Market

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Marketing
Introduction
In the most simple and non-technical language marketing
may be defined as a business function entrusted with the creation and
satisfaction of customer to achieve the aims of business itself. Thus, the
term may be logically broken down as follow:
Business aims at profit:

TO realize profit, a sale has to be made
To make the sale, a customer has to be created
To retain the customer, he has to be satisfied
To satisfy the customer, his needs have to be met
To meet his needs, the product should conform to the requirements of the
customer.
The analysis exactly fits in to Drucker ’s comment on the purpose

of the business, i.e. to create a customer.This idea may be stretched a
little further to structure the term marketing as one that is directly
concerned with demand: its recognition, anticipation, creation,
stimulation, and finally satisfaction. Thus marketing is, therefore, eyes
and ears of the business. It is responsible for keeping the business in close
contact with its environment and informed of events that can influence its
operations.
Because of changing emphasis it is no easy task to define the term

marketing. However, it may be defined “as a social and managerial
process by which individuals and groups obtain what they need and want
T.Y (BBI), Mumbai University 1

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through creating and exchanging products an value with others. It is

concerned ways in which the organization is able to meet those needs in a
profitable manner.
From the foregoing discussion we may conclude that:

1. Marketing is a management philosophy
2. Customer and his needs are central to marketing, around which
the concept revolves
3. Products are the means and not the end in themselves
4. Marketing has social orientation
5. Marketing aims at earning profit for the organization through
customer satisfaction.
MARKETING MIX
Marketing is one of the most fundamental concept in

marketing management. For attracting consumers and for sales
promotion, every manufacturer has to concentrate on four Basic elements
or components. These are: Product, Pricing, Place and promotion. A fair
combination of these marketing elements is called marketing mix. It is
the blending of Four Ps which forms the core of marketing system.
The four components of marketing mix are also called marketing

mix variables or controllable variables as they emanate from within the
enterprise and the marketing manager can use them freely as per his
desire or need of the situation.

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According to Philip Kotler, “Marketing mix is the mixture of

controllable marketing variables that the firm uses to pursue the sought
level of sales in the target market.”
Features of Marketing Mix:
 Marketing mix is the combination of four basic Marketing
Variables namely, product, price, promotion and place.
 Marketing mix is a consumer-oriented activity as its purpose is
the satisfaction and pleasure of the consumers.
 The concept of marketing mix is applicable to business as well
as to non-profit making organizations such as clubs and
associations.
 The main focus of marketing mix is the customer. His
satisfaction and support are important.
 Marketing mix variables are interrelated. Decisions are one area
affects the action in the other areas. An integrated approach is

needed while making changes in the marketing mix variables.
 Marketing is a flexible combination of variable.
Basic Elements of Marketing Mix (Ps)

There are four basic elements of marketing mix these are Product,
Place, Promotion and Price.
1 Product: Product is any articles which the manufacturer desires
to sell in the open market. A product has a capacity to satisfy
human want. This create demand and facilitates marketing. The
product mix in includes the following variables
a) Product line and range
b) Style, shape design colour and quality of a product
c) Product innovation

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d) Product servicing
2 Place: Physical distribution is the delivery of goods at the right
time and at the right place to the consumers place mix includes the
following variables:
a) Types of intermediaries available for distribution
b) Marketing channels available for distribution
A marketing manager has to select a channel which is convenient,
economical and suitable for the distribution of specific product.
3 Promotion : Promotional activities are for encouraging retailers
and dealer to keep the stock of company’s product and also for
encouraging consumers to purchase company’s products due to
various plus points. Promotion mix includes the following
variables:
a) Advertising and publicity of the product,
b) Personal selling (salesmanship)
c) Displays of goods for publicity and sales promotion
d) Public relation technique used for cordial relations with
dealers and consumers.

4 Price : Price is one more critical component of marketing mix. It is
a valuation of the product mentioned by the seller of the product. It
is the amount at which the seller is willing to sell and the buyer is
willing to buy. Price mix includes the following variables :
a) Pricing policies
b) Terms of credit sales
c) Pricing strategy
d) Terms of delivery.

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SERVICES MARKETING
SERVICES
A service is an act or performance offered by one party to
another. They are economic activities that create value and provide
benefits for customers at specific times and places as a result of bringing
about desired change in or on behalf of the recipient of the service. The
term service is not limited to personal service like medial service, beauty
parlors, legal services, etc. According to the marketing experts and
management thinkers the concept of services is a wider one. The term
services are defined in a number of ways but not a single one universally
accepted. Following are some of the definitions:
According to American Marketing Association, “Service are the

activities, benefits or satisfaction which are offered for sale or are
provided in connection with the sale of goods.”
CHARACTERSITICS OF SERVICES:
Services have different types of characteristic are mentioned
below:
1 Intangibility: Services are intangible we cannot touch them.

There is no inventories of the service, production and
consumption are inseparable, there is no ownership transfer.
While selling or promoting a service one has to concentrate on the

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satisfaction and benefit a customer can derive having spent on

these services.
2 Perishability : service are too perishable like labour. Service has

a high degree of perishability. Here the element of time assumes a
significant position. If we do not use it today, it is lost for ever. If
labour work stops working, it is complete waste. It cannot be
stored. Service has a high level of perishability.
3 Inseparability: service are generally created or supplied
simultaneously. They are inseparable. Service and their provider
are associate closely and thus, not separable. Donald Cowell states
‘Goods are produced, sold and then consumed whereas the service
are sold and then produced and consumed’.
4 Heterogeneity: This character of services makes it difficult to set
a standard for any service. The quality of service cannot
standardized. The price paid for a service may either be too high
or too low is seen in the case of entertainment industry and sports.
The same type of services cannot be sold to all the customers even
if they pay the same price.
5 Ownership : In the sale of goods, after the completion of process
the goods are transferred in the name of the buyer and he become
the owner of goods. But in the case of services, we do not find
this. The users have only access to services. They cannot own the
services.

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SERVICE MARKETING MIX
INTRODUCTION :
The marketing mix concept was popularized by an American professor
Jerome McCarchy in terms of 4Ps – product, price, promotion and place. The
major part of marketing after considering the environmental variables is
assembling and managing the marketing variables. The most important task is
to blend the 4 elements in different combination in order to have a greater
marketing impact and also to be cost effective.
Some modifications in the 4Ps are required when applied to service due
to some special features of services.
ELEMENTS OF SERVICE MARKETING MIX :-

(7Ps OF SERVICE MARKETING-MIX)
The service marketing mix consist of the following variables:

1. PRODUCT.
2. PRICE.
3. PROMOTION.
4. PLACE.
5. PEOPLE.
6. PROCESS.
7. PHYSICAL EVIDENCE.

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1 PRODUCT : The products offered by the bank may be in the core

and augmented form. The basic or core products are the basic service
offerings provided by almost all the banks. For instance, a bank may
provide savings bank accounts or housing loans to its customers. The
augmented product includes all the specific features and benefits that help
the marketer differentiate their offerings from those of competitors. They
include the supplementary services provided by the bank to the
customers.
A product mix refers to all the products offered for
customers by a particular seller. The product mix of a large bank include
a large number of services, providing the customers all the services under
one roof. New and innovative products are being offered to customers to
meet their varying needs. Most of the following products are commonly
offered by today banks-
 Saving account, debit card
 Salary saving account
 Current ,fixed deposit , recurring deposit account
 Loans, overdraft, cash credit, smart cards,
 Depository services
2 PRICING: Pricing of any product or service affects its

profitability because the price paid by the customers determines the
demand for the offering and also revenues and margins generated by it.
Traditionally, the main source of revenue for any bank was the interest
rate differential between the interest paid on investment and that charged

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on loans. However, the situation has changed in the modern banking, as

there are many more sources of income for banks today. The annual
charges for credit and debit cards, penalties, commissions for cross
selling and charges for payment of utility bills are some of the sources.
Though pricing strategies like cost-based, competition-based and
customer-based pricing are available, many banks base their pricing
strategies on risk/return pay-offs. However while initiating a price
change, reactions from customers as well as competitors, have to be taken
into consideration.
3 PLACE: The specific characteristic of services could pose a whole

lot of problems for bankers. Earlier customers had to wait in queues for
long hours to encash a cheque or make a deposit. On the other side, the
bank employees would get tired answering customer queries and dealing
with them. Since almost all banks were closed on Sunday and other
public holidays, customers had to face problems if they had some
emergency. The feature of perishability of services also caused
inconvenience to both bankers and customers. When it was salary time in
banks, most customers wanted to draw money and this led to a hectic
rush in banks. However, things have been changing in the banking sector.
Electronic channels of the distribution have become quite strong with
technological innovations. Place refers to making the services accessible
and available to customers. The different channels for banking including
both conventional and modern distribution channels are
 Physical channels of distribution or bank branches
 Telephones and call centre
 ATMs and ALMs (Automatic lending machines)
 Internet banking and home banking

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 Mobile offices and mobile ATMs
4 PROMOTION: The banking industry has been experiencing

intense competition since the opening up of the economy and the entry of
foreign banks into the Indian market. Indian banks have responded
positively by upgrading their services and promoting themselves
aggressively in the market. Banks use different promotional strategies
like personal selling, advertising, discounts etc. For example, banks like
HDFC and ICICI have customer care executives who contact the
customers either personally or on the phone and recommend their new
services/products. The SBI held home loan melas and property fairs
across the country as the lending rates plummeted and the market became
very competitive. Banks also tie up with companies from other industries
for the benefit of not just the two companies but also the customer. Banks
also advertise their services through different media like print and
electronic media. They put up large hoardings especially in commercial
areas, where they will be noticed by employees and businessmen. Banks
also target specific segments through their advertising. They advertise
their educational loans at the beginning of the academic year, to attract
students and their parents.
5 PEOPLE: People have always been important for any services

marketing. Though the role of people seems to have diminished in
banking services because of the technology, their contribution cannot be
ignored in practice. For instance, the banker sells personal loans to the
customer by persuading him that the loan can be used for any personal
purpose like marriage etc. the banker effectively explains repayment
through EMIs the effective cost the loan and the rate of interest. As the
bankers enjoys direct interaction with the customers , he understand their

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tastes and preferences better. So he can offer tailor made services to

match the customer expectation. If the customer wants more EMIs to
repay a car loan than the actual EMIs set by the bank, banker can attend
his offer accordingly.
6 PROCESS: Process plays a significant role in winning customers

and increasing market share. It is the processes in a bank that determine
the efficiency of its operations and the quality of service delivery to
customers. Every bank has a set of predetermined processes for each of
its transactions. The time required by a customer to take a demand draft
has come down from hours to minutes. Increased competition has forced
banks to improve their work processes and thus their efficiency. The
various processes in a bank have been simplified, made more customer
friendly and faster. Information technology too has helped bankers in the
process.
7 Physical Evidence :
Generally a service transaction involves the transaction of the
service provider with the customer in a service environment. Services like
hotel services and hospitals are delivered in physical environment created
by the service firm.
Physical evidence is termed as the social environment along with
the tangible cues. Zeithami and Bitner defines physical evidence as “ the
environment in which the service is delivered and where the firm and
customer interact; and any tangible commodities that facilitate
performance communication of the service”.
Physical Evidence includes all the efforts taken by the service
provider to tangibilise their services, they includes:
a) Physical facilities

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b) Physical environment, and

c) Social settings
Concept of Bank Marketing and its

Relevance
Marketing as it is viewed today is a way of managing a

business so that each strategy is evolved with foreknowledge of the
impact of such decision on the customer. Bank have broadly three
dimensions, i.e. deposits, borrowings, and other allied services.
Anyone who interacts on any of these fronts is qualified to be a
customer of a bank.
Thus, a bank renders financial services as an intermediary.

As it renders personalized services and the present emphasis in
marketing is customer satisfaction it will not be inappropriate here to
observe that “customer of bank is king”. The customer satisfaction,
which must be ultimately goal of bank marketing is achieved not only
through creating suitable products according to his need but also
through delivering them in a most satisfying manner.
Therefore bank marketing implies that “it is the creation and

delivery of financial services suitable to meet the customer’s needs at
a profit to the bank”. The concept of bank marketing encompases.
1. identifying the most profitable markets now and in future;
2. assessing the present and future needs of customers;

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3. setting business development goals and making plans to

meet them;
4. managing the various services and promoting them to
achieve the plan;
5. adapting to a changing environment in the market place.
The following model has been developed by Arthur Median to show
marketing approach to banking services.
From the above discussion of the bank marketing it can be understood

that the existence of bank has little
Relevance of Bank Marketing
It was all along being understood that marketing is meant only

for physical products produced by manufacturing units be it industrial or
consumer goods. Bank being a service industry, dealing in satisfying
financial and other related needs of customers were thought to be of
altogether a different breed. Financial needs were treated to be basic and
the demand for them as natural and perpetual. Therefore, it was though,
people would flock into banks either to deposit their surplus fund, or to
borrow to meet their financial requirements or to help themselves with
some other ancillary services as they had nowhere else to go. This belief
grew from the fact that bankers were habituated with the culture of
getting “walk-in” business. They were sure of share of the cake. “selling”
as a concept was looked down upon by the bankers.

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Through liberalisation it wanted to become a part of the

globalization process. Foreign banks took the opportunity to prove their
the strength. Suddenly there were several player in the field of financial
services sector. At the same time people became more choosy. They had
multiple option. There were several shops crying hoarse to attract his
attention. It was not necessary for him to go to one place with tailor-made
financial products to meet his needs, that too at his door-steps. Thus
people become more conscious of this vehicle of financial development
and started making use of it. In some way it led to rise of consumerism.
They preferred “buying first playing later” to “saving first and buying
later”. These changes did create a challenge before bankers. They
suddenly discovered themselves lagging much behind socially, culturally,
by training, by working habits, temperamentally and in so many ways to
overcome the challenge of this changing scenario.
The growth of capital market resulted in high net worth corporate

borrowers directly tapping deposit from general public, not only for
financing their fixed assets but also for payment of loans taken from
banks/financial institution and even financing working capital needs. This
phenomenon of financial dis-intermediation left the second rated
corporates who could not tap the capital market directly and other
borrowers to remain with commercial banks. Even when these high-rated
corporates decide to borrow from banks through raising commercial
papers, the playing field is uneven for banks. Either the foreign banks or
few large nationalised banks, with their better service snatch away a
greater share of this market. This has made a role reversal by making
banks to ran after valued customers.

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On the other hand the small investors, the banks stable depositors,
have now become more of borrower to have more financial muscle for
their investing ambition. Though it may prove to be temporary, in the
first instance banks lost their deposits from a section where it was least
expected.
Another factor that is worth considering here is profitability

compulsion of banks. The falling bottom lines of the banks maybe argued
from the point of view that the banks are not profit conscious or social
banking is not profitable. But, whatever may be the situation, Indian
banks would have to do social banking and that to at a profit. This throws
up another challenge. The answer lies in marketing. Instead of going
blindly by quantitative norms they have to do qualitative lending,
energies their effort to recover dues, increase fee-based incomes,
concentrates on off-balance sheet items, improve deposit mix to reduce
interest burden, maximize staff productivity to bring down overheads. A
market driven, profit conscious and customer-oriented culture will go a
long way in marketing this task easier.
To improve the bottom-line customers satisfaction is a prime

necessity. A dissatisfied customer is a bad advertisement. To undo the
damage caused by this will necessitate double the efforts. Customer
satisfaction is a dynamic concept. It is the perception of a customer of the
satisfactory service he receives from a bank. These perception differ from
individual to individual and within an individual from time to time. With
ever passing day, in tune with the changing financial sector, the
expectation of the customer from this sector also gets changed. So what is

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effective customer service today may be indifferent customer service

tomorrow and a bad service the day after.
Evolution of Bank Marketing
In the earlier days, selling as a concept was looked down

upon by the bankers. They, as a breed, were known for their conservative
approach. The bank building was created in the image of a Greek Temple
calculated to impress the public with the banks importance and solidity.
Marketing came into banks in the late 1950s not in the form of
marketing concept but in the form of the advertising and promotion
concept. Soon, however, it was realized that marketing transcends
advertising and friendliness. In 1960s bankers attitude towards marketing
flourished and in 1970s the bank marketing profession changed
dramatically. In the decade, banks throughout Europe have found it
necessary to introduce marketing function as a response to an
increasingly competitive market place. The quality, integration and
effectiveness of these functions naturally vary somewhat between banks.
The increasing inclination on the part of the banks towards

marketing can be observed from the way the marketing function within
the American Bankers Association (ABA), had shifted from one
department to the other till marketing itself became a separate
department. From 1959 through 1962, there was a subcommittee on
‘Market Research’ operating under the Economic Department. In 1963,

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Market Research at ABA was teamed with the Automation Department

because of developments and application of the computer. Then in 1965,
because of its relationship with other activities of the Association’s
Public Relation Department, the market research function was combined
with the public relations functions; and the Department’s title was
changed to the Public Relations and Marketing Department’s. In
September 1966, marketing became a separate department at ABA and
the Advertising Department became a part of this new department.
Since then, with support from ABA the member banks achieved
significant progress in marketing function in America. By 1970 there was
a formal marketing department in 55 percent of the banks with deposits
over $ 10 million.
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Pre- Liberalisation Scenario
After nationalisation of 14 major banks in 1969 bank’s approach

towards customer and market underwent a sea-change and focus was
gradually shifted to marketing. The said period witnessed a phenomenal
expansion in the volume of banking business not only in geographical
spread but also in functional diversification. Bank branches were opened
in unbanked areas and banking business diversified to provide credit, to
agriculture, to small industry and to the self employed. In other words
social banking was the order of the day. Table speaks of the way things
have changed since Independence. It is only after nationalization in 1969
things have taken a drastic turn. Branch expansion by commercial banks
was almost seven times between the period 1969 and 1991, reducing in

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the process, the population served by a bank office from around 64,000 to
14,000. Deposits grew from Rs. 4665 crores to Rs. 200,569 crores, by
forty-three times, making it almost 48.1 percent of nationalization it was
a mere 15.5 percent. Similarly credit increased from Rs. 3599 crore to Rs.
121,865 crore, by about 39 times. Though all these growth in the banking
sector was due to the compulsions imposed in the banks and socialistic
policy guidelines of the government, emphasis on marketing was also
observed in those days. As banking moved from class banking to mass
banking it picked up the concept of marketing using it synonymous with
‘selling’. The first major step in the field of marketing was initiated by
State Bank of India in 1972 when it reorganized itself on the basis of
market segments viz., commercial and institutional, small industries and
small business, agriculture, personal and service banking segments. It
was in early 1980s, banks in India started thinking in terms of product
development, market penetration and market development.
Though there was a heavy growth in the banking business in the post-
nationalisation period, there was also a heavy price to pay for these
achievements. Over the years, the productivity efficiency and profitability
of the system suffered. The reasons are many. In reaching quantitative
targets set, either over-enthusiasm on the part of the banker or, as it often
happened, due to pressures political and administrative, quality has been
sacrificed for quantity. Further, to add salt to the injury, populist
measures like loan melas, loan waivers dealt a severe blow to the very
credibility of rural lending and thus seriously affected the credit
discipline amongst the borrowers. Besides the above, the large volume of
directed credit and investment, administered structure of interest rates,
high level of preemption in the form of resource requirements and
detailed direction in respect of operational and administrative matters

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have stifled initiative and innovation qualities so important for marketing

and severely affected positive decision making based on business criteria.
__________________________________________________________
Bank Marketing In Indian Environment
In the past, the Banks did not find any attraction in the Indian
Economy due to the low level of economic activities and meager business
levels. Though the SBI was set up as early in the 19 th century in order to
extend credit facilities backward regions remained neglected till
independence.
However, with the dawn of independence, the developmental

activities, underwent radical changes. Indian Constitution assigned top
most priority to social welfare and eradication of economic imbalances.
The introduction to Five Year Plans to promote the economy of the rural
population and country as a whole gave new dimension to the banking
section. It paved the way for emergence of Commercial banks; Co-
operative banks and Regional Rural banks.
But when the private sector banks failed in delivering goods to the
society, it resulted in the nationalization of 14 commercial banks in 1969.
With this, a radical change in the banking policy came into being.
The Entrepreneurs needed large scale facilities at liberal terms and

conditions. The rural population also had to depend on the banking sector

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in improve their economy. Hence, the bankers had to develop need

strategies, keeping in view the commercial and social goals.
The policies adopted by the Government also played an important

role in streamlining the strategies of banking profession.
On one hand the bankers have to mobilize deposits for the existence
and on the other hand they have to be very liberal in providing credit
facilities to the needed. It is really a challenging the task for the bankers
and therefore new strategies have to be evolved to maintain balance.
__________________________________________________________
THE GLOBALISED SCENARIO

– EMERGING CHALLENGES
“Change” is a continuous process and banking industry is no

exception this law which is natural. Due to the implementation of the
financial sector reforms and policies for the country change in the
banking industry is inevitable.
The main aim of the financial sector reform is to promote an efficient,
competitive and diversified financial system in the country. After
liberlisation and globalization process that was initiated in 1991, the
Indian banking industry has undergone tremendous transformation. These
changes have forced the Indian banking industry to adjust the product
mix and to remain competitive in the globalised environment.
In order to accommodate the changes and challenges that are taking place
in the present globalization scenario, the Indian banking industry has to
re-orient its strategy towards marketing of banking services. New ways

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and means have to be found to compete in the future and to survive with
profit and business growth.
The following are some of the vital challenges that threaten the Indian
banking industry.
1. competition from foreign banks and now new private sector banks:
The competition in the Indian banking industry have
intensified with the entry of more and more foreign banks and now
private sector banks, with better technology, market orientation and cost-
effective measures. Financial institutions have also stated entering into
the domain of banks. The share of business of public sector banks has
considerably declined. Hence there is a compelling need for the Indian
banking industry to either change or modify its marketing strategy in
order to attract the customers and also to withstand the stiff competition
from foreign banks and new private sector banks.
2.Technological Advancement :
The methodology of banking business ahs drastically
altered due to advent of technology both in terms of computers and
communication. It has opened new vistas in the banking sector and in
turn ahs brought new possibilities for doing the same work differently
and in a most cost-effective manner. With the help of technology it is
now possible to have 24 hours a day banking and all seven days in week.
New business potentials and opportunities which have remain unexplored
have not opened up with Tele banking, Internet banking and E-banking.

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3.Innovation :
Innovation is another importance forced of change in the
Indian banking sector. Now-a-days banks have become innovative and
pro-active and offer top-class service to the customers. They play
dynamic role not only as a finance provider but also as a departmental
store of finance. Due to this new instruments and new products like
factoring, leasing, merchant banking, forfeiting venture capital, corporate
advisory services are emerging. These innovative services may increase
the revenue with cost effective measures.
4.Diversified Activities :
There is a universal trend toward banks diversification
normally through insurance depository participant service, investment
banking etc. Furthermore bank have diversified their activities by
rendering various service like depositing gold, paying, tax liability and
telephone bills and collecting interest on securities on behalf of the
customers.
All these diversified activities have made the banks to
develop and offer consultancy counseling and customer designed
packages for efficient management of funds. The banks traditional roles
as financial intermediaries is gradually assuming lesser importance in
their overall business as the banks diversify their activities and redefine
their roles.
It is important to note that the percentage of non-interest
income in increasing and the interest income of the banks is decreasing.
This shows that the income through service exceeds the income through
lendings.
5.Customer Awareness and Satisfaction:

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In the urban and metropolitan sector customers demand more

facilities than offered since they are more knowledgeable. They took for
services that are cheaper, faster and better in quality. IDBI is offering
110% loan of cost of the project in case of construction of the building.
Such type of loan is given to meet the documentation expenses.
Now – a – days customer can know the status of their accounts,
request for a cheque book or a financial statement, transfer funds or
“stop-payment” of cheque from his desktop.
6.Development of skills of Banks Personnel:

In order to meet the new challenges, bank have to develop novel
ways of meeting the customer’s demands. To get sufficient knowledge
and exposure to technology, suitable packages relating to hardware and
software applications are to created in every bank to market their banking
services. They must be suitably trained to keep pace with ever changing
environment. For meeting the challenges the human resource departments
in the banks have to prepare a proper manpower plans and strategies.
7.profitability Nature:
Profit is a barometer for judging the performance of any bank.
Profits are needed to meet the expectations of the stake holder, benefit of
employees and also for building capital. Banks have to pay attention to
the following emerging areas in order to protect and enhance their
profitability.
(a) Product development and management skill.
(b) Skills for operating in electronic environment
(c) Modern credit management skill
(d) New risk management practices

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(e) New focus on customer and his needs

(f) New internal audit skills in a changing business environment.
8.Corporate Governance:
Corporate Governance play a highly significant role in
corporate governance revolves around enchancing shareholders value, it
has also the responsibility of marketing the banking services by
introducing and producing new products and services.
Accountability at all levels, transparency and enchancing the

image of the organization would be the major ingredients of good
corporate governance. After the globalization and financial sector
reforms, corporate governance has been receiving a lot of attention in the
banking sector.
To conclude we say that the recent trends of globalization and

liberlisation has posed serious problems to domestic banks. The public
sector banks have been pushed to a tight corner because of the aggressive
marketing strategies from their foreign counterparts. Potential customers
have stared moving towards the private sector banks and foreign banks.
The business prospects of our public sector banks have gradually started
shrinking and as such they are forced to revise their strategy of banking
operations so that they can meet the threats posed by the foreign banks.
Lastly in order to survive and succeed the domestic banks must

identify their marketing areas, develop adequate resources into efficient

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services and distribute them effectively so that the customers are

satisfied.
Bank Marketing Approaches
Introduction
Bank marketing in general and Customer Relationship

Management (CRM) in particular are of vital importance for Indian
banks, particularly in the current context when banks are facing tough
competition from other agencies, both local and foreign, that offer value-
added services.
Competition is confined not only to resource mobilization but also

to lending and other revenue generating areas of services offered by
banks. Under the circumstances, it has become essential to develop a
close relationship with valued customers and come out with innovative
measures to satisfy their needs. Customer expectations for quality
services and returns are increasing rapidly and, therefore, quality in future
will be the sole determinant of successful banking corporations. It is,
thus, high time that Indian banks organically realize the imperative of
proactive Bank Marketing and Customer Relationship Management and
take systematic steps in this direction.

BANK MARKETING
Marketing Approach
Banking industry is essentially a service industry which provides

various types of banking and allied services to its clients. Bank customers
are such persons and organizations that have surplus or shortage of funds
and those who need various types of financial and related services
provided by the banking sector. These customers belong to different
strata of economy, different geographical locations and different
professions and businesses. Naturally, the need of each individual group
of customers is distinct from the needs of other groups. It is, therefore,
necessary to identify different homogenous groups and even sub-groups
of customers, and then with utmost precision determine their needs,
design schemes to suit their exact needs, and deliver them most
efficiently.
Banks, generally, have been working out various services and

products at the level of the Head Office and these are traded through their
retail outlets (branches) to different customers at the grass-roots level.
This is the so called 'Top to Bottom' approach. However, bank
marketing requires a change in this traditional outlook. It should be
'bottom to top' approach with customers at the grass-roots level as the
focal point for working out various products / schemes to suit the needs
of different homogenous groups of customers. Thus, bank marketing
approach, in general, is a group or "Collective" approach.
Customers Relationship Management, on the other hand, is an

individualistic approach which concentrates on certain select customers
from the homogeneous groups, and develops sustainable relationships
with them for adding value to the bank. This may be termed as a
"Selective" approach.

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Thus, bank marketing concept, whether "collective" approach

or "selective" approach, is a fundamental recognition of the fact that
banks need customer oriented approach.
In other words, bank marketing is the design and delivery of customer

needed services worked out by keeping in view the corporate objectives
of the bank and environmental constraints.
The following chart gives an overview of the Two Pronged Approach to

Bank Marketing.

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Principal Aspects of Bank Marketing
1 Customer Oriented Services

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Services offered by the banks are to be worked out in such a

manner that they fulfil the needs of the customers.
Traditionally, bankers have been accustomed to think in terms of

what banks can offer and not what customers want. However, bank
marketing concept requires them to change this orientation, and start
working out schemes and services by keeping changing customer needs
as the focus of their new and novel products. In order to design and
deliver customer needed services, the banks must learn to seek
information about the existing and potential customers, and their
perceived and latent needs on a regular and systematic basis.
2 Design & Delivery of Such Services
The word design implies that good marketing services need to be

properly designed and painstakingly crafted so as to suit a particular well-
defined group of clients. They do not just emerge effortlessly. Moreover,
such properly designed services must be properly traded. In fact, poor
delivery of smartly designed services is just as bad as smart delivery of
poorly designed services.
The quality of delivery is to be ensured not only through focussed

advertisement, but also through proper customer services offered at the
bank's retail outlets. Customer satisfaction is a dynamic process and it is
necessary to keep pace with rising expectations of the customers. Further,
the development of IT and spread of Internet are opening up newer
mechanisms of customer contact and services.

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3 Corporate Objectives of the Bank
The corporate objectives of the bank are to be worked out within the
broad framework of the national policy. The corporate objective are of
two types, Short Term and Long Term.
The Short Term Objectives could be of the type: -
a) Increasing profitability of the bank next year,
b) Widening customer base by offering new services,
c) Increasing growth rate of credit next year, etc.
The Long Term Objectives could be: -
a) To rise to number one position in five years,
b) To become the universal bank over the period of next 3 years, etc.
Once the corporate objectives are clearly spelt out, various

schemes can be designed to fulfil the needs of the customers within the
framework of the chosen corporate objectives. Further, the resources
made available for systematic marketing efforts are also constrained by
policies, vision and attitudes of the management.
4 Environmental & Other Constraints
Environmental and other constraints play an important role in bank

marketing decisions. Generally, the environmental constraints fall into
four categories: Economic, Cultural, Legal and Political.

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A thorough understanding of local and national economy is

essential for taking effective decisions about what product to be offered,
where it is to be offered, at what price it is to be offered, and how it is to
be offered?
Banking schemes which are suitable for a developed economy

might not be suitable for a developing economy. It is essential to have
intimate knowledge of income pattern of potential customers, population
growth, nature of industrial and trading activities, extent of agricultural
development, employment levels, wage structures, and other relevant
factors, in order to make decisions about services to be offered.
The cultural environment in which the bank operates also has a

bearing on bank marketing decisions. This includes attitude of local
people about saving, borrowing and spending, and also their traditions
and values. The schemes suited for urban sector would be different from
those suited for rural sector.
Legal and political environment mainly constrains the decisions

about the price of product to be offered and the place for offering the
product. For example, price of deposits and various types of advances is
constrained by the interest rate policies of the regulators.
Thus, the knowledge of environmental constraints is an essential

factor in the designing and delivery of various types of customer-oriented
schemes and services.
Marketing Strategy

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The marketing strategy consists of a very clear definition of

prospective customers and their needs and the creation of marketing mix
to satisfy them. A recent development in this regard is Customer
Relationship Management (CRM). It is a business strategy to learn more
and more about customer behaviour in order to create long term and
sustainable relationship with them. It is a comprehensive process of
acquiring and retaining selective customers to generate value for the bank
and its customers.
Under CRM, acquisition of customers is done through personal

visits, media advertisement or word of mouth from existing customers.
Customer retention is carried out through data warehousing and mining
tools, customer service and call services, and improved customer value is
obtained through cross-selling and upselling to the retained customers.
1 Identification of Target Customers & their Needs
This is an important area in formulation of a marketing strategy.

Unless the bank has clear idea about the customers it wants to serve, it is
not possible to work out products to satisfy their needs. This
identification process involves: -
Finding out profile of present customers in terms of their

education, occupation, income, geographical location, population group,
age, sex, marital status, products and services they purchase, their habits,
tastes and preferences, their businesses and future prospects, etc.
Finding out opinions of existing customers about the services

provided by the bank and their suggestions for improvement in present
services and introduction of new services.

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Collecting such information from the persons who are not

currently customers of the bank.
All this can be done by conducting a survey of customers and non-

customers of the bank. Moreover, this process of seeking information
about the market must form an integral part of the system and must be
done on a regular basis. The survey would give valuable information
about profiles and opinions of customers and non-customers of the bank,
and it can be analysed to find out the target group of the customers and
their felt and latent needs.
The concept of data warehousing and data mining used in CRM

helps in seeking information about individual customers and their needs
on a regular and systematic basis. Data warehousing builds customer wise
data by mapping it from various services and products used by the
customers such as deposits, credits, foreign exchange, e-business, safe
custody, lockers, bill collection, etc. Data mining carries out various
types of analysis on collected data to determine customer behaviour with
respect to product, price and distribution channels, and offers a holistic
view of every customer at a given point of time. The customer
information gathered by the bank in their day-to-day banking operations
is often sufficient for effective data storage. However, many times, it
needs to be supported by data collected from outside sources and
agencies. Further, the Customer Relations Management focuses on
customer classification by classifying the customers into: a high value (a
more profitable) customer and a low value (a less profitable) customer.
Once bank differentiates the customers in terms of their profitability and
other traits, it becomes easy for the banks to customize their services and
products to maximize overall value of their customer portfolio.

BANK MARKETING
2 Marketing Mix
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 and promotion. Decisions about product would
answer questions about the design of the services offered to suit customer
needs, the desirable hours for offering such services, the attractive names
of such services and so on. Various alternative ways to provide the basic
services might have to be worked out depending on the needs of the
various target groups.
Decisions about place should answer questions about location of

the prospective customers and, therefore, location for offering such
services. Decisions about price should answer questions about right price
for services offered, worked out by taking into consideration the cost of
such services, competitor's charges and other factors.
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,

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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.
A very good example of formulation of a market strategy under

the "collective" approach is development of the product, "Kisan Credit
Cards". The target group identified for this were farmers with the
purpose of dispensation of agricultural and rural credit to them.
Agricultural credit cards and cash credit facilities which were niche-
marketed and were exclusively preserved for the privileged class of
farmers were, thus, extended to the small and marginal farmers since
1999.
Keeping this need of target group in mind, the decision on product

was made. This product decision involved questions regarding types of
needs to be covered, number of withdrawals and repayments to be
permitted, basis of determination of limits, validity period of the cards, its
re-scheduling, the name of the product, and so on.
The place decision answered questions about the location where

the KCCs can be obtained. This involved all branches engaged in
agricultural lending. Price decision required answering questions on
margins, collateral, interest rates to be charged for different slabs, and so
on. The promotion decisions answered questions regarding mode of
advertising the KCCs so that it becomes widely known. These methods
included radio and TV commercials and personal contacts by the
employees of the bank apart from news paper insertions.
An example of marketing strategy under "selective approach" is

selecting a depositor with good track record and offering him services for
"car loan", "housing loan", etc., by personal contacts or through tele-

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marketing or selecting a valuable borrower, keeping track of his interests

and offering him some surprise gifts to ensure manifold increase in his
satisfaction. This approach requires thinking ahead of time to find out
what customers might need in future and fulfil these needs.
Promotional Strategy for Bank Marketing
Even if a scheme is properly developed and designed to suit

customer needs, it will not pick up, unless it is properly marketed at all
levels. Some of the strategies which would help banks in their
promotional efforts are given below: -
1. To promote "Personal Selling", whether performed by counter

clerk, bank officer or customer service representatives of the bank.
2. To ensure "Proper Knowledge and Awareness" of various schemes
of the bank among the employees of the bank.
3. To make efforts so that the "Selling Attitude" becomes part of the
"Corporate Culture" of the bank.
4. To impart "Sales and Product Training" including tele-banking and
net-banking concepts to employees of the bank. One of the ways of
doing this is to organise periodical in-branch departmental
meetings of the employees addressed by Branch Managers /
Departmental Heads.
5. To develop incentive programmes which reward good-customer
oriented selling behaviour. The incentives need not be necessarily
in terms of a cash payment but several other alternatives can also
be thought of, e.g., if a particular employee brings certain
minimum amount of business to the bank, he/she should be eligible
for certain special leave or they can be made members of a special
club called "Chairman's Club" for a particular period. Several other

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such ways giving cashless incentives to the employees can be

worked out.
6. To ensure conversion of the entire employees organization of the
bank into a well-informed, disciplined and professional force
committed to the corporate values and objectives.
7. To make effective use of the large network of the retail outlets of
the bank visited by a large number of customers every day. A
typical bank customer visits his/her branch two or more times a
month so one can imagine how many customer visits each branch
will have per year. The use of "In-bank Advertising" would,
therefore, help a lot in marketing bank services.
In this connection the bank may have to think of retail

shopkeepers' strategy of exhibiting their products in an attractive manner.
This would include: -
(a) Careful physical layout of the branch and creation of inviting

environment.
(b) Exhibition windows as found in many departmental stores
displaying various products of the bank in an attractive manner.
(c) Attractive table with glass box on top exhibiting literature on
various products offered by the bank to be kept at an appropriate
location on the branch floor.
(d) Creative ideas to exhibit "intangible products" in "tangible
manner", e.g., visual images, small models / photographs of life
style, customer could achieve with the help of proper financial
planning done through bank schemes.
(e) Creation and updating of literature on various schemes and
services offered by the bank and ensuring its availability at each
branch.

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(f) Specially designed in-branch video visuals exhibiting various

products and services of the bank.
· Public sector banks with a large network of branches have an excellent

opportunity to expand customer relationships and provide them with
additional complementary services. Personal contacts in any case are
much better as compared to contacts through phones or Internet.
· In Customer Relationship Management (CRM), results of data

warehousing and mining must be made available to all the concerned
employees so that they have complete knowledge about the value / profit
each individual customer adds to the bank, their future needs and ways
and means to satisfy them.
Conclusion
In the current context of free market competitive environment, a

two pronged approach is required in the area of bank marketing: -
First is the "collective" approach to satisfy all the customers of the

bank and develop a positive image of the bank in terms of quality service
and products. This could be achieved by introducing a system of
objective assessment of the standard of customer services / customer
satisfaction so as to identify deficient areas, find out causes for
deficiencies and initiate corrective measures.
Second is the "selective" approach concentrating on select valuable

customers through a Customer Relationships Management (CRM)
programme to detect the felt and latent needs of such clients, to develop
ways and means to satisfy them and to ensure that such clients are
retained by the bank on sustainable basis for improved customer value.

BANK MARKETING
Step to Take bank marketing to the next level
Executives in the bank marketing industry already know the

benefits of traditional marketing. In order to build market share, increase
deposits and retain customers, banks are finding themselves struggling to
stand out in an overcrowded marketplace.

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Stepping outside the realm of traditional newspaper and

radio advertising can often be just what is needed to take your bank
marketing to the next level.
Step One:
Choose a Unique Bank Marketing Promotion A well-
publicized exciting bank marketing promotion works to bring in clients
who are new to the community and provides an incentive for those who
are unhappy with their bank to finally make the switch. People enjoy
having fun and winning prizes. Implementing a high-profile bank
marketing promotion that incorporates these activities can be all that is
needed to bring clients through the door.
Attention-grabbing promotional ideas include a cash cube

money machine swirling with cash and prizes, a promotional prize wheel,
a locked prize vault or something as simple as customized scratch-off
lottery cards. Clients will earn the chance to spend 30 seconds in the
cube, spin the wheel, unlock the vault or scratch off a ticket. The goal is
to choose something so unique that people can't help but talk about it. Not
only will word-of-mouth advertising take over, but people will not want
to miss their chance to win.
Step Two:
Determine The Bank Marketing Goal Having a specific goal
for a public promotion can greatly influence its outcome. It is important

BANK MARKETING
to define this goal before moving forward. What is the bank's highest
priority for marketing right now? Increased loan applications? New
checking accounts? Increased deposits? Sometimes the bank's marketing
goal is not that easy to pinpoint. Many times banks are simply looking to
increase overall awareness within the community. If this is the case, it is
important to consider how the population currently feels towards the bank
and specifically what changes are desired. Setting tangible goals allows
the promotion's success to be measured.
Step Three:
Connect The Promotion To The Goal Once the objective of
the promotion and the attention-grabber have been chosen, it is now time
to tie them together. Let's assume a cash cube money machine was
selected as the incentive. If the primary marketing objective was to
increase new checking accounts, then every new checking client will earn
the opportunity to step into the cash cube to win hundreds or thousands of
dollars worth of real cash or custom imprinted vouchers that represent
cash or prizes. Based on the bank's marketing budget available, the cash
and prizes can be altered to meet any needs. Prizes may include anything
from cash, checking incentives, savings bonds and CD's to pizza coupons
and sporting tickets.
Step Four:
Utilize Traditional Bank Marketing Most banks still rely heavily on
traditional marketing to advertise their specials and rates. When a special
promotion such as a cash cube in the lobby is introduced, it is important
to use newspaper, radio and other advertising already in place to cross-
promote the event. Existing ads can be altered to include the phrase "Stop
in today for your chance to grab cash and prizes in our cash cube!" Using

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existing ads leverages your bank marketing budget. It also presents a

cohesive campaign to the public. Every impression counts, so having the
promotion mentioned at every opportunity only increases the chances that
a client will hear it, retain the information and act on it.
Step Five:
Take the Promotion on the Road Participating in community
events is a great way to gain exposure and promote that "neighborhood
bank" feeling. People like to feel as if they are doing business with a bank
that cares. During the duration of the promotion, check the local calendar
to see if there are any festivals or large community events in which the
bank could participate. The opportunity to have the cash machine in a
public venue will achieve visibility, build brand recognition, and gain
customers. Of course, public events would not necessarily have the same
level of prizes as the cash machine in the bank lobby! That becomes one
more reason for people to come into the bank.
MARKET SEGMENTATION
Market segmentation is the recognition that a market is composed

of different buyer who different responses to market offerings. No one
approach to market will satisfy all buyers. Each segment represents a
somewhat different opportunity for the organization. In its most
fundamental from market segmentation recognizes that a company or its
product or service offering can’t be all thing to everyone.
Definition:

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Philip kotler says, ‘Market segmentation is the subdivision of a

market into homogenous subsets of customers where any subset may
conceivably be selected on a market target to reached with a distinct
marketing mix.’
Stanton opines, ‘ Market segmentation consist of taking the total
heterogeneous market for a product and dividing it into several sub-
markets or segments each of which tends to be homogenous in all
significant aspect.’
In view of the aforesaid views of different marketing experts, it is

observed that market segmentation is the grouping or division or
subdivision of market. With a more pragmatic approach, we can say that
it is a game of divide and rule. By segmenting market, we identify the
customers. If we identify them, we divide them. If we divide them, we
rule them. If we rule them, our game of touching the target and getting a
victory in the market is secured. We find segmentation a device to help
marketers in formulating a sound marketing mix which gets a positive
response. Almost all the organizations have been found segmenting the
market and even the banking organizations also attempt to segment,
specially with the motto of identifying the level of expectations of each
segment so that the strategic decisions are found making the marketing
efforts proactive. Not only present marketing but even the future
marketing is also to get a positive response if the processes adopted for
segmentation are scientific.
It is right to mention that the banking business environment is of

late, more volatile which has made it essential that the public sector
commercial banks also realize gravity of the situation and formulate
segment wise strategy so that whatever the marketing decisions are made

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by the bank professionals get a positive response. Marketing in 21 st

century would not be so smooth if they fail to formulate a time honoured
and condition oriented marketing mix.
Purpose of Market Segmentation
An important question is raised regarding the purpose of

segmentation. Of course, there are diverse motives behind segmentation
but the main thing is to match the needs of the market profitably. An
expert says are
1. The segmentation is to direct the appropriate amounts of
promotional attention and money to the most potentially
profitable segment of his markets,
2. It is to design a product line that truly parallels the demands of
the market instead of that bulks in some areas and ignores or
sans other potentially quite profitable segments,
3. It is to catch the first sign of a major trend in a swiftly
changing market and thus gives professionals sufficient time to
prepare to take advantage of it,
4. It is to determine the appeals tat will e most effective in his
company’s advertising; and where several different appeals are

significantly effective, quantify the segments of the responsive
to each,
5. It is to choose advertising media more wisely and determine
the proportion of budget that should be allocated to each
medium in light of anticipated impact,

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6. It is to correct the timing of advertising and promotional efforts

so that they are massed in the weeks, month and seasons when
selling resistance is least and responsiveness is likely to be at
its maximum,
7. It is to understand otherwise seemingly meaningless
demographic market and apply it is scores of new and effective
ways.
IMPORTANCE OF SEGMENTATION
TO THE
BANKING SERVICES
Like other goods manufacturing and service generating

organisations, we find segmentation of market important to the
development of business in the banking organisations. If the
segmentation is done in a right way, the bank professionals find it easier
to formulate a strategic marketing plan. This simplifies professionals`
task of increasing the marketing share vis-à-vis excelling competition. On
almost all the fronts and for the successful discharge of almost all the

BANK MARKETING
important responsibilities, the segmentation makes ways for the bank

professionals to initiate qualitative improvements and it is against this
background that we find it an important dimension of bank marketing.
1. Instrumental in exploring opportunities: It is right to mention
that we find segmentation very much effective in exploring

profitable and untapped or non-optimally tapped opportunities. No
doubt opportunities are found available in the market but we often
overlook the same since we fail in conducting an in-depth study of
a big market in which a number of prospects and customers live. It
is well known that while segmenting, the market is divided into
different small groups and sub-groups and this simplifies the task
of studying and knowing the market in a right prospective. If we
know about rural segment, the opportunities are explored in the
rural areas. If know about the women segment, the opportunities
are identified in the women segment.
2. Active in formulating a sound marketing strategy: We are well
aware of the different mixes and their instrumentality in making

effective marketing decisions. The market segmentation helps bank
professionals in formulating a sound marketing strategy. Since they
know about the changing needs and requirements of customers /
prospects and they also know about the level of income and
intensity of expectations, the sensitive strategies related to the
different mixes can be formulated. The formulation of package is
found significant and bank policy makers and senior executives
find it possible to develop the package in the face of changing level
of expectations vis – a – vis the discretionary income. It is well
known that package is a combination of a number of services /
schemes keeping in view the changing needs and requirements of a

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particular segment. Since the professionals are found in a position

to know the hierarchy of needs of a particular segment, the product
strategy can be formulated.
3. Helpful to the policy planners: Whatever the policies are
formulated should have a close link with the emerging trends in the
business environment. The task of formulating a strategic plan is
found challenging. The policy makers need sufficient information
about the different segments so that they succeed in formulating a
strategic plan for future marketing. The professionals are found in
touch with different segments which helps policy planners in
getting the desired information for incorporating necessary
improvements. We are aware of the fact planning is an ongoing
process. To be more specific when we find the market competitive,
it is imperative that we formulate an action plan for the years to
come so that necessary preparations are made. The segmentation
signals the policy planners and the necessary improvements in the
strategic plan can be made possible.
4. A sound management of budget is possible: Formulating of a
scientific strategic plan simplifies the task of formulating a

pragmatic annual plan. As and when we talk about planning, the
budgetary provisions, allocation in the face of estimated
requirements, optimal distribution of funds to different heads,
monitoring of expenses etc. are found easier. This makes it clear
that market segmentation makes possible a sound management of
budget. If we know the segment we know their requirements. If we
know their requirement, we know about the inadequacy of our

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potentials. If we identify the lapses, we get time for making an

assault on the same. Thus we find a close relation between the
requirements of market and the availability of potentials. We get
time for enriching our potentials and fulfilling the budgetary
requirements.
5. Enriching the marketing resources: The marketing resources are
the available instruments in the hands of bank professionals who

bear the responsibility of translating the plan into action. The
inputs that we use for marketing goods or services are the resources
in our hands to touch the target. The setting of a target carries no
meaning, if we lack resources. Since the market is competitive and
the foreign banks in particular are found making the business
environment more volatile, it is essential that the policy makers
make available to the bank professionals adequate resources to
increase the market share for excelling competition. The bank
professionals need due support of the policy makers and vice -
versa to make the marketing resources optimal to the changing
business conditions.
Segmentation strategy:
A strategy for segmenting the market is found significant to make the
segmenting process more effective. The banking organizations need to be
select a strategy which is found helpful to them in marketing
successfully. Three strategy for segmentation are Mass Marketing or
Undifferentiated Strategy, Selective Marketing or Differentiated Strategy
and Niche Marketing or Concentrated Strategy.
1. Mass Marketing or Undifferentiated Strategy : If we find sale of
one product or service to the entire market, we call it mass

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marketing or undifferentiated strategy. In the undifferentiated

strategy, we find low cost of production since it is based on large-
scale economies which make it possible to adopt a price structure
which is low and uniform. Such a segmentation strategy is found
suitable to the organizations having a mass market. In the process
an organization goes after the whole market with one market offer.
It focuses on what is common in the needs of buyers rather than
what is different. In this context, we find the marketing programme
sensitive to all. The strategy relies on mass distribution and mass
advertising. An organization practicing undifferentiated marketing
typically develops an offer aimed at the largest segments in the
market.
2. Selective Marketing or Differentiated strategy: Contrary to be
undifferentiated strategy, we find differentiated strategy preferred

by a number of organizations. This is adopted by the organizations
where a number of products or services are sold to selected market
segments in order to increases overall sales. In differentiated
strategy the costs are however higher than in mass marketing. Most
large firms target many segments with a range of models as found
in the computer market specially by the IBM. The banking services
are found differentiated into segments. In the context of certain
services, the responses of the market may be varied like term
deposits of different maturities or a mix of different deposit
schemes. The impulses buying of the customers is influenced by
the salient features of the concerned services hence the purchasing
power or spending power is to found here insignificant.
3. Concentrated or Niche marketing: We find concentrated
marketing segmentation where organisations are found

concentrating on selling to a small market segment or niche. The

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costs can be kept low since the specialization makes it possible to

makes it possible to make entire process exceptionally cost
effective. It is a strategy commonly adopted by smaller companies
who are not in a position to complete with the well established
companies and therefore concentrate their limited resources on
establishing a strong image and dominate in the chosen niche.
Niche marketers also benefit from the absence of large firms as
competitors.
The aforesaid facts make it clear that segmentation
strategy, specially for the banking services focuses on differentiated
marketing strategy. Of late we find a number of term deposit
containing a good number of outstanding features but normally all the
features are not found in all the schemes. While formulating a strategy
for market segmentation it is imperative that the policy planners
innovate their marketing strategies keeping in mind the segment for
which the services are to be launched.
MARKETING STRATEGY
Strategy can be defined from at least two different perspectives,

first perspective of what organization intends to do and second from the
perspective of what organization eventually does. From the first
perspective,” the strategy is the broad programme for defining and
achieving an organisation’s objectives and implementing the missions.”
In this definition, the word programme implies an active, conscious

and rational role played by managers in formulating the strategy. From
the second perspective, strategy is the pattern of the organisation’s

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responses to its environment over time. In this definition, every

organization has a strategy – although not necessarily an effective one –
even if that strategy has never been explicitly formulated. That is every
organization has a relationship with its environment that can be examined
and described. This view of strategy includes organisations whose
manager’s behaviour is reactive managers who respond and adjust to
environment as the need arises.
Thus an analysis of the view points of experts make it clear that –

 Strategy is a broad programme for defining and achieving an
organisation’s objectives.
 Strategy is the organisation’s response to its environment overtime.
BANK MARKETING STRATEGIES – THE CONCEPT
The term marketing strategy focuses on strategies decisions for

marketing for goods or services. Since we are aware of the concept of the
strategy, the marketing strategy draws our attention on the managerial
proficiency of a marketing manager in conducting a campaign that
simplifies the task of achieving the marketing objectives. We also
consider it a game plan for the marketing manager that helps him in
devising ways for the formulation of a sound marketing mix. The strategy
answers to the question that keeping in view the emerging trends in the
market vis-à-vis the strength on the concerned organization and the

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strength of the market leaders as well: what type of marketing decisions

would be creative to get a positive result.
Regarding the marketing strategy, it is right to mention that

marketing strategies are highly dependent on whether the company is a
market leader, challenger, follower or a nicher. Thus we find marketing
strategy an appropriate answer to the multi-faceted challenges an
organization has to face, e.g., expanding the total market, protecting the
market share and expanding the market share. Such a perception of
marketing strategy would be relevant only to those banks who supposed
to be a market leader. If we find a bank only challenger, the perception
focuses on aggressive strategy which is meant a bank would choose from
a variety of attack strategies, such as frontal attack, flanking attack,
encirclement attack, bypass attack and guerrilla attack. The strategy thus
highlights issues related to the identification of the weaknesses of leaders
and other runner-up banks. When we find a bank runner-up, it is natural
that the bank would not prefer to rock the boat and the strategic decisions
would focus on growth of the market. The formulation of marketing mix
would take into account the devices helping a bank in increasing the
market.
TYPES OF STRATEGY:
1. Market-leader strategy:
The market leader strategy is for those banks who occupy a

dominating position in the market and have established their
reputation as a leader. By virtue of having a leadership in the market,

BANK MARKETING
it is natural that the market share of the concerned bank is at the top.
We find a hypothetical structure showing the position of a leader
bank. The bank is leader since in almost all the areas we find it in a
commanding position, such as the interest, promotional measures and
the package designed. The leader is orientation point for the
competitive banks and willingly or unwillingly, they have to realise
the dominance of the leader. While formulating marketing strategy,
leader banks need to expand the total market, market share vis-à-vis to
defend the same. An expansion in the total market is essential to
continue as a leader. This makes it essential that the leader banks are
very punctual while formulating the marketing mix and whatever the
services are made available by them establish an edge over the
followers .for maintaining the position, the banks are required to be
innovative in almost all the areas of the marketing mix. They are
supposed to pay high rate of interest which is not paid by others; they
need to practice innovative advertisement found creative in nature,
they are require to formulate an outstanding mix of services, whatever
the package they developed are superior to all and so on. It is natural
that the dominating banks prefer to remain number one and for this it
is also essential that they find ways to expand total market demand,
they protect its current market share through good defensive and
offensive actions and they always try to increase its market share
though we do not find a change in the size of market.
2 Market challenger strategies:

The banking organizations occupying second, third and lower
ranks are called runner up or trailing organisations. They can attack
the leader and other rival banks in an aggressive bid for further market
share or they can play ball and not rock the boat. A market challenger

BANK MARKETING
must first define its strategies objective. The military principle of the
objective holds that every military operations must be directed toward
a clearly defined, decisive and attainable objective. We can’t deny that
the strategies objective of the majority of the market challengers is to
increase the profitability. A number of strategic decisions are found in
the very context:
a) Attacking the Market Leader: This strategy is found potentially

high pay off and of courses makes a good sense if the leader is
fake. Of course we find it a risk generating strategy. If the leader
are not working satisfactorily the strategy may show positive
result.
b) Attacking organizations of its own size: Another strategy in the
very context is attacking organisations of its own size that are not
doing the in the right fashion. In this respect, the consumer satisfaction
and innovative potentials are to be examined carefully. If other
organizations face the problem of resource crunch, even frontal attack
might work.
c) Attacking small Local and Regional Organisations: This
focuses on attacking the regional or local organizations not doing well.
3 Market – follower strategy: With the contribution “Innovative

Imitation,”Levitt argued that a strategy of product imitation might
be profitable as a strategy of product innovation. It is natural that
as when we find innovation, the innovator bears the huge expenses
of developing the new product, getting it into distribution and
informing, sensing and educating the market. The reward for all
this work is, of course, leadership. It is in this context that another
organization gets as opportunity to copy or improve the product

BANK MARKETING
and launch it. We accept the fact despite such an effort of copying
the product, it is not possible to overtake the leader. We can’t
negate that the follower is in a position to generate more profit
since that organization is not involved in the innovation process. It
is natural that all followers would not challenge the market leader.
4 Market-Nicher strategy: Almost in all types of organization

we find such type of strategy. In lieu of pursuing the whole market
or even large segments of the market, the concerned organization
makes segment with segments or niches. This strategy is found
effective for smaller firms because of their limited resources. But
we also find cases where business units of even larger size pursue
niching strategies. The main point in this strategy is that firms with
low share of the total market can be highly profitable through smart
niching.
DIFFERENT TYPES OF
BANK MARKETING PROVIDE
LOAN
Their interest rates are almost 75-100 basis points cheaper than
private and foreign banks
PSBs bank on low rates in home loan war
In the booming home loan segment, it is the public sector banks

(PSBs) which are now having a clear-cut advantage over their private and
foreign counterparts. Some of the big PSBs, including State Bank of

BANK MARKETING
India, Bank of Baroda and Canara Bank, are offering both fixed and
floating home loan products almost 75-100 basis points cheaper than
private and foreign banks. After the recent rate hike by the Reserve Bank
of India (RBI), the private sector and foreign banks like ICICI Bank and
Standard Chartered have also raised rates to manage the rising cost of
funds. However, their public sector counterparts are yet to join the
bandwagon and are unlikely to react before the quarterly review of the
RBI Annual Policy slated for next month. As a result, public sector
banks, now following the same marketing model like the private sector
and foreign banks, are now offering competitive rates in home loan
segments.
The country's largest lender, SBI, extends loans at 9.75% in the

fixed regime, for a 5 to 10-year tenure, whereas ICICI Bank – which has
recorded the largest incremental growth in the housing finance segment
in recent times -- has pegged it at 10.75%, 100 basis points higher in the
similar category. Similarly, the floating rate of state-owned BoB is 8.75%
for the tenure between 5 to 15 years as against 9.5% of Standard
Chartered Bank or ICICI Bank – a difference of 75 basis points.
To make life further tough for the private and foreign banks, PSBs
have beefed up their marketing campaign to sell home loan products. For
example, BoB has launched a pilot project in Mumbai, named Project
Parivartan, in which BoB officers are going door-to-door to sell home
loans. This move is probably for the first time that a public sector bank is
going door-to-door to sell their products, initiatives normally associated
with private banks. The project, according to BoB sources, has become a
huge success for the bank and may be rolled out in Ahmedabad and
Chennai this month. The bank has deployed its own resources for this

BANK MARKETING
initiative and not outsourced to any outside agency. About Rs 50 crore

deals have been closed since the project’s inception in mid-April.
Similarly, SBI has also launched innovative products like ‘SBI

Maxgain’ wherein a housing loan can be linked to a current account and
the customer could benefit from the interest rate waiver over the amount
maintained in the. account on daily reducing balance calculation
system....
State Bank of India (SBI),
The largest bank in India, is one of the market leaders in the

home loan segment. But SBI's reputation has surely taken a hit following
the collapse of the erstwhile SBI Home Finance Limited in which SBI
was the largest shareholder along with other institutional promoters like
HDFC and LIC. Due to continued losses and complete erosion of its net
worth, the company's certificate of registration had been cancelled by the
National Housing Bank.
SBI offers home loans for a variety of purposes: purchase/

construction of new House/ Flat, purchase of an existing House/ Flat,
purchase of a plot of land for construction of House and extension/ repair/

BANK MARKETING
renovation/ alteration of an existing House/ Flat. SBI home loans come

with some unique features that make them stand out in the competition:
no cap on maximum loan amount for purchase/ construction of house/
flat, option to club income of one's spouse and children to compute
eligible loan amount, free personal accident insurance cover and
complimentary international ATM-Debit card.
Besides the standard package of home loans, SBI has some

customized home loan products in its kitty that address the needs of niche
customer segments. 'SBI-Flexi' Home Loans are designed to enable
borrowers to hedge their Home Loan against unfavorable movement in
interest rates and gives the customers a one time irrevocable option to
choose one of the three customized combinations of fixed and floating
interest rates.
'SBI-Freedom' Home Loans are customized for high net worth

individuals and offer benefits such as 100 per cent finance of the project
and no mortgage of the property, provided the individual could show
liquid securities such as LIC policies or NSCs.
ICICI BANK
Since making its maiden venture in the home loan segment

in 1999, ICICI Bank has been breathing down the neck of market leader
HDFC with its aggressive marketing strategy. Quality and value-added

BANK MARKETING
service - rather than interest rate - have been the hallmark of ICICI with
the company capitalizing on the absence of `door delivery' for housing
loans. In a marked shift from the existing industry norms, ICICI carved a
niche for itself by going to the potential borrower rather than waiting for
him to come to them.
ICICI Bank offers home loans for purchase or construction of

house and the loan amount can be up to 85% of the cost of the property.
The loan must terminate before or when the borrower turns 65 years of
age or before retirement, whichever is earlier. ICICI home loans come
with benefits like easy interest rates, simplified documentation, doorstep
service and free personal accident insurance.
ICICI MaxMoney Home Loans offer the unique advantage of

higher loan eligibility with a lower initial installment. One can get up to
30% higher amount against one's current income and the installment
amount gets stepped up over the years.
ICICI SmartFix Home Loans combine the safety of fixed rates

plus the advantages of floating rates. For the first 3 years the borrower
gets a fixed interest rate and the fourth year onwards, the loan gets
switched to the prevailing floating interest rate.
ICICI Bank offers Home Improvement Loans for renovation

/refurbishment of one's home. One can avail of loan up to Rs. 50 Lakhs
and the interest rate is same as that of the Home Loans. The loan covers
up to 70% of the cost of improvement and the repayment period is 15
years.

BANK MARKETING
HSBC
Has made rapid strides in the home loan segment. HSBC provides
loans for ready property, under construction property, self-construction
and home improvement. HSBC home loans range from Rs. 5 lakhs to Rs.
3 crore and the maximum repayment period can go upto 25 years.
Flexible repayment options of HSBC allow home loan borrowers to
choose between fixed and floating rate home loans. They also have the
option of switching from a floating rate home loan to a fixed rate home
loan once a year at no extra cost. Once the home loan is approved,
customers get a Gold Credit card, free for the first year with annual
charges being waived.
HSBC's MyHome is a unique home loan product that lets the

borrower control the EMIs on an annual basis. Every year, depending on
the customer's financial needs, he can decide to pay an EMI that is either
15% higher or lower than the regular EMI.
HSBC's Smart Home is a savings-linked home loan product that

requires the customer to open a current account with HSBC. The EMI
varies from month to month depending on the balance maintained in the
account and the bank claims that the customer can save up to 50 per cent
on interest expenses of the loan.
HDFC BANK

BANK MARKETING
Both in terms of business volume and market standing,

HDFC stands head and shoulder above the competition in the home loan
segment. With an expertise gathered over 25 years of existence in the
business, HDFC has managed to create an impressive loan portfolio that
caters to varied housing finance needs.
HDFC offers home loans for individuals to purchase (fresh / resale)

or construct houses. HDFC finances up to 85% maximum of the cost of
the property which is inclusive of agreement value, stamp duty and
registration charges. HDFC lends a maximum amount of Rs 1 crore and
the maximum period of repayment is 15 years or retirement age,
whichever is earlier.
HDFC's Home Improvement Loan facilitates internal and external

repairs and other structural improvements like painting, waterproofing,
plumbing and electric works, tiling and flooring, grills and aluminium
windows. HDFC finances up to 85% of the cost of renovation (100% for
existing customers).
HDFC Land Purchase Loan can be used to purchase land. HDFC

finances up to 70% of the cost of the land and repayment of the loan can
be done over a maximum period of 10 years. While repaying the loan
amount customers can choose from Fixed Rate of Interest or Floating
Interest Rate. The repayment options are flexible and customized to suit
the individual needs of the customers.
In addition to the attractive loan schemes, HDFC customers can

avail of a host of accouterments like Loan Cover Term Assurance Plan,
Automated Repayment of Home loan EMI and In-house scrutiny of
Property documents. Existing HDFC Bank home loan customers can

BANK MARKETING
avail of other loans (such as Personal Loans, Car Loans, Two-wheeler

Loans and Loan against securities) at lower interest rates.
Case Study
State Bank of India (SBI)
Is India's largest commercial bank. SBI has a vast domestic

network of over 9000 branches (approximately 14% of all bank branches)
and commands one-fifth of deposits and loans of all scheduled

BANK MARKETING
commercial banks in India. The State Bank Group includes a network of

eight banking subsidiaries and several non-banking subsidiaries offering
merchant banking services, fund management, factoring services, primary
dealership in government securities, credit cards and insurance.
The eight banking subsidiaries are:
1-State Bank of Bikaner and Jaipur (SBBJ)
2-State Bank of Hyderabad (SBH)
3-State Bank of India (SBI)
4-State Bank of Indore (SBIR)
5-State Bank of Mysore (SBM)
6-State Bank of Patiala (SBP)
7-State Bank of Saurashtra (SBS)
8-State Bank of Travancore (SBT)
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 Presidency banks (Bank of
Madras and Bank of Bombay) were amalgamated to form the Imperial
Bank of India. In 1955, the controlling interest in the Imperial Bank of
India was acquired by the Reserve Bank of India and the State Bank of
India (SBI) came into existence by an act of Parliament as successor to
the Imperial Bank of India.
Today, State Bank of India (SBI) has spread its arms around the
world and has a network of branches spanning all time zones. SBI's
International Banking Group delivers the full range of cross-border
finance solutions through its four wings - the Domestic division, the

BANK MARKETING
Foreign Offices division, the Foreign Department and the International

Services division.
Different type’s services provide by Bank
SBI VISHWA YATRA FOREIGN TRAVEL CARD (FTC)
SBI Vishwa Yatra foreign Travel Card (FTC), a prepaid plastic

card issued in association with VISA International, is presently available
in three different currencies - US Dollars, Euro and GBP. It is a safer
method of carrying funds in a safe, convenient and cost effective way on
your visit abroad. It takes away the hassles of going around Money
changers and loosing valuable foreign currency by way of high exchange
margins. It also relieves the customer of the Annual fees, joining fees,
credit limits, Mark-ups, unusual transaction charges etc., usually
associated with International Debit / Credit Cards
BROKING SERVICES
We are happy to announce that SBI Capital Markets Ltd. has

expanded its retail broking network to help investors carry out their
broking transactions with confidence. At present the investors can
buy/sell shares at both NSE and BSE through their Retail Broking
Centres in the cash market. We furnish hereunder the location of these

BANK MARKETING
Centres with full particulars of the contact persons. All investors can
approach these branches for their broking needs.
NAME AND ADDRESS DEALER CONTACT NOS.

AHMEDABAD MEHUL BHATT 079-26460139
SBI, DP CELL, CAG 079-26420735
BRANCH
58, SHRIMALI
SOCIETY
NAVARANGPURA
AHMEDABAD 380009
BANGALORE CHAITRA AITHAL 9845052934
SBI LHO CAMPUS 080-30905247
BEHIND SPB BRANCH
ST. MARKS ROAD
BANGALORE 560001
BARODA NIRAV SHAH 9825686545
SBI, ALKAPURI,
R.C. DUTT ROAD
BARODA 390 007.
STATE BANK NETWORKED ATM SERVICES
State Bank offers you the convenience of over 8500 ATMs in India, the
largest network in the country and continuing to expand fast! This means
that you can transact free of cost at the ATMs of State Bank Group (This
includes the ATMs of State Bank of India as well as the Associate Banks
– namely, State Bank of Bikaner & Jaipur, State Bank of Hyderabad,

BANK MARKETING
State Bank of Indore, State Bank of Mysore, State Bank of Patiala, State
Bank of Saurashtra, and State Bank of Travancore) and wholly owned
subsidiary viz. SBI Commercial and International Bank Ltd., using the
State Bank ATM-cum-Debit (Cash Plus) card.
INTERNET BANKING
The Internet banking portal of our bank, enables its retail banking
customers to operate their accounts all across India, removing the
restrictions imposed by geography and time. It's a platform that enables
the customers to carry out their banking activities from their desktop,
aided by the power and convenience of the Internet.
Availing the Internet banking services, you can do the following

normal banking transactions online:
• Self-account funds transfer across India.

• Third party transfers in the same branch
• New account opening
• Demand Draft requests
• Standing instructions
• New Cheque-book request and much more.
SBI’s
Life insurance and Mutual funds
Services
Life insurance

BANK MARKETING
1. SBI LIFE-UNIT PLUS II PENSION PLAN
This plan is benefit from a fexible Unit Linked Pension Plan with
the following added values:
• Option I: Pure Pension Plan.
• Option II: Pension cum Life Cover Plan.
• Regular income for life time, post vesting Age.
• Tax Benefits on premium paid as per the prevailing Tax laws
2. HORIZON II PENSION PLAN

• Option I: Pure Pension Plan.
• Option II: Pension cum Life Cover Plan.
• Sum assured available:
• Age group 18 to 35 years maximum sum assured Rs. 10 lakhs.
Mutual Fund
Benefits of SIP:
1. Disciplines approach to investments.
2. Takes advantage of Rupee cost averaging

BANK MARKETING
3. Simple, convenient and easy to monitor

4. Benefits of compounding
MAGNUM TAX GAIN (open ended equity):

1. Investment below Rs. 5 crores
2. Entry load 2.25% and Exit load Nil
3. Minimum application amount Rs. 500
4. Option Growth and Dividend option with payout
CONCLUSION
Banks accepts the deposits and lends money to their customers.

So the banks should do Bank Marketing to increase their customers. Bank

BANK MARKETING
Marketing is done to achieve the customer satisfaction. So the bank

should follow the Marketing Strategy and Market Segmentation.
Bank Marketing helps in knowing the customers wants and

needs. Thus Bank Marketing is very important part in banking function.
Every bank must give importance to the Bank Marketing to increase their
valuable customers.
Bank Marketing increases the Goodwill of the bank along with

increasing the customer. Thus it can be said that to achieve the success in
bank, the bank must do Bank Marketing.
SUGGESTIONS

BANK MARKETING
In the light of the observation made in the prevent study a few

suggestion may be offered for improvement in the marketing effort of the
bank.
• Emphasis, though in a discreet manner, should be given to mobiles

more of term deposits as they are more profitable for the Bank in
comparison to demand deposits. Introduction of products
comparable to “Kissan Vikas Patra” of post office and product with
the facility of tax rebate under section 88 of Income Tax will be of
much help in this regard.
• The Bank should embark upon aggressive marketing of its
products, particularly at the time of launching a new product,
which will inform the prospective customers regarding the product
and at the same time relieve staff at branch level from explaining
the product to all customer.
• In the present context it is not possible to serve all the needs of all
the customers. It is essential to specialise and open specialised
branches to cater to the specific needs of a particular target group.
The Bank should keep up the strategy adopted by it in this regard.
• As the competition from new private and foreign banks in urban
and metropolitan centre in stiff and the bank has a good network of
branches in rural and semi-urban areas, it has rightly chosen to
concentrate in rural and semi-urban areas for more business.
But, as it appears from the study, the shift in focus is yet to be
materialised. Before the competition in these areas become shift the
Bank should grad the opportunity.

BANK MARKETING
BIBLIOGRAPHY
Books Referred

BANK MARKETING
BANK MARKETING (Umesh Patnaik, Basudev Chhatoi & Dr. Zaa)
WEBLIOGRAPHY

BANK MARKETING
www.reprintarticlesite.com
www.iloveindia.com
www.financialexpress.com
www.statebankofindia.com

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BANK MARKETING

Business aims at profit:

The analysis exactly fits in to Drucker ’s comment on the purpose

Because of changing emphasis it is no easy task to define the term

T.Y (BBI), Mumbai University 1

through creating and exchanging products an value with others. It is

From the foregoing discussion we may conclude that:

Marketing is one of the most fundamental concept in

The four components of marketing mix are also called marketing

T.Y (BBI), Mumbai University 2

According to Philip Kotler, “Marketing mix is the mixture of

affects the action in the other areas. An integrated approach is

Basic Elements of Marketing Mix (Ps)

T.Y (BBI), Mumbai University 3

b) Personal selling (salesmanship)

c) Displays of goods for publicity and sales promotion

d) Public relation technique used for cordial relations with

dealers and consumers.

T.Y (BBI), Mumbai University 4

According to American Marketing Association, “Service are the

1 Intangibility: Services are intangible we cannot touch them.

T.Y (BBI), Mumbai University 5

satisfaction and benefit a customer can derive having spent on

2 Perishability : service are too perishable like labour. Service has

T.Y (BBI), Mumbai University 6

SERVICE MARKETING MIX

ELEMENTS OF SERVICE MARKETING MIX :-

The service marketing mix consist of the following variables:

T.Y (BBI), Mumbai University 7

1 PRODUCT : The products offered by the bank may be in the core

2 PRICING: Pricing of any product or service affects its

T.Y (BBI), Mumbai University 8

on loans. However, the situation has changed in the modern banking, as

3 PLACE: The specific characteristic of services could pose a whole

T.Y (BBI), Mumbai University 9

 Mobile offices and mobile ATMs

4 PROMOTION: The banking industry has been experiencing

5 PEOPLE: People have always been important for any services

T.Y (BBI), Mumbai University 10

tastes and preferences better. So he can offer tailor made services to

6 PROCESS: Process plays a significant role in winning customers

T.Y (BBI), Mumbai University 11

b) Physical environment, and

Concept of Bank Marketing and its

Marketing as it is viewed today is a way of managing a

Thus, a bank renders financial services as an intermediary.

Therefore bank marketing implies that “it is the creation and

T.Y (BBI), Mumbai University 12

3. setting business development goals and making plans to

From the above discussion of the bank marketing it can be understood

Relevance of Bank Marketing

It was all along being understood that marketing is meant only

T.Y (BBI), Mumbai University 13

Through liberalisation it wanted to become a part of the

The growth of capital market resulted in high net worth corporate

T.Y (BBI), Mumbai University 14

Another factor that is worth considering here is profitability

To improve the bottom-line customers satisfaction is a prime

T.Y (BBI), Mumbai University 15

effective customer service today may be indifferent customer service

Evolution of Bank Marketing

In the earlier days, selling as a concept was looked down

The increasing inclination on the part of the banks towards

T.Y (BBI), Mumbai University 16