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

1
 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 “BANK
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 “BANK
MARKETING” FOR THE V SEMESTER OF T.Y.B.C.B.I. IN THE
ACADEMIC YEAR 2010-2011

Course Co-cordinator Principal

(Prof.Mahesh Gurdasani) (Dr. Bhavna Motwani)

Project Guide
(Prof. KAJAL BHOJWANI ) Internal examiner

External examiner

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4
 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 :-

 MR. PANKAJ BHALERAO OFFICE OPERATION MANAGER :-

ICICI BANK (KALYAN BRANCH)

 MRS. S.R. BELLWANI ASSISTANT MANAGER :-

IDBI BANK (AMBERNATH BRANCH)

 SECONDARY SURVEY:-
REFERENCE FROM BOOKS, WEBSITES, AND MAGAZINES.

6
 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 “BANK 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 NAME OF THE TOPIC Page

NO. No.
01. The Financial System.
02. INTRODUCTION OF BANKING IN INDIA
 BANKING SYSTEM
 TYPES OF BANKS
03. MARKETING
 MEANING
 CONCEPT OF MARKETING
 DIFFERENCE BETWEEN SALES AND
MARKETING
04. SERVICES
 MEANING
 CHARACTERISTICS
 CLASSIFICATION
05. SERVICE MARKETING
 EVOLUTION OF MARKETING CONCEPT
 CONCEPT OF SERVICE MARKETING
 THE IMPORTANCE OF MARKETING IN THE
SERVICE SECTOR
06. BANK MARKETING
 INTRODUCTION
 CONCEPT OF BANK MARKETING
 APPLICATION OF
 MARKETINGCONCEPT IN BANKS
 NEED FOR BANK MARKETING
07. TYPES OF MARKETING
08. 7PS OF BANK MARKETING
09. Consumer behavior in Banks
 IMPORTANCE OF CUSTOMER SERVICE IN
BANKS.
 CONCEPT OF CUSTOMER SATISFACTION.

10. CHALLENGES FACED BY BANK IN MARKETING
THEIR PRODUCTS.
11. RECENT TRENDS IN BANK MARKETING.
12. FIELD STUDY ON ICICI BANK
13. ANNEXURE

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 CHAPTER No. 1

FINANCIAL SYSTEM

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12
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.

14
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.

15
 CHAPTER NO -2

INTRODUCTION TO BANKING IN INDIA

16
 INTRODUCTION TO BANKING IN INDIA

The word “Bank” is originated from the German word “Bank”

which means heap or mound or joint stock fund. From this, the Italian
word “banco” meaning heap of money was coined. The English
meaning of “bank” 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

17
"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, “An

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 “one who in ordinary course of business

honors the cheques drawn upon him by person from and for whom he
receives money on current accounts”

“Banking 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 “any company which
transacts the business of banking”

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BANKING SYSTEM

19
 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

21
 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 PRIVATE COOPERATIVE

SECTOR BANKS
SECTOR BANKS 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

22
 like HSBC, Citibank, Standard Chartered Bank etc are also clubbed
here.

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

24
Marketing

25
26
 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, it can be concluded that Marketing
Management is one of the major components of business
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, “Marketing 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 “as 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 ‘needs’ 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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H
D
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'S
4
F
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O
P
IM
DEFINITION OF MARKETING

According to William Stanton, “Marketing 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, “Marketing 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

32
 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 sold-
not 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 the age of environmental
deterioration, resource shortages, explosive population growth,
worldwide inflation and neglected social services, it is expected that
firms that senses, serves and satisfies individual wants should gear

33
 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 ?
35
 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.

37
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.)

38
 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.

39
CHAPTER NO- 4

SERVICES

40
Meaning of Service:

41
 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 “American Marketing Association” “Services 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:

42
 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 ‘J.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

43
a brand name, increasing services tangibility, emphasizing services
benefits rather than just describing its features.

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

44
demand. But it becomes a problem when it faces fluctuating demand.
So, to overcome this problem, the service concerns should have
proper

OWNERSHIP
product planning,
organization.
pricing, and built-in flexibility

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.

45
B
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in the
 CLASSIFICATION OF SERVICES
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).

46
 SERVICE MARKETING

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 ‘self-
sufficient 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 ‘exchange 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

47
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.

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

48
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.

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 customer-
oriented 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

49
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).
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 re-
engineered 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 “Bank marketing is the aggregate
of functions, directed at providing services to satisfy customer’s
financial (and other related) needs and wants, more effectively and

50
efficiently than the competitors keeping in view the organizational
objectives of the Bank.”

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 “customer of a bank is king”.
Therefore bank marketing implies that “it 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.

51
 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
(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 ‘source’ markets and each of the ‘use’
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.

52
 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.

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.

53
 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.

54
 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.
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 ‘internal 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

55
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
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 “you never hear our people say 'that's not my
job” or “if 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

56
 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.

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

57
 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.

MARKETING STRATEGIES

Introduction:-

Marketing strategy consists of the analysis, strategy

development, and implementation activities in
“Developing 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”.

58
 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 customer-
influencing strategies of the business into a coordinated set of market-
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.

59
 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.

CHAPTER NO -8

7 PS OF BANK MARKETING

60
  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. The changing
psychology, the increasing
expectation, the rising
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.

61
 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

62
 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.

63
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.

64
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 word-
of- 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

65
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

66
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

67
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

68
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 ‘deposits’ 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

69
  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

70
customers, setting business development goals, making plans-all in
the context of changing environment.

71
 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.

72
 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 “Relationship 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.

73
 CHAPTER NO -10
Challenges faced by banks in Marketing their
Products

74
Challenges faced by banks in Marketing their
products:-
“Change” 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

75
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 ‘The 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 ‘Real
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):-

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      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. 

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

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ICICI
 India’s second largest bank.
 614 branches and extension counters 2200.

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  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 –
“Aggressive”

First in the Industry :-

 Introduced concept of branding in the Indian banking industry.
 Process, People and Physical evidence – brought to life by ICICI.
Product Innovation.
 Unleashed the power of the internet.
 First bank to focus on retail banking as a driver for Growth.
 Comprehensive data centre availability & data protection
solutions.

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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
 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?

 YES (IDBI INTECH).

2) What are the innovative products added to your current

product line?
 For NRI – NRI INSTA.

3) What are the promotional strategies adopted by the banks?

 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?

 YES

5) How much is the average annual expenditure on Promoting

the Bank products?
 Nearly 1,00,000.

6) Does your bank use Direct Marketing or Online Marketing

strategies?
 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?

 Retaining customer is a critical key for Our bank. IDBI have
launched NRI INSTA for NRI’s. Zero balance account for rural
areas.

8) Do you think that in marketing area your bank has to

improve?

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  Yes, with changing in demand and according to competition
we have to improve day by day.

9) What are marketing strategies adopted by banks for

corporate customer?
 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.

11) How do you measure their performance?

 We measure Performance in Productive wise conducted
quarterly.

12) Do you have a ‘Customer Relationship Manager’ in your Bank?

 Yes, RO( RELATIONSHIP OFFICER)
RM(RELATIONSHIP MANAGER)

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.

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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.

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