Bank Marketing

INDEX

SR. NO. 1. 2. ". %. (. *. ,. .. 0. 12. 11. 12. 1". 1%. 1(. 1*. 1,. 1.. 10. 22. 21. 22. 2". 2%.

DESCRIPTION Executive summary The Financial System Origin of The Word BA ! #efinition of Ban$ and mar$eting Finance and &an$ing in 'ndia )sers of Ban$ing Services +eaning of +ar$eting Evolution of the mar$eting conce-t +ar$eting and /om-etition +ar$eting /once-ts 1 'ts a--lication to Ban$ing +eaning of Ban$ +ar$eting +ar$et 3esearch in 'ndian Ban$s 'ncreasing 'm-ortance of +ar$eting in Ban$ing 'ndustry +ar$et Segmentation +ar$eting +ix for Ban$ing Services Strategies for Segmentation +ar$eting +ix for &an$ing services Strategies for effective &an$ mar$eting in 'ndia Technology in Ban$ing What are customer services /ase study Ban$ +ar$eting in the 'ndian 4erce-tive Future of Ban$ +ar$eting /onclusion 3efrences

Pg no.

Bank Marketing

Bank Marketing

HTTP://PAKISTANMBA.JIMDO.COM FOR DOWNLOADING THIS REPORT AND FOR MORE PROJECTS, ASSIGNMENTS, REPORTS ON MARKETING, MANAGEMENT, ECONOMICS MARKETING MANAGEMENT, ACCOUNTING, HUMAN RESOURCE, ORGANIZATIONAL BEHA IOR, FINANCIAL MANAGEMENT COST ACCOUNTING ISIT HTTP://PAKISTANMBA.JIMDO.COM THE FINANCIAL S!STEM
The financial system consists of variety of institutions5 mar$ets and instruments that are related in the manner sho6n in the &elo6 figure5 it -rovides the -rinci-al means &y 6hich saying are transformed into investment. 7iven its role in the allocation of resources5 the efficient functioning of the financial system is of critical im-ortance to a modern economy. Financial manager negotiate loans from financial institutions5
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raises resources in financial mar$ed and invests sur-lus funds in financial mar$et. 'n very significant 6ay he manages the interface &et6een the form and its financial environment.

Financial System -laced a very im-ortant role in the develo-ment of a country. Through Financial System5 entire money or money e8uals are channeli9ed in such a 6ay so that each sector of economy li$e industry5 agriculture and services can &e develo-ed rationally. Financial sector develo-ment is the locomotive force for economic develo-ment of a country.

ORIGIN OF THE WORK "BANK#

According to some economists the 6ord :Ban$; has &een derived from the 7erman 6ord BA / 6hich means a <oint Stoc$ Firm 6hile others say that
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Bank Marketing

it has &een derived from the 'talian 6orld :BA /O; 6hich means a hea- or mound.

There is still another grou- of -eo-le 6ho &elieve that 6ord &an$ has &een derived from the 7ree$ 6or$ :BA =)E; 6hich means a &ench. 'n the olden days5 <e6s entered into money transactions sitting on &enches in a mar$ed -lace. When a &an$er 6as not in a -osition to meat his o&ligations5 the on 6hich he 6as carrying on the money &usiness 6as &ro$en into -ieces and the 6as ta$en as &an$ru-t. Thus &oth the 6ords Ban$ or &an$ru-t are said to have origin from the 6ord :Ban8ue;.

DEFINITION OF BANK
According to Oxford English #ictionary5 Ban$ is5 >An esta&lishment for custody of money received from or on &ehalf of5 its customers. 'ts essential duty is the -ayment of the orders given on it &y the customers5 its -rofit mainly from the investment of money left unused &y them?.

Ban$ing 3egulation Act5 10%0 @Sec. (@cAA5 has defined the &an$ing com-any as5 >Ban$ing /om-any means any com-any 6hich transacts &usiness of &an$ing in 'ndia?. According to Section (B5 >&an$ing means the acce-ting of de-osit of money from the -u&lic for the -ur-ose of leading or investment5 6hich are re-aya&le on demand or other6ise and are 6ithdra6a&le &y che8ue5 draft5 order or other6ise.?

Bank Marketing

#ifferent economists5 &an$ing -rofessionals and authorities ex-lained their vie6-oint regarding &an$ or commercial &an$. 't has &een rightly said &y A.!. Basu that a general definition of a &an$ or &an$ing is &y no means easy5 as the conce-ts of &an$ing differ from age to age5 and country to country.

FINANCE AND BANKING IN INDIA

'ndia is a vast country5 Before 10%,5 undivided 'ndia 6as e8ual to Euro-e excluding 3ussia in its area. 't is situated in south of Asia. 'n s-ite of a -art of Asia5 it is se-arated from it. 't is se-arated &y Bimalayas in orth 'ndia. 'ndia has vast oceans in South5 East and West. #ue to its vastness it is also called su& continent. That vast country has given different names in different times. 'n Cedic -eriod5 it 6as called :AryaDCDarat;. 'n Bir -eriod and ancient -eriod5 it as called Bharatvarash;. 4erha-s due to fame of $ing Bharat5 it 6as called :Bharatvarsh. 7ree$ called it 'ndus on the name of river Sindh. 'ranians called it Bindu. /hinese travelers called it Tienchu and Eintu. '-sing called :Arya #esh; and Brahmrashtra. Bi&le has called it Boddu. 'n medieval -eriod5 it 6as called :Bindustan; and Bind. Euro-ean called it 'ndia. After 'nde-endence5 it is return as Bharat 7anraFya or 'ndian 3e-u&lic in 'ndian /onstitution.

E OLUTION OF THE MARKETING CONCEPT

Bank Marketing

The 3ole of mar$eting in the &an$ing industry continues to change. For many years the -rimary focus of &an$ mar$eting 6as -u&lic relations. Then the focus shifted to advertising and sales -romotion. That 6as follo6ed &y focus on the develo-ment of a sales culture.

Although all the elements of the mar$eting conce-t 1 customer satisfaction5 -rofit integrated frame6or$5 and social res-onsi&ility 1 6ill remain im-ortant5 customer satisfaction must receive the greatest em-hasis in the years ahead.

The chief concerns of most &an$ executives still focus on legal and regulatory issues5 according to most surveys. /ommunity &an$s are -articularly concerned 6ith eliminating &arriers that give unfair advantages to financial services com-etitors5 such as credit unions. Bo6ever5 another concern -ertains to technologyG $ee-ing non&lan$ com-etitors out of the -ayment system.

B$n%&'( I)&n*+,- N&$'.T&$/ $n) Long T&'/ Con0&'n(

1221 +aintaining -rofita&ility /redit 4ortfolio +anagement Service =uality 3egional Economy /ost +anagement H reduction #eclining EarningsH more failures 3415 Service 8uality +aintaining -rofita&ility +ar$et H customer focus O-erationsHsystemsHtechnology Ex-ense /redit -ortfolio management 4roductivity im-rovement 'nvestment to stay com-etitive
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+ar$et H customer focus /a-ital ade8uacy Stoc$ mar$et value 'ndustry Overca-acity

Stoc$ mar$et value AssetHlia&ility management Electronic Ban$ing

When this gate6ay system 6as first -ro-osed5 access to the 'nternet 6as very ne6 and fe6 &an$s had the resources and $no6ledge to set u- their o6n directDaccess lines for customers. /ustomers have sho6n a gro6ing interest in online &an$ing services5 and &an$s have res-onded &y 8uic$ly -utting in -lace -ro-rietary sites on the World Wide We& and offering 4/ &an$ing.

Within the next five years5 0" -ercent of community &an$ executives surveyed say they -lan to offer tele-hone &an$ing5 and ,0 -ercent -lan to offer 4/ &an$ing.

When as$ed 6hich technology holds the most -otential for the future5 &an$ executives identified call centers first. As customers continue the transition the transition into a highDtech 6orld in 6hich they 6ant information and ans6ers more 8uic$ly and accurately than ever &efore5 call centers offer the ideal &ridge. With 2%Dhour access to either automated information or live o-erators5 customers do everything from chec$ their accounts to a--ly for a loan. Ban$ executives also identified 4/ &an$ing as having the most -romise for the future5 follo6ed &y 'nterest access and &road function $ios$s.
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MARKETING AND COMPETITION

'n vie6 of the declining -rofita&ility and -roductivity of the &an$ing sector and extremely lo6 rate of -rofit -ercentage5 the determination of the financial health of the system re8uires drastic remedial measures not only to &uild u- investor confidence &ut also to com&at com-etition from all over. 't is time that the -ros and cons of the oncoming &an$ing era are -ro-erly understood and advantage ta$en of various o--ortunities. This 6ill re8uire an efficient mar$eting a--roach to &an$ management in 6hich target mar$ets 6ill &e tac$led successfully along 6ith effective satisfaction levels and in 6hich the usual &asic elements 1 -roduct5 -ricing5 -romotion and distri&ution 6ill &e ta$en care of in a -ro-er format of an efficiently 6or$ing mar$eting organi9ation.

The nationalised &an$s must face com-etition from -rivate &an$s5 nonD &an$ing financial institutions5 foreign &an$s and others. The com-etition is in the fields of de-osits and credits5 foreign trade5 consumer credit and miscellaneous &an$ing activities. The com-etition 6ill &enefit customers and force the &an$ing system to raise its -roductivity5 minimi9e ex-enses5 and remain sensitive to evolving issues. arasimham /ommittee 3e-orts 6hile recommending internal autonomy long 6ith com-liance 6ith -rudential norms suggested ruleD&ased credit -olicies5 fiscal &alance and a gradual movement to6ards li&eratlisation.
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Bank Marketing

To deal 6ith the com-etition from foreign &an$s5 the 'ndian &an$s should go in for diversification and extension of services as 6ell as ex-ansion of -roducts and &usiness. Economic freedom and innovative s-irit have contri&uted greatly to the success of the mar$etDoriented financial sector in the Western countries. #irected credit and investment has done Fust the o--osite. 'nterventionism is not necessarily &ad -rovided it is associated 6ith a committed leadershi-. 'ndian financial sector had for more than four decades5 neither full economic freedom nor a 6ell disci-lined interventionism so that it cost o-erational flexi&ility as 6ell as functional autonomy &oth of 6hich 6ere concerned 6ith -rofita&ility -erformance and related factors.

MARKETING CONCEPTS
'ts a--lication to Ban$ing5 When 6e a--ly mar$eting to the &an$ing industry5 the &an$ mar$eting strategy can &e said to include the follo6ing 1 iA iiA iiiA A very clear definition of target customers. The develo-ment of a mar$eting mix to satisfy customers at a -rofit for the &an$. 4lanning for each of the :source; mar$ets I each of the :use; mar$ets @A Ban$ needs to &e dou&ly mar$et 1 oriented 1 it has to attract funds as 6ell as 6ere of funds I services.
iv)

Organisation I Administration.

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Bank Marketing

BANK MARKETING
We define &an$ mar$eting as follo6sG >Ban$ mar$eting is the aggregate of functions5 directed at -roviding services to satisfy customers; financial @and other relatedA needs and 6ants5 more effectively and efficiently that the com-etitors $ee-ing in vie6 the organi9ational o&Fectives of the &an$?. Ban$ mar$eting activity. This aggregate of functions is the sum total of all individual activities consisting of an integrated effort to discover5 create5 arouse and satisfy customer needs. This means5 6ithout exce-tion5 that each individual 6or$ing in the &an$ is a mar$eting -erson 6ho contri&utes to the total satisfaction to customers and the &an$ should ultimately develo- customer orientation among all the -ersonnel of the &an$. #ifferent &an$s offer different &enefits &y offering various schemes 6hich can ta$e care of the 6ants of the customers.

+ar$eting hel-s in achieving the organi9ational o&Fectives of the &an$. 'ndian &an$s have duel organi9ational o&Fective 1 commercial o&Fective to ma$e -rofit and social o&Fective 6hich is a develo-mental role5 -articularly in the rural area.

+ar$eting conce-t is essentially a&out the follo6ing fe6 thing 6hich contri&ute to6ards &an$s; successG
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1A 2A "A %A

The &an$ cannot exist 6ithout the customers. The -ur-ose of the &an$ is to create5 6in5 and $ee- a customer. The customer is and should &e the central focus of everything the &an$s does. 't is also a 6ay of organi9ing the &an$. The starting -oint for organi9ational design should &e the customer and the &an$ should ensure that the services are -erformed and delivered in the most effective 6ay. Service facilities also should &e designed for customers; convenience.

(A *A

)ltimate aim of a &an$ is to deliver total satisfaction to the customer. /ustomer satisfaction is affected &y the -erformance of all the -ersonal of the &an$.

All the techni8ues and strategies of mar$eting are used so that ultimately they induce the -eo-le to do &usiness 6ith a -articular &an$. +ar$eting is an organi9ational -hiloso-hy. This -hiloso-hy demands the satisfaction of customers needs as the -reDre8uisite for the existence and survival of the &an$. The first and most im-ortant ste- in a--lying the mar$eting conce-t is to have a 6hole hearted commitment to customer orientation &y all the em-loyees. +ar$eting is an attitude of mind. This means that the central focus of all the activities of a &an$ is customer. +ar$eting is not a se-arate function for &an$s. The mar$eting function in 'ndian Ban$ is re8uired to &e integrated 6ith o-eration.

+ar$eting is much more than Fust advertising and -romotionJ it is a &asic -art of total &usiness o-eration. What is re8uired for the &an$ is the mar$et
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orientation and customer consciousness among all the -ersonal of the &an$. For develo-ing mar$eting -hiloso-hy and mar$eting culture5 a &an$ may re8uire a mar$eting coordinator or integrator at the head office re-orting directly to the /hief Executive for effective coordination of different functions5 such as mar$eted research5 training5 -u&lic relations5 advertising5 and &usiness develo-ment5 to ensure customer satisfaction. The Executive #irector is the most suita&le -erson to do this coordination 6or$ effectively in the 'ndian -u&lic sector &an$s5 though ultimately the /hief Executive is res-onsi&le for the total mar$eting function. Bence5 the total mar$eting function involves the follo6ingG

a) +ar$et research

i.e. identification of customer;s financial needs and 6ants and forecasting and researching future financial activities. mar$et needs and com-etitors;

b) 4roduct #evelo-ment

i.e. a--ro-riate -roducts to meet consumers; financial needs. i.e.5 -romotional activities and distri&ution system in accordance 6ith the guidelines and rules of the 3eserve Ban$ of 'ndia and at the same time loo$ing for o--ortunities to satisfy the customers &etter.

c) 4ricing of the service

d) #evelo-ing mar$et

i.e.5 mar$eting culture 1 among all the customerDconsciousness :4ersonnel; of the &an$ through training.

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Bank Marketing

Thus5 it is im-ortant to recogni9e the fundamentally different functions that &an$ mar$eting has to -erform. Since the &an$s have to attract de-osits and attract users of funds and other services5 mar$eting -ro&lems are more com-lex in &an$s than in other commercial concerns.

MARKET RESEARCH IN INDIAN BANKS

After en8uiring 6ith all the -u&lic and 1% -rivate sector &an$s 6hether they had underta$en any mar$et research studies. The follo6ing &oard areas of mar$et research 6ere considered for the studyG @aA e6 service develo-ment5 @&A e6 service -roduct acce-tance5 @cA 3esearch and develo-ment of existing financial service5 @dA Ban$ images study5 @eA +easuring &an$;s advertising effectiveness5 @fA +easurement of mar$et -otentials5 @gA +ar$et research of com-etitive service -roducts5 @hA /ustomer;s o-inion study5 @iA /ustomer -rofile study5 and @FA +ar$et share analysis.

'n res-onse to the in8uiry information 6as received from 1, &an$s. Out of these &an$s5 1% are -u&lic sector &an$s and " are -rivate sector &an$s.
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T6o nationali9ed &an$s and t6o -rivate sector &an$s informed that they have not conducted any mar$ets research studies.

'nformation regarding Ban$6ise +ar$et 3esearch Studies B$n% 1. Allaha&ad Ban$ T+*6& o, *7& M$'%&* R&(&$'07 S*8)a. Survey /ustomer Service 2. Ban$ Baroda of &. +ar$eting de-osits and on R&/$'%( ot re-ort -re-ared. +4 3anadeG of B+4 Thesis. formal

allied services to nonDresidents customers

3. /anara Ban$

a.

o-inion @10(.A +ar$eting research for t6o de-osit ne6

For

internal

study use only

%. /entral of 'ndia

Ban$

a.

schemes @10.0A +ar$et survey of /onducted customer services B'TS5 For use

&y

the students of 4ilani. internal only

&.

+ar$eting de-osits @/ustomersA

15

service @10.*A

Bank Marketing

(. 'ndian Overseas Ban$ *. Oriental Ban$ of /ommerce

a.

4otential for &usiness ex-ansion Study customer

areas For

internal

future use only

a.

of 3

)-endran

+B4 Thesis s-ecial to

service in OB/ 6ith reference metro-olitan ,. 4unFa& ational Ban$ a. &ranches @10.0A Sam-le survey For on res-onses @10.,A
b.

internal internal

customer;s use only For use only survey Formal 3e-ort customer on lin$ed loan internal

Sam-le on

service @10..A c. Study de-osit housing .. 4unFa& Sind Ban$ and a.

scheme @10.2A Study on For customer turnover @mail 8uestionnaire

use only

&ased study of < S !alraG

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customers 6ho B+4 Thesis have their @10.0A &. /hanging 4rofile of 4unFa& and Sind their ex-ectorations5 a survey &ased 0. State Ban$ of Bi$aner a. study @10..A A survey on For customer service5 level of customer satisfaction and customer ex-ectations 12.Syndicate Ban$ a. @100.A Evaluation Study 8uality customer service @10.0A
b.

closed accountsA

Ban$;s

/ustomers and

internal

use only

For of

internal

on

the use only

! + !anath B+4 Thesis of

+ar$eting &an$
17

service

Bank Marketing

6ith reference &ranches

s-ecial to in

Bom&ay city of Syndicate Ban$D customer 11.)nion Ban$ of 'ndia a. service @10,0A /ustomer res-onses @O-inionA survey 12.)/O Ban$ a. @10..A /ustomers; o-inion study 1".)nited Ban$ of 'ndia a. @10.0A 3e-ort of the survey on customer o-inion @10.,A &. 'm-rovement of customer service in a metro-olitan 1%.CiFay Ban$ a. &ranch @10,0A 3e-ort of the customer service survey
15. !arur

For

internal

use only

For

internal

use only For internal

use only ! 4 3amesh 3ao B 4 Thesis

Formal 3e-ort

Cysya

a.

@10..A Study on the

18

)nderta$en &y

Bank Marketing

Ban$

image of the &an$ @10.0A

a /onsultant

+ost of these mar$et research studies 6ere conducted for internal use and no formal re-orts 6ere -re-ared. 't is im-ortant to note the su&Fect or issue researched &y the &an$. The most im-ortant su&Fect for mar$et research in terms of the num&er of studies conducted5 is the customer service H customer; -rofile o-inion studies. Fe6 &an$s have conducted even more than one customer service H o-inion studies.

INCREASING IMPORTANCE OF MARKETING IN BANKING INDUSTR!

The various other factors 6hich have led to the increasing im-ortance of mar$eting in the &an$ing industry are categori9ed as follo6sG

Go9&'n/&n* In+*+$*+9&( The 'ndian economy em&ar$ed on the -rocess of economic reform and various -olicy measures initiated &y the government resulted in the increasing com-etition in the &an$ing industry5 there&y highlighting the im-ortance of effective mar$eting. The arasimhan /ommittee 3e-ort evidence of the 7overnment;s desire to :reDregulate; the &an$ing industry so as to encourage efficiency through com-etition. The 7overnment initiatives includeG

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Bank Marketing

D&'&g86$*+on o, In*&'&(* R$*&( The &an$ may reduce their +inimum Kending 3ates so as to attract customers @individual and cor-orateA. Such reduction in lending rates reduce the s-read &et6een the de-osit rates and lending rates5 i.e. the &an$s margins 6ould decline and they 6ould have to increase their volumes or -rovide attractive services so as to maintain -rofits. This calls for &an$ mar$eting.

In0'&$(+ng E/:7$(+( on B$n% P'o,+*$;+6+*-: With the arasimhan /ommittee 3e-ort5 &an$s have &een directed to im-rove their efficiency5 -roductivity and -rofita&ility. Ban$s are re8uired to &e selfDsufficient. 'n fact5 the re-ort has ado-ted the B'S standards of ca-ital ade8uacy @though in a -hased mannerA.

Fo'&+gn B$n%( Foreign &an$s offer stiff com-etition to the 'ndian Ban$s and 6ith their su-erior services and technology offer them a com-etitive advantage. Thus 'ndian Ban$s have to effectively a--ly mar$eting conce-ts to attract customers.

En*'- o, N&< P'+9$*& B$n%( 'n the early :02s ne6 com-etition emerged in the form of ne6 4rivate Ban$s5 6ho &rought along 6ith them a high technologyD&ased &an$ing matching 6ith 'nternational Standards and have made a significant dent in the &an$ing &usiness &y ca-turing su&stantial share in the -rofits of the &an$ing industry.
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Bank Marketing

R&)80*+on o, S*$*8*o'- L+=8+)+*- R$*+o: With the 7overnment;s aim of reducing the SK3 to 2( -ercent5 the &an$s 6ill have sur-lus funds for 6hich they 6ill have to attract users.

So0+$6 En9+'on/&n* In0'&$(+ng U';$n+>$*+on, E)80$*+on $n) A<$'&n&((: The higher literacy level5 migration to ur&an areas and higher a6areness due to the &oom in the mass media have im-ortant im-lications for the retail &an$er. Be needs to &e conscious of the fact the increasing -ro-ortion of -eo-le are a6are of financial service and are5 therefore demanding and ex-ecting higher 8uality services.

In0'&$(+ng U';$n+>$*+on, E)80$*+on $n) A<$'&n&((: The higher literacy level5 migration to ur&an areas and higher a6areness due to the &oom in the mass media have im-ortant im-lications for the retail &an$er. Be needs to &e conscious of the fact the increasing -ro-ortion of -eo-le are a6are of financial service and are5 therefore demanding and ex-ecting higher 8uality services.

#ecline in Traditional 'ndian Calues @Borro6ing as Ta&ooA5 3ising /onsumerism5 3ise in the 4ercentage of Wor$ing Women.

T&07no6og- D&9&6o:/&n* +oderni9ation of Technology has facilitated the introduction of ne6 &an$ing services as to attract ne6 customers. An exam-le of this is the :Automated
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Teller +achines; or the facility of :Any Time +oney;. Also in foreign countries5 &an$s are ex-erimenting 6ith money transmission at 4oint of sale5 e.g.5 -etrol station lin$ed 6ith &an$ing net6or$.

C'&)+* +( E$(+&' *o O;*$+n G'o<+ng I/:o'*$n0& o, Non.B$n%+ng F+n$n0+$6 In(*+*8*+on(: Fixed #e-osits &eing offered &y the and that offered &y the BF/;s are very attractive for the -u&lic5 &ecause of the 6ide ga- of interest rates offered &y &an$s on term de-osits B/S;s. further5 they offer a variety of s-eciali9ed services to their customers so as to attract and retain them.

D+(+n*&'/&)+$*+on: The increasing role of ca-ital mar$ets in mo&ili9ing funds is reducing the im-ortance of &an$s as intermediaries. /om-anies are directly a--roaching the savers through the ca-ital mar$ets. +utual funds hel- in attracting the small investors 6ho do not 6ant to ta$e much ris$.

MARKETING BANKING

CONCEPTS

ITS

APPLICATION

TO

When 6e a--ly mar$eting to the &an$ing industry5 the &an$ mar$eting strategy can &e said to include the follo6ingG i. ii. A very clear definition of target customers. The #evelo-ment of mar$eting mix to satisfy customers at a -rofit for the &an$.

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Bank Marketing iii.

4lanning for each of the :source; mar$ets and each of the :user; mar$ets @A &an$ needs to &e dou&ly mar$et 1 oriented 1 its has to attract funds as 6ell as users of funds and servicesA.

iv.

Organi9ation and Administration.

Con(8/&' B&7$9+o' $n) S&g/&n*$*+on N&&) ,o' (&g/&n*$*+on 4hili- !otler has descri&ed the dilemma of the seller @es-ecially5 a seller dealing 6ith masses5 e.g. &an$sA as follo6sG

>Bo6 the seller determines 6hich &uyer;s characteristics -roduce the &est -artitioning of a -articular mar$etL The seller does not 6ant to treat all customers ali$e nor does he 6ant to treat them all differently?.

Ban$s deal 6ith individuals5 grou- of -ersons and cor-orates5 all of 6hom have their li$es and disli$es. o &an$ can afford to assess the needs of each and every individual &uyer @actual or -otentialA.

Segmentation of the mar$et into more or less homogenous grou-s5 in terms of their needs and ex-ectations from the &an$ing industry5 -rovides a solution to this -ro&lem. This involves dividing the mar$et into maFor mar$et segments5 targeting one or more of this segments5 and develo-ing -roducts and mar$eting -rograms tailorDmade for these segments.

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Bank Marketing

'n the first segmentation5 the mar$et is divided from a unitary 6hole5 to grou-s of &uyers 6ho might re8uire se-arate -roducts and mar$eting mix. The mar$eter ty-ically tries to identify different segments in the mar$et and develo- -rofiles of resulting mar$et segments.

The second ste- is mar$et targeting in 6hich each segment;s attractiveness is measured and a target segment is chosen &ased on tits attractiveness.

The third ste- is -roduct -ositioning 6hich is the act of esta&lishing a via&le com-etitive -osition of the firm and its offer in the target segment chosen.

'n the -rocess of segmentation5 the mar$et can &e divided into maFor segments 6hich are gross slices of the mar$et5 or into smaller s-ecially formed segments5 other6ise $no6n as niches. iche customers have a s-ecific set of needs 6hich the mar$erter tries to address. While a mar$et segment attracts several com-etitors5 a niche attracts fe6er com-etitors and therefore5 a com-any should clearly define its target segment and devise strategies to target the customer5 so that it has a com-etitive advantage in the segment.

These conce-ts can &e a--lied in -ersonal &an$ing &y an 'ndian Ban$. Traditionally5 'ndian Ban$s have not had any conscious strategy for selecting customers from the -ersonal &an$ing area5 a-art from some &an$s 6hich have a geogra-hic concentration strategy such as concentrating on a -articular region or state. These &an$s 6ill have to
24

Bank Marketing

segment the mar$et on certain &asis5 and identify mar$et segments or niches 6hich they 6ant to cater to. For exam-le5 a &an$ li$e SB' may not &e a&le to cater high income grou-s @say5 managers5 -rofessional5 3's5 etc. 6ho earn a&ove 3s. %5225222 -.a. and 6ho 6ant a higher 8uality of -roducts H services and 6ho are 6illing to -ay for themA5 as the services re8uired &y such a -rofile of customers are entirely different from the $ind of -roducts H services SB' can offer.

In+*+$*+on o, S&g/&n*$*+on +n In)+$ Station Ban$ of 'ndia 6as the first 'ndian Ban$ to ado-t the conce-t of mar$et segmentation. 'n 10,25 it reorgani9ed itself on the &asis of maFor mar$et segments dividing customers on the &asis of activity and carved out % maFor mar$et segments5 vi9. /ommercial and 'nstitutional5 Small 'ndustries and Small Business Segment5 Agriculture5 4ersonal and Services Ban$ing. The o&Fectives of this scheme 6ereG #ee-er -enetration and coverage of mar$et &y loo$ing out6ards. Ade8uate flexi&ility of organi9ation to accommodate gro6th and ra-id change5 #elegation of 6or$ for releasing senior management for more futuristic tas$s.

C'+*&'+$ ,o' S&g/&n*$*+on Segmentation in a right fashion ma$es the 6ays for -rofita&le mar$eting. This hel-s -olicy -lanner in formulating and innovating the -olicies and at the same time also sim-lifies the tas$ of &an$ -rofessionals 6hile
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formulating an innovating the strategic decisions. The follo6ing criteria ma$e -ossi&le rig segmentation.

An im-ortant criterion for mar$et segmentation the economic system in 6hich 6e find agricultural sector5 industrial sector5 services sector5 household sector5 institutional sector and rural sector re8uiring of 6eightage 6hile segmenting.

Ag'+086*8'$6 S&0*o': 'n the agricultural sector5 there are four category rise since the needs of all the categories cant;s &e identical.

The mechani9ation of agriculture5 the im-roved or scientific system of activation5 the hel- of nature5 the magnitude of ris$5 the availa&ility infrastructural facilities influence the level of ex-ectations visDMDvis the needs and re8uirements. The &an$ing organi9ation are su--osed to $no6 and under stand the changing re8uirements of different categories of farmers.

In)8(*'+$6 S&0*o': The &an$ing organi9ations su&serve the interests of the industrial sector. The largeDsi9ed5 smallDsi9ed coDo-erative and tiny industries use the services of &an$s. The ex-ectations of all the categories cant;s &e uniform.
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The &an$ing organi9ations are su--osed to have an inde-th $no6ledge of the changing needs and re8uirements of the industrial segment.

S&'9+0&( (&0*o': 't is an im-ortant sector of the economy 6here the &an$ing organi9ations get -rofita&le &usiness. The t6o categories of organi9ations such as -rofitDma$ing and notDforD-rofit ma$ing are found im-ortant in the very context.

The &an$ing organi9ations need to identify the changing needs and re8uirements of the services sector. With the fre8uent use of information technologist and 6ith the mounting -ressure of inflation and com-etition5 6e find a change in the hierarchy of needs.
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Ho8(&7o6) S&0*o': This is also constitutes an im-ortant sector 6here different income grou- have different needs and re8uirements. in &elo6 figure 6e find the different segments of the household sector.

Ho8(&7o6) S&g/&n*: The high income grou-5 middle income grou-5 lo6 income grou-5 su&stance level grou- and marginal income grou- have different hierarchy of need 6hich influence the level of their ex-ectations. G&n)&' S&g/&n*: 'n the gender segments5 6e find male and female having different needs and re8uirements. The &an$ing organi9ations are su--osed to identify the level ex-ectations of &oth sexes.

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Some of the 6omen are house6ives and therefore they have different need and re8uirements 6hereas some of them are 6or$ing ladies having different needs and re8uirements.

'n the -rofession segments5 6e find different categories of -rofessions an therefore 6e find a change in their needs and re8uirements.

The technocrats5 &ureaucrats5 cor-orate executives5 intellects5 6hite and &lue 1 collar em-loyees have different needs and re8uirements and therefore the &an$ing organi9ations should $no6 their ex-ectations.

Some of the organi9ations are $no6n as cultural organi9ations5 some of them are not for 1-rofit ma$ing5 some of them are -hilanthro-ic and some of them are related to trade and commerce. The emerging trends in the social transformation -rocess determine the hierarchy of needs.

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+ar$ets segmentation thus sim-lifies the tas$ of understanding the customersH-ros-ects. The &an$ -rofessional find it convenient to formulate and innovate the mar$eting mix of 6orld class 6hich sim-lify the -rocess of excelling com-etition.

'n the 'ndian -ers-ective 6here 6e find agrarian economy contri&uting su&stantially to the transformation of national economy5 it is -ertinent that the &an$ing organi9ations assign due 6eightage to the rural sector of the economy 6here 6e find tremendous o--ortunities.

The ur&ani9ation is li$ely to gain the momentum and villages5 outs$irts of &ig to6ns and cities are to &e develo-ed on a -riority &asis. Almost all the organi9ations are to get tremendous o--ortunities there. The mar$eting resources if of innovative nature 6ould ma$e the 6ays for ca-itali9ing on the same -rofita&ly.

MARKETING MIX FOR BANKING SER ICES

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The formulation of mar$eting mix for the &an$ing services is the -rime res-onsi&ility of the &an$ -rofessional 6ho &ased on their ex-ertise and excellence attem-t to mar$et the services and schemes -rofita&ly.

The &an$ -rofessionals having 6orld class excellence ma$e -ossi&le fre8uency in the innovation -rocess 6hich sim-lify their tas$ of selling more &ut s-ending less. The four su&mixes of the mar$eting mix5 such as the -roduct mix5 the -romotion mix5 the -rice mix and the -lace mix5 no dou&t5 are found significant even to the &an$ing organi9ations &ut in addition to the traditional com&ination of recei-ts5 the mar$eting ex-erts have also &een tal$ing a&out some more mixes for getting the &est result. The >4eo-le? as a su&mix is no6 found getting a ne6 -lace in the management of mar$eting mix. 't is right to mention that the 8uality of -eo-leHem-loyees serving an organi9ation assumes a -lace of outstanding significance. This re8uires a strong em-hasis on the develo-ment of -ersonallyDcommitted5 valueD&ased5 efficient em-loyees 6ho contri&ute su&stantially to the -rocess of ma$ing the efforts cost effective. 'n addition5 6e also find some of the mar$eting ex-erts tal$ing a&out a ne6 mix5 i.e. -hysical a--earance. 'n the cor-orate 6orld5 the -ersonal care dimension thus &ecomes im-ortant. The em-loyees re su--osed to &e 6ell dressed5 smart and active. Besides5 6e also find em-hasis on >4rocess? 6hich gravitates our attention on the 6ay of offering the services. 't is only not sufficient that you -romise 8uality services. 't is much more im-act generating that your -romises reach to the ultimate users 6ithout any distortion. The &an$ing organi9ations5 of late5 face a num&er of challenges and the organi9ations assigning an overriding -riority to the formulation -rocesses get a success.
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The formulation of mar$eting mix is Fust li$e the com&ination of ingredients5 s-ices in the coo$ing -rocess.

THE PRODUCT MIX: The &an$s -rimarily deal in services and therefore5 the formulation of -roduct mix is re8uired to &e in the face of changing &usiness environmental conditions. Of course the -u&lic sector commercial &an$s have launched a num&er of -olices and -rogrammers for the develo-ment of &ac$6ard regions and 6elfare of the 6ea$er sections of the society &ut at the same it is also right to mention that their develo-mentD oriented 6elfare -rogrammes are not o-timal to the national socioD economic re8uirements. The changing -sychology5 the increasing ex-ectations5 the rising income5 the changing lifestyles5 the increasing domination of foreign &an$s and the changing needs and re8uirements of customers at large ma$e it essential that they innovate their service mix and ma$e them of 6orld class. Against this &ac$ground5 6e find it significant that the &an$ing organi9ations minify5 magnify com&ine and modify their service mix.

't is essential that ever -roduct is measured u- to the acce-ted technical standards. This is due to the fact that no consumer 6ould &uy a -roduct 6hich contains technical faults. Technical -erfection in service is meant -rom-t delivery5 8uic$ dis-osal5 -resentation of right facts and figures5 right filing -ro-er documentation or so. 'f com-uters starts diso&eying the command and the customers get 6rong facts5 the use of technology 6ould &e a minus -oint5 and you don;t have any excuse for your faults.

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PRODUCT PORTFOLIO: The &an$ -rofessional 6hile formulating the -roduct mix need to assign due 6eightage to the -roduct -ortfolio. By the conce-t -roduct -ortfolio5 em-hasis is on including the different ty-es of servicesH schemes found at the different stages of the -roduct life cycle. The -ortfolio denotes a com&ination or an assortment of different ty-es of -roducts generating more or less in -ro-ortion to their demand. The 8uality of -roduct -ortfolio determines the magnitude of success. 't is excellence of &an$ -rofessionals that hel- them in having a sound -roduct -ortfolio.

We find the com-osition of a family sound5 if mem&ers of all the age grou-s are given due -lace. Ki$e this5 the com-osition or &lending of a service mix
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Bank Marketing

is considered to &e sound5 if 6ell esta&lished and li$ely to &e -rofita&le schemes are included in the mix. 't is against this &ac$ground that a study and analysis of -roduct -ortfolio is found significant. The &an$ -rofessionals are su--osed to -erform the res-onsi&ility of com-osing the same. A sound -roduct -ortfolio is essential &ut its -rocess of constitution is difficult. An organi9ation 6ith a sound -roduct -ortfolio gets a conducive environment and successes in increasing the sensitivity of mar$eting decisions. The &an$ing organi9ations need a sound -roduct -ortfolio and the &an$ -rofessionals &ear the res-onsi&ility of getting it done suita&ly and effectively.

'f the &an$s rely solely on their esta&lished services and schemes5 the multidimensional -ro&lems 6ould cro- u- in the long run &ecause 6hen the 6ell esta&lished servicesHschemes 6ould start saturating or generating losses5 the commercial via&ility of &an$s 6ould of course5 &e 8uestioned. The &an$ing organi9ations relying su&stantially on a -rofita&le scheme and ding nothing for ne6 scheme li$ely to get a -rofita&le mar$et in the future is to face is to face a crisis li$e situation. 't is in this context5 that 6e find designing of a sound -roduct -ortfolio essential to an organsition. We can;t deny that the -roduct -ortfolio of the foreign &an$s is found sound since they $ee- their eyes moving. The innovation5 diffusion5 ado-tion and elimination -rocesses are ta$en due care. The -u&lic sector commercial &an$s need to innovate their service and this ma$es a strong advocacy in favour of analy9ing the -roduct -ortfolio.

DESIGNIGN AN ATTRACTI E PACKAGE

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Bank Marketing

'n the formulation of -roduct mix for the &an$ing organi9ation5 the designing of -ac$age is found im-ortant. 'n this context5 6e find -ac$aging decision related to the formulation of a mix of different schemes and services. #evelo-ing an attractive -ac$age re8uired -rofessional excellence and therefore5 the &an$ -rofessionals are re8uired to &e a6are of the different $ey issues influencing the formulation -rocess. What the -ac$age should &asically &e or do for the -articular target. We re a6are of the fact that a num&er of schemes and services are included in the service mix of &an$ -roduct and all the services or schemes can;t &e -referred &y all. Of course 6e find some of the -u&lic sector commercial &an$s no6 evincing stage. This ma$es it essential that a &an$ manager thin$s in favour of develo-ing a -ac$age. The im-ortance of -ac$aging can;t &e underestimated considering the functions it -erforms and the effects 6hich 6e 6itness in the -rocess of attracting and satisfying the customers. 'n addition to other as-ects5 it is also -ertinent that a &an$ manager is familiar 6ith the -ac$age develo-ed &y the leading com-etitive &an$s since this 6ould helthem in innovating the -ac$age. 't is an im-ortant com-onent of the -roduct mix and a &an$ manager 6hile formulating or designing a -ac$age needs to assign due 6eightage to the formulation -rocess. While develo-ing a -ac$age5 it is essential that the -ac$ages offered are efficacious in esta&lishing an edge over the -ac$ages of com-etitors. Thus needs and -references of the target mar$et in addition to the -ac$ages offered &y the com-etitors need due 6eightage 6hile designing a -ac$age.

'n the designing -rocess the &an$ -rofessionals can ma$e a -ac$age5 an ideal com&ination of &oth5 the core and -eri-heral services. The main thing in the -rocess is to ma$e it -rofita&le5 convenient and -roductive to the
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customers so that they -refer to transact 6ith the &an$. For the &an$ -rofessional5 it is an im-ortant -ersuasive efforts that hel-s in increasing the &usiness even 6ithout develo-ing or innovating the services or schemes.

PRODUCTR DE ELOPEMNT: 'n almost all the services5 the develo-ment of a -roduct is an ongoing -rocess. The &an$ing organi9ations also need to develo- ne6 services and schemes. We can;t deny that the develo-ment of -roduct s-ecially in the &an$ing services is found diffcult since they don;t have any discretion5 ho6ever they can do it5 of course in a limited 6ay. By minifying5 com&ining5 modifying and magnifying5 the &an$ing organi9ations can give to the services or scheme a ne6 loo$. The regulations of the 3eserve Ban$ of 'ndia5 no dou&t stand as a &arrier &ut -rofessionally sound mar$eters ma$e it -ossi&le even 6ithout violating the rules and regulations. The &an$ing organi9ations in general have &een found develo-ing -roduct &y including some ne6 -ro-erties or features. 7enerally 6e find t6o -rocess for the develo-ment of -roduct. The first -rocess is found -roactive since the needs of the target mar$et are antici-ated and highlighted. The second -rocess is reactive and in this context the &an$s res-ond to the ex-ressed needs of the target.

PROACTI E PROCESS: 'n the -roDactive -rocess5 6e find -roduct to mar$et needs. This ma$es it essential that the &ranch managers are a6are of the changing needs of the target mar$et. There are six stages for the develo-ment of the -roduct5 such as idea generation5 screening of the conce-t5 assessing of mar$et -otential5 analy9ing the cost5 test mar$eting
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and final commercial launching. The &an$ -rofessionals have to &e careful at all the stages so that 6hatever the services or schemes are develo-ed are found instrumental in getting a -ositive res-onse. The customers and com-etitors hel- &an$ -rofessional su&stantially in generating a ne6 idea. The screening of the -roduct conce-t focuses on the -rocess of narro6ing do6n the list of the ideas generated to a small num&er of conce-ts.

The assessment of mar$et -otential is the third stage in 6hich 6e find scanning of the mar$et -otentials at the a-ex level. The &ranch managers can assess the -otential sin their command areas.

The fourth stage dra6s our attention on analy9ing the cost on the &asis of a costD&enefit analysis and the fifth stage &efore launching is test mar$eting 6hich is found instrumental in minimi9ing the ris$ element. And finally5 6e find commercial launching. The 3eserve Ban$ of 'ndia is also re8uired to ma$e the regulations li&eral so that the -u&ic sector commercial &an$s get an o--ortunity to ma$e their services or schemes internationally com-etitive. The unfair -ractices5 illegitimate ste-s should &e chec$ed &ut fair -ractice should essentially &e -romoted to ma$e the &usiness environment conductive.

PROMOTION MIX 'n the formulation of mar$eting mix the &an$ -rofessionals are also su--osed to &lend the -romotion mix in 6hich different com-onents of -romotion such as advertising5 -u&licity5 sales -romotion5 6ordDofDmouth -romotion5 -ersonal selling and telemar$eting are given due 6eightage.
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The different com-onents of -romotion hel- &an$ -rofessionals in -romotion the &an$ing &usiness.

A)9&'*+(+ng: Ki$e other organi9ations5 the &an$ing organi9ations also us this com-onent of the -romotion mix 6ith the motto of informing5 sensing and -ersuading the customers. While advertising5 it is essential that 6e $no6 a&out the $ey decision ma$ing areas so that its instrumentality hel-s &an$ organi9ation &oth at micro and macro levels.

F+n$6+(+ng *7& B8)g&*: This is related to the formulation of a &udget for advertisement. The &an$ -rofessionals5 senior executives and even the -olice -lanners are found involved in the -rocess. The formulation of a sound &udget is essential to remove the financial constraint in the -rocess. The &usiness of a &an$ determines the scale of advertisement &udget.

S&6&0*+ng $ S8+*$;6& 9&7+06&: There are a num&er of devices to advertise5 such as &roadcast media5 telecast media and the -rint media. 'n the face of &udgetary -rovisions5 6e need to select a suita&le vehicle. The latest develo-ments in the -rint technology have made -rint media effective. The messages5 a--eals can &e -resented in a very effective 6ay.

M$%+ng Po((+;6& 0'&$*+9+*-: The advertising -rofessionals &ear the res-onsi&ility of ma$ing the a--eals5 slogans5 messages more creative. The &an$ing organi9ations should see$ the coo-eration of leading advertising -rofessionals for that very -ur-ose.

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In(*'8/&n*$6+*- o, ;'$n07 /$n$g&'(: At micro level5 a &ranch manager &ears the res-onsi&ility of advertising locally in his H her command area so that the messages5 a--eals reach to the target customers of the command area. Of course 6e find a &udget for advertisement at the a-ex level &ut the &usiness of a -articular &ranch is considera&ly influenced &y the local advertisements. 'f 6e tal$ a&out the causeDrelated mar$eting5 it is the instrumentality of a &ranch manager that ma$es -ossi&le the identification of local events5 moments and ma$e advertisements conditionDoriented.

P8;6+0 R&6$*+on(: Almost all the organi9ation need to develo- and strengthen the -u&lic relations activities to -romote their &usiness. We find this com-onent of the -romotion mix effective even in the &an$ing organi9ations. We can;t deny that in the &an$ing services5 the effectiveness of -u&lic relations is found of high magnitude. 't is in this context that 6e find a &it difference in the designing of the mix of -romoting the &an$ing services. Of course in the consumer goods manufacturing industries5 6e find advertisements occu-ying a -lace of outstanding significance &ut 6hen 6e tal$ a&out the service generating organi9ations in general and the &an$ing organi9ations in -articular5 6e find -u&lic relations and -ersonal selling &earing high degree of im-ortance. 't is not meant that the &an$ing organi9ations are not re8uired to advertise &ut it is meant that the &an$ executives unli$e the executives of other consumer goods manufacturing organi9ations focus on -u&lic relations and -ersonal.

P&'(on$6 S&66+ng: The -ersonal selling is found instrumental in -romoting the &an$ing &usiness. 't is Fust a -rocess of communication in 6hich an
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Bank Marketing

individual exercise hisHher -ersonal -otentials5 tact5 s$ill and a&ility to influence the im-ulse &uying of the customers. Since 6e get in immediate feed &ac$5 the -ersonal selling activities energies the -rocess of communication very effectively.

The -ersonal selling in an art of -ersuasion. 't is a highly distinctive form of -romoting sale. 'n -ersonal selling5 6e find interD-ersonal or t6oD6ay communication that ma$es the 6ays for a feed &ac$. There is no dou&t in it that the goods or services are found half sold 6hen the outstanding -ro-erties are 6ell told. This are of telling and selling is $no6n as -ersonal selling in 6hich an individual &ased on hisHher ex-ertise attem-ts to transform the -ros-ects into customers.

D-n$/+0( o, P&'(on$6( S&66+ng The dynamics of -ersonal selling are found instrumental in activating the selling activities. Sales -re-arations are considered most crucial for the actual sales. 4reDsale activities and -ostDsale services can;t &e left neglected to im-rove the mar$eting activities. The customers may &e interested in $no6ing the main features of the services5 ho6 a -articular service 6ould hel- them5 rationale &ehind the technical services and -roof in regard to its uses. The -reDsale activities 6ould &ring the -ositive results5 if -re-arations are ade8uate.

Some of the customers are found highly a6are of the develo-ments5 they are found 6ell informed. On the other hand5 6e also find other category of
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Bank Marketing

customers 6ho are in dar$. Bere5 the &ranch managers are ex-ected to match the level of a6areness of customers. As for instance5 +r. A goes uthe matrix &ut +r. B has not enough time for the &ranch managers. The &ranch managers are su--osed to -re-are a syno-sis of their sales tal$. ot sur-risingly the highly a6are customers are found in a--osition to ma$e inde-endent decisions and $no6 all a&out. While selling to the less a6are customers5 the managers should stress on the main features of the services and the ex-ected &enefits of these services.

S$6&( P'o/o*+on: 't is natural that li$e other organisations5 the &an$ing organi9ations also thin$ in favour of -romotional incentives &oth to the &an$ers as 6ell as the customers. The &an$ing organi9ations ma$e -rovisions for incentives

FOR COMPLETE REPORT AND DO NLOAD!N"

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Bank Marketing

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