MARKETING MANAGEMENT PROJECT

GROUP 10

Anjali Maharia (B18010)

Ekansh Sharma (B18022)
Pankhuri Shrivastava (B18034)
Shashwat Konar (B18046)
Vasu Gupta (B18058)
Zubin Sortee (B18061)
1
 Table of Contents

INTRODUCTION AND EXECUTIVE SUMMARY 3

COMPANY OVERVIEW 4
ENVIRONMENT ANALYSIS 5
Category Analysis 5
PESTLE Analysis 7
Microenvironment Analysis 8
Porters’s Analysis 10
COMPANY & COMPETITOR ANALYSIS 12
Business model Canvas 12
Competitor Analysis 13
Strategies 14
Market Capitalization, Revenues and Profits for 2018 15
Value Proposition & Differentiation 15
STUDY OF CONSUMER ANALYSIS 16
Qualitative Insights 16
Quantitative Insights 19
SEGMENTATION 20
TARGETING 22
POSITIONING 23
PERCEPTUAL MAP 23
CONJOINT ANALYSIS 24
RECOMMENDATIONS 25
REFERENCES 26

MARKETING MANAGEMENT PROJECT – Group 10 – BM (A)

STATE BANK OF INDIA

2
Introduction and Executive Summary
The Banking Industry is at the epicentre of the Indian economy and is an established and mature industry
that is still steadily growing. The sector has a number of competitors, providing the consumers with a
variety of services such as savings account, checking accounts, home and education loans, debit and
credit card services, insurance and mutual funds, etc. In addition to private and public sector banks, there
are foreign players in the market too like Deutsche Bank, RBS, Standard chartered, HSBC, etc. The
Banking industry is a dynamic sector with the RBI regulations acting as an anchor amidst complex
interplay of various forces.

Some of the objectives of this analysis are:

 To understand strategies deployed by SBI in the wake of developments in the industry
 To conduct secondary research – through questionnaires & interviews to understand customer
perception
 To understand why SBI is running into losses
 To recommend changes to make business move towards profitability

The rationale behind choosing the Banking Industry is that it is an extremely dynamic industry and is
currently full of turbulences due to rising NPAs, frauds & scams, & increased cases with NCLTs that gives
banks like
SBI an
opportunity
to rev up
their
marketing
efforts. SBI
reported a
loss in the financial year 2017-18 and there is a pressing need for the bank to act appropriately.
The first step to the analysis involves a comprehensive study of the macro-environment,
microenvironment and the industry in general. The political and environmental factors are largely
conducive for SBI at the moment; initiatives like 'Waste to Gold' & 'SBI Corbett' undertaken by the bank
recently, in fact, provide a causal marketing advantage to SBI.

However, the economic factors are a mixed bag. While, the disposable incomes in the country are high
and increasing at a fast pace, rising NPAs is affecting the bank not only in terms of profitability but also in
terms of defection of customers.
After a thorough PESTLE analysis, the next step to the analysis entails understanding the present business
model of SBI. The visual business model canvas helps here, to recognize the key stakeholders, activities,
revenue streams, etc. and helps understand its shortcomings, weak links & potential areas where it could
work to become more profitable and gain further market share.
After the business model, Porter's Five Forces analysis helps in the evaluation of the competition SBI
faces within and outside the industry. With the relaxation in norms pertaining to obtaining banking
licenses, the threat from new entrants is high. Comparison of SBI with a few renowned competitors and
assessment of their offerings vis-a-vis SBI's helps identify key strengths and weaknesses that SBI could
potentially focus on.

3
The next step to the analysis is understanding the user behaviours and perceptions. SBI prides itself as a
‘Banker to Every Indian’ and it is imperative that SBI understands what its customer needs and what the
customer perceives the bank to be in order to come up with effective and optimal strategies. We
conducted primary research through in-depth interviews of 20 customers and a questionnaire that saw
130 respondents. We tried to understand if SBI is considered more trustworthy than other banks through
a simple case. We found that people would trust SBI more than HDFC in times of crisis. Another
important insight gained from qualitative research and after performing the conjoint analysis is on how
much value the average customer places in a bank’s customer service.
After an analysis of the user behaviour, a study on the bank’s current segmentation policies helps
understand how various banks have identified their segments banks – on the basis of demographics,
psychographic, income-level etc. Since the banks can offer services to everyone profitably and effectively
as there is not any drastic difference in needs and behaviours of segments, banks usually tend to target
all segments but customize their offerings and services accordingly.
The analysis concludes with recommendations and suggested strategies for SBI based on the consumer
and industry research.

Competition Overview
Banking Industry in India majorly comprises of Private and Public sector Banks and a general overview
about SBI’s major competitors in the industry is given below:

Features SBI HDFC ICICI

Number of branches  22,000+  4,787  4,867

Number of ATMs 59,000+ 12,635 14,367

Assets 3.4+ million crores 1.06 million crores .88 million crores

Types of accounts Basic types of savings Varied types of Varied types of

account accounts. Different accounts. Different
tiers account catering tiers account catering
to different income to different income
groups. Premium groups. Premium
services for higher services for higher
tiered accounts. tiered accounts.

Minimum Average Average balance Minimum average Minimum average

Balance maintenance from 1000- balance of >10000 balance of >10000
3000

Home Loans Interest Rates b/w 8.45% to Interest Rates b/w Interest Rates b/w
9.20% 8.70% to 9.45% 8.70% to 10.25%

Gross NPA’s Gross NPAs increased from Gross NPAs increased Gross NPAs increased
Rs. 1,77,866 Cr as on Mar 17 from 5885 crores to from 42,551 crores to
to Rs. 2,23,427 Cr as on Mar 8606 crores. % of gross 54000+ crores
18 NPAs

4
 SBI NPA & PAT
80,000
70,000
60,000 2013-14
50,000 2014-15
40,000 2015-16
30,000 2016-17
20,000 2017-18
10,000
0
Provisions for NPA Net Profit
-10,000
-20,000
Figure 1: SBI NPA and PAT

Environmental Analysis

A business enterprise operates in an environment and its success does not only depend on its
competences but on how quickly and effectively it can respond to the changes in this environment, for
instance, How swiftly can our bank-SBI respond to changes in regulation made by RBI. Therefore,
organizations should continually analyse the exchange environment and the market. The environment is
thus the source of threats and opportunities. We have chosen three models to conduct an environmental
analysis of SBI:
 Category Analysis
 PESTLE Analysis
 Micro-Environment Analysis
 Porter’s Analysis

Category Analysis
 Market Growth: The last decade has seen several consumer trends like an increase in disposable
incomes, increased consumption of consumer products and an easier access to loans for both
individuals as well as corporates. This has led to a steady increase in the net number of deposits
and loans being taken in the past decade. The graph below captures the aforementioned trend
with regards to the growth in deposits over the past few years:

5
 Growth of Deposits With SBI
3,000,000
2,500,000 2013-14
2,000,000 2014-15
2015-16
1,500,000 2016-17
1,000,000 2017-18

500,000
0
Deposits

Figure 2: Growth of Deposits with SBI

 Market Size: In India, there are about 27 Public Sector Banks (21 nationalized banks + 6 State bank
group (SBI + 5 associate banks) and remaining two are IDBI Bank and Bharatiya Mahila Bank), 22
private sector banks and 49 foreign banks. Recent policy changes of 2016 where the RBI opened
applications for licenses permanently as opposed to the previous practice of opening licensing
application only in select windows also hints at opening up of new banks and hence, increased
competition in the Indian setting. As of Q4FY17-18, total credit extended by commercial banks
surged to Rs 86,825,727 million (US$ 1,347 billion) and deposits grew to Rs 114,792,883 million
(US$ 1,781 billion). Assets of public sector banks stood at US$ 1,557.04 billion in FY18.

 Profits: Two factors majorly influence the profitability of banks; the first is credit growth rate that
essentially refers to the growth in the amount of credit that banks lend to companies or
individuals. Banks with higher credit growth rate are often more profitable. The second factor
responsible for profitability in the banking landscape in interest rates. Usually, high rates of
interest in the short term have a negative impact on profitability whereas higher interest rates
sustained over long periods usually have a positive impact on the profitability of banks. Although,
the Indian banking industry is considered to be comparatively healthy and robust, in the recent
years banks have struggled with profitability due to rising NPAs and stressed assets.
PNB had the biggest losses in the latest quarter at Rs. 13,417 crore. SBI was not far behind with
net loss worth Rs. 7,718 crores. Private Banks score over public sector banks as far as profitability
is concerned. HDFC leads the pack having made a net profit of Rs. 4800 crores in the recent
quarter followed by Yes Bank, Kotak Mahindra and ICICI Bank.

6
PESTLE Analysis
Political factors:
 Some of the policies set forth by the 
Government of India eased out stringent
regulations like depositing 50% of a bank’s
savings with RBI, regulated rates on lending
and deposit, differentiated banking license
etc. This in turn increased competition for SBI
as new entrants came easily as they did not 
have any legacy issues and could be more
focused.
 Schemes launched by Government like
Pradhan Jan Mantri Jan Dhan Yojana where
SBI was very proactive in its implementation
and has disbursed 28,556 crore for FY2018
against a target of 28,300 and other schemes 
like the Bank Boards Bureau (BBB) have surely
helped SBI in expanding.
 One of the initiative launched by the
government was the recapitalization plan of
2.11 Lakh crore for various Public Sector Banks
(PSBs) including SBI. This capital had to be
used to tide over bad debts and revitalize
credit growth. Country’s largest lender, SBI,
received 8,800 Crore from this which led SBI
7
Economic factors:
The current economic surge has resulted in a
higher disposable income with the Indian public
that presents an attractive opportunity for SBI
particularly in areas of Personal finance and
Equity market that is projected to rise by 20%.
The presence of the high NPA’s has affected
interest income adversely therefore putting
immense pressure on bank’s profitability. In
addition, SBI has been put under the Prompt
Corrective Action (PCA) framework of RBI
according to which dividend payments and
Branch expansions are under restrictions.
Recently, Shares of State Bank of India (SBI) hit
a six-month high and outperformed the market
by surging 19% after a tie up between Reliance
Jio and SBI happened, providing a platform for
Digital Banking, commerce and financial
services to customers. The outcome of tie-ups
like those that the one mentioned help SBI to
grow as a Bank that in turn helps the Indian
Economy.
 to reposition to lead Indian growth and serve
the people responsibly.

 For the coming Assembly elections in 2019,

SBI has started to roll out Electoral Bonds to
put a ceiling on electoral funding and prevent
black money to circulate within our system.
Social factors: Technical / technological factors:

 Schemes like Direct Benefit Transfer ensured 
usability of accounts created under Jan Dhan
Yojana and led to increased awareness about
other products like insurance & pension
 The edge of India in service industry
combined with technological advancements
have created an impulse for growth in
entrepreneurship in India. Various start-ups 
need financial support. This creates demand
of loan by these entrepreneurs. This indicates
the scope of lending opportunity for bank and
loan demand within the country.
Some of the latest initiatives of Bank include
‘Quick Photo Debit Card’, India’s first and
premier comprehensive digital service platform
‘You Only Need One’ (YONO), National Electric
Toll collection (NETC) etc. which concretely
justify and establish identity of SBI as a tech
savvy bank.
Issues related to information threat and
security which can affect the image of the bank
if not managed well

 Aversion to the latest technological changes

which have been incorporated by the existing
systems

Legal factors: Environmental factors:

 Insolvency and Bankruptcy code launched in  Projects like “Waste to Gold” and “SBI Corbett”
2017 provides for a single solution to the undertaken by the bank and also indulging in
problem of resolution of insolvencies, which is renewable financing, SBI actively delivers to
very time and cost consuming reduce its carbon footprint

8
Micro-Environmental Analysis
 Employees
Employee salary- The bank employs a very large number of employees and pays well, thereby
spending a high amount of money on employee salaries.
Hierarchical structure- It is difficult to bring in changes given the structure.
Training- SBI has been spending resources to train its employees with the advent of digital banking.

 Customers’
Wide customer base- SBI has a wide range of customers ranging across age groups, geographies and
other demographic variables.
Foreign expansion- SBI can consider expanding into the foreign market, given increase in trade in the
recent past and India’s large expatriate population
Micro-finance- SBI can venture into the microfinancing industry in rural areas. Given its brand image
and being from the public sector, it can attain wonders in this field in rural areas.

 Competitors
FDI in banking sector- As FDI is now allowed in banking sector, SBI faces increasing competition from
foreign banks, who generally provide better facilities and have better technology implemented.
Rural penetration of private banks- Private banks have now started penetrating into the rural and
semi-urban sector, thereby increasing competition for SBI in a segment which they have traditionally
dominated.

 Distribution Channels
Branches- It has world-class penetration in our country with over 22414 branches.
ATMs- It has over 59541 ATMs across the country with over 1 crore transactions per day.
Digital Banking- SBI has a fully functional Net banking site that enables users to perform multiple
activities ranging from funds transfer to applying for a credit card.

 General Public
Brand name- SBI is the oldest bank in India and has earned a strong reputation over time.
Public Sector- In terms of customer security, SBI has an edge over private sector banks with a
majority government stake involved.
Non-performing assets- SBI has the highest amount of NPA’s in the country.

9
PORTER Analysis

Threat of New Entrants: MEDIUM TO LOW

The Banking sector in India is a saturated market with several public and private players like SBI, HDFC,
ICICI, Axis Bank, PNB, Central Bank of India among others. Threat of new entrants in this industry is
relatively low as they face the following two barriers:

1. Licensing and Regulatory Requirements: The Reserve Bank of India has explicit and stringent
policies in place to give licenses to new banking and financial services. Hence, eligibility and entry
into the banking and financial services industry is difficult. In the last two decades, RBI has given
licenses to only 12 banks in the private sector. However in 2016, the RBI opened applications for
licenses permanently as opposed to the previous practice of opening licensing application only in
select windows. This was done in efforts to increase competition in the banking sector.

2. Requirement of Capital: Setting up requires heavy investment in technology and capital as there is
requirement for several branches and ATMs which could be a major barrier for small and medium
players

Entry of Foreign banks in India: Currently, there are several big foreign players in the Banking sector like
Citibank, Deutsche Bank, RBS, Standard Chartered, HSBC, etc. given that FDI of up to 49% is allowed in
the private sector without government permission. However, as of Jan ‘18, the government was

10
considering increasing this number to 100% that would, if brought into effect, mean more threat from
foreign players.

Bargaining Power of Buyers: MEDIUM TO HIGH

Buyers in this segment enjoy a relatively high bargaining power owing to the following factors:

1. Availability of Alternatives: The Banking sector in India is a fragmented market with a good
number of public (SBI, Indian Overseas Bank, PNB, etc.), private (HDFC, ICICI, Axis, IndusInd, Yes
Bank, etc.) and foreign players (Citibank, RBS, Standard Chartered, etc.). Consequently, customers
enjoy the ability to choose between wide ranges of options and can switch easily from one bank
to another if they want to. Additionally, availability of non- banking financial services like Muthoot
Finance, Bajaj Finance, etc. adds more options for at least a select segment of the consumer base.
Corporates also have the option of High competition in the market has enabled the buyers to gain
high levels of bargaining power.

2. Switching Costs: Due to increased competition, switching costs between banks is reducing. Banks
are coming up with schemes to attract the consumer base like zero balance accounts, higher rates
of return, etc. This again gives the buyers higher bargaining power. However, consumers show
high levels of inertia while switching services from one account to another because the exit is not
exactly hassle-free.

Bargaining Power of Suppliers: MEDIUM to LOW

The suppliers in this sector are mainly depositors, loans from other financial institutions, banking
software suppliers, etc. The bargaining power of the suppliers usually fluctuates but depends mostly on
the following factors:

1. RBI Regulations: The banking sector is a heavily regulated sector with the central bank having
strict policies and regulations around interest rates. Hence, there is not much room for suppliers
to bargain as all banks have to adhere to the RBI regulations and suppliers get no options or
alternatives.

2. Assurance of safety: Banks are considered one of the safest instruments available to people to
park their money. Hence, there is a perpetual demand for bank deposit accounts that ensures a
steady flow of suppliers in the absence of any alternatives to deposit their surplus money safely.

Pressures from Substitutes: MEDIUM TO LOW

1. Existing Substitutes: NBFCs constitute the major substitutes to banks as far as credits are
concerned. NBFCs, however, cannot accept deposits, which is where the banks differentiate
themselves from these financial services.

2. Emerging Substitutes: Up and coming substitutes include e-wallets and payment banks like that of
Paytm, Mobikwik and Airtel. These services allow people to deposit their money with them and
then use it to pay at various places as needed. However, cash pickups in these services are mostly
11
 unavailable and these services require you to link your accounts with your bank accounts
essentially increasing the demand for bank accounts. Hence, current pressure from these
substitutes is still low.

Current Rivalry in Category: VERY HIGH

The banking sector in India is an old and established sector with several players and hence the market is
highly competitive. The industry has now matured in terms of pricing and providing differentiated
services.

Company and Competitor Analysis

1) Business Canvas Model

Following is the Business Canvas Model to understand SBI’s business model and to identify key
stakeholders and cost and revenue streams.

conjoint analysis.xlsx

12
2) Competitor Analysis

SBI ICICI HDFC Bank Citibank New Entrants

SBI has been It is one of India’s The largest private It is one of the New entrants like
the oldest bank largest private sector bank in India largest banks in the payments bank
in India. It is sector bank. as per market world offering from companies
also the largest Targets people capitalization. services in the area like Reliance and
bank of India. from mid to high Focusses on of retail banking and Airtel have been
SBI has a wide income group. salaried employees investment options granted licenses by
reach across Leverages the and people for to the retail RBI and have
the nation. use of income group. Is customer as well. It’s started operations
Popular among technology for pushing the a large international in the banking
people from easy use of boundaries relies banking space. They
rural to urban banking services heavily on conglomerate with facilitate only
area. Offers for the technology to offerings across the remittance services
wide range of customers. render it services. world. Though in and accept deposits
services like The tagline is Forayed into all the India, its presence is up to Rs 100000
deposits, PPF “Khayal competing services quite limited. Has only. Unlike the
and various Aapka”,”Hum offered by its rivals. tied up with existing banks, they
types of loans. Hain Na”. Also corporates for cannot enter into
The tagline of competes with salaried accounts. lending services.
SBI is “Banker the SBI in Provides wealth But heavy
to every traditional spaces management investments in
Indian” like loans services to HNI and technology has
(housing, auto medium to high made them a
etc.) income people. As of threat to the
now present only in existing banks.
major cities across
India

3) Strategies

SBI ICICI HDFC Bank

SBI has always positioned itself
as a bank for everyone. It has
widespread network of around
13000+ branches reaching to
the remotest corner of the
country.
ICICI has mostly targeted
customers within the range mid to
high income group. People who
are tech savvy are provided
services with the usage of
technology. It has an international
presence across several countries.
HDFC bank also has targeted
customers within the range of
mid to high income group. Apart
from individuals it has a large
number of corporate tie ups for
salaried accounts.

13
As far as savings bank accounts
are concerned, SBI offers a few
different varieties of accounts.
Being a public sector bank the
minimum average balance
maintenance goes from Rs
1000 to Rs 3000.
ICICI offers varied kind of savings
account targeting different
customers of different segments.
They have special accounts for
senior citizens, minors and women
etc. Have a high minimum average
balance of >Rs 10000.
HDFC bank offers varied kind of
savings account targeting
different customers of different
segments. They have special
accounts for senior citizens,
minors and women etc. Have a
high minimum average balance
of >Rs 10000

Loan offerings of the bank are ICICI is very competitive in the

usually at the same rate market of loans (home loans, auto
offered by the competition. loans etc.).
Specialised loans like scholar
loans are at very attractive
interest rates as compared to
the private sector

Very adaptable when Minor discounts on e-commerce HDFC bank cards offer discounts
partnering with the e- site remains the same but have on e-commerce sites and has
commerce services and have tied up some brick and mortar offered large cashbacks for
offered up equivalent stores to offer larger cashback on specific purchases of mobile
discounts on usage of its cards. card usage especially with phones.
electronic stores

They are slowly getting into
the credit card market where
they have different types of
credit cards to suit the needs
of different kind of people.
They were the first bank to bring
internet banking facilities in the
market. They are also a huge
player in the credit card market
with differentiated offerings.
HDFC bank has wide range of
credit card offerings. Very
popular as far a offering
cashbacks and discounts are
concerned.

3) Market Capitalization, Revenues and Profits (for financial year ending 31st March.
2018)

Compan Market Capitalization Sales Revenue Net Profit

y

SBI > Rs 270,000 crores >Rs. 250000 crores Loss of >Rs 6500 crores

HDFC > Rs 570,000 crores >Rs. 95000 crores >Rs 17000 crores

14
 ICICI > Rs 204,600 crores >Rs. 72385  crores >Rs. 6700 crores

4) Value Proposition and Differentiation

SBI has a rich legacy that highlights its value proposition and differentiates it in the market:

 Customer Service- The staff at SBI is considered friendly. Often, they are relatives or
neighbours of the customers and know each other personally. We noted the same during our
consumer behaviour interviews and surveys. 9 out of the 10 people interviewed by us stated that
they were happy with the customer service of SBI emphasizing on a customer friendly
environment, low waiting time and quick resolution.

 Emphasis on rural population- It has a special emphasis on the rural population. For most of
the rural population, banks other than SBI are inaccessible. SBI’s penetration strongly
differentiates it from its competitors. It is also considered farmer-friendly and was the first bank to
provide loans to farmers.

 Loans- SBI has been very efficient at processing and disbursal of loans. SBI It has the highest
share in the home loan category in the Indian Banking market at 32.13%. The portfolio consisting
of Home Loan and Home Loan Related items stands at Rs 341081 Cr. The Assured Turnaround
Time drive made it achieve a Turnaround Time (TAT) of 9 days for processing loans in March 2018,
which is one of the best in the industry. SBI also offers education loans at concessionary rates. It
provided loans to 56042 meritorious students during the financial year 2017-18.

 Mobile Banking Services- It has the highest market share in mobile banking services,
capturing 21.20% of total volume of transactions and 19.81% value of transactions. Over 27 Lakh
transactions have taken place through mobile banking on SBI’s platform. SBI has collaborated with
Google to offer services to their UPI app- Google Tez. OKSBI handle has been used by 13 Lakh
users to link their accounts with Tez.

Study of Consumer Behaviour

QUALITATIVE INSIGHTS
Consumer 1

Profile - A student of age 24 from an upper-class family.

Q1: How did you apply for your first bank account? What made you choose one bank over others?

His first account was a minor account where he did not have any say on the bank. His
parents had chosen the bank they already had an account in (HDFC), to avoid any
hassles.

15
His under-grad college also required of him to have an account with SBI as all transactions like security,
scholarships etc. were made through SBI.

He has no other bank account and SBI is relatively dormant.

Q2: What is that you value the most in a bank? What do you like about SBI? Where do you think SBI can do
better?

He said that since this is public sector bank he feels his money is safe. In a disrupted banking environment like
today’s he feels the government shall work to protect SBI in case of a mishappening.

However, he also mentions that private banks offer much better services and customer support than SBI and this is
something he valued the most in a bank.

He narrated an upsetting event when he had to call the customer care for some grievances but the employees kept
transferring his calls and made him explain his situation, every time the call was transferred, from scratch.

Q3: Any advertisement of SBI or other banks that you can recall?

He could vividly remember a tune and hummed it for us recalling the advertisement of ICICI. He could also
remember Amitabh Bachchan endorsing ICICI in one of the ads.

Consumer 2

Profile – A 35-year-old businessperson from a lower middle-class background. He sells paints at his shop in
Sakchi market.

Q1: How did you apply for your first bank account? What made you choose one bank over
others?

He weighed all the pros and cons while applying for a bank account in Kotak. He was particularly
interested in maximizing his investment and was aware of the high interest rate Kotak offered
vis-à-vis other banks. On asking what other things he focussed on while making purchases he
said he looked at the minimum account balance (MAB) requirements and branch and ATM
accessibility.

Q2: What do you like about SBI? Where do you think SBI can do better?

He said based on what he heard from around, SBI is a safe and trustworthy bank to deposit in. It also has greater
number of branches and ATMs accessible.

He felt interest rate on deposits was the key factor he would invest in a bank for and according to him if SBI offers
lucrative rates, he would not think for a second before switching towards it.

Q3: Any advertisement of SBI or other bank that you can recall?

A monosyllabic ‘No’.

Consumer 3

Profile - A working woman in her mid-thirties from an upper-middle-class family.

Q1: How did you apply for your first bank account? What made you choose one bank over others?

Her first bank account was a minor account that her parents applied for, for her. But she
has another account with Citibank which she applied for in her first job. She mentions she
was influenced with the tie-ups banks have with various e-retail and shopping websites
like Myntra, Flipkart and Amazon and she wants to diversify her deposits in as many
banks as possible as she wanted to avail of the offers/discounts each bank offered and
also for safety purposes.
16
Q2: What is that you value the most in a bank? What do you like about SBI? Where do you think SBI can do
better?

Apart from the discount offerings, she says she would ideally want a quick customer service. She recalls a situation
when she applied for a visa for which she required her bank statement for a particular period. She visited the
nearest Citibank branch and was impressed by their organized way of operating and the personalized approach of
the staff. One of them even went on to give a few non-bank suggestions for her visit. She summed up by saying
that she had an ‘amazing experience’

She says banks like SBI can work on their customer service because she feels there is not really much to
differentiate between banking services today.

Since, she has not had any experience with SBI, she didn’t have many positives to mention about SBI.

Q3: Any advertisement of SBI or other bank that you can recall?

She gave a good thought but she could not recall any.

Consumer 4

Profile: A 65-year-old man who worked for the Bank of India for 30 years. He retired from service at the age of
60.

*This was a big opportunity for us and we tried to gain as much as we could. We also modified our questions and
asked him to talk of anything he felt was important.

Q1: What do you think drives a person to choose one bank over another?

He says that in his career he has mostly seen people whose relatives/parents already had an
account in it, coming to Bank of India for opening new accounts. Besides, the bank mostly
managed accounts of government employees, like all other Public-Sector Banks. He feels apart
from the above, “people are lured towards private sector banks because they offer better
services”

Q2: Why do you think customers value services more than anything does?

To this, he says, “people prefer to get their accounts opened in the comfort of their homes, something that
private banks take leverage of.”

On being asked why public banks do not aim to achieve the same, following was his response:

“Those at private banks are paid incentives for number of accounts they manage to open, the loans they give out
etc. At public sector banks, however, the salary structure is relatively fixed and there’s no incentive to match the
services of private banks.”

Q3: So, should incentives be introduced?

“It depends on whose perspective you consider – An employee who is confident of his negotiation skills would
want them to be introduced. This could also improve efficiency in the public banks so the public banking sector
would start giving the private banks a run for their money”

So, what is the other perspective?

“Those of the major chunk of employees who got into these banks in the first place because of the comfort these
jobs offered. They are sceptical of the competition that could creep in with the introduction of incentives. They
also believe that young people could get promotion over the seniors which is a little unacceptable in the Indian
tradition.”

17
Q4: What do you propose the solution could be?

He gave it a good thought and came up with a befitting solution. He said it is important to look at both perspectives
and come up with a solution that caters to both. He said he was sure there could be more solutions to this but at
that moment, what he could think of was that incentives at branch level could be given a try. That way the whole
branch feels motivated to achieve more and as a team and the apprehensions of individuals are taken care of too.

QUANTITATIVE INSIGHTS
A Questionnaire was floated and 130 responses were recorded.

We designed a comprehensive questionnaire ensuring that it brings out genuine responses.

Q-1 If all banks offer an interest rate of 4% and another offers a higher interest rate but is relatively new. What
interest rate would make you switch to the new bank?

Response to high interest rates on deposits

No interest rate

5.75%

5.50%

5.25%

5.00%

4.75%

4.50%
0 5 10 15 20 25 30 35 40

Series 1

Q-2 what do you value the most in a bank?

Dis
co
un
t/i
nt
rat
e Ac
off ce
eri Sales ssiRe
ng bili
lia
s ty bili
25 20 ty
% % (P
ubl
ic
vs
Cu Pri
st vat
o e)
m 15
Accessibility % (Public vs Private)
Reliability
er
Customer Service Discount/int
Se rate offerings
rvi
ce
40
%

We also did the following mini hypothetical case to check for the perception of people about SBI.

Q- Suppose you have an account in SBI and the NPAs increase so much so that SBI has started making losses.
Would you consider switching the money away from SBI?

18
 Response to rising NPAs
No, I will stay No, I will
stay; 90
Yes, I will
Yes, I will switch switch; 40
0 10 20 30 40 50 60 70 80 90 100

Series 3

Q- If you answered no, would you switch your bank if NPAs persist for more than 5 years?

Percent of People Who Responded no to Previous Question

Still no Still no; 20%

Yes Yes; 80%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90%

Series 1

Q- Would you have switched from your account in HDFC had it seen an increase in NPAs in a year?

Response to Rising NPAs in Private Banks

No, I will stay No, I will
stay; 30
Yes, I will
Yes, I will switch switch;
100
0 20 40 60 80 100 120

Series 1

If you answered no, would you switch your bank if NPAs persist for more than 5 years?

Percent of People Who Responded no to Previous Question

Still no Still no; 10%

Yes Yes; 90%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Series 1

Inferences
Based on 130 responses, we identified the following key aspects

 The demand for banks is quite elastic at small changes of interest rate offerings.

19
  A very high percentage of people value customer service more than any other attributes. The
same was evident from the customer interviews as well.
 A very high percentage of customers value discount and interest rate offerings as was found out in
the in-depth interviews as well (qualitative insights)
 27% wanted higher reliability of the bank for their deposits.
 The current NPA problem can affect SBI if appropriate measures are not taken immediately.
 However, SBI shall be able to retain more customers than other private banks as there is some
trust that people have on SBI.

SEGMENTATION
The Banking Industry is at the epicentre of the Indian economy and is an established and mature industry.
Many numbers of competitors vying for the customers makes the industry very competitive. Advent of
technology has made reaching out to the very easy for any organization. Adoption of technology gives the
company an advantage over its competitors. Till now SBI has had quite generics offerings as far as
products and services is concerned. It sticks to its principles of “Banker to Every Indian”. Until date, SBI
has been following the common segmentation strategy used across the banking sector. Following
variables are considered while dividing the populace for the products:

1) GEOGRAPHIC VARIABLES
2) DEMOGRAPHIC VARIABLES
 Income level
 Occupation
 Marital Status
 Age
3) BEHAVIORAL VARIABLES

GEOGRAPHY:
Geography based segmentation is very important when the bank strives to be a foremost choice as a
bank for the entire nation. In India, around 68% (census 2011) population stays in rural areas and the rest
in semi-urban or urban areas. The majority of the rural population has lower level of incomes and many
of them are daily wage earners. Such people use up their daily earnings on their daily expenses and
consequently the potential of accumulated savings is less. For this reason, the bank accounts have
different levels of minimum balance maintenance requirements for rural, semi-urban and urban areas.

DEMOGRAPHY:

This is the most widely used form of segmentation used by the banking industry. The entire market is
divided basis the above parameters. In earlier days, when tech penetration was lesser and there was no
available data on the customers, this sort of technique was followed by most of the banks.

Income of an individual is one of the defining factors in their relationship with the banks. SBI has variety
of offerings depending upon the earnings a person makes.

20
  For people belonging to lower income group who are just interested in depositing their hard-
earned money in to the bank and basic features, the bank offers a Basic Savings Account. The
account has zero average quarterly balance and the account holders are provided with basic debit
cards and services.
 For people who belong to mid to higher levels of income/salaries, the bank categorises them into
silver, gold or platinum membership. They are offered premium debit cards, higher withdrawal
limits, waivers on service charges. But access to such features come with a caveat of maintaining
higher AQB and having higher relationship value as well. Such people are offered a variety of
credit cards depending upon the income levels. Higher the income more premium the credit cards
offered with suite of features like, higher rewards points, higher credit limits, complimentary
memberships etc.

Basis the Occupation, individual has different needs to be taken care of. It is one of the factors that
attracts a huge number of customers. In India, there are majorly two categories of people, one who
derive regular incomes from the organization they work for and second, people who engage into business
of one kind or other.

 For a salaried person the bank offers a corporate salaried account. The bank offers a zero-balance
saving account, free NEFT/RTGS transfers, multi-city cheques, higher withdrawal limits on ATMs,
overdraft facility, accidental insurance, easier approval of loans etc.
 For business people the bank offers variety of loans. India being agriculture-based economy, there
are variety of farmer loans. For large businesses, the bank offers a working capital loan etc.

Depending upon the marital status, the bank offers the savings account as an individual holder or a joint
account holder. For credit and debit cards, married people have a facility of getting an add-on card at
lower or no costs.

SBI offers accounts for minors who are <18 years of age. This is to get the customers on board when they
are young and who can eventually provide a higher value as a customer. They also have student accounts
that have low minimum balance along with student loans linked to the accounts. The student loans are
also provided at competitive rates. These are offered for young adults who would become the next
generation of professionals in the country. At the same time, the bank also offers better interest rates on
fixed deposit to senior citizens.

BEHAVIOURAL:
Segmenting the customers on the behaviour is need of the hour from a marketer’s perspective. Banking
industry is a very age-old industry but the consumers of today are new gen youth who have different
requirements from that of the previous generation. Most of the new age consumers are salaried and
employed with many multi-national corporations. They are so occupied with their work and personal life
that they seek the same speed with their banking services. They need technological solutions to their
requirements. Also, this generation of people are dependent on digital money and love to spend online
as well as in the malls. What they seek is short-term loans in the form of credit cards and at the same
time variety of benefits, they provide. Many of these individuals also need wealth management solutions.

21
For such people, SBI provides variety of credit and debit cards. In addition, it has inculcated technology by
offering a YONO app, net banking services. For individual investors there is also a provision of demat
accounts etc.

TARGETING
From the above possible segmentations, following are the various target markets:

1) According to census 2011, the number of senior citizens (>=60 years of age) are around 103
million. This shows a huge target market for banking products and services. Many of them look for
easy and convenient way to bank, doorstep services and secured deposits. Majority of the seniors
would like to deposit their life savings into the bank accounts. Apart from savings account, many
of them look for retirement solutions and insurance services that a bank can tap into. Thus, it is a
sizeable market where in deposits would be higher and at the same time demand for additional
services is less as well.
2) Census 2011 puts the number of minors aged between 5 to 18 are around 33 million. They also
form a target market that require minimum services. Nevertheless, they have the potential to
become a huge market when they turn 18 and they start utilising other services of the bank.
Capturing them early on would ensure a consumer base for the future services and products.
3) In 2011, population of women between 18 to 60 years of age was 321 million. Governments push
towards project for women and increase in education levels of the girls in the country are making
the next addition to the working population of the country. These women will substantially
increase the workforce and hence have a huge potential for acquiring banking services. They
represent a sizeable chunk of the population.
4) As per year 2011, number of people working in the organised sector was 29 million and they
derived a salary from either a public or a private company. This represents a formal corporate
worker pool. Since 2011 jobs, creation in the country has been on upswing and number of salaried
people have increased substantially.

Hence looking at above statistics, we can conclude that each type of segmentation has a sizeable number
of customers due to humongous size of the general population of the nation. Each in itself is a lucrative
target market and SBI has offerings spread across all the markets. They cater to their target markets quite
well.

POSITIONING
 “Banker to every Indian”- It positions itself in a way that it caters to the needs of all segments of the
population. It is omnipresent across the country in all regions. It has a presence across the rural-urban
landscape. It has attractive schemes for women to make it more gender inclusive as well as for farmers in
order to help the marginalized prosper.

 Brand Equity- SBI has been trying to build an image of a technologically efficient bank in the evolving times
of high usage of digital products and services. This is an attempt to show versatility such that no notions
exist of it being traditionalistic. It has adapted well to the times. 7 out of the 10 consumers that we
interviewed stated that they found SBI’s online services fast and efficient.

22
  Awareness- SBI has associated itself with several essential social issues to raise awareness and portray
itself as a socially responsible banker. It has been a part of multiple campaigns such as the Read India
campaign and Clean Ganga campaign

 Digital Marketing- SBI has been continuously involved in digital marketing campaigns. One famous
campaign has been the #SafeBankingTip on Twitter. There also exist SBI Tech Learning Centres (TLCs),
which conduct sessions of 60-90 minutes. Customers are informed of its various offerings in these sessions.

Perceptual Map
Customer Service
High

Low High
Efficiency

Low

Conjoint Analysis
Three attributes were analysed at three levels each in the conjoint analysis. They are:

 Type of Bank: Public, Private and Foreign

 Accessibility: Near Home, Near Work and Close to where you shop
 Customer Service Reputation: Excellent, Good and Average

The above attributes resulted in 27 combinations of bundles. We recorded preferences of 20 customers against
these bundles. We assigned dummy variables to each combination. Next, we removed one level from each
attribute, namely foreign bank, accessibility close to where one shops and Average Customer Service reputation.
Then we performed regression analysis, obtaining analysed preferences of each bundle, which are shown by the
table given below:

Serial Type of Bank Accessibility Customer Service Actual Analysed

number Reputation Preferences Preferences
  Public Private Close Close to Excellent Good

23
 to
home work
1 1 0 1 0 1 0 10 8.556
2 1 0 1 0 0 1 6 4.556
3 1 0 1 0 0 0 4 4.556
4 1 0 0 1 1 0 8 8.000
5 1 0 0 1 0 1 6 4.000
6 1 0 0 1 0 0 4 4.000
7 1 0 0 0 1 0 7 7.444
8 1 0 0 0 0 1 6 3.444
9 1 0 0 0 0 0 3 3.444
10 0 1 1 0 1 0 9 8.333
11 0 1 1 0 0 1 6 4.333
12 0 1 1 0 0 0 4 4.333
13 0 1 0 1 1 0 7 7.778
14 0 1 0 1 0 1 6 3.778
15 0 1 0 1 0 0 4 3.778
16 0 1 0 0 1 0 7 7.222
17 0 1 0 0 0 1 6 3.222
18 0 1 0 0 0 0 3 3.222
19 0 0 1 0 1 0 8 7.778
20 0 0 1 0 0 1 5 3.778
21 0 0 1 0 0 0 4 3.778
22 0 0 0 1 1 0 7 7.222
23 0 0 0 1 0 1 5 3.222
24 0 0 0 1 0 0 4 3.222
25 0 0 0 0 1 0 6 6.667
26 0 0 0 0 0 1 5 2.667
27 0 0 0 0 0 0 3 2.667

The coefficients for the attributes level and regression statistics for the above results are:
  Coefficients Regression Statistics
Intercept 2.666666667 Multiple R 0.956107428
Public 0.777777778 R Square 0.914141414
Private 0.555555556 Adjusted R Square 0.888383838
Close to home 1.111111111 Standard Error 0.614636297
Close to work 0.555555556 Observations 27
Excellent 4
Good 2

We obtained R square value equal to 0.914141414, signifying that the deviation from the actual values is
minimal. Also, on analysing the coefficient values we realized that ‘Excellent’ Customer services is the
most significant factor for a bank amongst the three taken attributes, followed by proximity of a bank
presence to once residence. The customers whose preferences were taken showed a slight preference
for Public Sector Banks (PSBs) over Private Sector Banks.
The above results are in congruence with the qualitative insights gained from customers, where they
showed inclination towards PSBs owing to high trust factor. In addition, insights in the area of customer
service match the above results.
24
RECOMMENDATIONS
1. Advertisement in line with Segment Needs
To target different segments, SBI should make advertisements with respective value propositions.
Different segments will respond to ads differently and it is important to create personalized ads.

2. Leveraging Multiple Advertisement Channels

Increasing awareness through advertisements not only through conventional mediums like
newspaper, radio and TV; but also through online channels like social media, YouTube and other
channels. Search Engine Optimization and taking advantage of customer data to enhance bank
marketing and geographically target customers

3. Focus on Customer Services

Transformation of bank in rural and semi urban areas, to include E-services and Regular customer
feedback on working of bank. SBI should also focus on customer interaction by easing the
processes for customers as well as ensuring information dissemination to customers of any
change in rules of the bank.
As users look for increased convenience and as was shown by the user behaviour, it is imperative
that SBI upgrades its customer services in place. The IVRS is a commonly employed tool by banks
to help customers with their requests and to give them quick access to their information and SBI’s
IVRS system currently lags behind the other players. Mostly, their IVRS, currently, is unable to
tangibly process any of the customer’s requests and they usually have to visit a branch to service
their requests. An upgrade in the IVRS channel would help in making the customer service more
convenient.

4. Empowering Employees
SBI should provide training to the employees to effectively leverage the technology for providing
services. Along with that having performance component in employees’ salaries will further
motivate them towards efficient working and promoting professionalism. There can be resistance
to performance components by some employees. In that case, incentives can be can be given at
branch level.

5. Education & Awareness of Customers

Focus on Financial literacy of Customers through multilingual mode of educating Customers to use
e-channel through education campaigns through posters, publication, TV, radio, seminars and
training.

6. Adherence to NPA provisions

Following RBI provisions for identifying NPAs
• Dues are not paid for 90 days: Special Mention Account (SMA)
• SMA for less than 12 months: Sub-standard Asset
• Sub-Standard Asset remains so for more than 12 months: Doubtful Asset

7. Leveraging Technology

25
 Enhancing mobile-app security by introducing facial recognition and fingerprint features to access
their accounts more securely. Using machine learning and artificial intelligence to expedite resolution
of issues and to help them better manage their financial resources.

REFERENCES
[1] SBI Annual Report 2017-18
[2] State Bank of India. (2018, September 03). Retrieved from https://en.wikipedia.org/wiki/State_Bank_of_India

[3] Govt mulls allowing 100% FDI in private banks: Sources. (n.d.). Retrieved from
https://www.moneycontrol.com/news/india/govt-mulls-allowing-100-fdi-in-private-banks-sources-2485361.htm

[4] Business Standard. (n.d.). ICICI Bank Ltd. Retrieved from https://www.business-standard.com/company/icici-
bank-5418/peer-comparison/marketcap/bse/sector-by-sector

[5] Stocks. (n.d.). Retrieved from https://economictimes.indiatimes.com/icici-bank-ltd/yearly/companyid-9194.cms

[6] Stocks. (n.d.). Retrieved from https://economictimes.indiatimes.com/hdfc-bank-ltd/yearly/companyid-

9195.cms

[7] Stocks. (n.d.). Retrieved from https://economictimes.indiatimes.com/state-bank-of-india/yearly/companyid-

11984.cms

[8] Q4 report card: Losses in banking sector tower over 4 ... (n.d.). Retrieved from
https://www.moneycontrol.com/news/business/companies/q4-report-card-psb-losses-tower-over-other-banks-
profits-sbi-pnb-hit-the-most-2574879.html

[9] Personal Banking - SBI Corporate Website. (n.d.). Retrieved September 5, 2018,
from https://www.sbi.co.in/portal/web/personal-banking/

[10] Different SBI (State Bank Of India) Savings Accounts: Interest Rate, Minimum Balance, Cash Withdrawal. (n.d.).
Retrieved September 5, 2018, from https://www.ndtv.com/business/state-bank-of-india-sbi-types-of-savings-bank-
account-interest-rates-minimum-average-balance-1864873

[11] SBI- Customer Segmentation. (n.d.). Retrieved September 5, 2018,

from https://retail.onlinesbi.com/sbijava/customer-segment-popup.html

[12] 70% Indians live in rural areas: Census | Business Standard News. (n.d.). Retrieved September 5, 2018,
from https://www.business-standard.com/article/economy-policy/70-indians-live-in-rural-areas-census-
111071500171_1.html

[13] Indian Banking Industry Analysis. (n.d.). Retrieved September 5, 2018,

from https://www.ibef.org/industry/banking-presentation

[14] About Us - SBI Corporate Website. (n.d.). Retrieved September 5, 2018,

from https://www.sbi.co.in/portal/web/about-us/about-us

[15] Reserve Bank of India - Publications. (n.d.). Retrieved September 5, 2018,

from https://www.rbi.org.in/Scripts/Publications.aspx?publication=Annual

26
27