Banking Industry Segmentation
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Transcript of Banking Industry Segmentation
MARKETING OF BANKING PRODUCTS
What is Banking?
Basic Definition: A system of trading money which: provides a safe place to save excess cash, known as deposits. supplies liquidity to the economy by loaning this money out to help businesses grow and to allow consumers to purchase consumer products, homes, cars etc.
What are banks
Institutions which deals in money and credit. An intermediary, which handles other peoples money both for their advantage and to its own profits. A financial institution that links the flow of funds from savers to the users. Plays an important role in the economy of any country as they hold the saving of the public.
Types of banks in India
Central Bank: The Reserve Bank of India is the central Bank that is fully owned by the Government Public Sector Banks: State Bank Regional rural banks Group,
Private Sector Banks: Foreign Banks, Scheduled and Non- Scheduled Banks Co-operative Sector: State Co-operative Banks, Central Co-operative Banks, Primary Agriculture Credit Societies Development Banks/Financial Institutions: IDBI, ICICI, NABARD
Commercial Role of Banking Issue of banknotes (promissory notes issued by a banker and payable to bearer on demand) Processing of payments by way of telegraphic transfer, EFTPOS, internet banking or other means Issuing bank drafts and bank cheques Accepting money on term deposit Lending money by way of overdraft, installment loan or otherwise
Commercial Role of Banking Providing documentary and standby letters of credit (trade finance), guarantees, performance bonds, securities underwriting commitments and other forms of off-balance sheet exposures Safekeeping of documents and other items in safe deposit boxes Currency exchange Acting as a 'financial supermarket' for the sale, distribution or brokerage, with or without advice, of insurance, unit trusts and similar financial products
Economic Role of Banking Issue of money, in the form of banknotes and current accounts subject to cheque or payment at the customer's order. Netting and settlement of payments. Credit intermediation Credit quality improvement Maturity transformation
What is bank marketing?Bank marketing is the aggregate of functions, directed at providing services to satisfy customers financial (and other related) needs and wants, more effectively and efficiently than the competitors keeping in view the organizational objectives of the bank.
Why bank marketing necessary? The existence of the bank has little value without the existence of the customer. Aim is not only to create and win more and more customer but also to retain them through effective customer service. Appropriate promise to a customer through a range of services (products) and also to ensure effective delivery through satisfaction is important.
Concept of bank marketing Identifying the most profitable markets now and in future; Assessing the present and future needs of customers; Setting business development goals and making plans to meet them Managing the various services and promoting them to achieve the plans Adapting to a changing environment in the market place.
Marketing strategies Designed after taking into account the strengths and weaknesses of the organization. bank with clientele from various segments could think of market penetration by offering the existing range of services to existing customers. Bank which are not facing acute competition could think of Market Development by offering the existing services to new customers. design new product range for their customers of various segments
Segmentation How the sellers determines which buyers characteristics produce the best partitioning of the particular market?
The seller does not want to treat all customers alike nor does he want to treat them all differently
Segmentation Banks deal with individuals, group of persons and corporates More or less homogenous groups in terms of their needs and expectations. Market segments, targeting one or more segments, developing products and marketing programs tailor-made for these segments.
Criterion for Market Segmentation in India 1. 2. 3. 4. 1. 2. 3. 4. Agricultural Sector Marginal 2 to 5 acres 5 to 10 acres 10 acres and above Industrial Sector Tiny Co-operative Small-sized Large- sized
Criterion for Market Segmentation in India 1. 2. 3. 4. Services Sector Household Sector Marginal Low Income Middle Income High Income
Market Targeting in which each segments attractiveness is measured and a target segment is chosen based on its attractiveness. Positioning which is the act of establishing a viable competitive position of the firm and its offer in the target segment chosen.
Types of Marketing
Traditional external marketing
Traditional external marketing consists of usual four Ps of Product, Price, Place and Promotion of marketing mix Product: The products offered are the services which includes various types of bank accounts, different types of loans, investment services, Credit cards, Demat accounts, online banking, mobile banking and many more.
Pricingincludes interest , fees or commission charged by the bank. Also the interest paid by the bank. Typical for banking sector since RBI regulates rates of interest, Organizations are supposed to subserve weaker sections and the rural regions of the country.
Buyers look for satisfaction which differs from person to person. Keeping in view the level of satisfaction of a particular segment, the banks have to frame the pricing strategies. The interest charged and the interest paid should have a co-relation between them.
General steps for pricing
Develop marketing strategy
Make marketing mix decisions
Estimate the demand curve.
Place It refers to the establishment and functioning of a network of branches and other offices through which banking services are delivered. Objective is to get the right product ,at right places at right time at the least cost. Extensive branch network- access to large section of people Proximity may play a determinant role in selecting the bank.
Banks are coming up with extension counters, specialized branches, mobile branches, banks acquisition and amalgamation so as to have sufficient point of contacts with the customer. With the advent of technology other point of contacts have come up. Such as: ATM Telephone banking Online banking Mobile banking Video banking etc.
Promotion Advertising Publicity Sales Promotion Personal Selling Push and Pull Strategies
Internal marketing It involves the people(5th P) of the bank i.e. the employees. Employees should also be treated as internal customers, and sort of marketing mix should be followed. Quality Human resource can be a point of differentiation
Interactive marketing The quality of service provided during the buyeremployee interaction. Efforts for previous strategies will turn futile if the interaction does not takes place satisfactorily. It involves : Process (6th P) Physical evidence (7th P)
Process Refers to the systems used to assist the organization in delivering the service. Aids to the promotion of customer satisfaction It involves: speeding delivery of services reducing the paper work standardization of procedures customization as per individual demand simplicity etc.
Physical evidence It includes signage, reports, punch lines, other tangibles, employees dress code etc. The companys financial reports are issued to the customers to emphasis or credibility. Signage: Each and every bank has its logo by which a person can identify the company. It creates visualization and corporate identity for the banks. Tangibles: banks give pens, writing pads to the customers. Punch lines: Depicts the philosophy and attitude of the bank. Banks have influential punch lines to attract the customers.
Current Marketing Strategies Referral services Direct mailing Cold calling Offering items having your brand identity Using the media Getting celebrities to endorse the product or service. Sponsoring events Using permission-based Marketing
Customer satisfaction Recommendation of Talwars committee,1975: Establishment of customer service committee/staff committee in the every ranch. Customer meets to be held at the branches at least once in a half year. 15th of every month (next day if 15th is a holiday) to be observed as customers day at branches and administrative offices. Provision of complaint-cum-suggestion box in every branch.
Provision of May I help you counter in branches. Immediate credit of cheques up to Rs.2,500 which has since been increased to Rs.15,000. Payment of penal interest in case of delay of collection of cheques. In the year 1995 Banking Ombudsman was established by RBI with objective of resolving customer grievances in a quick and inexpensive manner.
Rural bank marketing Follows 80-20 Parato principal Bankers need to understand the rural psychology Employing local literate youth for confidence building Banker must be aware of agriculture aspects, cultural and communal aspects, institutional facilities etc. Process of change should be known to him Status of various development plans should be known
RURAL StrategyR:Retail Business for Rural Community As (Consumer & Producer) U: Urban facilities, Investment, Infrastructure R: Animal Husbandry & Allied Activities A: Agri Production(Field Crops, Plantation) L: Linkages & Synergy
New Avenues for Rural Business: Special Focus Horticulture, Plantation, Vegetable growing, Floriculture, aromatic and medicinal plants, Biodiesel plants etc. for high investment Opportunities Post Harvest and Food Processing Seed Multiplication & Processing Dairy Farming, Sericulture, Aqua-Culture & Others. Irrigation Projects & Wasteland Developments. Rural Tourism & Other emerging areas.
ICICI Bank A Case study
Industrial Credit and Investment corporation of India bank - largest private sector bank in market capitalization Second largest overall in terms of assets. largest issuer of credit cards in India
MARKETING OF SERVICES BY ICICI BANK: Product : Saving account: offers a power packed Savings Account with a host of convenient features and banking channels to transact through. Senior citizen services: convenience with benefits Fixed Deposits : Safety, Flexibility, Liquidity and Returns
Recurring Deposits: Affordability and higher earnings. Roaming Current: access your accounts at over 500
networked branches across the country. Loans: Home Loans. Personal Loans. Car Loans, two Wheeler Loans, Commercial Vehicle Loans. Loans against Securities, educational loans etc Investments: ICICI Bank Tax Saving ,Foreign Exchange Services, Senior Citizens Savings Scheme, 2004. Cards: Credit card, ATM card, travelers card
Demat services Online money transfer Mobile banking
7 Ps of ICICI Bank Pricing
1. Pricing Decisions related to interest, fee or commission. 2. RBI and IBA 3. Raising Number of Customers 4. 2 Fold Strategies
7 Ps of ICICI Bank 1. 2. Place Services are sold through branches Making Promised Services available to the ultimate users.
3. Branches OF ICICI: 1900 in India and 33 in Mumbai.
7 Ps of ICICI Bank 1. 2. 3.4. 5. 6.
Promotion Advertising - Television, radio, movies, theatres Print Media- Hoardings, newspaper, magazines Publicity- Road shows, campus visits, sandwich man, Sponsorship Sales Promotion- Gifts, discount and commission, incentives, etc. Personal Selling- Cross-sale (selling at competitors place), personalized service Telemarketing- ICICI one source Call center (mind space)
7 Ps of ICICI Bank
ProcessStandardization- ICICI bank has got standardized procedures got typical transactions Customization- Specialty counters at each branch to deal with customers of a particular scheme Simplicity- Separate counters exist with clear indication Customer Involvement- Money matters and signature
7 Ps of ICICI Bank
1. 2. 3.
Physical EvidenceSignage Financial Reports- The Companys financial reports are issued to the customers to emphasis or credibility Tangibles- Pens, Writing Pads to the internal customers. Passbook and Cheque books to the customers. Punch lines- Hum Hai Naa Employees Dress Code- ICICI bank follows a dress code for their internal customers
7 Ps of ICICI Bank People
1. All people directly or indirectly involved in the consumption of banking services. 2. Workers, Employees, Management and other Consumers 3. Employees of a Bank represents the organization to its customers. 4. Internal Marketing