2 Bank Marketing

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Bank Marketing

I saw a bank that said "24 Hour Banking,"

but

I don't have that much time.

- Steven Wright


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Bank Marketing - Background

Sahukars, pedhis

Initial days low level of economic activities & littlebusiness prospects

State Bank of India was set up in 1806 (formerly the

Imperial Bank of India) and was nationalized in 1955 14 commercial banks were nationalized in 1969 for

contribution to social development of India

1970- ATMs, Direct deposit of payrolls, pay by phone,credit & debit cards, etc.

Competition with newly emerged private banks andentrance of multi-national banks have compelled thenational banks to adopt the concept called BankMarketing


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Bank Marketing concept

Bank offers B2B as well as B2C products

B2B : letter of credit, OD, current account,

salary accounts, term loans, projectfinancing, Forex services etc

B2C : savings accounts, RD/ FD, personal

loans, vehicle/ housing loan, ATM & net

banking facilities, safety deposits, etc

Banks support industries and build nation.


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Why banks do marketing ?

Justification

Understanding the customers

Satisfying the customers

Excelling competition

Formulating & innovating the mixes

Social orientation


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Users of banking services

General users - Public accounts/individuals use bank for safety, savingsand loans. Also cover NRI accounts

Industrial Users- Industries, business firmsuse banks for funding, credit andtransactional operations

Prospects- The general users or firms whohave potential to avail bank services andmay take up services in future.


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Behavioral profile of bank users

Purchase & use

strategy

Family/ competition

Influence

Social

Influence

Business

Influence Economic

Influence

Cultural

Influence

Needs Motivation

PerceptionAttitudes


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Influences in buying behaviour

Social Influence : Influence of age on saving, impact ofconsumerism

Economic Influence : ability to pay, income class,economic situation, the area in which the firm operates

Business Influence : Service strategy of the banks,products and schemes, past reviews, etc

Family/ competition Influence : type of family orcompetition, position in family/ market, influencing

person in family or in organiozation Cultural Influence : cultural background, religion, local

& state background


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Marketing Information System

in Banks A marketing information system has four components: The internal reporting system : Funds, deposits

received, transactions done, inventory records, etc

The marketing research systems : customer feedback

, market feedback etc. The marketing intelligence system: study of market

research and interpretations presented to topmanagement.

Marketing models : means of interpreting information in

order to give direction to decision. These models may becomputerized or may not. Ex : Linear programming, whatif analysis, etc.

Operates at various levels such as branches, regionaloffices and HO


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Marketing Information system in

banks Individual segment Inputs : Individual

customer feedback, dailybank transactions,

demographic information( retirements, newemployments, incomes ofcustomers, loanapplications, FD amounts

etc)

Corporate segment

Inputs : Licenses,company registrations,letter of credits, OD limits

availed, current accountsstatistics, transactionaldata

Branches take operational decisions,

regional offices take control decisions and

& head offices take strategic decisions


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Segmentation

Market segments are the groups of

consumers according to such

characteristics as income, age, gender,

literacy and other social, demographic,

cultural and geographical factors.

Market segmentation is the dividing of

markets into more defined specific smallmarkets called as niche markets.


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Criteria for segmentation

Should be distinct from other segments

(different segments have different needs)

Should be homogeneous within thesegment (exhibits common needs)

Should respond similarly to a market

stimulus

Should be substantial in numbers/

business


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Market Segmentation in Banks

Economic Segmentation

Agricultural sector : by land , market,crops

Industrial sector : by size , operationalcharacteristics

Institutional sector : by type, turnover

Services sector : nature of service, size Household/ Individual sector : by gender,

by profession, by status ( local/ NRI)


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Advantages of segmentation

Distinguish between various consumer

groups

Segment focused marketing Divide & conquer policy

Accuracy in predictions & forecasting

Concentrate over A sectors Segment-wise analysis, review and

remedial actions


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Marketing mix for banking services

Product mix

Price Mix

Place mix Promotion mix

People

Processes Physical evidences


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Product mix

In a bank, Products are services not goods.Thus we can call it a services mix.

The product portfolio will include both servicesfor individuals and services for industries

Products are customized and sometimes evendifferentiated in nature.

Main components of product are safety, corecomponent and added features.

It is not only important to offer services but alsoto carefully design & customize servicesaccording to market needs.


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Product portfolio


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Price mix

Decisions related to interests, commission

fees are important in motivating the

customers.

Pricing has to be competitive and mainly

the prices are regulated by Government

and reserve bank of India. Segment-wise

the prices may be different.

Component of flexibility in pricing is less

thus the formulation of price mix is bit

challenging.


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Place mix

Proximity to the users is very much importantand sometimes the prime factor of choice by thecustomers. They usually select the nearestconvenient bank.

Strategic placing of branches among thegeographic region is a crucial decision

ATM centers, net banking, cheque books, Debitand credit cards are the components of a place

mix offered by a bank. Now a days bank officials also visit theircustomers for reasons like opening newaccounts, loan offerings & sanctions, etc.


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Promotion mix

Personal selling of Debit/ credit cards, currentaccounts, personal & housing loan schemes.Presentations in offices/ corporates for groups.

Sales promotion techniques such as loanschemes, interest schemes, etc. Banks alsomake tie-ups with housing schemes, vehicledealers etc.

Public relations , press conferences, articles bybankers is a usual practice.

Advertisement is a fast emerging promotionalcomponent in banks.


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People mix

Qualified staff selected through tough bankexams to ensure functional competitiveness

Need to build service aspirations

Experiences with nationalized and private banksmay be different.

Every body is offering similar services at similarprices.What makes difference is the personal

service and customer relations. People Mix can be a major tool is selling bank

solutions.


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Processes mix

ISO certifications apply to bank services.Used as marketing tool

Movement of transactions, flow of work

and methodology / formats used by banks

Filing, paperwork, computerization,systems, net securities

Standardization of processes in allbranches, similar code of conduct createsa formal & professional atmosphere.


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Physical evidence

Attractive bank premises, adequate andstate of the art infrastructure, properlighting, equipments/ tools & security

system etc create an impression andbuilds image of a bank

Forms, application formats, paymentreceipts, cheque books, transaction slips,bank stamps, statements, passbooks, etccreate a sense of confidence among theconsumers

2 Bank Marketing

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