires world-class professionalism.
PROMOTION :Promotion mix includes advertising, publicity, sales promotion, word ± of ± mouth promotion, personal selling and telemarketing. Each of these services needs to be applied in different degree. These
components can be useful in the banking business in the following ways:
1) ADVERTISING :Advertising is paid form of communication. Banking organizations use this component of the promotion mix with motto of informing, sensing and persuading the customers. While advertising it is essential to be aware of key decision making areas so that instrumentally helps bank set micro and macro levels.
2) FINALIZING THE BUDGET :This is related to the formulation of the budget for advertisement. The bank professionals, senior executives and even the policy planners are found to be involved in the process. The business of
a bank determines the scale of the advertisement budget. In addition, the intensity of competition also plays a decisive role since in the majority of cases; we find a increase in the budget due to a change in the competitor¶s strategy.
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3) SELECTING A SUITABLE VECHILE :There are a number of devices to advertise, such as broad cast media, telecast media and print media. In the face of the budgetary provisions, it is necessary to select a suitable vehicle. For promoting the banking business, the print media is found to be economic as well as effective.
4)
MAKING POSSIBLE CREATIVE :The advertising professionals bear the responsibility of making the appeals, slogans and messages more creative. Here, creative means making the advertisement programs distinct to the competitive organizations, which are active in influencing the impulse of the customers and successful in informing and sensing the customers. This requires an in-depth knowledge of the receiving capacity of the target market for which the advertisements are designed.
5) TESTING THE EFFETIVENESS :It bears an analogous significance that our advertisements are effective in influencing the impulse of customers by energizing persuasion. For making the process effective, it is essential to test the effectiveness before launching of the commercial advertisements.
6) INSTRUMENTALITY OF BRANCH MANAGER:At micro level, a branch manager bears the responsibility of advertising locally so that the messages reach the target audience.
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7) PUBLIC RELATIONS:In the banking services the effectiveness of public Relations is found in high magnitude. It is in this context that difference is found in designing of the mix for promoting the banking services.
8) TELEMARKETING:The telemarketing is a process of promoting the business with the help of sophisticated communication network. Telemarketing is found instrumental in advertising the banking services and the banking organizations can use this tool of the promotion mix both for advertising and selling. This minimizes the dependence of banking organizations on sales people and just a counter or center as listed in the call numbers may service multi- dimensional services. Telemarketing is likely to play an incremental role in marketing the banking services. The leading foreign banks and even some of the private sector commercial banks have been found promoting
telemarketing and they have been getting positive results for their efforts.
9) WORD OF MOUTH:Much communication about the banking services actually takes place by word- of- mouth information, which is also known as wordof- mouth promotion. The oral publicity plays an important role in eliminating the negative comments and improving the services. This also helps the banker to know the feedback, which may simplify the task of improving the quality ofservices. This component of promotion mix is not to influence budget adversely or generate additional
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financial burden. By improving the quality of services and by offering small gifts to the word- of- mouth promoters, bankers can get more business command in their area. The above facts make it clear that such kind of promotion is influenced by a number of factors. The most dominating factor is the quality of services offered. The bank professionals, the frontline staff and the senior executives should realize that degeneration in quality would make this tool effective.
PRICE MIX:
In the formulation of marketing mix, the pricing decisions occupy
a place of outstanding significance. The pricing decisions include the decisions related to interest and fee or commission charged by banks. Pricing decisions are found instrumental in motivating or influencing the target market. The RBI regulates the rate of interest and the Indian Banks¶ Association controls other charges. In our country, the price mix is more important because the banking organizations are also supposed to sub serve the interests of the weaker sections and the backward regions. Also in making the pricing decisions, the Government Of India instrumentalists or commands everything as a shadow policy maker.
This
also
complicates
the
price
mix
for
banking
sector.
Pricing policy of a bank is considered important for raising the number of customer¶s vis-à-vis the accretion of deposits. Also the quality of service provided has direct relationship with the fees charged. Thus while deciding the price mix customer services rank the top position. Banks also have to take the value satisfaction variable in to
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consideration. The value and satisfaction cannot be quantified in terms of money since it differs from person to person.
Keeping in view the level of satisfaction of a particular segment, the banks have to frame the pricing strategies.
The banking organizations are required to frame two- fold strategies. First, the strategy is concerned with interest and fee charged and the second strategy is related to the interest paid. Since both the strategies throw a vice- versa impact, it is important that banks attempt to establish a correlation between two. It is essential that both the buyers as well as the sellers have feeling of winning.
PEOPLE
:-
Sophisticated technologies no doubt, inject life and strength to our efficiency but the instrumentality of sophisticated technologies start turning sour id the human resources are not managed in a right fashion. We can¶t deny the fact that if foreign banks are performing fantastically; it is not only due to the sophisticated information technologies they use but the result of a fair synchronization of new information technologies and a team of personally committed
employees. The moment they witness lack of productive human resources even the new generation of information technologies would hardly produce the desired results. In addition to the professional excellence, the employees working in the foreign banks are generally value- based. Thus we accept the fact that generation of efficiency is substantially influenced by the quality of human resources.
The quality for banking sector is an aggregation of all the properties, which are found essential for generating the efficiency and
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projecting a fair image. Even efficiency essentially is supported by ethical dimension, humanity and humanism.
The development of human resources makes the ways for the formation of human capital. Human resources can be developed through education, training and by psychological tests. Even incentives can inject efficiency and can motivate people for productive and qualitative work.
THE PROCESS
FLOW OF ACTIVITIES:All the major activities of banks follow RBI guidelines. There has to be adherence to certain rules and principles in the banking operations. The activities have been segregated into various
departments accordingly.
STANDARDZTION:Banks have got standardized procedures got typical
transactions. In fact not only all the branches of a single-bank, but all the banks have some standardization in them. This is because of the rules they are subject to. Besides this, each of the banks has its
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standard forms, documentations etc. Standardization saves a lot of time behind individual transaction.
CUSTOMIZATION:There are specialty counters at each branch to deal with customers of a particular scheme. Besides this the customers can select their deposit period among the available alternatives.
NUMBER OF STORES:Numbers of steps are usually specified and a specific pattern is followed to minimize time taken.
SIMPLICITY:In banks various functions are segregated. Separate counters exist with clear indication. Thus a customer wanting to deposit money goes to µdeposits¶ counter and does not mingle elsewhere. This makes procedures not only simple but consume less time. Besides instruction boards in national boards in national and regional language help the customers further.
CUSTOMER INVOLVEMENT:ATM does not involve any bank employees. Besides, during usual bank transactions, there is definite customer involvement at some or the other place because of the money matters and signature require
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THE PHYSICAL EVIDENCE:The physical evidences include signage, reports, punch lines, other tangibles, employee¶s dress code etc. The company¶s financial reports are issued to the customers to emphasis or credibility. Even some of the banks follow a dress code for their internal customers. This helps the customers to feel the ease and comfort.
SIGNAGE:Each and every bank has its logo by which a person can identify the company. Thus such sign ages are significant for creating visualization and corporate identity.
TANGIBLES:Banks give pens, writing pads to the internal customers. Even the passbooks, Cheque books, etc reduce the inherent intangibility of services.
PUNCHLINES:Punch lines or the corporate statement depict the philosophy and attitude of the bank. Banks have influential punch lines to attract the customers.
Banking marketing consists of identifying the most profitable markets now and in future, assessing the present and future needs of
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customers, setting business development goals, making plans-all in the context of changing environment.
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CHAPTER NO- 09 CONSUMER BEHAVIOUR IN BANKS
CUSTOMER SERVICE
Customer service has been defined in many ways, but it will be better Understood if we define it from the customer¶s angle. Thus, customer service is the perception of a customer regarding the services he gets from his bank. As the human perception change from individual to individual and -within an individual from time to time, what is effective customer service today may be indifferent tomorrow and even a bad service the day after. This makes customer service a dynamic concept and a challenging job for the bankers.
IMPORTANCE OF CUSTOMER SERVICE IN BANKS
Bank is a commercial outfit marketing financial products. Its products are services offered by them. Services are performances. Production and consumption of services occur simultaneously.
Therefore, the frontline people and their interaction with customers, thus everyday postures, gestures, actions, reactions, emotions,
activities and impressions contribute significantly in projecting a particular image of the bank distinguishing it from the rest of the field. Further customer service has a tremendous retention-value. If we can-not retain a customer, all our efforts in terms of time and money in creating and winning a customer would be a sheer waste. Besides, it is found that retaining customer is often cheaper than finding a new customer. In addition to that satisfied customers recommend the business to others.
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Thus a customer is viewed as a long-term relationship rather than a party to a stray single transaction. The initial transaction is taken as the starting point and opportunity to establish a relationship through providing total customer satisfaction, which in turn will ensure further business, from him. This is what we term as relationship banking. Qualitative customer service and total satisfaction forms the edifice of ³Relationship Banking´.
CONCEPT OF CUSTOMER SATISFACTION :Satisfaction is a function of expectations about a product and its perceived performance. When perceived performance of a
product/service matches or exceeds one¶s expectations of service quality satisfaction occurs and vice-versa. The service quality attributes in a banking contest are of two types. First the product per se attributes like interest charges, accuracy of entries and reliability etc. Second, psychological attributes like recognition as important
customer, personal favor by the staff etc. As per product per se attributes, if a bank fails to meet them, it causes dissatisfaction. But, if bank meets them, they are treated as routine jobs that any bank, would have performed. Thus absence of such factors causes
dissatisfaction while their presence would only avoid dissatisfaction.
Thus for a customer to be totally satisfied, first there should be satisfaction with respect to product per se attributes then, in addition, he should get favorable treatment by the staff and the service should be delivered with a human touch.
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CHAPTER NO -10 Challenges faced by banks in Marketing their Products
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Challenges faced by banks in Marketing their products:³Change´ is a continuous process and banking industry is no exception to this law which is natural. The main aim of the financial sector reforms is to promote an efficient, competitive and diversified financial system in the country. These changes have forced the Indian banking industry to adjust the product mix and to remain competitive in the globalised environment. In order to accommodate the changes and challenges that are taking place in the present globalization scenario, the Indian banking industry has to reorient its strategy towards marketing of banking services. New ways and means have to be found to compete in the future and to survive with profit and business growth. The following are some of the vital challenges that threaten the India banking industry.
Competition from foreign banks and now new private sector banks :- The competition in the Indian banking industry
have intensified with the entry of more and more foreign banks and now private sector banks , with better technology, market orientation and cost-effective measures. Hence there is a compelling need for the Indian banking Industry to either change or modify its marketing strategy in order to attract the customers and also to withstand the stiff competition from foreign banks and new private sector banks.
Technology
Advancement:- The methodology of banking
business has drastically altered due to the advent of technology both in terms of computers and communication. It has opened new vistas in
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the banking sector and in turn has brought new possibilities for doing the same work differently and in a most cost effective manner.
Innovation: - Innovation is another important force of change in
the Indian banking sector. Now-a-days banks have become innovative and pro-active and offer top-class service to the customers. They play a dynamic role not only as finance provider but also a departmental store of finance. New Instruments like factoring, leasing, merchant banking, increases the cost effective measures.
Diversified Activities: - There is a Universal trend towards
banks diversification normally through insurance depository participant services, investment banking etc. Furthermore banks have diversified by rendering services like sale of gold, depositing gold, paying tax liability. All these diversified activities have made the banks to develop and offer consultancy counseling and customer designed packages for efficient management of funds. The Banks traditional roles as financial intermediaries is gradually assuming lesser importance in their overall business as the banks diversify their activities and redefine their roles.
Development of Skills of Banks Personnel :- In order to
meet the challenges, banks have to develop novel ways of meeting the customer¶s demands. To get sufficient knowledge and exposure to technology, suitable packages relating to hardware and software applications are to provided. Furthermore a separate marketing wing may be created in every bank to market their banking services.
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CHAPTER- 11 Recent Trends In Bank Marketing
The economy can be divided in the entire spectrum of economic activity into the real and monetary sectors. The real sector is where production takes place while the monetary sector supports this production and in a way is the means to the end. We know and we accept the financial system is critical to the working of the rest of the economy. . Therefore the banking sector is crucial and we want to express our views to explore how this sector can work in harmony with the real sector to achieve the desired objectives. The Banking sector has been immensely benefited from the implementation of superior technology during the recent past, almost in every nation in the world. Productivity enhancement, innovative products, speedy transactions seamless transfer of funds, real time information system, and efficient risk management are some of the advantage derived through the technology. Information technology has also improved the efficiency and robustness of business processes across banking sector. Moreover today each and every bank touts µThe Customer is King¶ mantra, it was a quite a different story not so long ago. Today, while the timings of banks have not changed drastically ± banks have become more customer-friendly, Now power has shifted into the hand of the customer.
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Following are the Innovative Services offered by the Industry in the Recent Past:
Real Time Gross Settlement (RTGS):-
Real
Time
Gross
Settlement
system
through
which
electronics
instructions can be given by banks to transfer funds from their account to the account of another Bank.The RTGS system is maintained and operated by the RBI and provides a means of efficient and faster funds transfer among banks facilitating their financial operations. As the name suggests, funds transfer between banks takes place on a µReal Time¶ basis. Therefore, money can reach the beneficiary
instantaneously and the beneficiary¶s bank has the responsibility to credit the beneficiary¶s account within two hours.
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Automatic Teller Machine (ATM):Automatic Teller Machine is the most popular devise in India,
which enables the customers to withdraw their money 24 hours a day 7 days a week. It is a devise that allows customer who has an ATM card to perform routine banking transactions without interacting with a human teller. In addition to cash withdrawal, ATMs can be used for payment of utility bills, funds transfer between accounts, deposit of cheques and cash into accounts, balance enquiry etc.
Point of Sale Terminal:Point of Sale Terminal is a computer terminal
that is linked online to the computerized customer
information files in a bank and magnetically encoded plastic transaction card
that identifies the customer to the computer. During a transaction, the customer¶s account is debited and the retailer¶s account is credited by the computer for the amount of purchase.
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Tele Banking:-
Tele Banking facilitates the customer to do entire non-cash related banking on telephone. Under this devise Automatic Voice Recorder is used for simpler queries and transactions. For complicated queries and transactions, manned phone terminals are used.
Electronic Data Interchange (EDI):-
Electronic Data Interchange is the electronic exchange of business documents like purchase order, invoices, shipping notices, receiving advices etc. in a standard, computer processed, universally accepted format between trading partners. EDI can also be used to transmit financial information and payments in electronic form.
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Internet banking:
Internet banking involves consumers using the Internet to access their bank account and to undertake banking
transactions. At the basic level, Internet banking can mean the setting up of a Web page by a bank to give information about its product and services. At an advance level, it involves provision of facilities such as accessing accounts, funds transfer, and buying financial products or services online. This is called ´transactional'' online banking.
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MARKETING MIX OF ICICI
79
ICICI
y y y y y y y India¶s second largest bank. 614 branches and extension counters 2200. ATM¶S Biggest private sector bank in India. Most valuable bank in India in terms of market capitalization. Described by the competitors and industry expert in one word ±
³Aggressive´
First in the Industry :y y Introduced concept of branding in the Indian banking industry. Process, People and Physical evidence ± brought to life by ICICI. Product Innovation. y y y Unleashed the power of the internet. First bank to focus on retail banking as a driver for Growth. Comprehensive solutions. data centre availability & data protection
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Focus areas of marketing effort
Target marketing and customer acquisition Share of wallet Channel strategy and management Relationship management and database marketing Product development & innovation Credit approval
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Products and services
y y y y y y y Deposits Investment Loans Cards Demat services Mobile Banking NRI services
PRICING
The pricing decisions or the decisions related to interest and fee or commission charged by banks are found instrumental in motivating or influencing the target market.
PLACE
This component of marketing mix is related to the offering of services. The services are sold through the branches.
Product Promotion
1) Aimed at generating Sales. 2) Communicates product features and benefits mainly through print media. 3) Point of purchase promotion tools for different products to reach the relevant customer segment.
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Public Relations
Purpose - To deliver communication that is uniform in its message and yet customized for specific target audiences Media relations Investor relations Analyst relations Government relation
People
1) Orientation towards customer service 2) Division of SME, 3) Personal Banking and other functions at the branch level, 4) Effort towards providing sophisticated and modern image of the bank
through its people.
Process
Extensive investment in software solutions for process systemization.
CONCLUSION :IDBI Bank today services a growing Customer base of more than customer accounts and bondholders¶ accounts through a multi-channel access network. They are focused on quality of products and services rather than quantity of products and services.
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QUESTIONNAIRE
1) Does your bank have a separate Marketing department?
y
2)
YES (IDBI INTECH).
What are the innovative products added to your current product line?
y
3)
For NRI ± NRI INSTA.
What are the promotional strategies adopted by the banks?
y y
Campaign Advertisement. In colleges/ schools were Drawing, Blood Donation happens Our Bank goes and market their products.
4)
Does your bank believe in aggressive advertisement strategy?
y
5)
YES
How much is the average annual expenditure on Promoting the Bank products?
y
6)
Nearly 1,00,000.
Does your bank use Direct Marketing or Online Marketing strategies?
y
Our bank believe in both. So both Direct Marketing and Online Marketing strategies being adopted by Our Bank.
7)
What are your future strategies to attract your customer?
y
Retaining customer is a critical key for Our bank. IDBI have launched NRI INSTA for NRI¶s. Zero balance account for rural areas.
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8)
Do you think that in marketing area your bank has to improve?
y
Yes, with changing in demand and according to competition we have to improve day by day.
9)
What are marketing corporate customer?
strategies
adopted
by
banks
for
y
ZERO BALANCE ACCOUNT. Where the corporate house/customers can access the account even at zero balance.
10)
Do you provide regular training to the employees of your Marketing Department? Yes we provide regular training to our employees it being conducting once in a Month.
y
11)
How do you measure their performance? We measure Performance in Productive wise conducted quarterly.
y
12)
Do you have a µCustomer Relationship Manager¶ in your Bank? Yes, RO( RELATIONSHIP OFFICER) RM(RELATIONSHIP MANAGER)
y
13)
Is the customer satisfy with services provided by the bank? Yes the customer are almost satisfied we get complaints but we solve it immediately.
y
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CONCLUSION Banking sector has gone undergone changes after the new economies policy based on privatization, globalization and new liberalization adopted by Government of India. Introduction of asset classification and prudential accounting norms, deregulation of interest rate and opening up of the financial sector made Indian Banking sector competitive. Encouragement to foreign banks and private sector banks increased competition for all operators in banking sector. However banks under the new environment, needs to decide effective marketing of their products.