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STRATEGIC MARKETING MANAGEMENT PROJECT

Firm: THE BANK OF KHYBER

Submitted
to

Mr.Imran Qureshi

Submitted
By

Asad Khan (4573-FMS/MBA/S10)

Yaqoob Shah (4572-FMS/MBA/S10)
Ahmad Qayum(4567-FMS/MBA/S10)
Kaleem Akram (4545-FMS/MBA/S10)

Dated May 3 ,2010

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DEDICATED
TO OUR PARENTS
WHO ALWAYS
LOVED US
& all those who have a soft
corner for us in their hearts


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ACKNOWLEDGEMENT

All gratitude and thanks to almighty ³ALLAH´ the gracious, the most merciful
and beneficent who gave us courage to undertake and complete this task. we are
very much obliged to our ever caring and loving parents whose prayers have
enabled to reach this stage.

We are grateful to almighty ALLAH who made us able to complete the work
presented in this report. It is due to HIS unending mercy that this work moved
towards success.

We are very grateful to Mr Imran Qureshi our respectable teacher for his
continuous help, support and time during the entire course of our project.

We feel great pride and pleasure on the accomplishment of this report

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PREFACE

Like any other basic sphere of modern socio-industrial activities, banking, too, is a
vigorous and purposeful monetary±based media that foster and nourish the
socio-economic growth of a developing country.
Nowadays the banking sector is very important. It is the back bone for the
economy of a country. In a country like Pakistan, banks are now the focus of
government, to nourish and initiate the developmental projects at lower levels.
Banks have also ensured a high level of productivity, growth, and strategies. One
such bank with new policies and strategies pushing forth towards progress is The
Bank of Khyber, which has since its inception shown remarkable achievements
and discovered new avenues of innovative banking.
This report has been divided into four sections:
Section one deals with the introduction, back ground of study, purpose of study, .
Section two involves SWOT analysis, TOWS matrix, Ratio Analysis, BCG
matrix, Customer Analysis, Competitor Analysis, Positioning, Scorpio
Techniques and some suggested strategies. Lastly, We would like to mention that
all this has only been done by the grace of Almighty Allah and with the support of
my very kind and loving parents, who have always been remembering me in their
prayers and encouraging me to be a true Muslim as well as to achieve excellence
in academic education which is the building block of my future life. .
We are also thankful to Mr.Imran Qureshi, who has extended full cooperation and
help towards us.
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TABLE OF CONTENTS
TITLE PAGE NO

Preface

Table of Contents

Executive summary

SECTION I INTRODUCTION

INTRODUCTION

Back Ground of Study

Why is the study conducted

Scope of Study

Methodology of Study

SECTION II

SWOT Analysis of the BOK

TOWS Matrix
Ratio Analysis
Boston Consultant Group Matrix
Customer Analysis
Competitor Analysis
Positioning
Scorpio Technique
Suggested Strategies
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EXECUTIVE SUMMARY
The main purpose of the report is to develop the suitable marketing strategy that would
benefit the firm by comparing the strategic marketing management knowledge in theory
and put it to practice in a real work situation as well as to improve communication and
analytical skills. The report is composed of information obtained from interviews,
observations, reference books, annual report of The BOK and from other manuals
published by the organization.
The Bank of Khyber was established in 1991 after the passing of a resolution in the
Provincial Assembly of NWFP. The main purpose of establishment of the BOK was not
only to provide employment opportunities for the manpower of this province, but also to
provide financial assistance to the people of NWFP. The Head Office is situated at
24-The Mall, Peshawar Cantt. In the year 1991, it was awarded as a schedule bank and
it started its operations directly with SBP. In 1995, the BOK availed a license from SBP
to deal in foreign exchange business. The BOK has its own Board of Directors,
comprising five members; the Managing Director may also hold a position of Chairman.
The BOK has a network of 44 branches, which are located in different cities of Pakistan.
In this report of strategic marketing management various analysis are done, like SWOT
Analysis, TOWS matrix, Ratio Analysis, BCG matrix, Customer Analysis, Competitor
analysis, Positioning and Scorpio technique. And some strategies are developed in
concern with these analyses.
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CHAPTER # 1

INTRODUCTION

STUDY BACKGROUND
Today, banks are the most important financial institutions which play a vital
role throughout the world¶s economic system. Because most of the sectors like
Industries, Commerce and Agriculture need financial assistance, it is the banks
which carefully entertain them.

A resolution was passed in the Provincial Assembly of NWFP, in the year 1991
for the establishment of a provincial bank. It proved successful and the result
was the emergence of a new bank in the banking sector, i.e. The Bank of
Khyber Pakistan. In the year 1994 it became a scheduled bank. The Head Office
is situated at 24-The Mall, Peshawar Cantt. NWFP-Pakistan. This bank has
been playing an important role for the development of different sectors in
Pakistan and especially in NWFP. It has a network of 41 branches, which are
located in different locations of our country. Despite difficult economic
conditions, like lack of suitable lending opportunities, volatility of interest rate
and equity prices, the bank manages to show good results for every year.

SCOPE OF STUDY

This report may help students in future to understand banking practices in our
country. It would also attempt to evaluate the overall performance of The BOK
through a thorough & detailed analysis of its daily working.

METHODOLOGY OF STUDY

For the purpose of writing this report, the following methods of collecting
information have been used:

Primary Data
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The information, which is collected for the first time and exists in raw form, is
known as Primary Data. It contains the following:

a) Personal observations

b) Discussion with staff of the BOK.

Secondary Data

The information, which has undergone through statistical techniques and

exists in a refined form, is known as secondary data. It contains the following:

a) Annual Report

b) Information memorandums

c) Internet

d) Documents published by banks.

e) Banking manuals.
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CHAPTER # 2

BANKING SECTOR IN PAKISTAN

DEFINITION OF BANK

A corporation empowered to deal with cash, domestic and foreign, and to

receive the deposits of money and to loan those monies to third-parties.

In 1901, Justice Holmes wrote, in an Irish case (Re Shields Estate):

"The real business of the banker is to obtain deposits of money which he may use for
his own profit by lending it out again."

In United Dominions (1966), Lord Denning deferred to these words to define a bank:
"An establishment for the custody of money received from, or on behalf of, its
customers. Its essential duty is to pay their drafts on it: its profits arise from the use of
money left unemployed by them.

FUNCTIONS OF BANK:

According to section 7 of the BCO, 1962, the banks in Pakistan are authorized
to engage in any one or more of the following forms of business, namely:

a) The borrowing ,raising or taking up of money;

b) The lending or advancing of money either upon or without security;

c) The drawing, making, accepting, discounting, buying, selling, collecting

and dealing in bills of exchange ,promissory notes, drafts, bills of lading warrants,
debentures (musharika and mudaraba certificates);

d) The granting and issuing of letters of credit, travelers¶ cheque and

circular notes;

e) The buying and selling of foreign exchange including foreign bank notes;

f) The acquiring, holding, issuing on commission, underwriting and dealing

in stock fund, share debenture stock, bonds, obligations, securities;
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g) The receiving of all kinds of bonds, scripts or valuables on deposit or for

safe custody or otherwise, the providing of safe deposit vaults, the collecting and
transmitting of money and securities.

h) Acting as agents for any government or local authority or any other

person or persons;

i) Acting as ³Mudaraba company´ under the provisions of the Mudaraba

Companies Ordinance 1980;

j) Contracting for public and private loans and negotiating and issuing the
same;

k) The effecting ,insuring, guaranteeing, underwriting, participating in

managing and carrying out of any issue, public and private, government, municipal, or
other loans or of shares, stock, debentures or debenture stock of any company,
corporation or association and the lending of money for the purpose of any such issue;

l) Carrying on and transacting every kind of guarantee and indemnity

business;

m) Purchase or acquisition in the normal course of its banking business of

any property, including commodities, patents, designs, trade-marks, and copy rights,
with or without buy-back arrangements by the seller, or for sale in the form of
hire-purchase or on deferred payment basis with markup or for leasing or licensing or
for rent-sharing or for any other mode of financing;

n) Managing, selling and realizing any property which may come into the
possession of the company in satisfaction or part satisfaction of any of its claims.
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BIRTH OF THE BANK OF KHYBER

The Bank of Khyber is one such bank which came into being after the passing
of a Resolution in the Provincial Assembly of NWFP in 1991. The focus point for the
establishment of this bank is to provide employment opportunities for the man power
of this province & to provide financial assistance to the people of NWFP, who are
engaged in small, medium and large scale businesses. Most of the nationalized
commercial banks have their Head Offices in provinces other than NWFP, which is
the main hindrance to availing loan in time from these banks. The banks have to take
formal approval from their H/O in order to advance loans to their customer or to make
some transactions within the branches. Therefore, it was felt that there was a great
need to have a bank which has its Head Office in the same province also, so that there
could be no time delay, communication gap or provisioning of documents to advance
loans expeditiously. Initially, the Bank of Khyber had agency arrangements with ABL
and MCB for clearing and collecting cheques from other banks, but with the grace of
Almighty Allah and the hard work of its management, it became a scheduled bank. It
started its operation in SBP and to have a clearing officer of its own for clearing
purposes and tackling of other matters with SBP. Presently, this bank has started to
work as an agent for all its branches in Peshawar and other cities where SBP
arrangements are not possible. In 1995, the BOK availed an opportunity for a Foreign
Exchange license and its corporate main branch became the first authorized dealer to
deal in foreign exchange business and trade services/finance. The BOK corporate
main branch also provided its services to its different branches which had
import/export businesses but were not authorized for such business. After the
successful completion of the foreign exchange business, the licenses were also availed
for The BOK Ashraf Road Branch, Peshawar, The BOK Sadder Road Branch
Peshawar & the BOK Khyber Bazaar Branch, Peshawar. Now, other than its branches
in the NWFP, the Bank of Khyber has its network of branches in Islamabad, Lahore,
Quetta and Karachi & Muzaffarabad also.
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CHAPTER # 3

ORGANIZATIONAL STRUCTURE

THE BOK¶S ORGANIZATIONAL CHART

The graphical representation of an organizational structure is known as an

organizational chart. The organizational chart is a formal document which shows the
chain of command and titles which have been given to the managers and other
members of the organization.
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Organization

Boar of irectors



anaging irector

  
ong erm rojects



esi ent irectors I


anaging Committee


ersonnel &
Banking Operation


stablishment ivision
ivision

Investment
Branch Operations


epartment

  Comp
ters
cco
nts & reas
ry


epartment



International Banking


epartment




, & eptt.
Cre it ivisions



blic elation
 

ssets anagement epartment


epartment



Branches 29 arketing epartment

Chart Organizational Chart of the Bank of Khyber

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CHAPTER # 4

SWOT ANALYSIS:-

In every organization efficient managers analyze the workings of their

organization Analysis.

It is a combination of four words that is

S stands for Strengths.

W stands for Weaknesses.

O stands for Opportunities.

T stands for Threats.

SWOT ANALYSIS OF THE BANK OF KHYBER:-

STRENGTHS

1 Bank of Provincial Govt

As the Bank of Khyber is the bank of the NWFP government the people repose
more confidence in the BOK as compared to other banks and deposit more money in it
also.

The BOK also has many government accounts due to which its reputation and
image becomes stronger & more positive. Examples of such accounts are Traffic
Challan accounts, TV License accounts and NADRA¶s accounts.

2 Launching of New Product2

With the ordinary deposits accounts the BOK has launched a SDA (Special
Deposit Account) on which it provides mark-up / profit on a daily basis. Most of the
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people prefer to open such an account.

3 Micro Finance Unit (MFU)

The BOK has a department known as the Micro Finance Department which is
operating in every branch of the BOK. This department provides micro lending
facilities to small businesses like shops, small projects or in-home projects of ladies,
like boutiques, beauty parlors, embroidery & stitching centers. Through this
department the BOK earns even more revenue every year.

4 Finance rovided by the Government

Whenever the BOK faces problems of liquidity, the government of NWFP

helps them which is a plus point for the Bank of Khyber.

WEAKNESSES

1)-Number of branches

The number of branches of the BOK is very limited as compared to other

banks. Although it is the NWFP government¶s bank its branches in Peshawar only
nine which are still less when compared to other banks branches. In Karachi, which is
one of the most populous cities of the Pakistan, there are only two branches.

2)-Behavior of the staff

Most of the employees consider themselves to be govt employees and do not

take interest in their work which does affect the performance of the bank (in the long
run). Beside this, the behavior of the staff is some times very rude to their customers
and naturally the customers want to wind up their accounts in the BOK as a result.

3)-Branches in other countries

In foreign countries the BOK has no branch and this creates problems for
importers and exporters.
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4)-Load of work

The work burden carried by some employees is very high due to shortage of
branches & that creates errors and mistakes. As is known in the banking line, one little
mistake can create a very big problem.

5)-Influence of Provincial Govt

As it is a provincial government bank so at all level there is some interference

by and at times undue influence of the provincial government in the decision process
of the Bank.

6)-Heavy load of Bad Debts

As it is a provincial government bank so the concerned loan officers sanction

the loans to the government¶s people who in turn do not make the repayment of these
loans. That ultimately goes to the Bad Debts Account & becomes a burden on the
Bank.

7) -Weak ex osure to media:

Marketing skills of the bank are good but they have little presence at

different media.

OPPORTUNITIES:-

1)-O ening Of New Branches

They have the opportunity to open new branches in the country as well as in
foreign countries. They should open new branches at least at the district level. Besides
this they have the opportunity to take an NOC from SBP and open new branches in
Afghanistan.
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2)-Hire skilled rofessional educated ersonnel

The BOK has the opportunity to hire skilled, professional, and educated
persons who are specialized in the course of banking and accountancy like CAs
(Chartered Accountant).

3)-Investment in ublic and industrial sectors

They have the opportunity to invest their liquid cash in public & industrial
sectors especially in commercial plazas which is a most profitable activity for the
BOK. They have the opportunity to invest in the IT sector also especially in software
programming. They can also invest in the mineral resource sector of the NWFP

4)-Reduction in Commission Charges

The BOK can attract all the business and non-business community by
providing low bank charges commission on DD, TT, and MT. Thus the BOK can gain
maximum market share.

5) Collection of utility bills:

Being a provincial govt bank they have the opportunity to make agreement
with private as well as govt organizations to collect utility bills for them and through
this activity the bank can earn profit without any investment .

THREATS

1)-Recovery of loans:

As it is the bank of the provincial government so most of the politicians take

loans from the bank. The recovery becomes impossible from such politicians due to
which the bank faces problems of bad debts and the bank incurs major loss.
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2)-Foreign banks

The number of foreign banks is increasing day by day in Pakistan. They also
provide good quality services at the same cost as the BOK provides to their clients.
Thus this too is a potential threat for the BOK.

3)-Interference of Government

As the political situation is always unstable, that is why the government does
not give proper attention to the performance of the BOK. Beside this, the NWFP
government is directly involved in the affairs of the bank which may affect the
position of the bank.

4)- Global economic recession

From the last few years worldwide economy is moving down, which reduces
the business activities and investors are uncertain about their investment return.
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TOWS MATRIX FOR THE BANK OF KHYBER

Internal

elements Organizational Organizational

Strengths
External elements Weaknesses

Strategic o tions

S-O W-O

Environmental
Opportunities (THE BANK OF
(and risks) KHYBER)

S-T W-T
Environmental
threats

STRATEGIES:
1 The BOK lies in SO(Strength Opportunity) region, as they have sufficient
funds provided by provincial government of NWFP ,which is their one of the
biggest strength ,They can use these funds to open new branches in
Afghanistan which is mostly a Pukhtoon representative area, which is one of
the reliable opportunity for their business expansion outside the country.

2 Most of the area of NWFP is rich in mineral resources which are mostly
unexplored, so the BOK has also an opportunity to invest in these mineral
resources of the province, which might be a better source of revenue for both
the provincial government and bank itself.
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m
   

   
m

We have discussed the following marketing ratios of the BOK.

1) Operating profit
Total Assets

(2008) (2009)

708813000 648549000
31338989000 38811000000

=2.26% 1.67%

Inter retation

The BOK has suffered loss in 2009 as compared to 2008, in which 2.26% of their
total assets were generating operating profit, while in 2009it is declined to 1.67%.

2) Operating Profit
Sales Revenue

708813000 648549000
2958865000 3390014000

=23.95% 19.13%
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Inter retation: In 2008, 23.95% of the sales revenue were converting into
operating profit, While in 2009 it has declined to19.13% ,So Bank has suffered the
loss in 2009 as compare to 2008.

3) Assets Employed
Average daily sales

31339000000 38811000000
8106479.452 9287709.589

= 3865.91 4178.74

4) Production cost of sales

Average daily sales

1897816000 2390388000
8106479.452 9287709.589

= 234.11 257.37

Inter retation: In 2008 Bank was more efficient because its production cost was
less as compare to 2009.

5) Distribution and marketing cost

Average daily sales

654869000 719453000
8106479.452 9287709.589

=80.7 77.46
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Inter retation: Bank was more efficient in 2009 because its Dist & Mktg cost
was low as compare to 2008.

6) Earnings er share ratio:

(loss)/profit for the year

Total number of shares

137348000 (637183000)
500400148 500400148

= 0.27/- 1.27/-
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7) Advertising & Selling expenses

Total sales

15646000 13717000
2958865000 3390014000

=0.52% 0.40%

Inter retation
In 2008,0.52% of the total sales of the BOK was used in advertising and selling
expenses, While in 2009 bank is being more efficient because its sales has
been increased and advertising and Selling expenses is reduced to 0.40%.

8) Current Assets
Average Daily sales

28832410000 35518519000
8106479.452 9287709.589

=3556.71 3824.24

Inter retation
Bank is earning benefit in 2009beacuse in 2009 more average daily sales is
generating as compare to 2008.
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BOSTON ~

 GROUP

Agricultural credit:

Year 2007 2008

(000)
(000)
The Bank of Khyber 21567 30464

Muslim Commercial Bank 41422 52432

United Bank Limited 31384 42278

Total 125176

Growth Rate BOK = 30464-21567/21567*100

= 41.25%
market share of BOK= 30464/125176*100
= 24.3%
Leader market share MCB= 41.89%
Relative Market Share= 24.3%/41.89%
= 0.58 times

De osits:-

Year 2007 2008

(000) (000)
The Bank of Khyber 21411 24732

Muslim Commercial Bank 4361760 4705540

United Bank Limited 3289637 3699548

Total 8429820

Growth Rate BOK = 15.5%

market share of BOK=0.29%

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Leader market share MCB= 55.82%

Relative Market Share= 0.005 times

Micro Finance:-
Year 2007 2008
(000) (000)
The Bank of Khyber 31465 32575

Muslim Commercial Bank 324422 396862

United Bank Limited 313718 324565

Total 754002

Growth Rate BOK = 3.53%

market share of BOK=4.32%

Leader market share MCB= 52.6%
Relative Market Share= 0.082 times

Advances:-

Year 2007 2008

(000) (000)
The Bank of Khyber 10068 12644

Muslim Commercial Bank 2815614 3025141

United Bank Limited 2724703 3216234

Total 6254019

Growth Rate BOK = 25.59%

market share of BOK=0.2%

Leader market share UBL= 51.4%%

Relative Market Share= 0.003 times
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Relative Market Share= 0.003 times

Industry Growth Rate:-

Sum of 2007 = 14047171
Sum of 2008= 15563015
Growth Rate=15563015-14047171/14047171*100
= 10.79%
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Customer Analysis:
We have selected the following four products or services of The Bank of Khyber for
doing their consumer analysis,
1. Islamic Banking
2. Deposits
3. Microfinance
4. Agriculture Credit
After having a detailed study of our products in the perceptive of our customers we came
up with the following results,

Ty es of roduct:

Islamic banking is specialty good/services for the BOK because it differentiates it from
other conventional banks. It needs a bit low involvement because trading rules and
regulations through Islamic banking are fixed by Islamic law, which is adopted by all
banks dealing in Islamic Banking.
Deposits, Microfinance and agriculture credit are categorized as shopping goods/services
and it needs high involvement.

Product Life Cycle:

Islamic banking services are currently going through the growth stage.
Deposits are in the stage of decline because due to the current economic condition
peoples don¶t have enough money to deposits in the banks and they also have the fear of
bank ruptcy.
Microfinance is currently in the boom stage because in such economic downfall peoples
mostly prefer to Entrepreneurship.
Agriculture credit in Pakistan is always in boom stage because it is an agricultural
country and this sector is s
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BUYING BEHAVIOUR

High involvements Low involvements

Com lex
Significant Deposits Variety
Differences Microfinance Seeking
Agriculture
credit

No Resonance Habitual
Significance Reducing Islamic
Differences Banking
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BUYING DECISSIONS: Customers use the following methods while availing the
products /services of the BOK.

1. Introspective method
2. Retrospective method

Islamic Banking: Customers follows the retrospective method for availing the
Islamic banking services of the BOK.

De osits Agri credit: For availing the deposits and agri credit services of the
BOK. Customers use retrospective method i.e. they use their past experience and
information they have collected from others.

Microfinance: To avail the microfinance services, customers follow both the

introspective and retrospective methods. They also make decisions on the bases
of their own information without asking anyone and also from their past
experiences or from someone others.
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COMPETITOR ANALYSIS

R Com etitive stance

Competitive stance provide us with the information through which we analyze

our customers that they are growing or not.

All the competitors of The BOK are growing(developing) in terms of

infrastructure, baking services, distribution networks.

R Promotion/ Public Relation

Competitors of the BOK are promoting their banks products and services
through huge marketing efforts and using huge financial resources.

R 
9


 

 



R Technology skills

The competitors of the BOK are much more advance in the field of technology
as compare to the BOK. Because The BOK is a new bank and its still in the
developing stage.

R New roduct innovation

The competitors of the BOK are much more efficient in terms of Innovation in
products and services. They are offering various new schemes.

Strategic forms/com etitive

J Com etition: The BOK are competing with other Banks in terms of all the
products, services, and several schemes that they are offering.

Com etitor Res onses

J Selective Res onse: The competitors of the BOK are much more developed
than the BOK, so they do not give that much response to any move of the BOK.
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they choose their competitors selective or the competitors that are of their level.
They are showing a very selective response.

J Undifferentiated Strategy: All the banks including the BOK are using the
undifferentiated strategy. They take the whole market as a one segments and
apply the same strategies for all the segment.\
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POSITIONING: Positioning means that how your customers are viewing

the products/services of your company. It creates the image of your
company in the customers mind.

Ty es of ositioning

J Tri le benefit ositioning

The products/services that the BOK is providing offers triple benefit positioning
to its customers. When a customer opens an account in the bank, he can also get
the benefits of ATM, debit card facility and online banking.
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SCORPIO TECHNIQUE

This technique is used to justify the strategies that we have selected while
doing various analyses like BCG Matrix, TOWS Matrix, GE Multifactor
Matrix.
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SCORPIO TECHNIQUE:

Industry or Market

R Industry or technology thinking

Exam le:- ATM, free cheque books

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CUSTOMER:-

1. General public, govt officials, entrepreneur

2. Advances, deposits, microfinance, agri credit

3. ATM, Credit Cards, Free Cheque books.

4. 24 hours online banking services, increase number of branches.

5. Security issues, less no of branches

6. Regional bank, reliability

7. Branches, websites, telephone

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SEGMENTATION AND TARGETING

1. Undifferentiated

2. To increase customers by targeting all the level of social classes.

3. All the segments

4. Durable

5. No priority

6. All

7. By delivering new offerings

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POSITIONING AND BRANDING

1. Commodity marketing

2. Medium quality

3. Best quality at higher price by following market trend for future

4. Provide finance for govt projects

5. Risk of default is minimum

6. Customer trust increases

7. Increase business activities.

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RETENTION STRATEGY

1. holding current customers to attract new customers

2. Quick Respond to complaint

3. No, it can also increase the customers

4. Yes

5. Good

6. To get satisfaction of your customers

7. Offering New schemes

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ORGANIZATION: PROCESSES AND CULTURE

1. Both

2. Providing better services

3. Strictly followed

4. Yes

5. Yes
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OFFERINGS

1. Superior values and services with attractive schemes

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SUGGESTED STRATEGIES: After doing all the detailed analysis in the scorpio
technique, we come up with the following strategies that the BOK should follow.

1. Market Develo ment: They should develop their infrastructure, and

should keep their main focus on increasing the number of branches all
over the country. They should also focus on other big cities of Pakistan
like Karachi and Lahore. They also can take the NOC from the state
bank of Pakistan to open branches in Afghanistan which could be a
valuable source of revenue for them.

2. Unrelated Diversification: Most of the areas of NWFP is rich in

mineral resources which are mostly unexplored, so the BOK has also an
opportunity to invest in these mineral resources of the province, which
might be a better source of revenue for both the provincial government
and bank itself.


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