24-08-2023

UNITED UNIVERSITY
FACULTY OF COMMERCE & MANAGEMENT

BCOM (H) – SEMESTER – V

SUBECT NAME – MARKETING OF BANKING SERVICES

SUBECT CODE – CMUBM5101T

DND

UNIT - 1
INTRODUCTION TO
MARKETING OF BANKING SERVICES

DND

CONCEPT OF MARKETING
• Marketing is an economic activity in which goods and
services are exchanged in lieu of money. The marketing
program starts with a product idea and does not end until
the customers are completely satisfied.
• Customers must be satisfied for the company to retain them
and make repeat business.
• Marketing is the combination of activities designed to
produce profit through ascertaining, creating, stimulating,
and satisfying the needs and/or wants of a selected segment
of the market.

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• Marketing is the process of planning and executing the

conception, pricing, promotion and distribution of ideas,
goods and services to create exchanges that satisfy individual
and organizational objectives.
The American Marketing Association

Dr. Nishant Dabhade

COMMON CONCEPTS
USED IN MARKETING
1. Needs; a need is a state of felt deprivation of some basic
requirement e. g. people need food, clothing, shelter, and safety
for survival.
2. Wants; these are desires for specific satisfiers of the needs e.g. a
person needs food but wants fish and chips. He needs shelter but
wants a mansion.
3. Demands; are wants for specific products that are backed up by
the ability and willingness to buy them. A want becomes a demand
when it is backed by purchasing power.

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SELLING V/S. MARKETING

Point of Selling Marketing
difference
Starting point Factory Marketplace
Focus Existing products Customer needs
Means Selling and promoting Integrated marketing
End Profits through volume Profits through
satisfaction

The difference between selling and marketing can be best illustrated

by this popular customer quote:
‘Don’t tell me how good your product is, but tell me how
good it will make me’.

SCOPE OF MARKETING

1. Study of Consumer Wants and Needs

Goods are produced to satisfy consumer wants. Therefore study is
done to identify consumer needs and wants. These needs and wants
motivates consumer to purchase.

2. Study of Consumer behavior

Marketers performs study of consumer behavior. Analysis of buyer
behavior helps marketer in market segmentation and targeting.

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3. Pricing Policies
• Marketer has to determine
pricing policies for their
products.
• Pricing policies differs form
product to product.
• It depends on the level of
competition, product life cycle,
marketing goals and objectives,
etc.

4. Production planning and development

• Product planning and development starts with the generation of
product idea and ends with the product development and
commercialization.
• Product planning includes everything from branding and packaging
to product line expansion and contraction.

Dr. Nishant Dabhade

5. Distribution
Study of distribution channel is important in marketing. For maximum
sales and profit goods are required to be distributed to the maximum
consumers at minimum cost.

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6. Customer Satisfaction
The product or service offered
must satisfy consumer.
Consumer satisfaction is the
major objective of marketing.

Dr. Nishant Dabhade

MARKETING OF BANKING SERVICES /

BANK MARKETING
• Bank marketing is same as Service marketing. Bank
marketing deals with providing services to satisfy customers'
financial needs and wants. To satisfy these financial needs,
customers want specific services.
• All the techniques and strategies of marketing are used so
that ultimately they induce the people to do business with a
particular bank.

Dr. Nishant Dabhade

MARKETING OF BANK PRODUCT

• Marketing of bank products refers the various ways in which a bank
can help a customer, such as operating accounts, making transfers,
paying standing orders and selling foreign currency.
• Marketing is important for growing market share as well as sales in
banking industry.
• Marketing is essential for any business. Since the Banking sector is
moving towards customer-centric, Marketing is very important for
that. Traditional banking method is changed to digital banking.
• The marketing of bank services is the activity of presenting,
advertising and selling of bank's products in the best possible way in
order to satisfy consumers' requirement.
Dr. Nishant Dabhade

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WHY BANK MARKETING IS NECESSARY

• The existence of the bank has little value without the
existence of the customer.
• Aim is not only to create and win more and more customer
but also to retain them through effective customer service.
• Appropriate promise to a customer through a range of
services (products) and also to ensure effective delivery
through satisfaction is important.

Dr. Nishant Dabhade

BANK MARKETING APPROACH

• Bank customers are mostly people and enterprises that have
surplus or lack of funds and those who require various types of
financial and related services.
• These customers are from different strata of the economy, they
belong to different geographical regions, areas and are into
different professions and businesses.
• It is quite natural for the requirement of each individual group
of customers to be unique from the requirements of other
groups.

Dr. Nishant Dabhade

• Thus, it is important to acknowledge distinct homogenous groups

and even sub-groups of customers, and then with maximum
precision conclude their requirements, design schemes to suit their
particular requirements, and deliver them most efficiently.
• Basically, banks engage in transaction of products and services
through their retail outlets known as branches to different
customers at the grassroots level. This is referred as the ‘top to
bottom’ approach.
• In simple words, bank marketing is the design structure, layout and
delivery of customer-needed services worked out by checking out
the corporate objectives of the bank and environmental constraints.

Dr. Nishant Dabhade

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FEATURES OF BANK MARKETING

1.Human and Intangible activity:

Originally, the term marketing is a human activity under which
human needs are satisfied by human efforts. It’s a human
action for human satisfaction. Since in banking industry
intangible products are offered by the banks, so it is quite
difficult assess and satisfy the needs of the bank customers.

2. Consumer-oriented:
A business exist to satisfy human needs, hence banks must find
out what is the desire of customer (or consumer) and thereby
produce goods & services as per the needs of the customer.

Dr. Nishant Dabhade

3. Guiding element of business:

Bank Marketing is the heart of banking activities that tells what,
when, how to produce. It is capable of guiding and controlling
business. Also it helps in identifying the needs of customers by
segmenting the customers into different categories

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4. Exchange Process:
All marketing activities revolve around commercial exchange process.
The exchange process implies transactions between buyer and seller.
It also involves exchange of technology, exchange of information and
exchange of ideas.

5. Starts and ends with customers:

• Marketing is consumer oriented and it
is crucial to know what the actual
demand of consumer is.
• This is possible only when required
information related to the goods and
services is collected from the
customer.
• Thus, it is the starting of marketing
and the marketing end as soon as
those goods and services reach into
the safe hands of the customer.
Dr. Nishant Dabhade

IMPORTANCE OF BANK MARKETING /

WHY MARKETING

1. Basis of organization’s Existence:

• When customers are satisfied from the bank’s goods and
services then only success of any bank is determined.
• Since marketing assures customer satisfaction through the
fulfillment of their needs and wants, it has become the social
and economic basis for the existence of all service
organizations.

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2. Source of Revenue:
Among various activities , marketing is the only one that generates
adequate revenue directly to the bank because marketing consists of
economic activities, which include production of various banking
products, distribution and many other supportive function.
Performance of all these activities generates adequate revenue to the
bank.

3. Information for Planning and Decision Making:

• Marketing helps to maintain a suitable marketing information
system within the bank.
• This collects, sorts, analyses and maintains the most valuable and
reliable information necessary for suitable planning, organizing,
supervising directing and controlling the marketing activities for
the betterment of the banking operations.

4. Distribution of product:
Marketing helps banks to provide products and services to their
targeted/potential customers in an effective and efficient way
which helps in smooth functioning of the organization.

Dr. Nishant Dabhade

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5. Management of Innovation and Change & Adaptation:

• In today’s world because of technology and other development
Customers’ needs and wants go on changing situations over time.
• A successful marketer is one, who can over time; adapt to the
changed situation.
• Marketing, as a business strategy and strategic tool, provides new
techniques and teaches us to adapt to the changed situation
according to the need of change.
• Marketing enables a firm to adapt to the changing business
environment. It helps to understand the changing preference of
customers thereby leading them towards adaptation as per the
necessity.

ELEMENTS OF
BANK MARKETING MIX
• The elements of marketing mix are the convenient means of
organizing all the variables controlled by the banks that
influence transactions in the marketplace.
• It is a ‘checklist approach’ where bank’s attempt to list and
organize the variables under their control which may be
important in influencing transactions in the market place.

Dr. Nishant Dabhade

Seven elements used in marketing

mix for banking service are as
follows:
(1) Product
(2) Price
(3) Place
(4) Promotion
(5) People
(6) Physical evidence
(7) Process.

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1. Product
• In bank marketing mix the product is intangible in nature.
Product as a marketing mix in banking denotes the offer of
banking products and services that the bank defines in
accordance with the needs of specific target groups (retail
clients, corporations, individual industries).
• The main products of banks are Saving Account, Current
Account and Demat Account. The other products are Home
loan, personal loan, Insurance, Credit cards, etc.

Dr. Nishant Dabhade

2. Price
• Pricing is more difficult in case of services than in the
products. A bank’s ability to acquire funds at lower prices,
i.e. interest rates, and loan them at the highest possible
margins determines the profitability of banking operations.
• In addition to this, determining the price is also limited by
certain external factors, such as the rate of statutory
reserves, inflation, levels of development of the banking
market, with the resulting degree of competition.

Dr. Nishant Dabhade

3. Place
• Place determines where the service product is going to be located. The
location of the service providers and their accessibility are important
factors in services marketing.
• Accessibility relates not just to physical accessibility but to other means
of communication and contact. Distribution refers to banks’ activities
whereby their services are placed at the disposal of users in the right
place and at the right time.
• In addition to distribution through a network of branches and counters,
the development of electronic banking brings additional channels such
as ATMs, internet centers, call centers, video communication, mobile
banking, etc.

Dr. Nishant Dabhade

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4. Promotion
• Promotion is the tool to create awareness to the public regarding the
products. Brand promotion helps a lot in service sector why because
services can be duplicated easily.
• Promotion includes the various methods of communicating with markets
whether through advertising, personal selling activities, sales promotion
activities and other direct forms of publicity, and indirect forms of
communication like public relations.
• Promotion in banking plays a special role in strengthening corporate
reputation, goodwill and other elements of intangible assets.

Dr. Nishant Dabhade

5. People
• In bank marketing another element which plays a major role is people. All
human actors who play a part in service delivery and thus influence the
buyer’s perceptions.
• People as a marketing mix instrument in banking include the staff of the
branch selling services and offering accompanying services, auxiliary staff,
as well as other users who find themselves in the branch at the moment of
service performance.
• Now a day‘s banks are also concentrating on the training activities to
impart necessary skills to the employees. The factors such as skills,
attitudes and knowledge of the human resources play a vital role in
determining the competitiveness of the financial sector. The banks can
deliver value to customers only when they maintain quality of human
resources.
Dr. Nishant Dabhade

6. Process
• Process is the way in which the services are created and delivered to
the customer in bank marketing. Technology is supporting a lot to the
banks now a days.
• In order to improve the efficiency in service the banks prefer the latest
technologies.
• Processes in banking show a bank’s ability to perform the tasks
assigned to it, and an illustration can be the process of disbursing loans
in the sense of terms, complexity and total risk.

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7. Physical Evidence
• The physical evidence of service includes all of the tangible
representations of the services – such as brochures, letterhead,
business cards, report formats, signage, and equipment.
• In some cases it includes the physical facility where the service is
offered, for example, the retail bank branch facility. Physical
environment is extremely important for forming the users’
impression about the bank, and particular standards define the
outer and inner appearance of branches.
• The main intention is for the users to have an identical experience
of service provision at every branch.

Dr. Nishant Dabhade

MARKETING APPLICATIONS
IN BANK INDUSTRY
• Banking is the business activity of banks and similar
institutions. Customers are offered innovative products to
redefine banking convenience.
• With bank’s expertise, customer can rest assured that our
wealth is protected and nurtured at the same time.
• Banking product cannot be seen or touched like
manufactured products. In marketing of banking products,
the product and the seller are inseparable; they together
define the banking product.
Dr. Nishant Dabhade

• Banking products are products and

delivered at the same time; they
cannot be stored and inspected
before delivering.
• Bank safeguards money and
valuable and provide loans, credit,
and payment services such as
checking accounts, money orders
and cashier’s checks. Banks also
may offer investment and insurance
products.

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1. APPLICATION ON CONSUMER TRUST

• Trust has become the topic of abundant conversation within
company, banking system, academia and the media.
• The role of trust encompasses the exchanges and
interactions of a retail bank with its customers on various
dimensions of online and offline banking.
• Specifically lays stress on the bank‐to‐customer exchanges
taking place through the technological interface.

Dr. Nishant Dabhade

• Trust relates to the belief that a

customer has in an honest
investment and engagement with
the service provider.
• In the banking context, trust is
defined as customer confidence in
the quality and reliability of the
services offered by the organization.
• It has become the moral values that
are established to enhance their
business relationship with the
customers
Dr. Nishant Dabhade

2. APPLICATION ON CONSUMER LOYALTY

• Banks are gradually accepting a relationship based method to
marketing to grow client loyalty as the growth of client loyalty
is a deliberate objective for most Banks.
• Banks need to have a good understanding of their customer
behavior so that appropriate marketing strategies directed
towards relationship building and customer retention can be
developed.

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• Customer loyalty is also achieved

through free offers, coupons, low
interest rates on financing, high
value trade-ins, extended
warranties, rebates, and other
rewards and incentive programs.
• The ultimate goal of customer
loyalty programs is happy
customers who will return to
purchase again and persuade
others to use that bank’s
products or services
Dr. Nishant Dabhade

3. APPLICATION ON DIGITALIZE OPERATING SYSTEM

• Banks are looking to diminish facilities in the term of cost cutting to
repay for decreasing profits.
• The most successful banks will be those that have transformed their
business models. Banks will increasingly focus on profitability rather
than revenues.
• Banks keep all information about customer by using different software.
They use data when needed so easily.
• Banks are now providing their information about their products on
internet. They are providing digitalize service to their customers

Dr. Nishant Dabhade

4. APPLICATION ON FRAGMENTING CUSTOMER BASE

• Fragmentation continues to be an important marketing concept
also in a relationship marketing context.
• Relationship marketing is, however, more interested in enhancing
the existing customer relationships and this generates a need for
a better understanding of the existing customer base.

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• By marketing of
bank product,
bank’s objective is
to identify and
manage better the
brand
communication that
determines the
quantity and quality
with their brand
relationships.
Dr. Nishant Dabhade

EVOLUTION OF MARKETING CONCEPT

TRADITIONAL TO MODERN
There are five philosophies under which marketing activities
can be conducted.
1. The production concept
2. The product concept
3. The selling concept
4. The marketing concept
5. The societal marketing concept

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1. The Production concept

• It is the philosophy that consumers
will like products that are easily
available and highly affordable.
Therefore the company should focus
on production and distribution
efficiency.
• Whatever is produced is quickly sold
and product quality is not important.
• Hence more products are
manufactured since it is assumed that
little effort is needed to achieve more
sales and profits.

2. The Product concept

• It holds that consumers will favour
products that offer the highest quality,
performance or innovative features.
• The company therefore focuses on
making superior products and
improving them over time.
• Product oriented companies trust that
their engineers can design exceptional
products hence little or no customer
input is obtained.

3. The Selling concept

• It is the idea that consumers will not
buy enough of the company’s products
unless it (the company) undertakes a
large scale selling and promotional
effort.
• The concept assumes that consumers
show buying inertia or resistance
and must be persuaded into buying.
• It holds the belief that the purpose of
marketing is to sell more products to
more people, more often for more
money in order to make more profit.

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4. The Marketing Concept

• It holds that the key to achieving
organizational goals consists of the
company being more effective than
competitors in creating, delivering and
communicating superior customer value
to its target markets.
• The job is not to find the right customers
for your product, but the right products
for the customers. While the selling
concept focuses on the needs of the
seller, the marketing concept focuses on
the buyer’s needs.
• The starting point is always the
consumer.

5. The Societal marketing concept:

• The Societal Marketing Concept puts the Human
welfare on top before profits and satisfying the
wants.
• Societal marketing is when a company markets a
product not only with consumer and company
needs in mind, but also the long-term well being
of society as a whole.
• Societal Marketing emphasizes on social
responsibilities and suggests that to sustain long-
term success, the company should develop a
marketing strategy to provide value to the
customer’s to maintain and improve both the
customers and society’s well being better than
the competitors.

PRODUCT AND SERVICE MARKETING

• Marketing of products and services involves different
strategies due to the dissimilarities in their characteristics.
• While in product marketing, the aim is to fulfill the needs and
wants of the target population with the qualitative product
and its characteristics.
• As against, in service marketing, the firm seeks to create a
good relationship with the customer, to win their trust.
• Nowadays, marketing is not confined to the product, but
services, ideas, property, experiences and even people are
marketed.
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PRODUCT MARKETING
• The entire process, right from the market analysis, to delivering
product to the customer and receiving feedback, is called product
marketing.
• The process is aimed at finding out the right market for its product and
its placement in such a way that it gets good customer response.
• It involves promotion and sale of a product to its target audience, i.e.
prospective and existing buyers.
Example: Marketing for tangible objects like books, handbags, laptops,
mobiles, clothes and so on.

Dr. Nishant Dabhade

SERVICE MARKETING
• When a person or business entity promotes services, it offers to its
customers or clients, it is known as service marketing.
• It is aimed at providing solutions to the problems or difficulties of
the clients. It includes both business-to-business (B2B) and
business-to-consumer (B2C) marketing.
• A service is an act of performing something for someone in
exchange for adequate consideration. It is intangible, consumed at
the time of its production, can’t be inventoried and resold.
Example: Marketing of banking services, Professional services,
coaching centers, health services, telecommunication, etc.

Dr. Nishant Dabhade

COMPARISON BETWEEN PRODUCT & SERVICE MARKETING

BASIS FOR PRODUCT

SERVICE MARKETING
COMPARISON MARKETING

Meaning Product marketing refers Service marketing

to the process in which implies the marketing of
the marketing activities economic activities,
are aligned to promote offered by the business
and sell a specific to its clients for
product for a particular adequate solution with
segment. consideration.

Marketing mix 4 P's 7 P's

Sells Value Relationship

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Who comes to Products come to customers. Customers come to

whom? service.
Transfer It can be owned and resold It is neither owned nor
to another party. transferred to another
party.
Return-ability Products can be returned. Services cannot be
returned after they are
rendered.
Tangibility They are tangible, so They are intangible, so it
customer can see and touch is difficult to promote
it, before coming to the services.
buying decision.

Dr. Nishant Dabhade

Separability Product and the Service cannot be

company producing it, separated from its
are separable. provider.
Customization Products cannot be Services vary from
customized on a large person to person, they
scale as per can be customized.
requirements.
Quality comparison Quality of a product can Quality of service is not
be easily measured. easily measurable.

Dr. Nishant Dabhade

A person who never made a mistake never tried anything new."

—Albert Einstein

THANK YOU
END OF
UNIT -1
Reference Books:
• Dynamics of Banking Marketing, VBS publishes.
• Marketing of Banking & Financial Services, Serials Publication.
• Services Marketing: People, Technology and Strategy, Pearson Education.
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