“Marketing Strategies of Banking Industry &

Recent Trends”

Bachelor of Commerce
Banking & Insurance
Semester V

(2014-2015)

Submitted by
Pawan V. Kukreja
Roll No.: 22

H.R. COLLEGE OF COMMERCE & ECONOMICS

123, D.W. Road, Churchgate, Mumbai – 400 020.
“Marketing Strategies of Banking Industry &
Recent Trends”

Bachelor of Commerce
Banking & Insurance
Semester V

In Partial Fulfillment of the requirements

For the Award of Degree of Bachelor of
Commerce – Banking & Insurance

Submitted by
Pawan V. Kukreja
Roll No.: 22

H.R. COLLEGE OF COMMERCE & ECONOMICS

123, D.W. Road, Churchgate, Mumbai – 400 020.
 H.R. COLLEGE OF COMMERCE & ECONOMICS
123, D.W. Road, Churchgate, Mumbai – 400 020.

CERTIFICATE

This is to certify that Shri Pawan Vashdev Kukreja of

B.Com.-Banking & Insurance Semester V (2014 - 2015) has
successfully completed the project on Marketing Strategies
of Banking Industry And Recent Trends under the guidance
of Tasneem Razmi.

Project Guide Principal

Internal Examiner External Examiner

 DECLARATION

I Pawan Vashdev Kukreja the student of B.Com.-

Banking & Insurance Semester V (2014 - 2015) hereby
declare that I have completed the Project on Marketing
Strategies of Banking Industry And Recent Trends.

The information submitted is true and original to the best of

my knowledge.

Pawan V. Kukreja
Roll No.: 22
 Acknowledgement

A lot of efforts have been put in this project. However, it would not
have been possible without the kind support and help of many individuals. I
would like to extend my sincere thanks to all of them.

I am highly indebted to H. R. College of Commerce & Economics for

their guidance and constant supervision as well as for providing necessary
information regarding my project topic and also for their support in completing
the project.

I would like to express my gratitude towards my parents and for their

kind co-operation and encouragement which help in completion of this project.
I would like to take this opportunity to express my profound gratitude and deep
regards to my guide Professor Ms. Tasneem Razmi for her exemplary
guidance, monitoring and constant encouragement throughout the course of
this project.

My sincere thanks to all individual and my friends who helped me in

times of difficulty and confusion.
 INDEX

SR. DESCRIPTION Pg no.

NO.
1. Executive Summary 1
2. Objectives, Research Methodology 2
3. Review of Literature 4
4. Marketing Strategies of The Banking Industry 5
5. From Passbook to Mobile: The Evolution Of 7
The Bank Account
6. Marketing Concepts – Its application to 9
Banking
7. Marketing Mix – 7 P’s 11
8. Factors influencing the Consumer Behavior 22
9. Increasing Importance of Marketing in Banking 24
Industry
10. Strategies for effective bank marketing in India 27
11. Technology - Future Perspective of Bank 31
Marketing
12. Marketing Mix of Banks – ICICI, SBI & CITI 35
Bank & SWOT ANALYSIS.
13. Recommendations 52
14. Analysis of Data 54
15. Conclusion 59
16. Annexure 61
17. Bibliography 62
 Executive Summary

Only those banks will survive in the future which will adopt effective and
realistic strategy to win the trust of the customer.

The banking industry is an integral part of any society. The competitive

environment is continuously changing and is also under increasing pressure
due to the effect of the economic recession, customer spending and
confidence. The dynamic nature of banking industry makes environmental
monitoring and analysis essential. Delighting the customer is the buzzword for
the service industry today. To fulfill this, the banks should have an excellent
marketing mix. The marketing mix for services is different than the mix for
product.
Marketing helps in achieving the organizational objectives of the bank.
Indian banks have duel organizational objective – commercial objective to
make profit and social objective which is a developmental role, particularly in
the rural area. All the techniques and strategies of marketing are used so that
ultimately they induce the people to do business with a particular bank.
For understanding marketing mix in detail three famous banks were
considered for study: ICICI, SBI, CITI Bank.
All these three banks are undergoing drastic changes as far as marketing mix
goes. The information about the marketing mix of these banks was collected
from various primary and secondary sources.
Once the marketing mix structure of these banks was ascertained it was
necessary to understand the customer’s response to this mix of various
banks. A study of this was conducted by means of getting the questionnaire
filled by 50 customers of these banks. By means of the responses the gap
between banks offering under marketing mix desired by customers becomes
clear. This gap level shows the areas of problems on the basis of which
proper recommendation could be prepared.
Since the nature of the product can be easily altered in case of service a
dynamic approach should be taken towards other attributes of marketing mix.
Therefore to combat the challenges of increasing competition in banking
industry environment, a detailed and thorough knowledge about marketing
strategies is a must.

1
 Objectives

 An in-depth study of marketing mix of banking services.

 To study and analyze the marketing developments regarding products
and services in various bank groups.
 To suggest some strategies for the enhancement of bank marketing.
 To verify the customer satisfaction towards the services given by banks.
 To make recommendations on the basis of the findings of the study.

Research Methodology

Marketing has suddenly become a buzzword in the banking sector. Customer

has suddenly moved to the centre-stage and he has now a choice. How do
banks then attract a customer to use their product and services? One has to
reckon the fact that the old loyalty can no longer be taken for granted. Banks
have to make efforts to retain the existing customers and also use strategies
to attract new customers to their fold.

Method: To understand the customer’s response to the 7 different features of

marketing mix a questionnaire was prepared.
ORGANISATION SITE: For the purpose of finding the customers response
towards marketing mix structure of different banks questionnaire was made to
be filled by customers from Dadar Branch, Mumbai of these banks.

SAMPLE:

SAMPLING UNIT:

Comprised of all the customers who were

-Based in Mumbai.

-Customers from Dadar Branch of these banks.

SELECTION OF SAMPLE:

Selection of the sample was done at random.

SAMPLE SIZE:

A sample size of 50 customers was taken.

2
INSTRUMENTS USED:

To understand consumers’ behavior towards the banks efforts for their

marketing mix structure the questionnaire method of data collection was used.
The questionnaire interviews were conducted in person, through e-mail and
on telephone.

The type of questionnaire used was structured, non-disguised. These types of

questionnaires are considered to be most effective since they produce more
reliable result. Also the data obtained through these are easier for tabulation
and interpretation then the data collected by other methods. Also, this type of
questionnaire is considered to be more convenient for the interviewee to
answer.

PROCEDURE FOLLOWED:

For the preparation of the report, firstly, the details of marketing mix for ICICI
bank, SBI and Citibank were collected. The sources were both primary and
secondary. The secondary sources were collected through articles in print,
books, brochures, websites and journals. The primary source was through
personal contact at the three banks. A small questionnaire asking about the
details of the marketing mix was put forward to an employee in each bank who
had sufficient information regarding it. On the basis of this the marketing mix
of the three banks were studied.

To understand the consumer’s response to the available marketing mix of

banks, a questionnaire was got filled by a total of 50 customers of these
banks. On the basis of these responses the customer’s attitude was
understood and analyzed.

3
 Review of Literature

 Dwivedi, R. (2009) explained that finance functions are important but

not as important as the marketing functions. Friction between the
marketing and finance functions would be detrimental to the smooth
development and functioning of any business organization. Finance
objectives like value maximization to shareholders are integral parts of
any new strategy adopted by the organization. But this objective seems
to have been lost amidst the flurry of marketing activities focusing on
market share. Conscious efforts must be taken to avoid the missing core
objective and for sales growth.
 Dixit, V.C. (2007) concludes that for successful marketing and to make
it more effective, identify the customer needs by way of designing new
products to suit the customers. The staff should be well equipped with
adequate knowledge to fulfill the customer’s needs. We should adopt
long-term strategies to convert the entire organization into a customer-
oriented one.
 Jain, A. (2010) described that marketer has to know that each and
every country is having various marketing environment. Comparatively,
it has to be very clear that the international marketer is bound to hold on
the reorganization that every marketing environment differs from place
to place as well as nation to nation than that of the same country state. It
is also evident from the study that the global business transactions have
to be sound planned and objectives oriented in nature.
 Patnaik, U.C. and Chhatoi, B. (2012) assess the marketing efforts of
the Staten Bank of India, which enjoy the status of premier bank in India.
He also concludes that banks have a wide network of branches for
delivery of products. It has taken up some measures to improve the
quality of its employees and customer service at branches. But, its
pricing are wilting under competition without any regard to costs and it is
yet to give due emphasis to its promotional measures.
 Sreedhar (2011) have dealt with marketing in commercial banks. They
have emphasized motivation research, marketing research and
promotional aspects in marketing of services and suggested to improve
the marketing strategies to cope with the changing environment.

4
 Marketing Strategies of The Banking Industry

Banking Industry is one of the most important service industries which touches
the lives of millions of people. Its service is unique both in social and
economic points of view of a nation. Earlier the attitude of banking service was
that it was not professional to sell one's services and was unnecessary in the
sense that traditional relationships and quality of products were sufficient to
carry forward the tasks. Before the mid 1950's the banks had no
understanding or regard for marketing. It was in the late 1950's that marketing
in banking industry emerged in the west. It emergence was in the form of
advertising and promotion concept. At that time, personal setting could not get
a significant place. Gradually there was a change in the attitude of bankers,
probably in time with the attitudinal change in customers. The idea of
customers' satisfaction began in the late 1950's, flourished in 1960's and
became an integral part of the banking services in the 1970's. They began to
realise that marketing was a lot more than smiling and friendly tellers. The
idea of customer convenience began in the late fifties and it flourished in the
1960's. Bankers were beginning to understand the concept of market
segmentation in the late 1960's. The bank marketing profession changed
dramatically in the 1970's. Marketing positions in banks were created and
marketing was accepted as an organizational imperative. [ CITATION Sax88 \l 1033
]

To understand how banking services can be marketed better, one must

examine banking as a service industry, in the content of a swiftly changing
environment, redefine marketing to suit a banker's needs, analysis how the
marketing of financial services differs from that of other products, identify the
tasks involved there in and set forth a series of steps for effective bank
marketing.[ CITATION Kur10 \l 1033 ].

Human being is a social being. Throughout the life, all we do is try our best to
fulfill our needs. The place where things are exchanged or say mutual needs
are satisfied, is called the market and the efforts to make people aware of your
offerings encouraging them to deal with you and let them believe that in doing
so, they are satisfying their needs at its best is called marketing. After the
banking sector reforms, marketing has developed as a more integrated
function within financial service organizations like banks largely as a result of
rapid changes in the operating environment. [ CITATION Sas04 \l 1033 ]

5
Banks Marketing is defined as a aggregate of function directed at providing
service to satisfy customer’s financial needs and wants, more effectively than
the competition keeping in view the organizational objective of the bank. The
bank marketing has become a very complex yet interesting subject as it
requires the knowledge of economics, sociology, psychology, banking and
also core marketing concept. In marketing, it is the customer who has the
upper hand. The mantra of effective marketing bank products lies in the
systematic and professional approach towards satisfying customers needs (O.
Thus, banks have to set up “Research and Market Intelligence” wings so as to
remain innovative to ensure customer satisfaction and to keep abreast of
market development.[ CITATION Kotai \l 1033 ]

The Role of marketing in the banking industry continues to change. For many
years the primary focus of bank marketing was public relations. Then the
focus shifted to advertising and sales promotion. That was followed by focus
on the development of a sales culture. Today banking sector all elements of
the marketing concept – customer satisfaction, profit integrated framework
and social responsibility are all equally important.
When applying marketing to the banking industry, the bank marketing
strategy can be said to include the following:-
 A very clear definition of target customers.
 The development of a marketing mix to satisfy customers at a profit for
the bank.
 Planning for each of the source ‘markets & each of the use ‘markets.

Banks need innovative marketing decisions and strategies both at the apex
level related to its product, promotion, pricing, place process, physical
evidence and people. The financial services sector in India has registered
phenomenal growth in the past ten years and technology has played a key
role in this. Whether it is increasing the reach of banking services through
ATMs and Internet banking, or facilitating online purchase of stocks, bonds,
mutual funds and insurance, technology has proved a boon to the sector.
According to an approach paper of the Indian Banks Association, the need to
provide personalized, speedy, and cost effective services is pushing banks to
reorient the business model of banking and enabling technology. The banking
sector is growing by leaps and bounds. Customers can use mobile phone to
transfer funds, pay utility bills, recharge cell phone, even mobile tickets. For
many of customers, it is long time before need to visit a bank branch, even
though the usage of the banking services has increased. Mobile and internet
banking have made life easier for millions.
6
From Passbook to Mobile: The Evolution Of The Bank Account

In the past, it might take years for new technologies like the first PCs, Mobile
Phones (Feature Phones) or even Internet adoption to become mass market
and to have an impact on the way we do business. Today, new technologies
such as the iPad and new interaction platforms like Facebook and Instagram
are being adopted by consumers en masse in a period measuring just
months. This adoption of mobile will fundamentally change how retail banking
and payments work in our economy going forward.

For 60% of the world’s population that today does not have a bank account,
their mobile phone will likely be their very first banking experience. In markets
like Kenya and the Philippines, the majority of the population has had their first
electronic payments experience via their phone, and their first deposit account
was simply a balance carried on their phone.

The fastest growing use cases for mobile in emerging markets like these have
been payments and remittances. In markets like Kenya, this has changed the
day-to-day flow of cash in the economy. The same will soon be true for India,
China, Indonesia and other such emerging markets.

By 2020, the world’s bank account will be indistinguishable from the

functionality you find on your mobile phone. Your mobile device will allow you
access to your money (in the form of an available balance), send and receive
money, pay at a store, pay online and to exist fluidly in the world of commerce.

In the past, we have tended to characterize our bank account by its physical
form factor. Initially, a passbook was our ‘bank account’. Then in the 80s, the
checking account was the primary form of banking relationship. Today, our
debit card (attached to an online account number) is how most of us do our
day-to-day banking. Very soon, however, banking will be dominated by the
mobile phone.

2013 will be a big year for mobile payments. Many of the mobile wallet
projects currently in development will hit the market. The first mobile-only
banks, such as Movenbank, will go live with products and interactions
designed for an enhanced customer experience around the mobile device.

7
ISYS will launch, and other players like Google Wallet, PayPal and Square will
duke it out for merchant dominance in mobile payments space.

NFC deployment will start to be highly visible, and more banks will announce
PayPass and v.Me (Visa) deployments to capitalize on this emerging mobile
trend. When we look back on 2013, we’ll recognize it as the year the biggest
players realized that mobile was the game changer it was projected to be.

By 2015-16, mobile banking use will dominate day-to-day banking interactions

in most developed economies, being the preferred channel for the majority of
customers. This is unlikely to have a significant impact on Internet banking
utilization, however, since tablet computing will still be widely used for
managing day-to-day portfolios, bill payments and transfers. In fact, comfort
levels with digital interactions will rise such that consumers will manage most
of their banking relationships entirely through digital devices, with more than
60% of retail banking revenue coming through non-human channels.

This mobilization of banking will put extraordinary pressure on branch

systems. Initially, many banks will move to reduce their branch network by up
to 20-30%, retooling and retasking remaining branches to focus purely on
sales and service as transactional activity moves digitally. Branches that
remain will either be brand flagship and showcase stores, or smaller footprint
stores designed to support sales and service metrics without the large network
expense.

Financial analysts watching bank stocks will start to discount retail banking
brands who aren’t aggressively dealing with excess capacity in the branch
network. For the first time, we’ll see stock markets penalize banks for having
branches.

Mobile has been consistently underestimated in terms of its impact on retail

banking since the emergence of the “app” phone. The lack of enthusiasm and
adaptation by major banking players, and the over reliance on traditional
physical distribution, is opening up many doors for new non-bank players to
own emerging banking and payments experiences on the mobile device.
With the certainty that mobile will dominate the future of banking, it’s clear that
banking won’t look much like it looks today in a decade’s time. It’s also clear
that bankers like the one I mentioned at the start of the post, may very well be
casualties of this disruptive change.[ CITATION Bre13 \l 1033 ]

8
 Marketing Concepts – Its application to Banking

Its application to Banking, when we apply marketing to the banking industry,

the bank marketing strategy can be said to include the following –
i) A very clear definition of target customers.
ii) The development of a marketing mix to satisfy customers at a profit
for the bank.
iii) Planning for each of the ‘source’ markets & each of the ‘use’ markets
(A Bank needs to be doubly market – oriented – it has to attract funds
as well as were of funds & services.
iv) Organization & Administration.
“Bank marketing is the aggregate of functions, directed at providing services
to satisfy customers’ financial (and other related) needs and wants, more
effectively and efficiently that the competitors keeping in view the
organizational objectives of the bank”.
Bank marketing activity, this aggregate of functions is the sum total of all
individual activities consisting of an integrated effort to discover, create,
arouse and satisfy customer needs. This means, without exception, that each
individual working in the bank is a marketing person who contributes to the
total satisfaction to customers and the bank should ultimately develop
customer orientation among all the personnel of the bank. Different banks
offer different benefits by offering various schemes which can take care of the
wants of the customers.
Marketing helps in achieving the organizational objectives of the bank. Indian
banks have duel organizational objective – commercial objective to make
profit and social objective which is a developmental role, particularly in the
rural area.
Marketing concept is essentially about the following few thing which contribute
towards banks’ success:
1) The bank cannot exist without the customers.
2) The purpose of the bank is to create, win, and keep a customer.
3) The customer is and should be the central focus of everything the banks
does.
4) It is also a way of organizing the bank. The starting point for
organizational design should be the customer and the bank should
ensure that the services are performed and delivered in the most
effective way. Service facilities also should be designed for customers’
convenience.
5) Ultimate aim of a bank is to deliver total satisfaction to the customer.

9
 6) Customer satisfaction is affected by the performance of all the personal
of the bank.
All the techniques and strategies of marketing are used so that ultimately they
induce the people to do business with a particular bank. Marketing is an
organizational philosophy. This philosophy demands the satisfaction of
customers needs as the pre-requisite for the existence and survival of the
bank. The first and most important step in applying the marketing concept is to
have a whole hearted commitment to customer orientation by all the
employees. Marketing is an attitude of mind. This means that the central focus
of all the activities of a bank is customer. Marketing is not a separate function
for banks. The marketing function in Indian Bank is required to be integrated
with operation.

Marketing is much more than just advertising and promotion; it is a basic part
of total business operation. What is required for the bank is the market
orientation and customer consciousness among all the personal of the bank.
For developing marketing philosophy and marketing culture, a bank may
require a marketing coordinator or integrator at the head office reporting
directly to the Chief Executive for effective coordination of different functions,
such as marketed research, training, public relations, advertising, and
business development, to ensure customer satisfaction.

Thus, it is important to recognize the fundamentally different functions that

bank marketing has to perform. Since the banks have to attract deposits and
attract users of funds and other services, marketing problems are more
complex in banks than in other commercial concerns. [ CITATION Raj \l 1033 ]

10
 Marketing Mix – 7 P’s

The marketing mix refers to the blend of ideas, concepts and features which
marketing management put together to best appeal to their target market
segments. The second element in formulation of marketing strategy is
development of proper marketing mix, so as to satisfy the needs of the target
group of customers. This would involve decisions regarding product, place,
price, promotion, process, physical evidence, and people. [ CITATION Jai07 \l 1033
]

The formulation of marketing mix for the banking services is the prime
responsibility of the bank professional who based on their expertise and
excellence attempt to market the services and schemes profitably. The
banking organizations, of late, face a number of challenges and the
organizations assigning an overriding priority to the formulation processes get
a success. The formulation of marketing mix is just like the combination of
ingredients, spices in the cooking process.

11
 1. THE PRODUCT MIX:

First among the P’s of bank marketing is product mix. Product stands for both
goods and service combination offered to the public to satisfy their needs. In
the highly regulated banking industry all offered the same type of products.
Actually the bank takes little time and no additional investment to develop a
financial product or service. But the drawback is that no brand can be
marketed with unique selling proposition for long because it can be copied
immediately. Thus it is better to focus on some selected ideas relating to
products, which have immediate operational utility as well as feasibility on
banks. The banks primarily deal in services and therefore, the formulation of
product mix is required to be in the face of changing business environmental
conditions. Of course the public sector commercial banks have launched a
number of polices and programmers for the development of backward regions
and welfare of the weaker sections of the society but at the same it is also
right to mention that their development-oriented welfare programmes are not
optimal to the national socio-economic requirements.

The changing psychology, the increasing expectations, the rising income, the
changing lifestyles, the increasing domination of foreign banks and the
changing needs and requirements of customers at large make it essential that
they innovate their service mix and make them of world class. Against this
background, we find it significant that the banking organizations minify,
magnify combine and modify their service mix. It is essential that ever product
is measured up to the accepted technical standards.

The concept of product packages is by considering customers' behavior.

Generally, a customer comes to the bank simply for a product but basically for
solving the problems and to satisfy the needs. Customer needs are varied,
complex and multidimensional needs. A Value Augmentation bank should
offer multidimensional product otherwise called product package. In the place
of offering one or two or a large number of products to the customers, it is by
understanding all bank related needs of a customer and then evolves a
comprehensive product package which can take care of his entire spectrum of
needs. Hence once the bank gives a tailor-made product it will definitely
cultivate a psychological ownership on the customer's mind.
Eg:- Insurance product, Personal Banking, Cards, Home Loans, Car loans,
Two wheeler loans, Commercial vehicle loans, Personal Loans, CD Loans,
Loans against shares, Demat Services Bonds/Fixed Deposits, NRI Services.
12
 2. PRICING:

Price in the case of service, different terms are used for different services like
fees for legal service, fare for transport service, commission agency services,
premium for insurance service, interest for the use of money. The price in
financial services terms relates to the cost involved to the customer in say,
bank charges or credit card rates. These prices seem to evoke low levels of
customer sensitivity as many customers enjoy ‘free’ banking, by maintaining
their current accounts in credit, for example, or paying their credit card
balances off each month. The introduction of new charges, however, such as
the annual credit card fee had a noticeable effect initially, however, and
sparked off competitive reaction from lenders prepared to offer cards with no
annual charge.

Price also relates to the value of the products to the customer and, as such,
can be highly sensitive. This can be in terms of interest rates charged on a
mortgage, where reductions in interest for first time buyers or preferential
rates for existing customers of other services (for example current account
holders) are standard promotional tools in the industry, representing a form of
discounting. The rates of return offered to investors are another element of the
price and different products within the range are frequently priced at
differential rates, to attract long-term savers or large sum investors, for
example. Pricing can therefore be used to differentiate the offering and is
likely to be used by customers in selecting service.

Even though complete deregulation of the price regime is still to materialise,

price is fast becoming a strategic tool for bankers for their marketing. The
banks have to take the value satisfaction variable into consideration while
designing the pricing strategies. McIver and Naylor opine that a marketing
manager has to regard price as a variable to be traded off against product
quality and promotion rather that as an absolute where the lowest price is not
desirable. [ CITATION Kotai \l 1033 ]

13
 3. PLACE:

The most important element in distribution strategy relate to this issue of

location of the banks to render their service. Distribution means delivery of the
products or service at the right time and at the right place. The place where
the banking products or service are delivered is an important element in bank
marketing. The place strategy of Indian banks has been on the basis of too
many parameters. Prior sanctions from RBI and responsibility of banks
towards development of banking habit in remote unbanked areas have been
some of the important given parameters. So from the marketing stand point,
place strategy is not fully positive to Indian banks.

Place or location has always been regarded as critical in retail financial

services where high street positions are maintained by most of the large
institutions. For transaction services where regular and frequent branch
contact is required this can be important. First Direct, however, the telephone
banking service, has proved that a bank without branches is possible though
its customers still need access to convenient ATM outlets. Some consumers
prefer personal, face-to-face contact within a branch and may be more likely
to use a local branch or building society. Direct Line and other telephone
insurance services are also moving away from the traditional large networks of
branches and brokers or agents. Changes in distribution systems, technology
and consumer demands are all key influences on the evolution of the ‘place’
component of the marketing mix. Distribution management is concerned with
two things: availability and accessibility.

The selection of a suitable place for the establishment of a branch is

significant with the viewpoint of making the place accessible and in addition,
the safety and security provisions are also found important. The banking
organizations are not free to open a branch since the Reserve Bank of India
regulates the subject of branch expansion but so far as the management of
branch is concerned, the branch managers have option to select a place
which is convenient to both the parties, such as the users and the bankers.

Thus, the place mix is found to be an important decision making area which
requires due attention, both at macro and micro levels. If the banking
organizations sell the promises it is essential that the end users get the same
without any distortion.[ CITATION Sax88 \l 1033 ]

14
 4. THE PROMOTIONAL MIX:

The promotion is to inform and remind individuals and persuade them to

accept, recommend or use of a product service or ideas. Promotion is a
demand stimulating aid through communication. Any marketing promotion
campaign has two objectives. 'They are to inform the prospective customer
and then to persuade him. Due to the inherent intangible nature of senices,
the customer of banking service relies more on subjective impression rather
than concrete evidence. When a bank comes out with a new product, it makes
its target customer segment aware of it only through marketing promotion.

In the formulation of marketing mix the bank professionals are also supposed
to blend the promotion mix in which different components of promotion such
as advertising, publicity, sales promotion, word-of-mouth promotion, personal
selling and telemarketing are given due weight-age. The different components
of promotion help bank professionals in promotion the banking business.

The aims of the promotional fall into three main categories: to inform, to
remind, and to persuade. It will always be necessary to inform prospective
consumers about new products and services, but other issues may also need
this type of communication to consumers; new uses, price changes,
information to build consumer confidence and to reduce fears full descriptions
of service offerings, image building are examples. Promotion designed to
persuade consumers would be in line with specific objectives, for example to
encourage switching or to build preference.

Decision about promotion answers questions about communication with the

customer. After getting information on needs and location of the prospective
customer and after designing schemes to suit their needs, it is necessary to
take decisions on making schemes known to the prospective customers
through proper communication media and through proper words, so as to
bring out the salient features of the scheme. Actual delivery of the schemes at
the counters and at the manager's desk also plays a vital role in determining
the success of the scheme. Expectations of the customers in post-reforms
period have been changing very fast and customers have started shifting
loyalty to better banks. It is, therefore, all the more necessary to ensure that
not only the felt needs but also the latent needs of the customers are foreseen
and satisfied.

15
The different components of promotion help bank professionals in promotion
the banking business.
 Advertising: Like other organizations, the banking organizations also us
this component of the promotion mix with the motto of informing, sensing
and persuading the customers. While advertising, it is essential that we
know about the key decision making areas so that its instrumentality
helps bank organization both at micro and macro levels.

 Public Relations: Almost all the organization need to develop and

strengthen the public relations activities to promote their business. We
find this component of the promotion mix effective even in the banking
organizations. We can’t deny that in the banking services, the
effectiveness of public relations is found of high magnitude. It is in this
context that we find a bit difference in the designing of the mix of
promoting the banking services.

 Personal Selling: The personal selling is found instrumental in

promoting the banking business. It is just a process of communication in
which an individual exercise his/her personal potentials, tact, skill and
ability to influence the impulse buying of the customers. Since we get in
immediate feedback, the personal selling activities energies the process
of communication very effectively.

 Sales Promotion: It is natural that like other organizations, the banking

organizations also think in favour of promotional incentives both to the
bankers as well as the customers. The banking organizations make
provisions for incentives to the bankers and call this bakers’ promotion.
Like this, the incentives offered to the customers are known as
customers’ promotion.

 Word-of-Mouth Promotion: Much communication about the banking

services actually take place by word-of-mouth information which is also
known as word-of-mouth promotion. In the banking industry, we find use
of different components of promotion and in the context it is essential
that we also talk about word-of-mouth communication which makes the
process of influencing the prospects effective by sensitizing the word-of-
mouth recommendations. The persons engaged in communication, the
hidden sales force that plays an incremental role in increasing the
demand. An important question regarding the word-of-mouth

16
 communication is related to its intensity of sensitizing the persuasion
process.
In this component of the promotion mix, we find two important considerations,
first the bank professionals are required to make it sure that the promised
services reach to the ultimate users and second, the word-of-mouth promoters
are offered small but new incentives which have not been offered by their
competitors. The list of word-of-mouth promoters is to be based on a survey
result or on the personal experiences of a branch manager. A revision in the
list is made possible as and when circumstances necessitate so. The
innovative peripheral services offered by the banks are well publicized and the
word-of-mouth promoters focus on the same intelligently.

There are a number of devices to advertise, such as broadcast media,

telecast media and the print media. In the face of budgetary provisions, we
need to select a suitable vehicle. The latest developments in the print
technology have made print media effective. The messages, appeals can be
presented in a very effective way. The advertising professionals bear the
responsibility of making the appeals, slogans, messages more creative. The
banking organizations should seek the cooperation of leading advertising
professionals for that very purpose.

The bank must try to understand the real needs and aspirations of the society
and provide such product or services which will satisfy their assets. Marketing
strategy should be designed to suit not only the present market but also the
potential future market.[ CITATION Raj \l 1033 ]

17
 5. PROCESS:
The process is crucial to the bank marketing strategy. It gives value to the
buyer and an element of uniqueness to the product. It is very significant
because it provides competitive advantage to the bank. The importance of
process in bank marketing strategy is based on 'value chain concept' given by
Michael Porter. The concept basically stresses close attention to all the
organizational activities which go into marketing the final product to the
customer. It is also useful in focusing attention on those orgarlisational
activities or processes which give uniqueness to the product. And the element
of uniqueness in the product is a basic condit~onfo r acquiring competitive
advantage.

Reasons for enhancing process in banks are some of the following changes:
Rising competition among banks and from outside the traditional banking
sector is driving them to improve their customer service level to retain and
increase the customer base and hence the need to provide better service.
Globalization and liberalization have added to the competition forcing banks to
further reduce cost and increase efficiency.

More mergers and consolidation of banks put pressure on them to improve

productivity and reduce costs. Banks have to follow a customer centric
approach to prevent rapid shifts in customer’s choice. Banks face constant
pressure to adapt to changes brought about by dynamic environment. This
dynamic environment places extreme demands on information systems to
provide better customer service, at lowest possible costs and in the shortest
possible time “The change in the banking environment has happened not only
due to competition but also regulation.” according to Bart Hellemans, deputy
manager Vysya Bank. “Hence they are focusing on not just volumes but also
on the bottom lines. When you want volumes with profits, you have to bring in
sales culture.”

A customer who applies for a loan at a bank evaluates the purchase not only
by the amount of the loan received and the interest rate paid. The speed and
sensitivity of the approval process, the interaction with the bank officers, the
accuracy of bank statements and the ease of getting redress if mistakes are
found all affect the person's attitudes about doing further business with the
bank and his or her willingness to recommend it to others.

That explains why our banks keep inquiring whether we need a personal or a
home loan when we go to put some money in the fixed deposit. The mantras
18
now is sales, and there is a tremendous pressure on bankers to turn sellers
rather than just being bankers.[ CITATION Sas04 \l 1033 ]
6. PEOPLE:

People are crucial to the success of any business. Customer care is at the
forefront of both quality and differentiation in the financial services industry.
Staff needs to be highly trained not only in customer care but also in how to
respond to the rapidly changing market environment. Personnel can be used
to develop competitive advantage in the marketplace and to build and
maintain relationships with customers.
Customers are no less a part of a firm's human resource than its employees. If
the service organization's customers are sufficiently talented, they can do all
sort of things for that organization from co-designing the services to co-
designing the human resources management practices. Having the "best
customers" can be a source of competitive advantage.

The customer tier, then, deals with the three important characteristics: their
expectations, their needs and their competencies. Once these are understood,
the people who deal with customers, those who manage the service counter,
come in to play. We have called the people who interface with customers,
members of the boundary tiers. Customers are no less a part of a firm's
human resource than its employees. If the service organization's customers
are sufficiently talented, they can do all sort of things for that organization from
co-designing the services to co-designing the human resources management
practices. Having the "best customers" can be a source of competitive
advantage.
Sophisticated technologies, no doubt, inject life and strength to our efficiency
but the instrumentality of sophisticated technologies start turning sour if the
human resources are not managed in a right fashion. Generation of efficiency
is substantially influenced by the quality of human resources. It is against this
background that a majority of the management experts make a strong
advocacy in favour of developing quality people and late, the people
management has been include dint he marketing mix of organizations is
general and the service generating organizations in particular.

We emphasize that attention to the constituents of the boundary tier and their
individual abilities, attitudes and motivations is only one of many rules for
winning the service game. The service organization should try to avoid what
we have called the "human resources trap", which is the mistake many
companies make of putting all the burden for service quality on how people at
the moment of the truth treat customers.

19
Here, we would also like to stress the importance of the non-personal service
characteristics (like the physical facility, billing accuracy and timeliness) and
the support that must be given to the front-line employees to enable them to
contribute most effectively to winning the service game. As with the figure
skater who is provided with just the right music and wardrobe, performance by
service workers can be only as perfect as the supporting elements permit.
This helps them in improving the efficiency of even the inefficient people. The
development of human resources makes the ways for the formation of human
capital. Incentives, of course, inject efficiency and the organizations offering
more incentives succeed in motivating the people.

 Having better and cost-effective control over operations.

 Enriching the job content of employees at all level (by reducing the
drudgery of mundane operations and increasing the analytical content of
their work).
 Improving the quality of decision-making, a must in the fast changing
environment.

Each employee in a bank irrespective of his position in the bank hierarchy is

both a recipient and provider of service. Unless each employee extends
support to his colleagues and also receives support from them, workflow will
get obstructed and the victim will be the customer. In other words to satisfy a
customer, people who participate this must be right and apt ones.

On the other hand, the right mix of customers can greatly increase the
enjoyment of experience - for example, at entertainment services, such as
nightclubs or sporting events. Determining the desirable customer mix for a
service, segmenting the market into compatible groups and managing
customer arrivals to avoid conflict and enhance the service experience are
essential components of service management. [ CITATION Kur10 \l 1033 ]

20
 7. PHYSICAL EVIDENCE:

The environment in banks is changing, moving away from austerity and

formality to a more friendly approach reflected in more attractive branch
layouts and decor. Other physical evidence plays an important part in financial
transactions such as the documentation which must be presented by the
salespeople to prove that they are authorized to offer investment advice. This
creates confidence and helps to build the relationship between the customer
and provider. Physical evidence is also widely used to tangibilise the service.
Attractive brochures and policy documents, presented in glossy folders,
cheque book and credit card holders, ‘gold’ credit cards, children’s
‘collectable’ money boxes are all examples of physical evidence being used in
this way.

Physical evidence is the material part of a service. Strictly speaking there are
no physical attributes to a service, so a consumer tends to rely on material
cues. There are many examples of physical evidence: 1.Paperwork
2.Brochures 3.Furnishings 4. Business cards 5.The building itself.
The physical evidences also include signage, reports, punch lines, other
tangibles, employee’s dress code etc.
Signage: each and every bank has its logo by which a person can identify the
company. Thus such signage is significant for creating visualization and
corporate identity.
Financial reports:
The Company’s financial reports are issued to the customers to emphasis or
credibility.
Tangibles: bank gives pens, writing pads to the internal customers. Even the
passbooks, cheque books, etc reduce the inherent intangibility of services.
Punch lines: punch lines or the corporate statement depict the philosophy
and attitude of the bank. Banks have influential punch lines to attract the
customers.
Employee’s dress code: For example ICICI bank follows a dress code for
their internal customers. This helps the customers to feel the ease and
comfort.

Earlier customers used to see a bank as a strong institution and therefore the
image portrayed was one of solidarity, strength and seriousness as seen in
strong buildings, high ceilings and long cash counters. But when the concept

21
of personalized banking came in with foreign banks it brought about a change
in the design of banks.[ CITATION Kotai \l 1033 ].
Factors influencing the Consumer Behavior

Marketing concept asserts to identify consumers' needs before the product is

produced so that the product developed can meet the needs. It can be said
that the consumer is the pivot around which the whole marketing system
revolves. Modem marketing therefore begins with an understanding of
consumer needs. The real problem is to learn what a consumer needs. The
real problem is to learn what a consumer takes into consideration when he
chooses a particular brand. All the behaviour of human beings during the
purchase may be turned as buyer's behaviour. Factors influencing the
consumer behaviour are internal like needs, motives, perceptions and
attitudes as well as external. The major external factors are family, social
group, culture economics, business influence etc.

A consumer may not act in isolation in the purchase, but rather may be
influenced by any of several people in various roles. The number of people
involved in the buying decision increases with the level of involvement and
complexity of the buying decision behaviour.Consumer’s buyer behaviour and
the resulting purchase decision are strongly influenced by cultural, social,
personal and psychological characteristics. An understanding of the influence
of these factors is essential for marketers in order to develop suitable
marketing mixes to appeal to the target customer. 

Cultural factors include a consumer’s culture, subculture and social class.

These factors are often inherent in our values and decision processes.
Social factors include groups (reference groups, aspirational groups and
member groups), family, roles and status. This explains the outside influences
of others on our purchase decisions either directly or indirectly.
Personal factors include such variables as age and lifecycle stage,
occupation, economic circumstances, lifestyle (activities, interests, opinions
and demographics), personality and self concept. These may explain why our
preferences often change as our `situation' changes.
Psychological factors affecting our purchase decision include motivation
perception, learning, beliefs and attitudes.
Other people often influence a consumer’s purchase decision. The marketer
needs to know which people are involved in the buying decision and what role
each person plays, so that marketing strategies can also be aimed at these
people. Hence the ultimate objective of every consumer should be to come
with new products that will serve the consumer and replace the old products

22
which became obsolete with the passage of time and consumer likes and
dislikes.[ CITATION Kotai \l 1033 ]
Marketing In Banks
Banking is a major industry throughout the world today. Characteristics of
banking marketing:
Intangibility: Banking services are generally intangible, but the service
providers got the considerable lengths to tangibilise the services for
customers, eg. Bankpass book, regular bank statements, gold credit cards.

Inseparability: The degree of inseparability depends upon the type of

services and the actual supplier. Many everyday transactions are carried out
now via automated services (ATM). Because access to these systems has
broadened to allow use of any particular kind of machine by customers of
other institutions, the customer will often not be dealing directly with their own
provider. Many financial services are sold by brokers, agents of various kinds
and this has led to several difficulties and misunderstanding and
dissatisfaction in case of wrong advice or unsuitable product.

Heterogeneity: In this case the complexity of the services transaction process

will determine the extent of variability and this can differ to a large extent
between institution and even within one institution. The greater the degree of
automation within any transaction process, the greater the degree of
standardization. Thus simple transactions may be carried out via ATMs and
completely standardized or via a branch counter where they might be fairly
standardized but subject to some variation in quality.

Perishability: The degree of perishability depends upon the type of service. If

a cheque needs to be cleared by a certain date and the system causes a
delay then the benefits to the consumer are lost so the service could be said
to be perishable. By and large however money and financial services are
enduring in nature. If a bank’s reserves are not fully utilized profitably through
lending or investment they will still retain their worth and may be utilized again
on a later date.

High level of brand loyalty: Customers tend to stay with financial services
providers and use them to satisfy their different needs at different stages of
their life. Banks recognized this well and are keen to provide students
overdrafts s in the hope of retaining a professional salaried account holder for
many years. Many people choose the same bank as their parents because the
parents open an account for them. Children and teenagers are a keen target
market for the banks because of the possibility of the future business.

23
Financial services also tend to be joint purchases, very often, with
decisions made by more than one person.
Increasing Importance of Marketing in Banking Industry

The various other factors which have led to the increasing importance of
marketing in the banking industry are categorized as follows:

Government Initiatives
The Indian economy embarked on the process of economic reform and
various policy measures initiated by the government resulted in the increasing
competition in the banking industry, thereby highlighting the importance of
effective marketing. The Narasimhan Committee Report evidence of the
Government’s desire to ‘re-regulate’ the banking industry so as to encourage
efficiency through competition. The Government initiatives include:

Deregulation of Interest Rates

The bank may reduce their Minimum Lending Rates so as to attract customers
(individual and corporate). Such reduction in lending rates reduce the spread
between the deposit rates and lending rates, i.e. the banks margins would
decline and they would have to increase their volumes or provide attractive
services so as to maintain profits. This calls for bank marketing.

Increasing Emphasis on Bank Profitability:

With the Narasimhan Committee Report, banks have been directed to improve
their efficiency, productivity and profitability. Banks are required to be self-
sufficient. In fact, the report has adopted the BIS standards of capital
adequacy (though in a phased manner).

Foreign Banks
Foreign banks offer stiff competition to the Indian Banks and with their
superior services and technology offers them a competitive advantage. Thus
Indian Banks have to effectively apply marketing concepts to attract
customers.

Entry of New Private Banks

In the early ‘90s new competition emerged in the form of new Private Banks,
who brought along with them a high technology-based banking matching with
International Standards and have made a significant dent in the banking
business by capturing substantial share in the profits of the banking industry.

Reduction of Statutory Liquidity Ratio:

24
With the Government’s aim of reducing the SLR to 25 percent, the banks will
have surplus funds for which they will have to attract users.

Social Environment
Increasing Urbanization, Education and Awareness: The higher literacy
level, migration to urban areas and higher awareness due to the boom in the
mass media has important implications for the retail banker. He needs to be
conscious of the fact the increasing proportion of people are aware of financial
service and are, therefore demanding and expecting higher quality services.

Increasing Urbanization, Education and Awareness: The higher literacy

level, migration to urban areas and higher awareness due to the boom in the
mass media has important implications for the retail banker. He needs to be
conscious of the fact the increasing proportion of people are aware of financial
service and are, therefore demanding and expecting higher quality services.

Decline in Traditional Indian Values (Borrowing as Taboo), Rising

Consumerism, Rise in the Percentage of Working Women.

Technology Development
Modernization of Technology has facilitated the introduction of new banking
services as to attract new customers. An example of this is the ‘Automated
Teller Machines’ or the facility of ‘Any Time Money’. Also in foreign countries,
banks are experimenting with money transmission at Point of sale, e.g., petrol
station linked with banking network.

Credit is Easier to Obtain

Growing Importance of Non-Banking Financial Institutions: Fixed
Deposits being offered by the NBFC’s are very attractive for the public,
because of the wide gap of interest rates offered by banks on term deposits
and that offered by the NBCS’s. further, they offer a variety of specialized
services to their customers so as to attract and retain them.

Disintermediation: The increasing role of capital markets in mobilizing funds

is reducing the importance of banks as intermediaries. Companies are directly
approaching the savers through the capital markets. Mutual funds help in
attracting the small investors who do not want to take much risk.

Substitutes
The main substitutes are Financial Institutions and NBFCs. Commercial Banks
have been facing competition from the Fis in the intermediary business. Fis

25
are also into lending business, raising deposits, giving loans for working
capital, discounting, leasing, hire -purchase etc.

Suppliers
The RBI is the Central Bank of India and it regulates the working of all the
banks. The bank has the sole right of issuing currency notes above one rupee
in denomination. Being the apex bank, it acts as the banker to all other banks.
All Scheduled banks have to keep a certain percentage of their demand and
time liabilities with the RBI. The scheduled banks have to submit weekly
returns of their business to the RBI which regulates the flow of credit. Every
bank has to get a license from RBI to carry out banking business in the
country.

Buyers
The individual customers and corporate are the buyers of the facilities being
provided by these banks. The PSBs bank on large and loyal customer base.
With growing customers’ demand the focus is now shifting towards high
quality and better services. Private and Foreign banks are now offering
innovative products and services like convenience banking, ATMs, inter bank
connections.

The increasingly competitive and complex nature of the banking industry has
compounded the compulsion for focusing on the key profit drivers and this has
led to fundamental question of exploitation of new opportunity areas. The
expansion of banking activities across vertical and horizontal dimensions, in
an industry traditionally characterized by high degree of pricing regulations,
direct lending and pre-empted investments is the major challenge facing the
industry today.

26
 Strategies for effective bank marketing in India

Since the inception of globalization in India, banking sector has undergone

various changes. Introduction of asset classification and prudential accounting
norms, deregulation of interest rate and opening up of the financial sector
made Indian banking sector competitive. Encouragement to foreign banks and
private sector banks increased competition for all operators in banking sector.
The protective regime by the authority is over. Indian banks are exposed to
global competition. Even competition within the country has increased
manifold. The almost monopoly position enjoyed by the public sector banks of
India is no more existence. Under this development Indian banks needs to
reinvent the marketing strategy for growth.
The spread of the bank in Indian rural and semi urban areas are highly
different from state to state and region to region. Many states have fewer
networks of bank branches in the rural areas. Under such scenario different
marketing approach for different areas is required. If the bank follows the
same marketing strategy for all areas the success would be difficult.

Marketing approach for urban area: The urban areas of India are developed
taking into account all parameters of development. The level of income of the
people, the literacy rate and level of education as well as awareness of the
people about rights of the customer are higher than that of the rural and even
semi urban areas. Thus here for effective bank marketing different approach is
necessary than that of rural areas.

The marketing strategy should be based on customer service and the use of
modern technology in banking. Under competitive environment for the
success of the business, better customers and retaining existing customers is
possible only with customer service. Use of modern technology in urban areas
will also go long way for marketing of banking services. Technology based
service like credit card, debit card, ATM, anywhere banking, internet banking,
and mobile banking are necessary for urban areas. This is because it enables
customers to perform banking transactions at their convenience. Business
hours of a bank are also an important factor for urban banking. India many
private sector banks, especially co-operative banks and now even some of the
public sector banks have also started this practice and they find it successful.
To attract business and wholesale customers, banks need to adopt
technology based product and service which is suitable to such class of
customer. For instance RTGS, collection of out station cheques, issuing the
27
cheques at par at any branch in the country, cash management facility, DD
boutiques etc. are necessary.
Another strategy for effective marketing is bank need to change the focus from
the traditional banking to universal banking. In urban areas the extend and
variety of economic activities demands that one institution should meet all
financial need of a customer. Under such an expectation of people universal
banking would prove successful approach for bank marketing. The term
‘universal banking’ in general refers to the combination of commercial banking
and investment banking, i.e., issuing, underwriting, investing and trading in
securities.

A universal bank is a supermarket for financial products. Under one roof,

corporate can get loans and avail of other handy services, while individuals
can bank and borrow.

For increasing customer base and retention of the existing cliental universal
banking approach is effective strategy. Universal banking offers number of
benefits to customers as well s the banks. For instance, economies of scale
arise in multi-product firms because costs of offering various activities by
different units are greater than the costs when they are offered together.

Universal banking with focus on retail customers made the ICICI banks to
acquire first position in Indian banking sector. Universal banking approach is
beneficial to bank also. For banks economies of scale relate to cost-savings
through sharing of overheads and improving technology by jointly providing
generically similar groups of services. Since universal banking basically
provides financial services the inputs like manpower, infrastructure is more or
less same. Necessary changes in the inputs can be made easily. For instance
training can be given to staff for providing different financial services to
customers. Moreover the most important benefit for the bank is that it is useful
to increase the fee based income of the bank. Financial sector passing from
lower interest rate regime at present and added to this the process of
disintermediation is affecting the main and the traditional source of income for
the banks i.e. interest income. All banks are striving hard to increase their fee
based income to improve their bottom line. Universal banking can help the
banks here positively. [ CITATION Jai07 \l 1033 ]

28
Marketing approach for rural areas: Prior to nationalization of banks in
1969, the rural areas were virtually without banking facility. At that time
unorganized sector was dominating in the rural finance. After nationalization of
banks in 1969 branches of the banks were started gradually in the rural areas
also. Today more than 50 percent branches of the banks are found in the rural
areas. However, the distribution of banks in the rural areas is highly uneven.
Here banks have to face competition with the unorganized sector. Moreover
the rural banking is highly regularized activity by the Government in India.
Lending as well as interest rate is regularized. Thus under such environment
different marketing approach is required. For effective rural marketing product
development, promotion and communication is important. All these
parameters banks have to balance with socio-economic factors prevailing in
the rural areas. Bank need to innovate product that could attract the
depositors. Various loan schemes that are suitable for them for getting funds
at right time and also they find convenient to repay. For instance traditional
saving bank account may be given fixed deposit concept that once a particular
limit of balance is reached the funds from saving account is automatically
coveted into fixed deposit attracting higher interest rate.

Banks need t develop some scheme which would attract them to bank with.
For loans and advances products which are suitable to tarmers, small traders,
small scale agro based rural industries are already in existence. Banks need
to see the how value addition can be mad to these existing scheme. Banks
also needs to tie up with Non Government Organisations and various Self
Help Group for different types of loans, micro financing etc. This will help the
bank for building good image and reputation in the rural areas over and above
the business. Another potential area which can be explored by the banks in
the rural area is retail banking. With the steady increase in the income of the
rural people there is ample scope for retail loan products like housing loans
and loan for consumer durables.

Marketing through customer services in rural areas is different from that of

urban areas. Here personalized banking is the success mantra for banks.
Because of high level of illiteracy people prefer to undertake banking
transaction themselves. They hesitate to depend upon technology based
service. For effective marketing in rural areas bank should have staff with right
soft skill like concern for customers’ problem, positive attitude, good
communication and negotiation skill. At every level of dealing with the
customer bank need to educate them for banking activates and process. To
attract the customers from the unorganized sector most important factor is to
29
provide the borrower the required finance of right amount at right time.
[ CITATION Jai07 \l 1033 ]

Whatever strategic initiatives are agreed to by a bank’s or credit union’s

management, it should be shared and communicated with bank employees so
they understand the organizations’ mission, vision, goals, and objectives and
the employees’ role in achieving the objectives.

In its simplest form, a bank’s strategic planning process should answer the
following four questions:

1. Where are we now?

2. Where do we want to be?
3. How do we get there?
4. How do we measure our progress?

In today’s marketplace the strategic planning process must be dynamic and

focused. Unfortunately, at many institutions I visit, the process becomes
nothing more than an adjustment to the prior year’s plan without adjustments
that reflect the rapidly changing industry dynamics. In others, there is a lack of
unified focus that can lead to disruption and competing priorities.

Fintech advisor and CEO of Clientific, J.P. Nicols cautions, “Too many banks
try to be all things to all people, and the universal bank model really needs
significant scale to work. Bank executives should spend a a good share of
their strategic planning time evaluating all of the businesses they are in (or not
in) and make an honest assessment of potential growth rates and the
investments and scale needed for success”. He adds, “Business lines not
making the grade should be divested or closed and the investments diverted
to lines where they can legitimately compete and win”. [ CITATION Jim13 \l 1033 ]

30
 Technology - Future Perspective of Bank Marketing

Technology is proving to be a vital tool in enhancing banking activities around

the globe. The advent of ATMs and Internet Banking are key pointers to this.
The role of an information system can in no way be underestimated. The
expanding role of information systems have aided banks achieving Anytime,
Anywhere and Anyhow banking. The improvement in telecommunication
infrastructure is redefining the way banking is being conducted.

Information Technology made its presence felt in banks in India a few

decades ago. However, it is still being used as a support systems. Most of the
software packages used in bank work on stand-alone systems and are not
integrated.

Banks in India need to have an integrated system that takes care of all the
front-office and back-office operations. However, Indian banks should not be
content with the integration of their activities. Banks in advanced countries are
planning to have global electronic banking. Electronic banking or e-Banking is
a generic name for a range of technologies that allow the electronic exchange
of information related to banking transactions.

As Electronic Networks become more robust and widespread, they are

beginning to attract the attention of retail banks – like ATMs and phone
banking. However they tend to be viewed merely as one more cheap
distribution channel. Accordingly banks are replicating the branch banking
experience online, even to the extent of creating 3D virtual branches for their
customers to navigate through. Such an approach is characteristic of early
attempts to use new technology platform.

ATM (AUTOMATED TELLER MACHINES)

Traditionally, banking players relied extensively on their reach to effectively
put emerging banks out of competition. This forced new banks develop
strategies, that could help them reach out to end-customers cost effectively.
The solution came in the form of a delivery channel known as Automated
Teller Machines or ATMs. And when new private banks started installing
ATMs across the length and breadth of the country, customers started flocking
in droves. A case in point is ICICI Bank. During the liberalization of the

31
banking sector, ICICI Bank which did not have a huge national network,
realized that it could use IT to enhance its value-added offerings.

Says O.P. Srivastava, head of the retail channel infrastructure group at ICICI
Bank, “When the banking sector was liberalized we knew that to get a lead
over the well entrenched PSU banks, we had to take the help of delivery
channels like ATMs. This was the only way to counter the reach of national
players. “ICICI Bank is the most aggressive deployer of ATMs and has seen
its base surge from 125 ATMs in January 2000 to 1,200 ATMs today. Such
has been the impact of ATMs that ICICI Bank’s customer base has grown
from two million to five million in the last two years. Srivastava attributes this
increase to the increase in ATM outlets.

Alok Shende, Industry manager for IT practice at Frost & Sullivan, summaries
the evolution of the Indian banking industry perfectly when he says, “Banks
followed two broad approaches when adopting technology. The first approach
was evolutionary. Banking players who had large brick and mortar legacy
particularly the public sector banks, kept the banking channels intact and
automated the bottleneck points. This approach was adopted by around 80
percent of the industry. However, some banks adopted a revolutionary
approach and changed the banking scenario altogether. State Bank of India is
a good example of the evolutionary approach, whereas HDFC Bank and ICICI
Bank, are good examples of the revolutionary approach. “Some banks have
gone a step ahead and share their ATMs with other banks. For instance, ABN
Amro Bank has a private ATM sharing agreement with UTI Bank.
Banks are also developing new strategies to leverage their ATM outlets. For
instance, rather than set up a branch in every suburb, ICICI Bank has hit upon
a ratio of 8 ATMs to one branch office, thus effectively reaching out to a large
customer base, at a substantially lower cost.

Internet Banking
The adoption of Internet banking by the bank’s customers is important since
the costs per transaction are even lower than those of an ATM. A net-based
transaction costs the bank only around Rs. 4. Thus, banks are trying to get
customers to switch over to this mode of banking registered users for Internet
banking in India at over two million currently.

It represents a significant opportunity for banks. In addition, as a delivery

channel, Internet banking does not require physical infrastructure, thus saving
on prohibitive real estate costs.

32
Private banks like ICICI Bank, HDFC Bank, UTI Bank and ABN Amro Bank
have seen a steady surge in the number of users registered for Internet
banking does not require physical infrastructure, thus saving on prohibitive
real estate costs.
Most banks today have facilities to enable internet banking customers to pay
insurance premiums and utility bills over the Net. Though Internet banking as
a concept has not caught the fancy of a majority of customers as yet-even the
small percentage that does use it, makes a difference to the overall cost.
Almost all leading banks in India are hoping that just as ATMs saw a period of
inaction before they were accepted by Indian masses, Internet banking too
would be adopted once customers are comfortable with the technology. For
instance, in 1998 India had just 500 ATMs today it has close to 7,500.

Roadblocks:
While Internet banking is a potential and powerful delivery channel, it has
failed to make a significant impact due to a variety of reasons. RBI in its
report, ‘Trend and progress of Banking in India, 2007-08, says Internet
banking has failed to take off due to a combination of psychological,
technological and socio-economic factors. Further, the report states that
additional hurdles relating to legal and infrastructural problems have also
affected growth.

Although the government has made considerable progress in initiating a trust

environment, with some Public Certification Authorities (PCA) already licensed
to operate, the adoption of trust technology is still a daunting factor for many
users. What needs to be developed is a simple way of integrating trust into
online banking services.

MOBILE BANKING
What’s M-Banking?
M-Banking allows a customer to request for account balance, cheque books,
cheque status, demand drafts, and banker’s cheques as well as stop
payments, make fixed deposits enquiry and transfer bills online. HDFC
customers, for instance, can pay their Max Touch and BPL Mobile both
provide cellular services – Bombay State Electricity Supply, and Maharashtra
State Electricity Board bills. Says Shyamlal Saxena, 33, Vice President
(Liabilities Product Management), HDFC: “WE are, in a sense, content
providers of banking information.”

Is it Better?
M-banking is no different from Net Banking, in fact it has many limitation. You
still cannot transfer fund from one bank to another and, given the high air-time
33
charges, it works out much more expensive than Net Banking. And for the
mobile phone to access a site, the contents must be in Wireless Markup
Language. [ CITATION Jim13 \l 1033 ]

E-Newsletters
According to the website Bank Advisor, banks need to reach customers when
they are not in the bank, because customers are using other channels to meet
their banking needs. One example is to use teller machines in convenience
stores not owned by the bank. Another example is online banking. Another
option is e-newsletters. Banks can use them to educate their customers about
improving their financial decisions and to educate customers about the banks'
products and services.

Social and Mobile Media

Banks need to take advantage of social media. According to the research
company Nielsen, the use of Twitter grew 1,444 percent in 2008-2009, and
time spent on Twitter grew 175 percent during the same time period. In
addition, web visitors using a mobile device grew 34 percent from July 2008 to
July 2009.

Your bank can provide mobile personal finance applications to help customers
manage and improve their financial situation. You can also use social media
tools to help promote special deals.

34
 Marketing Mix of Banks – ICICI, SBI & CITI Bank & SWOT ANALYSIS.

ICICI Bank

The Industrial Credit and Investment Corporation of India Limited now known
as ICICI Ltd. was founded by the World Bank, The Government of India and
representatives of private industry on January 5, 1955. The objective was to
encourage and assist industrial development and investment in India. Over
the years, ICICI has evolved into a diversified financial institution.

ICICI Bank is India's largest private sector bank with total assets of Rs.
5,946.42 billion (US$ 99 billion) at March 31, 2014 and profit after tax Rs.
98.10 billion (US$ 1,637 million) for the year ended March 31, 2014. ICICI
Bank was originally promoted in 1994 by ICICI Limited, an Indian financial
institution, and was its wholly-owned subsidiary. ICICI's shareholding in ICICI
Bank was reduced to 46% through a public offering of shares in India in fiscal
1998, an equity offering in the form of ADRs listed on the NYSE in fiscal 2000,
ICICI Bank's acquisition of Bank of Madura Limited in an all-stock
amalgamation in fiscal 2001, and secondary market sales by ICICI to
institutional investors in fiscal 2001 and fiscal 2002. ICICI was formed in 1955
at the initiative of the World Bank, the Government of India and
representatives of Indian industry. The principal objective was to create a
development financial institution for providing medium-term and long-term
project financing to Indian businesses.

In October 2001, the Boards of Directors of ICICI and ICICI Bank approved
the merger of ICICI and two of its wholly-owned retail finance subsidiaries,
ICICI Personal Financial Services Limited and ICICI Capital Services Limited,
with ICICI Bank. The merger was approved by shareholders of ICICI and ICICI
Bank in January 2002, by the High Court of Gujarat at Ahmedabad in March
2002, and by the High Court of Judicature at Mumbai and the Reserve Bank
of India in April 2002. Consequent to the merger, the ICICI group's financing
and banking operations, both wholesale and retail, have been integrated in a
single entity.[ CITATION ICI14 \l 1033 ]
35
 MARKETING MIX FOR ICICI

 PRODUCTS:
 Personal Banking
 Cards
 Home Loans
 Car loans
 Two wheeler loans
 Commercial vehicle loans
 Personal Loans
 CD Loans
 Loans against shares
 Demat Services Bonds/Fixed Deposits
 NRI Services

ICICI Bank offers the following services:

 Working Capital Financing
 Term Loans
 Dealer Financing
 Vendor Financing
 Financing Cash-flow Gaps
 Cash Management Services
 I-Payments
 Corporate Internet Banking
 Foreign Exchange Remittances/Advisory
 FII Services

 PRICE

They don’t have any service charges when a customer goes for the first time
on normal services. Debit card of ATM has a yearly charge of 99 Rs.

36
 PROCESS

The present business model prevalent at ICICI for the delivery of products and
services to the customers is as follows. It is based on separate product and
channel structures, and results in diffused customer ownership.

PRODUCTS/SERVICES SUITE CHANNELS

AUTO LOANS CALL CENTRES
MORTGAGES DSAS
LOANS TO BUY DURABLES ATMs
BONDS MUTUAL FUNDS INTERNET
STOCK TRADING BANK BRANCHES
NET BANKING DISTRIBUTION CENTRES
CREDIT CARDS

Corporate Internet Banking

ICICI Bank opens the door to complete transparency in your banking activities
The power to know is the power to do
Today corporate decisions are taken across the world in split seconds. These
decisions are based on quick and easy sharing of vital information; which is
made possible only through transparency of operations.
ICICI Bank brings you the power of financial transparency through its net
banking service. Over the last 7 years, ICICI Bank has established itself as
one of India's fastest growing private banks. With a network of over 100
branches (increasing to 360 very soon), 450 ATMs spread across over 100
centers, it has increasingly given more and more Indians the power to bank
the ICICI Bank way.
In 1997, ICICI Bank took banking to an entirely new level. On to the Internet.
With Infinity, it became the first bank in the country to launch Internet banking.
It changed the way banking was done.
Infinity - Puts the bank on your table
Infinity helps ICICI Bank extend its counters and services into homes and
offices. Making the bank accessible through the mouse 24 hours a day, 7
days a week, 365 days a year
Handled with Care
The transparency of your corporate account is limited to you and the core
group you wish to share it with. This transparency is fully protected by state-
37
of-the-art online security measures. The multi-layered security architecture
comprising firewalls, filtering routers, 128-bit encryption and digital certification
protects your account information from unauthorized access.

Channelfinance@internet
The new product launched by ICICI Bank integrates channel financing and
online banking. It is aimed at enabling you to shift the supply-chain operations
on to the net. This minimizes paperwork, lowers banking costs and improves
operational efficiency.
In addition the product also offers overdraft facilities to your dealers and
suppliers based on their business with your company. They can now source
funds at lower costs from ICICI Bank through you.
ICICI Bank lets you optimize on time, money and business opportunities by
simply upgrading to Corporate Internet Banking.
ICICI bank is actively involved in the maintenance of its software as well as
hardware. Infact ICICI group has come up with its own software co. called
ICICI Infosys Technology. The bank’s software is updated every 3 months.
The technological upgradation happens at corporate as well as branch offices.

With a network of over 100 branches (increasing to 360 very soon), 450
ATMs, spread across over 100 centers, it has increasingly given more and
more Indians the power to bank the ICICI Bank way. ICICI bank boasts of 620
0f the 3800 odd ATM outlets in the country, and hopes to account for two of
the six that will be installed every day in the next one year plan to garner some
extra income by leveraging the advertising potential of the teller machines.
Maximum banking takes place through walk –ins. Though the bank is trying
for shifting the clientele to ATM. Till date 45%of the customer database has
been converted to ATM.

 PROMOTION:
ICICI bank is running an advertising campaign that focuses on the
convenience of banking with it. Kamath’s A team has wrapped it up by burning
money on brand advertising across sectors in a serious manner that, has
been rarely seen in the industry – using the services of megastar Amitabh
Bachchan to launch credit cards, advertising almost daily on prime time
television for banking portals, etc. insiders estimate that ICICI should have
spent, by a conservative estimate, as much as Rs. 20-30 crore for brand
building. ICICI banks media agent is Quantum.
For marketing of ATMs also lot of efforts have been put in. each if ICICI ATM
does 281 transactions a day on an average but Quantum and ICICI are
hoping advertisers will be attracted by the quality of audience they can reach.
It remains to be seen whether the costs (ICICI advertising budget is Rs.5000-
38
10000 lakhs) depending on the no. of ATMs chosen and the frequency of the
message will pay off advertises in the long run or whether this trend will go the
way of banner advertising. The bank considers TV as the best media for
promotion.

 PHYSICAL EVIDENCE:
ICICI considers ambience very important since they believe that it leaves a
major impact on client. All banks have attractive décor and lovely interiors.
Several scrolling machines are put on which the new as well as existing
schemes’ details are shown. Glossy brochures and leaflets are available at
various counters.

 PEOPLE:
They consider internal marketing as a very important part. They have
excellent training programs for their employees. They have training programs
for fresher’s as well as other employees. These are held every month and also
upgraded on a monthly basis. They also have physical training programs.
They have a site on the Internet on which they take online feedbacks from the
employees and there is complete transparency in this case.
The cost of training the employees about better technology range between Rs.
7000-80000 per employee. The cost varies as per the: Venue : i.e. whether
the employee is trained in the Bank training center or if a hotel is booked for
the same.
Duration of training:
ICICI plans to put in a data mining solution that will effectively collate and
make sense of data across 3 million bank accounts, 384 ATMs, 130,000
cards, 100 banks branches, 400,000 net banking accounts and 5-6 distribution
channels.
Its bank has 4 million customers and the institution nearly 5 million bondholder
accounts. Also the banks environment has been constantly emphasized as
being women friendly.

39
 SWOT OF ICICI

STRENGTH
 Is the preferred financier for 10 auto manufacturers companies
 Considered to be a flexible company
 Very consumer friendly.
 Has the highest month on month share of the market.
 1.6 million Customer base.
 Owns the largest ATM network.
 It is considered as a one stop shop for finance related business.
 Aggressive pruning of its nonperforming assets is improving its credit rate
profile allowing access to cheaper funds.
 Dealers love to work with them because of fast speed of processing loans
 Its volumes allow ICICI to offer among the lowest cost

WEAKNESS
 Need to increase its outlets
 It’s still a metro city bank
 Need to have more branches
OPPORTUNITIES
 1, sky is the limit as the market is growing and large part is still to
untapped
 Need to have offers for the consumers with manufacturers
 Online banking can be profitised upon.
 Can venture into retail banking.
THREATS
 New entrants are making the competition tougher
 Consumers are becoming more and more demanding
 Decrease in interest rates have made in this field bit unrewarding
 The threat of takeover for ICICI bank under the following heads.
 Managing credit card risks is a challenging job.
 Change in leading profile from project finance to good quality corporate
business is driving net interest margin down.
 Retail bank business profitability prospects are unclear.

40
 INTRODUCTION FOR SBI
State Bank of India is the largest bank in the country with over 190 years of
banking experience and with advantaged technology at our fingertips. Today,
State Bank of India ranks among the top 25 commercial banks in Asia with
assets exceeding US$ 59 billion. We operate worldwide through the most
extensive network ever owned by a commercial bank. With over 8998
branches in India and 52 foreign offices in 31 countries, our total deposits
exceed US $ 45 billion.

The origins of State Bank of India date back to 1806, when the Bank of
Calcutta (later called the Bank of Bengal) was established. In 1921, the Bank
of Bengal and two other banks (Bank of Madras and Bank of Bombay) were
amalgamated to form the Imperial Bank of India. In 1955, the controlling
interests of the Imperial Bank of India were acquired by the Reserve Bank of
India and the State Bank of India was created by an act of Parliament to
succeed the Imperial Bank of India.

The Bank has its Corporate Office at Mumbai. Its domestic operational area is
divided in 14 Circles, each with one Local Head Office and a few Zonal and
Regional Offices. The Bank's top management consists of the Chairman,
group executives for National Banking Group, Corporate Banking Group,
International Banking Group and Associates & Subsidiaries, and four staff
functionaries in charge of finance, credit, human resources and technology
management, and inspection and audit.[ CITATION Sta14 \l 1033 ]

MARKETING MIX FOR SBI:

 PRODUCTS

The various products available with SBI are:

 Personal Banking
 Gold Banking
 NRI Banking
 International Banking
 Corporate Banking
 Small Scale Industries
 Small Business Finance
 Rural Banking
 Government Business
Services
41
  Locker
 Rupee Traveller Cheque
 Gift Cheques
 Public Provident Fund (PPF)
 RBI relief bonds
 PSU Retiring Employees Scheme
 Loan On Demat Accounts
 ATM Services
 Internet Banking

 PRICING
They have normal charges for their services like drafts, collection of charges
etc. but the banks prices are considered to be very nominal compared to other
banks. Other features of the banks’ prices are:
* SBI's Prime Lending Rates (PLR) are among the lowest
* Presently Bank has two PLR's
--SBAR for loans payable on demand and upto one year
--SBMTLR for loans payable beyond one year.

 PLACE
As of now bank sees maximum transaction through walk ins. But the bank is
trying to convert these to ATMs. It is also emphsizing a lot on Internet banking.
The Bank has its Corporate Office at Mumbai. Its domestic operational area is
divided in 14 Circles, each with one Local Head Office and a few Zonal and
Regional Offices.

 PROCESS
Technology Orientation
With increased competition and new business opportunities, it is imperative for
the Bank to introduce and absorb technology extensively and at a rapid
speed, not only to remain customer-friendly, efficient and competitive for
existing services and business but also, and perhaps more importantly, to be
able to manage newer forms of business and services in an increasingly
dynamic and global environment.
The Bank's effort to improve efficiency and customer service through use of
technology is reflected in the rapid pace of its branch computerization.

Anywhere Anytime Banking: The ambitious ATM networking project went on

stream in its pilot phase in March 2001, with the aim of enabling the
42
customers accessing their accounts from many designated centers at any
time. As at August 2001, ATMs were networked in eight cities covering 250
branches and 106 ATMs. There are 309 ATMs installed in 100 centers all over
the country. The Bank has issued 1.4 million ATM cards, accounting for 30 per
cent of the ATMs card issued in the country, as on June 2001. Internet
Banking started on a pilot basis on the 1st August 2000 at 11 branches, and
by June 2001, 51 branches in major centers were covered. For electronic
transmission of inter-branch data for reconciliation through the Internet the
Project ERECON was extended to 2,009 fully computerized branches.
In 2000-01, the Bank established "SBI-Helpline" at LHO centers, equipped
with toll-free telephone lines, fax and e-mail for providing quick and complete
information on Bank's products and services, and to enable the customers to
have their grievances redressed through electronic media.
The SBI Home Page was thoroughly redesigned and revamped during the
year. The site is a window for all SBI products and services and detailed
corporate profile, and provides seamless integration with Net banking.
Product-wise Frequently Asked Questions (FAQs), Newsletters and Helpline
facilities attracted a large number of visitors to the site.
The Bank made significant improvements to provide better and efficient
banking services to customers through introduction of appropriate
technologies. These include -
1. Electronic Data Interchange projects for handling customer transactions at
airports and seaports made operational at 11 centers.
2. Introduction of computerized printing of drafts.
3. Opening of MICR and ECS centers for Electronic Clearing Services.
4. Remote login facilities for corporate customers implemented in over 70
branches covering about 400 customers.
5. Tele-banking introduced on a pilot basis at 38 branches in Mumbai Circle of
the Bank, to be extended to other Circles soon.
6. On-line Electronic Funds Transfer facility in 629 branches
7. Swift Connectivity to 146 Branches, accounting over 85% Forex Business
8. E-recon--Transmission of inter-branch data for reconciliation through
Internet in 1790 fully computerized branches.
9. Introduction of Telebanking on a pilot basis at 38 branches in Mumbai to be
extended to select branches across all Circles.
10. Introduction of remote banking facility for 400 corporate customers in 70
branches, allowing them to view and download account balance and
transaction details from their office through a computer connected to the
branch.

 PEOPLE

43
Experience a whole new world of banking at our newly opened Personal
Banking Branches (PBBs)- often dubbed boutique branches by others.
Customer friendly knowledgeable staff will cater to your financial requirements
with speed and efficiency.
The continuing deregulation of India's financial services sector has resulted in
increased competition for the Bank. In order to maximize shareholder value in
this increasingly competitive environment, the Bank aims to improve
profitability while consolidating its position as India's leading bank, and
capitalize on opportunities presented by deregulation and other changes in the
financial services sector to further enhance profitability through the following
strategies:
a. Improve customer service
b. Develop and market new products and services
c. Increase employee productivity through training and new technology
d.. Improve credit assessment, loan monitoring and debt recovery
e. Selectively develop its international operations.

Staff Strength
The Bank had total staff strength of 2,14,845 on 31.03.2001. Of this, 52,459
(24.4%) were officers, 1,06,731 (49.7%) belonged to the Award staff category,
and the remaining 55,655 (25.9%) were sub-staff.

 PROMOTION:
They consider print media as the best media. The advertising agency is Apex
Advertising.
Their famous punchline is “with you all the way”.

 PHYSICAL EVIDENCE:
They give a lot of importance to the physical evidence. The ambience is well
taken care of. There has been a considerable improvement in the ambience of
several branches. They have been emphasizing on glossy brochures, better
infrastructure etc. however this cannot be said about all the branches of SBI.

44
 SWOT FOR SBI

STRENGTHS:

 It has a branch network of 9100 branches and has an excellent delivery

channel.
 Being one of the oldest bank people have a lot of trust in the bank.
 Its India Millennium deposit scheme last year got total NRI Deposits of a
huge 5.5 $ billion which makes up a large chunk of the total India’s $40
billion foreign exchange.

WEAKNESS:

 SBI Home Finance finds itself in a spot today because of its focus on
housing projects rather then retail housing.
 It is considered as one of the biggest wealth destroyers. SBI tops on size
based measures like revenues, PAT, total assets but appears among the
bottom ranks for wealth creations.

OPPORTUNITY:

 THE ABNK IS TRYING TO PUSH ITS RETAIL GAMEPLAN IN A BIG WAY

AND ALSOPLANS TO MAKE MAJOR INROADS INTO HOUSING
FINANCE ON ITS OWN

THREAT:

 More and more corporates are moving from traditional bank loans to
cheaper funding avenues in a bid to cut costs.
 Under the guidelines of RBI a bank can advance only 25% of its capital to a
single borrower. Now due to the coming together of standard chartered and
ANZ Grindlays, they have an increased capital base. The bank can issue
Rs. 500 crore to a single corporate. That makes it the only foreign bank
with this facility and hence has given the customers, a choice that no longer
have to go to SBI for this kind of a loan.

INTRODUCTION TO CITIBANK

45
Citibank, the global bank from the US completed 90 years in 1992.It has all
along accepted India’s place in the regional as well as the global economy.
The bank has encashed its expectations and over the past 90 years has lived
upto two of its characteristics:
 Firstly, it is occupying premium position in the banking industry, and is
making Citibankers feel proud in working for the bank and its customers
feel prestigious to bank with Citibank.
 Secondly, it has got well integrated into the ethos and economy of the
country. Citibank continues to be a global leader in cash management and
in India volumes are growing almost 50% every year in this area. But the
buzzword in corporation these days is shareholder value and risk
management.
A great opportunity seen by Citibank was: ‘A bank that would go to the
customers’ and not vice-versa. It could foresee that since the late ‘70s the
habits of the Indian consumer were changing; ‘buy now, pay later ‘ was
overtaking ‘save now, buy later’. India was also becoming one of the biggest
markets for two-wheelers, refrigerators and TVs with annual growth rates of
around 25%. The customer and the product were available, all that separated
them was an easy loan.

The Path Breaker

The bank had aimed to be a path breaker in its operations, wherever it
operated, and India is no exception. It pioneered in mid 1960s, among the
foreign banks, recruitment of Indians to managerial positions. It went to
management institutes to recruit its future executives. These executives, over
a period of time have been tapped by the parent bank to manage its global
operations. Citibank has now become the biggest exporter of high caliber
manpower, which was used in other banks. The bank’s software subsidiary is
one of the biggest exporters of bank oriented computer software. [ CITATION
CIT14 \l 1033 ]

46
 MARKETING MIX FOR CITIBANK

 PRODUCTS:
 Citibank Online offers a wide range of products and services to meet
your banking and investment needs.
 Products:
 Checking
 Savings
 Cititrade
 Brokerage
 Individual retirement account
 Loans and lines
 Credit card
 Pricing packages
Services:
 Advantage debit card
 ATM card
 Debit/ATM card
 ATM reimbursement
 Auto deduction
 Checks as cash
 Citi financial needs analysis
 Cititrade auto investment
 Direct deposit
 Online bank statement
 Online bill payment
 Overdraft protection
 Safe web online protection
 Wireless alerts

 PROCESS
The process for some of its services are:

Citibank Investment Services

Citibank Investment Services together with international partners such as
Alliance Capital and Prudential bring you superior investment options. With an
expert Investment Counselor to assist you in making your decisions. One way
to assure that your money works the hardest for you.

47
Free Drafts
You can get free drafts drawn on any of 60 locations, up to Rs. 10 lakh per
week. Just call CitiPhone from the comfort of your home or office and we'll
have the draft delivered to you within 24 hours.
Book a draft through the Internet, and we'll have it delivered to third parties
absolutely free!

Cash/Check Pick-up
Call us and we'll pick up your checks for deposit to your Account, absolutely
free.

Cash Delivery
You can order cash between Rs.1000 and Rs. 25,000 per day at your
residence or office, at a small charge.

Unmatched Banking Convenience

You can conduct your banking in complete exclusivity and confidentiality at
our exclusive the world through financial and business magazines and
television programmes.
CitiGold brings to you superior banking convenience with draft drawing
facilities at over 275 locations, national banking, payable-at-par cheque books,
cash delivery and cheque pick-up facilities.
An exclusive CitiGold telephone line at CitiPhone, Citibank Online and
Citibank Banking Centers enables you to conduct your banking transactions
24 hours a day, 7 days a week - both while you are in India or travelling
overseas. CitiAlert messaging services helps you keep tab on your money
through Alerts on your email or mobile phone.

 PRICE

The Citibank Personal Loans are clean cash loans. They do not require any
security, collaterals or even guarantors.
In many cases, Citibank won't charge you for using non-Citibank ATMs, as
long as you meet minimum balance requirements or stay within the
transaction limits set for your account.
OTHER CHARGES
There are several other charges associated with getting a loan which together
form the effective cost of your loan.

48
PROCESSING FEE
This fee is paid up-front to the lender for processing your application. Though
it may be a small amount, it increases your cost of borrowing. Processing fees
range between 2 to 4 per cent of the loan amount. This charge is negotiable.

 PEOPLE:

Relationship discounts are offered to you in case you already have a relation
with the lender. For instance, if you are banking with the lender or have
previously taken a loan, you have the option of negotiating for lower interest
rates on the loan.

 PHYSICAL EVIDENCE:
Ambience of office is greatly emphasized by the Citibank. The décor,
maintenance, quality of posters and brochures is keenly taken care of. Even
the websites are made attractive and catchy with detailed information. Even
the ATM centers are well equipped and impressively kept.

 PLACE
One can use ATM/Debit card to get cash at over half a million ATMs
worldwide and to make purchases at merchants displaying the Cirrus ®,
Maestro®, NYCE®, and STAR® symbols. Select merchants in these networks
will allow cash back from your account when you make a purchase.
In addition to the locations listed above, the Citibank ® Banking Card with the
MasterCard® logo is accepted at over 21 million MasterCard locations
worldwide.
Branch locations are at
1. Mumbai
2. Delhi
3. Chennai
4. Hyderabad
5. Calcutta
6. Bangalore
7. Pune
8. Baroda
9. Ahmedabad
10. Jaipur
11. Vadodara

49
 PROMOTION
Biggest spender on promotion is considered to be Citibank, which spends
Rs.15 crore on advertising, of which about 50% is, spend on boosting its credit
card business. The bank however spends Rs. 60 crore on marketing. Citibank
is glitzy and high profile and it has the widest portfolio-it is into credit cards,
personal loans and other such products. It also introduced local understanding
of a global level of service that came to India.
Citibank has been coming up with various schemes from time to time. Mostly it
uses print media to promote its products. It has several punchlines of which
the most famous are
“The Better Way To Manage Your Money Starts Here.”
“The Citi Never Sleeps.”
Apart from these it also goes in for various schemes in collaboration with
companies like Indian Oil and MTV.
It also promotes extensively on Internet. Presently it has an advertisement in
sify.com home pages

50
 SWOT OF CITIBANK INDIA
STRENGTHS
1. Being the first entrant in the auto-finance business the brand recall
is high among consumer.
2. As it has tie-up with Maruti which is the largest seller of automobile
in India. It has an edged over its competitors as when consumer
goes to dealer.
3. People associated Citicorp with Maruti.
4. The Citicorp has very wide network which gives it an extra
leverage.
5. It has the first mover advantage.
6. Along with Times Group it brought in Times Online Money Ltd.
which is India’s largest financial supermarket.
WEAKNESS
1. People are unaware about the fact that Citicorp provides are loans
for other car manufacturing companies.
OPPORTUNITIES
1. As the auto-financing market is increasing rapidly the company
can gain considerable market share.
2. The companies to have preferred financial status with other
manufacturing automobiles company.
3. With the change in life style of companies people are open to the
idea of car finance which will help Citicorp the gain a greater
market share.
THREATS
1. Entry of new players in the market the competition is increasing.
2. With a decrease in the interest rates the profits of the company
are under threat.

51
 RECOMMENDATIONS:

 Banks should go in for branding exercises comprising of two parts:

enhance brand logo i.e. to make it more catchy and easy so that customers
could relate to it, and secondly by focussing on service since whether in the
bank or at the ATM service is key. Hence these should be incorporated in
branding.
 Banks like ICICI can go into retail banking as it is the best long term
solution for ICICI to remain with the A group of finance companies in the
future.
 Banks need to have high investment in infotech while at the same time
should own expensive premises in the most attractive locations.
 The banks should emphasize on being completely automated and provide
information faster and keep flexible working hours.
 They can use outsourced agents to contact customer directly.
 Banks should work to transform themselves into one stop shop for all
financial services.
 Branch banking is clearly out as it involved huge costs and also considered
outdated in the new technology age. So, the banks need to be where the
customer is i.e. take bank to the customer’s door step through other
distribution channels from Internet to phone, even mobile banking.
 Banks should improve their advertising and other means of promotion. This
is so since when there is no big benefit to offer because products have
become standardized, there is need to advertise to create a sharp
reference and then preference.
 The foreign banks such as Citibank earlier restricted business to MNCs
should now expand completely and strategically in the domestic market.
 Banks can have proper call centers like ICICI.
 Banks should let technology, clearing and book keeping take a backseat
and put customer services in front.
 Banks like SBI should emphasize more on Internet banking. ICICI is
already cashing on it.
 Banks should now scans all of its customers for value, risk, attrition, and
propensity to buy.
 Banks should put more emphasis on RURAL BANKING.

52
 AFTER SALES SERVICES:
Historically, after-sales service was regarded in most manufacturing
companies as a necessary evil - as a supporting but relatively minor
function in the overall function of the organization. While it was realized that
it was important to provide a reasonable level of after-sales service, the
role and function of service was generally viewed purely as a cost center.
As consumers grew more sophisticated, they became less willing to accept
poor quality goods and services. The banking organizations should to
realize that by offering guarantees and service warranties they could
enhance their competitive position.

 Banner Advertising: Web-based advertising revenue is shrinking for many

Web sites, and banner advertisement CPM (cost per thousand
impressions) rates are plummeting. Thanks to the "e-advertising law of
diminishing returns," this is a natural progression for banner advertising as
the Internet continues to grow.

 Opt-In E-Mail Marketing: Direct e-mail marketing has response rates of 5

percent to 15 percent, exceeding those of online banner ads and traditional
direct mail (1 percent to 3 percent). Drawn by high response rates and
perceived lower costs, two-thirds of Global 1000 companies have allocated
as much as 5 percent of their marketing budgets for e-mail campaigns.
Enterprises are also building their own e-mail marketing lists from
storefronts, Web sites, catalogues and public events. The cost of
acquisition for these efforts will vary greatly.

53
 ANALYSIS OF QUESTIONNAIRE

To find what does the consumer believe about the marketing mix of the above three banks:

Q.1. Which of the following bank do you avail service from :

(A) ICICI (B) SBI (C) CITIBANK
Out of the 50 people contacted for filling
SEVICES AVAILED FROM up of the questionnaire 46%dealt with
ICICI, 30% with the SBI and only24%with
the Citibank.
CITIBANK ICICI Q.2. What are the services that you
24% SBI generally avail from banks?
ICICI
46% CITIBANK
SBI
30%
SERVICES AVAILED
OTHERS ATM ATM
18% CREDIT CARD
26%
LOANS LOANS
14% OTHERS
CREDIT CARD
42%

(A) ATM (B) Credit Card (C) Loans (D) Others (savings &deposits)

Q.3. Are all your financial requirements met effectively with your bank?
(A) Yes (B) No
When asked about this 60% of the respondents answered in the affirmative. Out of these
67% are the customers of ICICI, 20% of SBI and 13% of Citibank. This gives an idea about
the amount of varied services provided by different banks.
ALL FINANCIAL REQUIREMENTS ARE MET WITH Q.4. Are the service charges of your
YOUR BANK
20
bank :
(A) High (B) Low (C) Reasonable
20 YES
15 9 Out of the total respondents 74%feel that
8 NO
10 3
6 4 bank charges are reasonable (of these
5 16.2% were Citibank customers,
0 57%were for ICICI and 27% for SBI),
ICICI SBI CB 6%feel that they are low (100% of these
were SBI customers) while 20%feel that
they are high (out of these 60% were dealing with ICICI, and 20%each for SBI and
Citibank).

SERVICE CHARGES OF THE BANKS ARE Q.5. What is the best source of
25 21 promotion by which you get to
20
know about the new services
HIGH provided by your bank?
15 10 LOW (A)T.V. (B) Print (C) Internet (D)
10 6 6 REASONABLE Word Of Mouth
5 2 2 3
0 0
54
0
ICICI SBI CB
 38% of the respondents feel that TV
BEST MEDIA FOR PROMOTION is the best means for promoting
TV
banking services, 28% found print
WOM
12% TV INTERNET media as the best alternative and
PRINT 38% PRINT 22% favored Internet as the best
28% WOM means. 12% of the total respondents
INTERNET believed that nothing could promote
22%
banking services better then word of
mouth.
Q.6. Can you recall the last advertisement of your bank in the media you consider as
best?
(A) Yes (B) No
Only 64% of the total respondents were able
CAN YOU RECALL THE LAST to recall the last advertisement for their banks.
ADV Out of these 71% were dealing with ICICI,
23 OF YOUR BANK 6.2% with SBI and 21.8% with Citibank. Out of
25 YES the ones that were not able to recall 72%
20 13
NO
15 7 5 were dealing with SBI and 28%with Citibank
10 2
5 0 and none from ICICI.
0 Q.7. By which source do you generally
ICICI SBI CB perform your banking functions?
(A) Walk In (B) ATM (C) Telephone (D)
Home (E) Credit Card (F) Internet
The sources by which the functions performed by customers of various banks are as
follows:
20
18
18 Q.8. Are the
16 branches of
14 your bank
12 10
10 9 ICICI
8 7 7 SBI
6 6
6 CB
4 3
2 2 2
2 1
0 0 0 0 0 0
0
WALK IN TELE HOME INTERNET ATM CREDIT CARD

widespread?
A. Yes
B. No
ARE THE NO. OF BRANCHES OF YOUR 78% of the total respondents felt that
their bank had enough branches
BANK ENOUGH (54% of ICICI customers, 36% of SBI
25 customers and 10%of the Citibank
21
20 YES customers). 73% of the Citibank
14 NO customers felt that their bank had not
15 enough branches.
10 8
5 4 55
2 1
0
ICICI SBI CB
Q.9. How much do you feel your banks services have improved by means of new
technological gadgets?
(A) Very Much (B) Not Much (C) Not AT All

When confronted with this question most of the customers replied that technology has
changed the look and performance of the banking services.70% of the total believed that
there has been a lot of change (51% of ICICI, 26% of SBI and 23% of Citibank customers).
While 24% believed that there has been only a marginal change 6% felt the services and its
quality has not changed at all (out of these 67% were SBI, 33% of ICICI and none of the
Citibank customers.

HAS TECHNOLOGY LED TO Q.10. How do you find the

IMPROVEMENT OF SERVICES ambience of your bank?
(A) Very Good (B) Average (C)
20 18 VERY MUCH Poor
15 NOT MUCH 62% of the total respondents found
10 9 8 NOT AT ALL their banks ambience as very good
5 4 4
2
4 (61% of ICICI, 6.4% of SBI and
1 0
0 32.2% of Citibank customers. 34%
ICICI SBI CB felt that the banks ambience was
kind of O.K.20% of the respondents
had complaints regarding the
ambience out of which 60% were customers of SBI, 30% of ICICI and only10% of Citibank
customers.

HOW IS THE AMBIENCE OF YOUR BANK

Q.11. How is the attitude of the
20 19 bank staff towards you?
18 (A) Very Friendly (B) Formal
16
14 VERY GOOD (C)Bad
12 10 54% of the respondents had very
10 AVERAGE good experience with the bank’s
8 7 6
6 VERY POOR staff. 67% of the ICICI customers
4 3 2 found their staff very friendly,
2 1 1 1
0
while only 15% of SBI and 18%
ICICI SBI CB of Citibank customers found their
bank’s staff friendly. 34% of the
50 respondents found their
bank’s staff formal (24% of ICICI,
ATTITUDE OF THE STAFF 47% of SBI and 29% of Citibank
20
customers). Out of the 12% who felt
18
that the bank’s staff attitude was bad
15 VERY FRIENDLY 16% were ICICI customers, 50%
10 8 FORMAL were SBI customers and 34% were
5 5 BAD Citibank customers.
5 4 4 3
1 2
0 56
ICICI SBI CB
Q.12. Are the process of your bank services:
(A) Easy
(B) Difficult

76% of the total customers felt that bank processes for the delivery of services were easy
(67% of ICICI customers, 20% of SBI and 13% of Citibank customers. Out of
the 40% who felt the processes were difficult 45% were SBI, 15% were ICICI
and 40% were Citibank customers.

THE BANK PROCESSES ARE LIMITATIONS:

20
16
 The preference of various customers
15 13
EASY may be a bit influenced since most of
9
10 7 DIFFICULT the respondents were from Dadar,
5 3 Mumbai.
2
 Since the data has been collected
0 from a variety of primary and
ICICI SBI CB
secondary sources there might be
slight inaccuracy in conclusion.
 Since the questionnaire was structured, non-disguised type, it prevented me from probing the
respondents for more explanation on certain topics.
 Number of customers/respondents for each bank was different and hence the final ratio of
response varied.
 The score allotted by the different respondents on different parameter might not be with the same
yardstick, as individuals are subjective in nature as well as the environment round them differs,
which play a critical role in building up a perception.

CONCLUSION

Banking sector has undergone various changes after the new economic policy
based on privatization, globalization and liberalization adopted by Government
of India. Introduction of asset classification and prudential accounting norms,
deregulation of interest rate and opening up of the financial sector made
Indian Banking sector competitive. Encouragement to foreign banks and
private sector banks increased competition for all operators in banking sector.
Banks in India prior to adoption of new economic policy was protected by
Government and was having assured market due to almost state monopoly in
banking sector. However, under the new environment, Indian banks needs to
reinvent the marketing strategy for growth. In India geographical development
is not even throughout the country, there are full-fledged urban areas covering
the metropolitan cities and other big cities. On the other hand there are
underdeveloped rural areas too. For effective bank marketing different
57
approach for different areas is required. In urban areas customer services is of
paramount importance as the level of literacy and therefore awareness of the
people is more. Also technology based marketing would have higher degree
of success due to typical urban life style of the people. Universal banking
providing all financial service under one roof will have more success in urban
areas. In the rural areas for bank marketing personalized banking will go in
long way. Also banks need to offer innovative tailor made deposits and
advances products to suit individual customers. Delivery of advances of right
amount of right amount and at right time is essential in rural marketing.

Banking sector reforms have changed the traditional way of doing banking
business. Mainly technology is the outcome of banking reforms. Customer is
now the king and customer focus or satisfaction of customer is the main aim of
the banks. With the introduction of new products and services competition has
grown up among the banks. Only those banks will survive who face the
competition with the effective ways of marketing.

Bank Marketing has become a necessary survival weapon and is

fundamentally changing the banking industry worldwide. The rise of Bank
Marketing is redefining business relationships and the most successful banks
will be those that can truly strengthen their relationship with their customers.
Technology innovation and fierce competition among existing banks have
enable a wide array of banking products and services, being made available
to retail and wholesale customer through an electronic distribution channel,
collectively referred to as e-banking. Technology is altering the relationships
between banks and its internal and external customers.

Marketing techniques is seen to be requiring improvement as many facilities

like Single Window, Teller and May I help you counter are not available to a
good number of customers. Comfortable seating is provided to most of the
customers. Customers are yet to get the benefit of technology oriented
facilities like ATM, Online and Telebanking and many branches are yet to be
computerized.

There is a need for professionalism and market oriented banking in our

country. Market-oriented banking will require a new culture: a disciplined,
professional, and committed manpower; employees trained for specialized
services; specialized branches; strong marketing organization in different
58
banks; aggressive selling; meeting new customer's expectations; and cost-
effective and efficient services.

Customers for financial services are changing in terms of their wants, needs,
desires, expectations and problems and financial service providers have to
understand who their customers are, what they prefer, why they buy, who
makes the decision and how the consumer uses the product and service. In
conformity with these changes, there should be changes in the Bank's
services, training, attitudes and images, marketing strategies and patterns of
organization and control. New technology driven products blended with the
traditional ones and personalized service will enable banks to extend a variety
of financial services under one roof.

ANNEXURE: QUESTIONNAIRE:

What does the consumer believe about the marketing mix of the above three
banks:
Q.1. Which of the following bank do you avail service of :
(A) ICICI (B) SBI (C) CITIBANK

Q.2. What are the services that you generally avail from banks?
(A) ATM (B) Credit Card (C) Loans (D) Others (savings &deposits)

Q.3. Are all your financial requirements met effectively with your bank?
(A) Yes (B) No

Q.4. Are the service charges of your bank :

(A) High (B) Low (C) Reasonable
59
Q.5. What is the best source of promotion by which you get to know
about the new services provided by your bank?
(A) T.V. (B) Print (C) Internet (D) Word Of Mouth

Q.6. Can you recall the last advertisement of your bank in the media you
consider as best?
(A) Yes (B) No

Q.7. By which source do you generally perform your banking functions?

(A) Walk In (B) ATM (C) Telephone (D) Home (E) Credit Card (F) Internet

Q.8. Are the branches of your bank widespread?

(A) Yes (B) No

Q.9. How much do you feel your banks services have improved by
means of new technological gadgets?
(A) Very Much (B) Not Much (C) Not AT All

Q.10. How do you find the ambience of your bank?

(A) Very Good (B) Average (C) Poor

Q.11. How is the attitude of the bank staff towards you?

(A) Very Friendly (B) Formal (C) Bad

Q.12. Are the processes of your bank services:

(A) Easy (B) Difficult
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