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Banking Diploma Reading Material

Marketing Note-2

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1. Definition of Marketing

2. Why Bank Marketing?

3. What’s are the Features and Approach of Bank Marketing?

4. Describe the marketing mix

5. Importance of Marketing in Banking Sector/ Financial Organization

6. Explain the different steps in advertising for bank or financial services institutions

7. Discuss the regulations that directly influenced on advertising specific financial services

8. Briefly discuss the marketing mix in banking sector in Bangladesh

9. Explain the New-Product Pricing Strategies

10. Development in Marketing Scope at the Aspect of Service Marketing

11. Importance of Bank Marketing

12. What’s are the Features of Bank Marketing

13. Different Products and Services of Banks

14. Marketing Approach to Banking Services

15. What’s the Challenges of bank marketing?

16. Strategies for the enhancement of bank marketing

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1. Definition of Marketing

Marketing is the process of exposing target customers to a product through appropriate tactics
and channels, gauging their reaction and feedback, and ultimately facilitating their path to
purchase.

There are a lot of marketing definitions available but the right ones are focused upon the key
to marketing success i.e. customers. Following are some of the marketing definitions available.

The Chartered Institute of Marketing (CIM) says:

“Marketing is the management process responsible for identifying , anticipating and

satisfying customer requirements profitability.”

Philip Kotler defines marketing as:

“Marketing is the social process by which individuals and groups obtain what they
need and want through creating and exchanging products and value with others.”

Palmer’s marketing definition is as:

“Marketing is essentially about marshalling the resources of an organization so that

they meet the changing needs of the customer on whom the organization depends.”

Lastly, we can say that Marketing is the activity, set of institutions, and processes for creating,
communicating, delivering, and exchanging offerings that have value for customers, clients,
partners, and society at large.

2. Why Bank Marketing?

Awareness among Customers

Modern technology has made customers aware of the developments in the economic
environment, which includes the financial system. Financial needs of the customers have
grown multifold into various forms like quick cash accessibility, money transfer, asset security,
increased return on surplus funds, financial advice, deferred payments etc. With a wide network
of branches, even in a dissimilar banking scenario, customers expect the banks to offer a more
and better service to match their demands and this has compelled banks to take up marketing
in right earnest.

Quality as a Key Factor

With the opening up of the economy, fast change has been experienced in every activity, and banking
has been no exemption. Quality is the watch word in the competitive world, which is market
driven and banks have had to face up to this emerging scenario. In fact, it may not be out of
place to reiterate that quality will in future be the sole determinant of successful banking
ventures and marketing has to focus on this most crucial need of the hour.

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Growing Competition
Increased completion is being faced by the banking industry from within the system with
other agencies both, local and foreign, offering value added services. Competition is no more
confined to resource mobilization but also to lending and other areas of banking activity. The
foreign commercial bank with their superior technology, speed in operations and imaginative
positioning of their services has also provided the necessary impetus to the Indian banks to
innovate and complete in the market place.

Technological Advances
Technological innovation has resulted in financial product development especially in the
international and investment banking areas. The western experience has demonstrated that
technology has not only made execution of work faster but has also resulted in greater
availability of manpower for customer Contact.

3. What’s the Features and Approach of Bank Marketing?

Features of Bank Marketing

There are some features of bank marketing. These ares-

a). Banking product cannot be seen or touched like manufactured products (intangibility).

b). In marketing banking products, the product and the seller are inseparable; they together
define the banking product (inseparability)

c). Banking products are products and delivered at the same time; they cannot be stored and
inspected before delivering’ (perish ability)

d). Standardization of banking product is difficult (variability)

Approach Bank Marketing

With the need for marketing in banks having evolved out of the changing environment and
constant interplay of various interdependent factors, the importance of a systematic approach
to marketing cannot be over stressed. The application of a marketing approach in banks will
therefore involve:

a. Identifying customers’ financial needs and wants;

b. Developing appropriate banking services to meet these needs;

c. Pricing for the services so developed;

d. Setting up suitable outsells / banks branches;

e. Advertising to promote the services to the existing as well as prospective customers.

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4. Describe the marketing mix

Marketers deal with the marketing mix, which was described by McCarthy as the four Ps of
marketing. These are:

• Product. The product should fit the task the target consumers want it for, it should work,
and it should be what the consumers expected to get.

• Place. The product should be available from wherever the firm’s target group of customers
find it easiest to shop. This may be a high street shop, it may be mail order through a
catalogue or from a magazine coupon, or it may even be doorstep delivery.

• Promotion. Advertising, public relations, sales promotion, personal selling and all the other
communications tools should put across the organization’s message in a way that fits what the
particular group of consumers and customers would like to hear, whether it be informative or
appealing to the emotions.

• Price. The product should always be seen as representing good value for money. This does
not necessarily mean that it should be the cheapest available; one of the main tenets of the
marketing concept is that customers are usually prepared to pay a little more for something
that really works well for them.

The 4-P model has been useful when applied to the manufacture and marketing of physical
products, but with the increase in services provision the model does not provide a full enough
picture. In 1981 Booms and Bitner8 proposed a 7-P framework to include the following
additional factors:

• People. Virtually all services are reliant on people to perform them, very often dealing
directly with the consumer: for example, the demeanor of waiters in restaurants forms a
crucial part of the total experience for the consumers. In a sense, the waiter is part of the
product the consumer is buying.

• Process. Since services are usually carried out with the consumer present, the process by
which the service is delivered is, again, part of what the consumer is paying for. For example,
there is a great deal of difference between a silver service meal in an up market restaurant,
and a hamburger bought from a fast-food outlet. A consumer seeking a fast process will prefer
the fast-food place, whereas a consumer seeking an evening out might prefer the slower
process of the restaurant.

• Physical evidence. Almost all services contain some physical elements: for example, a
restaurant meal is a physical thing, even if the bulk of the bill goes towards providing the
intangible elements of the service (the decor, the atmosphere, the waiters, even the
dishwashers). Likewise a hairdressing salon provides a completed hairdo, and even an
insurance company provides glossy documentation for the policies it issues.

5. Importance of Marketing in Banking Sector/ Financial Organization

Introduction:
Marketing in banking sector should be considered under the service marketing
framework. Bank marketing is not only include service selling of the bank but also gets
personality and increasing image/ status for bank on its customers’ mind. For this

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reason, the traditional marketing is separate from the marketing of financial

organization and Banks.

Importance of Marketing in Banking Sector/ Financial Organization:

The Importance of Marketing in Banking Sector/ Financial Organization are mentioned
below:

Large competition in financial service sector:

The competition became extreme for growing international banking perceptiveness and
recently being unlimited new enterprises in this sector. Increase in liberalization of
interest rates has intensified the competition.

Change in demographic structure:

Thinking and quality vary men to men. Differentiation of population in the number,
quality and attribute, banks has to maintain a close relation and has to cope with the
change. For this reasons, the importance of marketing in Banking Sector/ Financial
Organization has emerge.

Bank’s wish to increase profit:

Banks increases their profits by creating new markets, to protect and develop their
existing market shares. Since the banks wants to make high profit, they must involve
with marketing to survive in their sector.

6. Explain the different steps in advertising for bank or financial services institutions

Several steps are essential for successful execution of advertising campaigns in financial
services. These steps are-

Determining the Objectives of Advertising:

The first step is to determine the objectives of the advertising campaign, reflecting the overall
marketing strategy of the company.
For example, the objective of an advertising campaign might be to generate new policies for
an insurance product or to increase the level of consumer awareness of the brand or the
company. Recognizing and identifying the exact objective of an ad campaign is critical to
accurate assessment of its merits and potential. Examples of popular advertising objectives in
financial services are target levels for customer inquiries, new policies signed, and advertising
recall.

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(2) Determining the available Budget

The next step in the advertising process is to determine the budget required to carry out the
ad campaign. Often, the required budget is significantly different from what is available, and
may be dictated by organizational budgetary constraints. For example, the budget available
for advertising a particular financial service might be determined based on a percentage of the
total premium revenues generated in the prior year. Clearly, an increase in the intensity of an
advertising campaign would require higher budget allocations and may call for the
abandoning of traditional budget-setting approaches for advertising. The total budget that is
required to execute an advertising campaign is a function of the reach and frequency (and
hence the gross rating points) necessary to create consumer response and the cost of media
used to secure this level of exposure. The associated dollar figure, therefore, needs to have
been estimated prior to negotiations with higher levels of management, in order to ensure the
availability of sufficient funds for executing an effective advertising campaign.

(3) Estimating the Return on Investment (ROI):

The next step in the advertising process is to determine the return on investments associated
with the advertising campaign. Four items of information are needed in order to conduct this
estimation, one of which is an estimate of the lifetime value of an acquired customer. The
lifetime value of the customer is the total profit that an acquired customer represents to the
company. It is quantified as the sum of the profits associated with the stream of transactions
that the customer will undertake with the company over the years. In addition, an estimate of
the total number of consumers who will be exposed to the advertising campaign is required.
An estimate of the percentage of reached consumers who will eventually purchase the
advertised financial product or service is also required. Clearly, negative return on investment
estimates would make the advertising campaign and unlikely prospect for further action.

(4) Developing the Contents of the Ad:

Once the return on investment computation has shown favorable results, the next step in the
advertising process is to develop the contents of the ad, as reflected in its execution style and
informational content. In this step, the services of advertising agencies that specialize in
producing financial services ads are required. These specialized agencies often also engage the
support of legal experts who can determine the compliance of advertising content with
existing regulations. Often, testing of ad content using small-scale samples, focus groups, or
test markets may be needed.

(5) Media Selection:

The next step in the advertising process is to determine the media that will be used. In
general, financial services that are more complex and require the communication of detailed
information tend to rely on print forms of advertising.
Television advertising, which capitalizes on multiple sensory inputs, tends to be the most
effective although often the most expensive. Once the media to be used for an ad campaign
has been determined by the ad agency, a media schedule needs to be developed in order to
achieve the original objectives of the ad campaign which had been identified. There are
specific media scheduling and campaign execution strategies that are most effective in certain
forms of financial services. For example, an effective ad-scheduling tactic is to advertise in
pulses with heavy advertising in one month, reduced advertising the following month, and a
return to high advertising levels in the third month.

(6) Scheduling and Campaign Execution:

There are specific media scheduling and campaign execution strategies that are most effective
in certain forms of financial services. For example, an effective ad-scheduling tactic is to
advertise in pulses with heavy advertising in one month, reduced advertising the following
month, and a return to high advertising levels in the third month.

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This tactic tends to result in more sales and higher levels of consumer response than a constant
and steady level of ad spending.

(7) Measurement:
The final step in the advertising process is to assess the impact of the ad campaign through
formal market research or examination of company records. It is critical to measure and
record sales levels and other advertising responses following an ad campaign in order to
determine the financial effects of the invested advertising dollars.

Such measures may help fine-tune the advertising strategy of the company and provide
estimates for optimizing future advertising campaigns. For direct advertising campaigns, such
measures are obtained through the tracking of consumer inquiries following the ad campaign
and the use of tracking numbers, which can pinpoint the exact promotional material to which
the consumers are reacting. For ads delivered through mass media such as television, radio,
and newspapers, the tracking of consumer responses may be considerably more difficult and
might require examining aggregate changes in sales for the months following the ad
campaign, or the purchase of market research data from specialized research firms.

7. Discuss the regulations that directly influenced on advertising specific financial services

Some of the regulations that have a direct influence on advertising specific financial services
are discussed below-.

Advertising Commercial Banking Services:

Advertising of commercial banking services is monitored through the various regulations
enforced by the Federal Reserve as well as the Office of the Comptroller of the Currency. For
example, the Truth in Savings Act specifies items of information that depository institutions
should disclose about deposit accounts featured in their advertisements. Terms such as the rate
of interest, applicable fees, and terms of the deposit such as the minimum length of time that
is required prior to withdrawal of the funds need to be clearly communicated to consumers.
For credit products, the Truth in Lending Act (regulation Z of the Federal Reserve) dictates
that the true cost of credit must be communicated in written form to consumers. Regulation Z
also establishes the method to be used to determine the cost of credit and requires that
lenders communicate this information in the form of the annual percentage rate (APR).

Regulators may also monitor advertisements to ensure that banks do not exaggerate the
extent to which they claim to make credit available to customers as a means for generating
leads. In addition, commercial banks, which are ensured by the Federal Deposit Insurance
Corporation (FDIC), need to mention their coverage status with the FDIC in their ads and
other consumer communications.

Advertising of Insurance Company:

Each state’s department of insurance regulates insurance advertising. The objectives of
insurance advertising regulations are twofold. The first objective is to prevent the creation of
biases in consumer assessment of the probability of catastrophic events. This objective relates
to the established fact that consumers typically are unaware of the risks and probabilities for
events for which they purchase insurance products, as discussed in Chapter 2. For example,
insurance advertising that bolsters the fear of catastrophic events through dramatic imagery is
not allowed. Negative outcomes of disasters should also not be overstated in insurance
advertisements. The second objective of insurance advertising regulations is to prevent the
creation of inferences that suggest that an insurance company is unusually generous in its
payout behavior. As a result, insurance advertisers have to take great care not to exaggerate
either the severity of harmful events or their own willingness to payout customer claims. In

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addition, images of currency and checks should not be included in advertisements for
insurance products as they may make consumers infer unconsciously that the insurance
company has a high propensity to payout claims and is usually generous.

An additional objective in insurance advertising is to prevent misleading information from

being communicated to consumers. Formally, an ad can be considered misleading when it
causes individuals with average levels of intelligence to arrive at inferences that conflict with
reality. In order to establish if such inferences are a result of the advertisement, formal market
research utilizing third-party companies and random samples of consumers would be used.
Insurance advertising is further restricted by the terminology that may be used. Terms such as
“liberal” and “generous,” for example, cannot be used as they boost impressions of the
payout behavior of the insurance company. Similarly, references to words such as “financial
disaster” and “catastrophic” are not allowed because they may exaggerate the extent of the
harm consumers might face if they do not have insurance coverage. The fact that insurance
prices vary from one consumer to the next due to varying risk levels also limits the pricing
terminology that can be used in insurance advertising.
Therefore, terms such as “low,” “budget,” and “low-cost” cannot be used.

Advertising, Investment and Brokerage Services:

The advertising of investment and brokerage services is regulated by the SEC as well as the
NASD. These regulators require that advertisers ensure that consumers understand that past
returns of an investment may or may not be realized in the future. As a result, statements to
this effect need to be mentioned in consumer communications, including advertisements in
mass media and direct mail. Advertisements for mutual funds must also encourage potential
investors to seek the detailed technical information on the fund by requesting the fund’s
prospectus. The ads should facilitate such action by providing consumers the necessary contact
information.
Additional Securities and Exchange Commission rules should be consulted for the details of
information that must be included in mutual fund advertisements. Readers are encouraged to
further examine sources specializing in financial services advertising regulations for additional
details.

8. Briefly discuss the marketing mix in banking sector in Bangladesh

Recently, banks are in a period that they earn money in servicing beyond selling money. The
prestige is get as they offer their services to the masses. Like other services, banking services
are also intangible. Banking services are about the money in different types and attributes like
lending, depositing and transferring procedures. These intangible services are shaped in
contracts. The structure of banking services affects the success of institution in long term.

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Besides the basic attributes like speed, security and ease in banking services, the rights like
consultancy for services to be compounded are also preferred.

Price:
The price which is an important component of marketing mix is named differently in the base
of transaction exchange that it takes place. Banks have to estimate the prices of their services
offered. By performing this, they keep their relations with extant customers and take new
ones. The prices in banking have names like interest, commission and expenses. Price is the
sole element of marketing variables that create earnings, while others cause expenditure.
While marketing mix elements other than price affect sales volume, price affect both profit
and sales volume directly.
Banks should be very careful in determining their prices and price policies. Because mistakes in
pricing cause customers’ shift toward the rivals offering likewise services.
Traditionally, banks use three methods called “cost-plus”, “transaction volume base” and
“challenging leader” in pricing of their services.

Distribution:
The complexity of banking services is resulted from different kinds of them. The most
important feature of banking is the persuasion of customers benefiting from services.
Most banks’ services are complex in attribute and when this feature joins the intangibility
characteristics, offerings take also mental intangibility in addition to physical intangibility. On
the other hand, value of service and benefits taken from it mostly depend on knowledge,
capability and participation of customers besides features of offerings. This is resulted from the
fact that production and consumption have non separable characteristics in those services.
Most authors argue that those features of banking services make personal interaction between
customer and bank obligatory and the direct distribution is the sole alternative. Due to this
reason, like preceding applications in recent years, branch offices use traditional method in
distribution of banking services.

Promotion:
One of the most important elements of marketing mix of services is promotion which is
consist of personal selling, advertising, public relations, and selling promotional tools.

Personal Selling:
Due to the characteristics of banking services, personal selling is the way that most banks
prefer in expanding selling and use of them.
Personal selling occurs in two ways. First occurs in a way that customer and banker perform
interaction face to face at branch office. In this case, whole personnel, bank employees, chief
and office manager, takes part in selling. Second occurs in a way that customer representatives
go to customers’ place. Customer representatives are specialist in banks’ services to be offered
and they shape the relationship between bank and customer.

Advertising:
Banks have too many goals which they want to achieve. Those goals are for accomplishing
the objectives as follows in a way that banks develop advertising campaigns and use media.

1. Conceive customers to examine all kinds of services that banks offer

2. Increase use of services
3. Create well fit image about banks and services
4. Change customers’ attitudes
5. Introduce services of banks
6. Support personal selling
7. Emphasize well service

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Advertising media and channels that banks prefer are newspaper, magazine, radio, direct
posting and outdoor ads and TV commercials. In the selection of media, target market should
be determined and the media that reach this target easily and cheaply must be preferred.

Banks should care about following criteria for selection of media.

1. Which media the target market prefer

2. Characteristics of service
3. Content of message
4. Cost
5. Situation of rivals

Ads should be mostly educative, image making and provide the information as follows:

1. Activities of banks, results, programs, new services

2. Situation of market, government decisions, future developments
3. The opportunities offered for industry branches whose development meets national
benefits.

Public Relations:
Public relations in banking should provide;

1. Establishing most effective communication system

2. Creating sympathy about relationship between bank and customer
3. Giving broadest information about activities of bank.
It is observed that the banks in Turkey perform their own publications, magazine and
sponsoring activities.

Selling Promotional Tools:

Another element of the promotion mixes of banks is improvement of selling. Mostly used
selling improvement tools are layout at selling point, rewarding personnel, seminaries, special
gifts, premiums, contests.

9. Explain the New-Product Pricing Strategies

Pricing strategies usually change as the product passes through its life cycle. The introductory
stage is especially challenging. Companies bringing out a new product face the challenge of
setting prices for the first time. They can choose between two broad strategies:
1. Market-skimming pricing and
2. Market-penetration pricing.

Market-Skimming Pricing
Many companies that invent new products set high initial prices to “skim” revenues layer by
layer from the market. Apple frequently uses this strategy, called market-skimmingpricing (or
price skimming).

Example of market-skimmingpricing
When Apple first introduced the iPhone, its initial price was as much as $599 per phone. The
phones were purchased only by customers who really wanted the sleek new gadget and could
afford to pay a high price for it. Six months later,
Apple dropped the price to $399 for an 8GB model and $499 for the 16GB model to attract
new buyers. Within a year, it dropped prices again to $199 and $299, respectively, and you

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can now buy an 8GB model for $99. In this way, Apple skimmed the maximum amount of
revenue from the various segments of the market.

Conditions for Market skimming Pricing:

Market skimming makes sense only under certain conditions.

First, the product’s quality and image must support its higher price, and enough buyers must
want the product at that price.

Second, the costs of producing a smaller volume cannot be so high that they cancel the
advantage of charging more.

Finally, competitors should not be able to enter the market easily and undercut the high price.

Market-Penetration Pricing
Some companies use market-penetration pricing. Companies set a low initial price to
penetrate the market quickly and deeply—to attract a large number of buyers quickly and
win a large market share. The high sales volume results in falling costs, allowing companies to
cut their prices even further

Example of Market-Penetration Pricing

The giant Swedish retailer IKEA used penetration pricing to boost its success in the Chinese
market. When IKEA first opened stores in China in 2002, people crowded in but not to buy
home furnishings. Instead, they came to take advantage of the freebies— air conditioning,
clean toilets, and even decorating ideas. Chinese consumers are famously frugal.

When it came time to actually buy, they shopped instead at local stores just down the street
that offered knockoffs of IKEA’s designs at a fraction of the price.

So to lure the finicky Chinese customers, IKEA slashed its prices in China to the lowest in the
world, the opposite approach of many Western retailers there. By increasingly stocking its
Chinese stores with China-made products, the retailer pushed prices on some items as low as
70 percent below prices in IKEA’s outlets outside China. The penetration pricing strategy
worked. IKEA now captures a 43 percent market share of China’s fast-growing home wares
market alone, and the sales of its seven mammoth Chinese stores surged 25 percent last year.
The cavernous Beijing store draws nearly six million visitors annually. Weekend crowds are so
big that employees need to use megaphones to keep them in control.

Conditions for Market-Penetration Pricing:

Several conditions must be met for this low-price strategy to work.

First, the market must be highly price sensitive so that a low price produces more market
growth.

Second, production and distribution costs must decrease as sales volume increases.

Finally, the low price must help keep out the competition, and the penetration price must
maintain its low price position. Otherwise, the price advantage may be only temporary.

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10. Development in Marketing Scope at the Aspect of Service Marketing

Marketing scope develops day to day. These developments carry special significance for
service sector in which customer and service producer interact closely.

INTERNAL MARKETING
Especially in service sector like external relations, internal relations also have significance. It
requires finding and keeping successful personnel.
For personnel of the organization to be considered their own goals and service situation,
values of the organization are sold to them. The communication techniques carried out for
customers are also performed for the personnel in internal marketing and this two techniques
go together. For example, the ads that aim creating firm’s image should be prepared with
regarding to audience which is composed of firm’s personnel.

NETWORK MARKETING
This approach takes the organization as a sequence which involves producer and customer
that market services to each other in the organization. In this structure, the activities of
departments that compose organization would be more focused on market. This will also
affect the structure of organization.

RELATIONSHIP MARKETING
It was mentioned that close relationship was established between producer and customer in
service sector. In addition to this, life cycle of a customer relationship was also mentioned
under the product outline.

According to the researchers, maintaining the relationship for extant customer increases the
profit of firms. It should be emphasized that this fact has an importance for service sector.

Life cycle of a customer relationship is composed of three stages. At the first stage, firms try to
be well known and to acquire new customers. At the second stage, the connection between
customer and firm has been achieved. During the stage, firms intensified their activities on
acquired customers and both of them promises mutually. At the third stage, these promises
are accomplished and the service is consumed. During the stage, firms face “Reality Instants”
which could possibly achieve satisfaction of customer and continuous relationship.
This could be also true for second stage. So, these instants should be managed successfully.

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11.Importance of Bank Marketing

Awareness among Customers

Modern technology has made customers aware of the developments in the economic
environment, which includes the financial system. Financial needs of the customers have
grown multifold into various forms like quick cash accessibility, money transfer, asset security,
increased return on surplus funds, financial advice, deferred payments etc. With a wide network
of branches, even in a dissimilar banking scenario, customers expect the banks to offer a more
and better service to match their demands and this has compelled banks to take up marketing
in right earnest.

Quality as a Key Factor

With the opening up of the economy, fast change has been experienced in every activity, and banking
has been no exemption. Quality is the watch word in the competitive world, which is market
driven and banks have had to face up to this emerging scenario. In fact, it may not be out of
place to reiterate that quality will in future be the sole determinant of successful banking
ventures and marketing has to focus on this most crucial need of the hour.

Growing Competition
Increased completion is being faced by the banking industry from within the system with
other agencies both, local and foreign, offering value added services. Competition is no more
confined to resource mobilization but also to lending and other areas of banking activity. The
foreign commercial bank with their superior technology, speed in operations and imaginative
positioning of their services has also provided the necessary impetus to the Indian banks to
innovate and complete in the market place.

Technological Advances
Technological innovation has resulted in financial product development especially in the
international and investment banking areas. The western experience has demonstrated that
technology has not only made execution of work faster but has also resulted in greater
availability of manpower for customer Contact.

12. What’s are the Features of Bank Marketing

The main features of Bank Marketing are-

1. Banking product cannot be seen or touched like manufactured products (intangibility)

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2. In marketing banking products, the product and the seller are inseparable; they together
define the banking product (inseparability)

3. Banking products are products and delivered at the same time; they cannot be stored and
inspected before delivering’ (perishability)

4. Standardization of banking product is difficult (variability)

13. Different Products and Services of Banks

Mainly there are two types of product in Bank. These are

· Deposits – Banks accept the deposits of the public. In order to attract the savings of the
people, the bank provides every sort of facility and inspiration to them and collects the
scattered savings of the society. The bank opens an account of those people who deposit their
savings with the bank. These deposit accounts can mainly be of three types and people can
open any of these three types of accounts according to their wish. These accounts are current
account, saving bank account, fixed deposit account.

· Loans – The bank just don’t keep with themselves the deposited amount of the people,
rather they advance them in the form of loans to the businessman and entrepreneurs, just to
earn profits for their partners. The loanee keeps some gold, silver, fixed and variable assets in
the form of security with the bank. The bank can advance loan to their customers in three
ways: overdrafts, money at call, discounting bills of exchange.

14. Marketing Approach to Banking Services

There are some approaches to bank marketing. These are discussed below:
· Identifying the customer’s financial needs and wants.

· Develop appropriate banking products and services to meet customer’s needs.

· Determine the prices for the products/services developed.

· Advertise and promote the product to existing and potential customer of financial services.

· Set up suitable distribution channels and bank branches.

· Forecasting and research of future market needs.

From the above discussion of bank marketing, it can be understood that the existence of the
bank has little value without the existence of the customer. The key task of the bank is not
only to create and win more and more customers but also to retain them through effective
customer service. Customers are attracted through promises and are retained through
satisfaction of expectations, needs and wants. Marketing as related to banking is to define an
appropriate promise to a customer through a range of services (products) and also to ensure
effective delivery through satisfaction. The actual satisfaction delivered to a customer depends
upon how the customer is interacted with. It goes on to emphasize that every employee from
the topmost executive to the junior most employee of the bank is market.

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15. What’s the Challenges of bank marketing?

· Technology
Marketing by private sector banks and foreign banks is more effective than public sector banks
because these banks are IT oriented. Private sector banks and foreign banks are attracting
more customers by providing e-services. Thus, technology has become a challenge before the
public sector banks.

· Untrained Staff
Often it happens that when a prospective customer approaches the branch, the employees
seem to have very little knowledge about the scheme. This reflects an ugly picture of our
bank’s image. Banks are not losing one prospective customer but 10 more customers who
would be touch of this man. Attitude of the employees towards customers is also not very
well. Thus, it is a need of time to reorient the staff.

· Rural Marketing
This is a big challenge before the Indian banks to enhance rural marketing to increase their
customers. Banks should open their branches not only in the urban and semi-urban areas but
also in the rural areas.

· Trust of Customers
Marketing can be enhanced only by increasing the customers. Customers can be increased or
attracted only by winning the trust of the customers.

· Customer Awareness
Customer awareness is also a challenge before the banks. Bank can market their products and
services by giving the proper knowledge about the product to customer or by awarding the
customer about the products. Bank should literate the customers.

16. Strategies for the enhancement of bank marketing

In the fierce competitive market, needs of customer keep changing. Hence, our marketing
strategy must be dynamic and flexible to meet the changing scenario. Here are steps that form
successful and effective marketing strategy for bank products.

· Emphasis on Deposits
Emphasis, though in a discrete manner, should be given to mobilize more of term deposits as
they are more profitable for the bank in comparison to demand. Introduction of products
comparable to “Kisan Vikas Patra” of post office and product with the facility of tax rebate
under section 88 of Income Tax Act will of much help in this regard.

· Form a Saleable Product Scheme

Bank should form a scheme that meets the needs of customers.
A bunch of such schemes can also form a product. A bank product may include deposit
scheme, an account offering more flexibilities, technically sound banking, tele/mobile/net
banking, an innovative scheme targeted to special group of customers like children, females,
old aged persons, businessman etc. In short, a bank product may consist of anything that you
offer to customers.

· Effective Branding
Man is a bundle of sentiments and emotions. This can effectively be helpful in branding our
products. Considering the features of products and target group of customers, the product can

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be effectively branded so as to sound it catchy and appealing. Some proven examples are
Apna Ghar, Dhan Laxmi, Kuber, Flexi Deposit, Smart Kid, Sapney, Vidya etc.
The branding should be done in such a way that the brand name must attract the attention of
customers. It should be easy to remember. The target group and the silent feature of the
product should resemble brand name. This will help a lot in making the brand successful. All
employees and all our campaigns should refer the product by its brand name only so that to
strike the same in the customer’s mind.

· Products for Women

The national perspective plan for women states that 94 pc of women workers are engaged in
the unorganized sector and 83 pc of these in agriculture and allied activities like dairy, animal
husbandry, sericulture, handloom, handcrafts and forestry. Banks should do something to
improve their access to credit which they require.

· Customer Awareness
There is a need to educate the customers on bank products. Efforts should be made to widen
and deepen the process of information flow for the benefit and education of Indian
customers. Today, the customers do not have any idea as to how much time is required for
any type of banking service. The rural customers are not aware for what purpose the loans
are available and how they can be availed.
Customers do not know the complete rules, regulations and procedures of the bank and
bankers preserve them for themselves and do not take interest in educating the customers. It is
a need to educate the customers from the grassroots of banking. It is time that each bank
branch takes steps to educate the customers on all banking function, which will facilitate
growth of banking on healthy lines both qualitatively and quantitatively.

· Advertisement
Advertisement is an eminent part of marketing of bank products. Advertisement should be
such that appeals to people. It should not follow the orthodox pattern of narrating a product.
For effective advertisement, bank should understand people’s tastes and choices.

· Selling Products in Rural Areas

For enhancing the marketing of their product, bank should sell their products in rural areas.
For it, there is a need to open branches in the rural areas.

· Informing Customers About Products

The bank should embark upon aggressive marketing of its products, particularly at the time of
launching a new product, which will inform the perspective customers regarding product and
at the same time relieve staff at branch level from explaining the product to all customers.

· Customer Convenience
In a service industry like banking where product differential is hard to maintain and quality of
service depends upon the service provider, from whom it cannot be separated. So the bank
employees have to render services to the satisfaction of the customer, not as per their own
conveniences or whims.

· Re-orient Staff
Sincerity of efforts in implementation of the measures is lacking among the bank staff. It is a
fact that its employees are not able to rise up to the expectations of its customers. They lack
in their behavior, attitude and efficiency. The phenomenon is glaring at urban centers.
Therefore, it calls for an immediate attention which is missing link in the entire process of
marketing, and the bank should undertake all such steps to motivate and reorient its staff.

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· Sale of Products and Services through E-delivery Channels

After the Information Technology Act, many new e-delivery products have been introduced.
These e-delivery channels are very helpful in enhancing the marketing of various products and
services. Thus banks should sale the products and services through e-delivery channels.

· Sale of Products and Services through Web-sites

Internet is a network of network which connects the world. Thus, banks should sale their
products through web-site. This will enhance the marketing of the products not only at the
national but also at the international level.

Collected & Edited by বয্াংিকং িনউজ বাংলােদশ, Email: bankingnewsbd@gmail.com, www.bankingnewsbd.com