Market Segmentation in Banking Sector
-
Upload
archana-pawar -
Category
Documents
-
view
223 -
download
0
Transcript of Market Segmentation in Banking Sector
-
8/18/2019 Market Segmentation in Banking Sector
1/56
• THE CONCEPT – BANK MARKETING
In this chapter we are going to see an Overview of Bank Marketing Concept .it’s
features, strategies and approach in the Indian perception.
• We define Bank Marketing as follows
“Bank Marketing is the aggregate of functions, directed at providing services
to satisfy customers’ financial and other related! needs and wants, more effectively
and efficiently that the competitors keeping in view the organi"ational o#$ectives of
the #ank%.
Bank Marketing activity. &his aggregate of functions is the sum total of all
individual activities consisting of an integrated effort to discover, create, arouse and
satisfy customer needs. &his means, without e'ception, that each individual working
in the #ank is a marketing person who contri#utes to the total satisfaction to customers
and the #ank should ultimately develop customer orientation among all the personnel
of the #ank. (ifferent #anks offer different #enefits #y offering various schemes
which can take care of the wants of the customers.
)
-
8/18/2019 Market Segmentation in Banking Sector
2/56
• W!at is Bank Marketing"
#er$k We$er of Bar%la$s Bank call it “* process, consisting of identifying
the most profita#le markets now and in future+ assessing the present and the future
needs of the customers+ setting #usiness development goals and making plans to meet
them+ and managing various services and promoting them to achieve the plans all in
the conte't of a changing environment in the market%.
• W!$ Bank Marketing"
• Awareness a&ong C'sto&ers
Modern technology has made customers aware of the developments in the
economic environment, which includes the financial system. -inancial needs of the
customers have grown multifold into various forms like uick cash accessi#ility,
money transfer, asset security, increased return on surplus funds, financial advice,
deferred payments etc. /ith a wide network of #ranches, even in a dissimilar #anking
scenario, customers e'pect the #anks to offer a more and #etter service to match their
demands and this has compelled #anks to take up marketing in right earnest.
• ('alit$ as a Ke$ )a%tor
/ith the opening up of the economy, fast change has #een e'perienced in
every activity, and #anking has #een no e'emption. 0uality is the watchword in the
competitive world, which is market driven and #anks have had to face up to this
emerging scenario. In fact, it may not #e out of place to reiterate that uality will in
future #e the sole determinant of successful #anking ventures and marketing has to
focus on this most crucial need of the hour.
1
-
8/18/2019 Market Segmentation in Banking Sector
3/56
• Growing Co&*etition
Increased completion is #eing faced #y the Indian #anking industry from
within the system with other agencies #oth, local and foreign, offering value added
services. Competition is no more confined to resource mo#ili"ation #ut also to lending
and other areas of #anking activity. &he foreign commercial #ank with their superior
technology, speed in operations and imaginative positioning of their services has also
provided the necessary impetus to the Indian #anks to innovate and complete in the
market place.
• Te%!nologi%al Ad+an%es
&echnological innovation has resulted in financial product development
especially in the international and investment #anking areas. &he western e'perience
has demonstrated that technology has not only made e'ecution of work faster #ut has
also resulted in greater availa#ility of manpower for customer contact.
• Marketing A**roa%! in Banks
/ith the need for marketing in #anks having evolved out of the changing
environment and constant interplay of various interdependent factors, the importance
of a systematic approach to marketing cannot #e overstressed. &he application of a
marketing approach in #anks will therefore involve2
a. Identifying customers’ financial needs and wants+
#. (eveloping appropriate #anking services to meet these needs+
c. 3ricing for the services so developed+
d. 4etting up suita#le outsells 5 #anks #ranches+
e. *dvertising to promote the services to the e'isting as well as
prospective customers.
6
http://www.articlesbase.com/marketing-articles/bank-marketing-never-a-full-stop-903198.html#%23http://www.articlesbase.com/marketing-articles/bank-marketing-never-a-full-stop-903198.html#%23http://www.articlesbase.com/marketing-articles/bank-marketing-never-a-full-stop-903198.html#%23http://www.articlesbase.com/marketing-articles/bank-marketing-never-a-full-stop-903198.html#%23
-
8/18/2019 Market Segmentation in Banking Sector
4/56
,*e%ial )eat'res of Bank Marketing
• Banking product cannot #e seen or touched like manufactured products
intangi#ility!
• In marketing #anking products, the product and the seller are in separa#le+ they
together define the #anking product insepara#ility!
• Banking products are products and delivered at the same time+ they cannot #e
stored and inspected #efore delivering’ perisha#ility!
• 4tandardi"ation of #anking product is difficult varia#ility!
&he #ank marketing is than an approach to market the services profita#ility. It is a
device to maintain commercial via#ility. &he changing perception
of #ank marketing has made it a social process. &he significant properties of the
holistic concept of management has made #ank marketing a device to esta#lish a
#alance #etween the commercial and social considerations, often considered to the
two opposite wings. * compendium of two words #anks and marketing thus focuses
our attention on the following2
• Bank marketing is a managerial approach to the market services.
• It is a social process to su# serve social interests.
• It is a fair way of making profits
• It is an art to make possi#le performance7orientation.
8
-
8/18/2019 Market Segmentation in Banking Sector
5/56
• It is a professionally tested skill to e'cel competition.
• Bank Marketing In t!e Indian Pers*e%ti+e
&he formulation of policies is su#stantially influenced #y the emerging trends
in the national and international #usiness conditions. &he level of income,
e'pectation, and the rate of literacy the geographic and demographic considerations,
the rural or ur#an orientation, the chances in economic systems the freuent use of
technologies are some of the key factors governing the development plan of an
organi"ation.
In the development sensitive welfare economy, the formulation of a sound
marketing mi' is found a difficult task. &he nationali"ation of the 9eserve Bank of
India is a landmark in the development of Indian Banking system which in a true
sense paved avenues for ualitative7cum uantities improvements. &his makes it
essential that the reserve Bank of India and the policy makers of the pu#lic sector
commercial #anks think in favor of conceptuali"ing modern marketing which would
#ring a radical change in the process of uality up gradation.
&he first task #efore the pu#lic sector commercial Banks is to formulate the
marketing mi' which suits the national socio7economic reuirements. &o #e more
specific the peripheral services need freuent innovations, since this would #e helpful
in e'celling competition. &he designing of a product portfolio is found significant to
maintain the commercial via#ility of the pu#lic sector #anks. &he #anks professionals
need to assign due weightage to their physical properties. &hey are supposed to look
smart active and attractive.
• Bank Marketing ,trategies
&he marketing research considered #eing a systematic gathering, recordingand analysis of data makes ways for making and innovation the marketing decisions.
:
http://www.articlesbase.com/finance-articles/challenges-facing-by-banking-industry-993145.html#%23http://www.articlesbase.com/finance-articles/challenges-facing-by-banking-industry-993145.html#%23http://www.articlesbase.com/finance-articles/challenges-facing-by-banking-industry-993145.html#%23
-
8/18/2019 Market Segmentation in Banking Sector
6/56
&he information collected from the e'ternal sources #y conducting surveys helps #ank
professional in different wants.
In the #ank services, the formulation of overall marketing strategies is
considered significant with the view point of tapping the potentials, e'panding the
#usiness and increasing the marketing share. &he increasing domination and gaining
popularity #anks, the popularity #anks, the profita#le schemes of the non7#anking
organi"ation mounting cra"e among the customers for private #anks have made the
task of influencing the impulse of customers a #it difficult.
&he marketing research simplifies the task of studying the magnitude of
competition #y opinion surveys and the feed #ack customers, the multi7dimensional
changes in the services mi' can #e made productive if it is #ased on marketing
research.
It is su#mitted that the #anking system is on the threshold of a momentous era
of change and continuity in growth and development, of individual customer needs
and corporate practices, technology and competitions. &he role of marketing in the
#anking industry continues to change. -or many years the primary focus of marketing
was pu#lic returns. &hen the focus shifted to advertising and sales promotion. &hat
was followed #y a focus on the development of a sales culture. ;ow the focus is on
the individual customer meeting and even anticipating his or needs and developing
trusting, long7term relationships #y delivering high uality personali"ed service.
Marketing #oth as a philosophy and an activity+ is e'pected to contri#ute immensely
to the reali"ation of goals #oth immediate and future. *ll though all the elements of
the marketing concept customer satisfaction, profit integrated framework and social
responsi#ility must receive the greatest emphasis in the years a head.
-
8/18/2019 Market Segmentation in Banking Sector
7/56
&hey must #e guided #y the dictum of Ma!at&a Gand!i-
“* customer is the most important visitor in our promises. =e is most
dependent on us. /e are depending on him. =e is not an interruption on our work. =e
is the purpose of it. =e is not an outsider on our #usiness. =e is part of it. /e are not
doing him a favour #y serving him. =e is doing as a favour #y giving as an
opportunity%.
>
-
8/18/2019 Market Segmentation in Banking Sector
8/56
• MARKETING CONCEPT, – IT., APP/ICATION
TO BANKING
W!at is Marketing"
&here are many definitions of marketing. &he #etter definitions are focused
upon customer orientation and satisfaction of customer needs.
“Marketing is the social process #y which individuals and groups o#tain what
they need and want through creating and e'changing products and value with others.%
-Kotler.
“Marketing is not only much #roader than selling, it is not a speciali"ed
activity at all It encompasses the entire #usiness. It is the whole #usiness seen from
the point of view of the final result, that is, from the customer?s point of view.
Concern and responsi#ility for marketing must therefore permeate all areas of the
enterprise.%
-Drucker.
/hen we apply marketing to the #anking industry, the #ank marketing
strategy can #e said to include the following2
* very clear definition of target customers. &he (evelopment of marketing
mi' to satisfy customers at a profit for the #ank. 3lanning for each of the @source’
markets and each of the @user’ markets * #ank needs to #e dou#ly market oriented
its has to attract funds as well as users of funds and services!.Organi"ation and
*dministration.
In an age of electronic #anking, the concept of #ank marketing is reuired to
#e reviewed. * num#er of e'perts agreed with this view that marketing is unavoida#ly
a social concern. &hus a change in the concept of marketing paved the ways for a
change in the concept of #ank marketing. It is right to say that #ank marketing isrelated to the product, promotion, place, pricing and people decision of the #anking
A
-
8/18/2019 Market Segmentation in Banking Sector
9/56
)or&'lating
and
Inno+ating
t!e Mi0es
E0%elling
%o&*etition
,atisf$ing
t!e
%'sto&ers
1nderstandi
ng t!e
%'sto&ers
2'stifi%ation
for a**l$ing
t!e
Marketing in
Banks
organi"ation which simplifies the task of restructuring or revamping their decisions in
tune with the changing #usiness environment.
T!e following arg'&ents 3'stif$ t!e a**li%ation of &arketing *ro%ess to
4anking-
-ig.)
application of marketing process to #anking.
-
8/18/2019 Market Segmentation in Banking Sector
10/56
Marketing helps in achieving the organi"ational o#$ectives of the #ank. Indian
#anks have duel organi"ational o#$ective commercial o#$ective to make profit and
social o#$ective which is a developmental role, particularly in the rural area.
Marketing concept is essentially a#out the following few thing which
contri#ute towards Banks’ success2
)! &he #ank cannot e'ist without the customers.
1! &he purpose of the #ank is to create, win, and keep a customer.
6! &he customer is and should #e the central focus of everything the #anks does.
8! It is also a way of organi"ing the #ank. &he starting point for organi"ational
design should #e the customer and the #ank should ensure that the services are
performed and delivered in the most effective way. 4ervice facilities also
should #e designed for customers’ convenience.
:! ltimate aim of a #ank is to deliver total satisfaction to the customer.
#ank.
*ll the techniues and strategies of marketing are used so that ultimately they
induce the people to do #usiness with a particular #ank. Marketing is an
organi"ational philosophy. &his philosophy demands the satisfaction of customers
needs as the pre7reuisite for the e'istence and survival of the #ank. &he first and
most important step in applying the marketing concept is to have a whole hearted
commitment to customer orientation #y all the employees. Marketing is an attitude of
mind. &his means that the central focus of all the activities of a #ank is customer.
Marketing is not a separate function for #anks. &he marketing function in Indian Bank
is reuired to #e integrated with operation.
)D
-
8/18/2019 Market Segmentation in Banking Sector
11/56
Marketing is much more than $ust advertising and promotion+ it is a #asic part
of total #usiness operation. /hat is reuired for the #ank is the market orientation and
customer consciousness among all the personal of the #ank. -or developing marketing
philosophy and marketing culture, a #ank may reuire a marketing coordinator or
integrator at the head office reporting directly to the Chief E'ecutive for effective
coordination of different functions, such as marketed research, training, pu#lic
relations, advertising, and #usiness development, to ensure customer satisfaction.
&he E'ecutive (irector is the most suita#le person to do this coordination
work effectively in the Indian pu#lic sector #anks, though ultimately the Chief
E'ecutive is responsi#le for the total marketing function.
=ence, the total marketing function involves the following2
a! Market research i.e. identification of customer’s financial needs
and wants and forecasting and researching future
financial market needs and competitors’
activities.
#! 3roduct (evelopment i.e. appropriate products to meet consumers’
financial needs.
c! 3ricing of the service i.e., promotional activities and distri#ution
system in accordance with the guidelines and
rules of the 9eserve Bank of India and at the
same time looking for opportunities to satisfy
the customers #etter.
d! (eveloping market i.e., marketing culture among all the customer7
consciousness @3ersonnel’ of the #ank through
training.
))
-
8/18/2019 Market Segmentation in Banking Sector
12/56
&hus, it is important to recogni"e the fundamentally different functions that
#ank marketing has to perform. 4ince the #anks have to attract deposits and attract
users of funds and other services, marketing pro#lems are more comple' in #anks
than in other commercial concerns.
Indian #anking is at cross roads today. /ith the deregulation and li#erali"ation
process in full swing, the conseuent policy changes introduced in the Indian financial
system in general and #anking in particular are effecting unprecedented changes in its
functioning. /ith the emerging changes did spring up new challenges of commercial
via#ility, cost effectiveness, effective marketing strategy, etc. Market oriented policies
also gave #irth to new players like foreign and private sector #anks and su#sidiaries
offering varied high tech and cost effective 4ervice. &here was an a#solute shift from
sellers into #uyers’ market, esta#lishing the @consumer’ as the key factor in the
market. &he dictum “as the #ank e'ists #ecause of its customers, has #ecome more
pronounced and relevant in the present conte't%. &hus, marketing constitutes the key
strategy for #anks to retain good customers and also anticipate their future demands.
)1
-
8/18/2019 Market Segmentation in Banking Sector
13/56
• Introd'%tion of Market ,eg&entation
*n organi"ation cannot satisfy the needs and wants of all consumers.
&o do so may result in a massive drain in company resources. 4egmentation is simply
the process of dividing a particular market into sections, which display similar
characteristics or #ehaviour. &here are a num#er of segmentation varia#les that allow
an organi"ation to divide their market into homogenous groups.
&he identification of market occupies a place of outstanding significance in
the #anking industry. &his helps in transforming the plans into action or turning the
dreams into realities. &he concept Market 4egmentation #ased on the principle of
(ivide and 9ule. 4ince the very #eginning of the marketing, the market segmentation
has #een practiced to get the productive result. 4egmentation makes possi#le tailoring
of products and marketing programmes uniuely suita#le for each segment.
4egmentation is a method of dividing and su#7dividing the markets into
different small segment. By segmenting, #y dividing, #anks find it convenient to
identify and thus #anks succeed in understanding the changing needs and
reuirements, likes and dislikes and the #ehavioural profile of customers. Of course,
no two #uyers are found identical in all respects. =owever there are certain
characteristics shared #y the large groups. &he segmentation is thus a process of
understanding the market in aright perspective which simplifies the task of
formulating a creating marketing strategy.
• #efinition 5
* num#er of e'perts have e'pressed their views regarding segmentation.
3hilip Fotler says, “Market segmentation is the su#division of market into
homogeneous su#sets of customers where any su#set may conceiva#ly #e selected on
a market target to #e reached with a distinct marketing mi'.%
)6
-
8/18/2019 Market Segmentation in Banking Sector
14/56
4tanton opines, “market segmentation consist of taking the total heterogeneous
market for a product and dividing into several su# markets or segments each of which
tend to #e homogeneous in all significant aspect.%
In view of the aforesaid views of different marketing e'perts, it is o#served
that market segmentation is the grouping or division or su# division of markets. It is a
device to help marketers in formulating a sound marketing mi' which gets a positive
response.
-ig ).
&he concept of segmentation can #e made clear with the help of a#ove figures27
• T!e Traditional A**roa%! to Market ,eg&entation
)8
-
8/18/2019 Market Segmentation in Banking Sector
15/56
=istorically, the traditional approach to segmentation attempts to segment the
market using one or more! of four schemes.
&he first scheme attempts to segment the market #ased on how customers and
prospects #ehave #ehavioral segmentation!.
&he second scheme attempts to segment the market #ased on who they are
demographic or life7phase segmentation!.
&he third scheme attempts to segment the market #ased on how much worth
they potentially hold for the organi"ation profita#ility or current value segmentation!.
&he fourth scheme attempts to segment the market #ased on what customers
think a#out the features of the product or service in uestion attitudinal
segmentation!.
Each of these four approaches to segmentation contri#utes an important piece
in understanding the market, yet, each of these approaches displays significant
limitations.
• W!$ ,eg&entation"
/hen it comes to marketing strategies, most people spontaneously think a#out
the 83’s 3roduct, 3rice, 3lace, 3romotion! e'tended #y three more 3s for
marketing services 3eople, 3rocesses, 3hysical Evidence!.
Market segmentation and the identification of target markets, however, are an
important element of each marketing strategy. &hey are the #asis for determining any
particular marketing mi'. Giterature suggests the following steps2
):
-
8/18/2019 Market Segmentation in Banking Sector
16/56
-ig.)
&he importance of market segmentation results from the fact that the #uyers of
a product or a service are no homogenous group. *ctually, every #uyer has individual
needs, preferences, resources and #ehaviors. 4ince it is virtually impossi#le to cater
for every customer’s individual characteristics, marketers group customers to market
segments #y varia#les they have in common. &hese common characteristics allow
developing a standardi"ed marketing mi' for all customers in this segment.
)
-
8/18/2019 Market Segmentation in Banking Sector
17/56
• Market seg&entation in 4anks
In #anking services the #anks are e'pected to satisfy all type of customers like,
rural customers, ur#an customers, high earning and low earning customers, small
scale and large scale entrepreneurs and so on.
=ence segmentation of market if considered to #e important in #anking
industry. 4ince #ank have to deal with different types on customers from field and
localities so #anking industry need segmentation. * marketing plan or product launch
cannot #e successful without proper segmentation. Market segmentation is perhaps
the most difficult and comple' decision a #ank must make when deciding its market
strategy.
)ollowing is t!e ta4le s!owing seg&entation in 4anks
,e%tors ,'4seg&ent
6- *gricultural 4ector a. )D acre Ha#ove #. : to )D acre
c. 1 acre H #elow
d. Gandless
1. =ousehold 4ector Incomes 2 a. a#ove 9s.) lack 3.*
#. 9s.:DDDD to 9s.)DDDDD
c. 9s.1:DDD to 9s.:DDDD
d. #elow 1:DDD e. a#ove 9s.:DDD
f. 9s.:DDD to #elow 9s.1DDD
6. Institutional 4ector a. 9eligious
#. Educational
c. Charita#le and clu#s
8. 4ervice 4ector a. -inancial 4ervices
#. ;on7financial 4ervices
)>
-
8/18/2019 Market Segmentation in Banking Sector
18/56
7- &rade and Commerce a. /holesalers
#. 9etailers
c. Merchant E'porters
8- Industrial 4ector a- 3rivate 4ector
#. 3u#lic 4ector
c. Co7operative 4ector
d. Garge74cale 4ector
e. 4mall 4cale 4ector
f. &iny 4ector
• I&*ortan%e of &arket seg&entation to t!e 4anking
ser+i%e 5
Gike other goods manufacturing and service generating organi"ation, #anks
find segmentation of market important to the development the #anking organi"ation.
If the segmentation done in a right way, the #anks finds it easier to formulate a
strategic marketing plan. &he following facts testify the instrumentality of
segmentation in the #anking services.
6 - Instr'&ental in e0*loring o**ort'nities 5
It is right to mention that segmentation is very much effective in e'ploring
profita#le and untapped or non7optimally tapped opportunities. It is wellknow that
while segmenting, the market is divided into different small group and su#7groups and
this simplified the tack of studying and knowing the market in a right prospective. If
#anks know a#out the rural segment, the opportunities are e'plored in the rural areas.
&hus #anks divide the market and so they know a#out the market which makes it
easier to identify the opportunities.
)A
-
8/18/2019 Market Segmentation in Banking Sector
19/56
9 - A%ti+e in for&'lating a so'nd &arketing strateg$ 5
&he market segmentation helps the #anks in formulating a sound marketingstrategy. &he formulation of a strategy is found significant and the #ank policy makers
and senior e'ecutives find it possi#le to develop the package in the face of changing
level of e'pectation. 3ackage is a com#ination of num#er of services 5 schemes
keeping in view the changing needs and reuirements of a particular segment.
4ince the #anks are found in a position to know the hierarchy of needs of a particular
segment, the product strategy can #e formulated. In addition the promotional
measures can also finali"ed in the face of the receiving capacity of that segment.
: - Hel*f'l to *oli%$ *lanners 5
/hatever the policy are formulated should have a close link with the emerging
trends in the #usiness environment. &he task of formulating plan is found challenging.
&he #anks need sufficient information a#out the different segments, so that they
succeed in formulating a strategic plan for future marketing. It helps the #anks in
getting the desired information for incorporating necessary improvements. &he
development of personnel, installation of sophisticated information technologies,
innovation in the service mi', etc. take more time and reuire adeuate finance.
7 - Enri%!ing t!e &arketing reso'r%es 5
&he setting of a target the particular segment, there is no meaning when #anks
lack marketing resources. 4ince the market is competitive and foreign #anks are found
making the #usiness environment more volatile, it is essential that the #anks make
availa#le the adeuate resources to increase the market share for e'celling
competition. 4o that #anks needs due support to make the marketing resources
optimal to the changing #usiness conditions.
)
-
8/18/2019 Market Segmentation in Banking Sector
20/56
• Need ; fa%tors infl'en%ing Market ,eg&entation 5
3hilip Fotler has descri#ed the dilemma of the seller especially, a seller
dealing with masses, e.g. #anks! as follows2
“=ow the seller determines which #uyer’s characteristics produce the #est
partitioning of a particular market &he seller does not want to treat all customers
alike nor does he want to treat them all differently%.
Banks deal with individuals, group of persons and corporates, all of whom
have their likes and dislikes. ;o #ank can afford to assess the needs of each and every
individual #uyer actual or potential!.
4egmentation of the market into more or less homogenous groups, in terms of
their needs and e'pectations from the #anking industry, provides a solution to this
pro#lem.
&his involves dividing the market into ma$or market segments, targeting one
or more of this segments, and developing products and marketing programs tailor7
made for these segments.
In the first segmentation, the market is divided from a unitary whole, to groups
of #uyers who might reuire separate products and marketing mi'. &he marketer
typically tries to identify different segments in the market and develop profiles of
resulting market segments.
&he second step is market targeting in which each segment’s attractiveness is
measured and a target segment is chosen #ased on its attractiveness.
&he third step is product positioning which is the act of esta#lishing a via#le
competitive position of the firm and its offer in the target segment chosen.
1D
-
8/18/2019 Market Segmentation in Banking Sector
21/56
In the process of segmentation, the market can #e divided into ma$or segments
which are gross slices of the market, or into smaller specially formed segments,
otherwise known as niches. ;iche customers have a specific set of needs which the
markerter tries to address. /hile a market segment attracts several competitors, a
niche attracts fewer competitors and therefore, a company should clearly define its
target segment and devise strategies to target the customer, so that it has a competitive
advantage in the segment.
&hese concepts can #e applied in personal #anking #y an Indian Bank.
&raditionally, Indian Banks have not had any conscious strategy for selecting
customers from the personal #anking area, apart from some #anks which have a
geographic concentration strategy such as concentrating on a particular region or
state. &hese #anks will have to segment the market on certain #asis, and identify
market segments or niches which they want to cater to. -or e'ample, a #ank like 4BI
may not #e a#le to cater high income groups say, managers, professional, ;9Is, etc.
who earn a#ove 9s. 8,DD,DDD p.a. and who want a higher uality of products 5 services
and who are willing to pay for them!, as the services reuired #y such a profile of
customers are entirely different from the kind of products 5 services 4BI can offer.
T!e following *oints 3'stif$ t!e need of Market seg&entation-
• Market segmentation is needed in order to concentrate attention on a specific
target market.
•&o ad$ust marketing mi' as per the need and reuirements of specific group.
• -or the introduction of strategy of divide and conuer
• It is needed as it acts as a #ase of present customer oriented marketing
philosophy. *s a result customer get #etter services
1)
-
8/18/2019 Market Segmentation in Banking Sector
22/56
• It is needed to create and innovate the products as per the needs and
e'pectation of customer of each market segment
• Benefits of &arket seg&entation in 4anking ser+i%e 5
a! =elps in #etter understanding of the customers’ needs and wants.
#! Better targeting and position of the product.
c! Encourages two7way communication among the potential #uyer and the #anks
d! Maintaining effective relationship with the customers.
e! 9etaining the e'isting customers and attracting new ones.
f! Improving service delivery standards.
g! 9educing cost 5 e'penses on various marketing activities and increases market
share+ resulting in higher profits.
h! Improving the marketa#ility of #anks products and services.
i! Improving #anks marketing strategies.
$! Improving #anks marketing plans.
k! Improving #anks #usiness’s marketing position.
11
-
8/18/2019 Market Segmentation in Banking Sector
23/56
•/i&itations 5
• &oo much concentration of few segments is dangerous. If the market
segments are not selected properly or marketing mi' is not ad$usted properly
from time to time.
•9ational segmentation is difficult 2 7
• It is difficult to have accurate market segmentation in a vast country like India
with diversity as regards demographic ,and socio7economic factors. 4uch
segmentation is difficult, complicated and may not prove to #e accurate.
• Market segmentation strategy has special draw#acks as regards Costs and
Coverage. It increases marketing costs to reach customers of different
segment.
• npredicta#le consumer #ahaviour 2 7
• =uman #eing and his #ehaviour is unpredicta#le. &herefore market segments
may prove to #e wrong.
• Inadeuate information and data due to which rational segmentation may not
#e possi#le. (efective 5 deceptive varia#les used for segmentation may prove
to #e costly.
• Changing marketing environment makes market segmentation ineffective as
the #ank has no control on the e'ternal factors responsi#le for changes in themarket environment.
16
-
8/18/2019 Market Segmentation in Banking Sector
24/56
• Conservative managements do not give much importance to the concept of
market segmentation and conduct their marketing activities as per old
methods.
Initiation of ,eg&entation in India
4tate Bank of India was the first Indian Bank to adopt the concept of market
segmentation. In )>1, it reorgani"ed itself on the #asis of ma$or market segments
dividing customers on the #asis of activity and carved out 8 ma$or market segments,
vi".
• Commercial and Institutional,
• 4mall Industries and 4mall Business 4egment,
• *griculture,
• 3ersonal and 4ervices Banking.
T!e o43e%ti+es of t!is s%!e&e were
• (eeper penetration and coverage of market #y looking outwards.
• *deuate fle'i#ility of organi"ation to accommodate growth and rapid change,
• (elegation of work for releasing senior management for more futuristic tasks.
18
-
8/18/2019 Market Segmentation in Banking Sector
25/56
Market seg&entation strateg$
Market segmentation as a marketing strategy is a recent development.
4egmentation is supplementary to marketing mi'. By successfully segmenting the
market, evaluating the features of each of the segments and #y applying a fair
com#ination of marketing mi', a marketing manager is likely to get good reward in
terms of sale of products, profit, and goodwill. &he #enefits of market segmentation
will #e availa#le only when the segmentation is introduced properly. &his reuires
knowledge, e'perience and maturity and naturally this responsi#ility should #e given
to senior marketing e'ecutives. Market segmentation strategy is certainly useful to
consumers and marketing #anks.
* #ank should identify the most promising and convenient segment of
the total market and concentrate its marketing efforts on that segment for #etter
results. &his suggests that the target market must #e selected and concentrated attack
should #e made on the same through the effective use of marketing mi'. &his is
1:
-
8/18/2019 Market Segmentation in Banking Sector
26/56
descri#ed as segmentation strategies or market targeting strategies. &here are three
alternative marketing strategies as noted #elow 2
-ig.)
Mass ; 1ndifferentiated Marketing ,trateg$ 5
In mass marketing sale of one product 5 service to the entire market. In this
we find low cost of production since it is #ased on large scale economies
which make it possi#le to adopt a price structure which is low and uniform.
such a segmentation strategy is found suita#le to the organi"ation having a
market. &he strategy relies on mass marketing and mass advertising. *n
organi"ation practicing undifferentiated marketing typically develops an offer
aimed at the largest segments in the market. /hen we talk a#out the #anking
organi"ation, we do find this strategy effective to savings accounts in the
conte't of response and no particular marketing mi'.
1
-
8/18/2019 Market Segmentation in Banking Sector
27/56
M'lti*le or #ifferentiated ,trateg$ 5
&his strategy adopted #y the organi"ations where a num#er of products and
services are sold to selected market segment in order to increase overall sales. In
differentiated strategy, the cost however higher than in mass marketing. &he
#anking services are also found differentiated into segments. In certain services
the response of the market may #e varied like term deposits of different maturities
or mi' of different deposit schemes. &he impulse #uying of a customer isinfluenced #y the silent features of the concerned services hence purchasing
power or spending power is found here insignificant. &hus in #anking services for
the undifferentiated market, we so not need a specified marketing mi' #ut for
differentiated market, we essentially need #oth depending upon the nature of
schemes. 4ince the competition is found increasing, the #anking organi"ation has
#een found launching a num#er of services5 schemes in tune with the changing
potentials and reuirements of different segments. &his strategy is thus found to
increase the market share so all that all the segments are tapped optimally.
Con%entrated or Ni%!e &arketing 5
Organi"ation concentrating on selling to a small market segment or niche is called
as a concentrated or ;iche marketing. 4ome points make it clear that segmentation,
especially for the #anking services focuses on differentiated marketing strategy. Of
late, we find a num#er of term deposits containing a good num#er of outstanding
features #ut normally all the features are not found in all the schemes. /hile
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 services5schemes are to #e launched. &his simplifies the task of #ank professional,
especially while influencing the potential customers of that segment. &he motive is to
influence the profita#le segment #y innovating the marketing mi'es. In this
1>
-
8/18/2019 Market Segmentation in Banking Sector
28/56
concentrated marketing strategy, attention is concentrated on one specific target
market only. More attention is given to target consumers and more satisfaction is
offered to them.
Reason for Effe%ti+e Market ,eg&entation ,trateg$
*s already stated, segmentation is the #asis for developing targeted and
effective marketing plans. -urthermore, analysis of market segments ena#les
decisions a#out intensity of marketing activities in particular segments.
* segment7orientated marketing approach generally offers a range of
advantages for #oth, #anks and customers
6- Better ser+ing %'sto&ers needs and wants
It is possi#le to satisfy a variety of customer needs with a limited product
range #y using different forms, #undles, incentives and promotional activities. Many
#anks organi"e it’s products and services #y customer groups. &hey offer the same
products to all customer groups. ;evertheless, they suggest product #undles and
supporting services that are individually tailored for the needs of each particular
group. &hus, segment7specific product #undles increase chances for cross selling.
9- Hig!er Profits
It is often difficult to increase prices for the whole market. ;evertheless, it is
possi#le to develop premium segments in which customers accept a higher price level.
4uch segments could #e distinguished from the mass market #y features like
additional services, e'clusive points of sale, product variations and the like. * typical
segment7#ased price variation is #y region. &he generally higher price level in #ig
cities is evidence for this.
/hen differentiating prices #y segments, #anks have to take care that there is
no chance for canni#ali"ation #etween high7priced products with high margins and
#udget offers in different segments. &his risk is the higher, the less distinguished thesegments are.
1A
-
8/18/2019 Market Segmentation in Banking Sector
29/56
:- O**ort'nities for Growt!
&argeted marketing plans for particular segments allow to individually
approach customer groups that otherwise would look out for speciali"ed niche
players. By segmenting markets, #anks can create their own @niche products’ and thus
attract additional customer groups.
Moreover, a segmentation strategy that is #ased on customer loyalty, offers the
chance to attract new customers with starter products and to move these customers on
to premium products.
-
8/18/2019 Market Segmentation in Banking Sector
30/56
*n undifferentiated marketing strategy that targets at all customers in the total
market necessarily reduces customers’ preferences to the smallest common #asis.
4egmentations provide information a#out smaller units in the total market that share
particular needs. Only the identification of these needs ena#les a planned development
of new or improved products that #etter meet the wishes of these customer groups. If
a product meets and e'ceeds a customer’s e'pectations #y adding superior value, the
customers normally is willing to pay a higher price for that product. &hus, profit
margins and profita#ility of the innovating #anks increase.
=- Hig!er Market ,!ares
In contrast to an undifferentiated marketing strategy, segmentation supportsthe development of niche strategies. &hus marketing activities can #e targeted at
highly attractive market segments in the #eginning. Market leadership in selected
segments improves the competitive position of the whole organi"ation. It strengthens
the #rand and ensures profita#ility. On that #asis, organi"ations have #etter chances to
increase their market shares in the overall market.
*s much as strategies are good, #ank should avoid using one strategy for all
products or marketing applications effective segments or marketing applications
effective segments. * strategy will vary according to what are the marketing
o#$ectives. In the case of attracting new customers who have no history with the #ank.
&he #ank will come up with a wedge product strategy where they give customers of
other #anks a chance to sample some of its products or services for the time #eing and
this will ena#le them to cross7sell more profita#le products to them and create a long
lasting relationship with them.
6D
-
8/18/2019 Market Segmentation in Banking Sector
31/56
Criteria for ,'%%essf'l ,eg&entation
In this chapter we are discussing a#out the which sectors, #anks are going to
segment and how su# segment .
4egmentation in a right fashion makes the ways for profita#le marketing. &his
helps policy planner in formulating and innovating the policies and at the same time
also simplifies the task of #ank professionals while formulating an innovating the
strategic decisions. &he #anking organi"ation also segment market and for the same
they are supposed to assign due weightage to the following criteria which would help
them in many ways. &he following criteria make possi#le rig segmentation.
&he #anking organi"ation need to segment and su#7segment the se'tors where
they succeed in e'ploring the #usiness potentials or say the profita#le opportunities.
*n important criterion for market segmentation the economic system in which
we find agricultural sector, industrial sector, services sector, household sector,
institutional sector and rural sector reuiring of weightage while segmenting.
6- Agri%'lt'ral ,e%tor
the agricultural sector assumes a place of outstanfing significance and the
#anking organi"ation may find profita#le opportunities if they segment this market
into different categories In the agricultural sector, there are four category rise since
the needs of all the categories cant’s #e identical.
6)
-
8/18/2019 Market Segmentation in Banking Sector
32/56
-ig.)!
&he mechani"ation of agriculture, the improved or scientific system of
activation, the help of nature, the magnitude of risk, the availa#ility infrastructural
facilities influence the level of e'pectations vis7J7vis the needs and reuirements. &he
#anking organi"ations are supposed to know and under stand the changing
reuirements of different categories of farmers.
9- Ind'strial ,e%tor
&he #anking organi"ations su# serves the interests of the industrial sector. &he
large7si"ed, small7si"ed co7operative and tiny industries use the services of #anks. &he
e'pectations of all the categories cants are uniform.
fig.1!
&he #anking organi"ations are supposed to have indepth knowledge of the
changing needs and reuirements of the industrial segment.
61
-
8/18/2019 Market Segmentation in Banking Sector
33/56
:- ,er+i%es se%tor
It is an important sector of the economy where the #anking organi"ations get
profita#le #usiness. &he two categories of organi"ations such as profit7making and
not7for7profit making are found important in the very conte't.
fig.6!
&he #anking organi"ations need to identify the changing needs and
reuirements of the services sector. /ith the freuent use of information technologist
and with the mounting pressure of inflation and competition, we find a change in the
hierarchy of needs.
-
8/18/2019 Market Segmentation in Banking Sector
34/56
fig.8! =ousehold 4egment
&he high income group, middle income group, low income group, su#stance
level group and marginal income group have different hierarchy of need which
influence the level of their e'pectations.
Kender 4egment2 In the gender segments, we find male and female having different
needs and reuirements. &he #anking organi"ations are supposed to identify the level
e'pectations of #oth se'es.
-ig.:!
4ome of the women are housewives and therefore they have different need and
reuirements whereas some of them are working ladies having different needs and
reuirements.
7- Profession
In the profession segments, we find different categories of professions an
therefore we find a change in their needs and reuirements.
68
-
8/18/2019 Market Segmentation in Banking Sector
35/56
fig.
&he technocrats, #ureaucrats, corporate e'ecutives, intellects, white and #lue
collar employees have different needs and reuirements and therefore the #anking
organi"ations should know their e'pectations.
8- Instit'tional se%tor
Organi"ations, institutions, industries, #usiness, or say, the large7si"ed
customers is an important market segment for the #anking organi"ation. In the
following figure.> we find different su#7segments in the category institutional sector.
&his the most profita#le segment of #anking organi"ation.
4ome of the organi"ations are known as cultural organi"ations, some of them
are not for profit making, some of them are charita#le and some of them are related
to trade and commerce. &he emerging trends in the social transformation process
determine the hierarchy of needs.
6:
-
8/18/2019 Market Segmentation in Banking Sector
36/56
fig.>! Institutional 4egment
Markets segmentation thus simplifies the task of understanding the
customers5prospects. &he #ank professional find it convenient to formulate and
innovate the marketing mi' of world class which simplify the process of e'celling
competition.
In the Indian perspective where we find agrarian economy contri#uting
su#stantially to the transformation of national economy, it is pertinent that the #anking
organi"ations assign due weightage to the rural sector of the economy where we find
tremendous opportunities.
&he ur#ani"ation is likely to gain the momentum and villages, outskirts of #ig
towns and cities are to #e developed on a priority #asis. *lmost all the organi"ations
are to get tremendous opportunities there. &he marketing resources if of innovative
nature would make the ways for capitali"ing on the same profita#ly.
6
-
8/18/2019 Market Segmentation in Banking Sector
37/56
=ence this is found essential to know the changing needs and reuirements of
the different segments. &he launching of new products and services or an overriding
priority to the innovation process cannot #e meaningful unless the #anks succeed in
rating the e'act level of e'pectation of different segments.
Bases of Market ,eg&entation
In this topic we are discussing on what #ases #anks can segregate their customers .
6>
-
8/18/2019 Market Segmentation in Banking Sector
38/56
/hen we divide any class or a su#$ect, it is done on certain grounds. &he #ase
is created after considering the various fields and the characteristics of students, merit
and so on. 4imilarly marketing segmentation is done on certain consistency that e'ists
within the group.
Marketers use segmentation #ases, or varia#les, which are characteristics of
individuals, groups, or organi"ations, to divide total market into segments.
Markets can #e segmented using a single varia#le, such as age group, or
several varia#les, such as age group, gender, and education. *lthough it is less
precise, single7varia#le segmentation has the advantage of #eing simpler and easier to
use than multiple7varia#le segmentation. &he disadvantages of multiple segmentation
are that it is often harder to use than single7varia#le segmentation+ usea#le secondary
data are less likely to #e availa#le+ and as the num#er of segmentation #ases increases,
the si"e of individual segments decreases. ;evertheless, the current trend is toward
using more rather than fewer varia#les to segment most markets. Multiple7varia#le
segmentation is clearly more precise than single7varia#le segmentation.
4o in order to make sure that the product, offerings reach the right consumers
and customers it is necessary that we understand the #ase of segmentation.
Geogra*!i%
;ations
4tates
9egions
Cities
/orld
M74i"e
(ensity
6A
-
8/18/2019 Market Segmentation in Banking Sector
39/56
Climate
#e&ogra*!i%
*ge
-amily 4i"e
-amily life cycle
Kender income
Occupation
Education
9eligion
Keneration
;ationality
4ocial Class
Ps$%!ogra*!i%
Gife 4tyles
3ersonality
Lalues
Be!a+ioral
Occasions
Benefits
ser 4tatus
sage 9ate
Goyalty 4tatus
9eadiness 4tage
6
-
8/18/2019 Market Segmentation in Banking Sector
40/56
*ttitude &oward Offerings
,tages for seg&entation
/hile segmenting, it is essential that the #ank are familiar with the different
stages to #e covered for right segmentation since this would simplify the task of
sensiti"ing the marketing efforts vis7J7vis would make the #usiness profita#le. ;ow
we are going through the different stages of segmentation.
8D
-
8/18/2019 Market Segmentation in Banking Sector
41/56
6- Cond'%ting t!e Resear%!
&he first stage in the segmentation process is to conduct research which
analyses the market to identify the group of customers within the overall market who
share needs and have certain #ehavioural properties or features in common which
distinguish them from groups of customers. &he research is done with help of
varia#les #ases! which helps to conduct the research efficiently. &he research would
answer to the uestions and so the #anks #ear the responsi#ility of intensifying the
research.
9- Identif$ t!e Profita4le ,eg&ent
Market research would help the #anks in knowing the segments containing the
most #uyers or the most profita#le #uyers. It is most important that the most
profita#le segment should not #e too large in si"e. &he concept of market
segmentation is eually applica#le to the #anking or the other service generating
organi"ation also. &he #anking organi"ation like =ong Fong #ank and the IndusInd
#ank have #een found treating each class in the same way as the manufacturing
organi"ation treating their products. If #anks are succeed in identifying the profita#le
segment, the task of #ank professionals would #e simplified considera#ly.
:- Esta4lis!ing t!e *osition of t!eir ser+i%e ; s%!e&es
8)
-
8/18/2019 Market Segmentation in Banking Sector
42/56
&he third stage in the market segmentation process is to esta#lish the position
of their products 5 services 5 schemes in the market relative to those of rival #anking
organi"ations. &he product position is found different in #oth categories of #anking
organi"ation pu#lic sector commercial #anks and the private #anks. It is important
that the competing #anking organi"ation assign due weightage to the positioning
strategy adopted #y the competitors.
-
8/18/2019 Market Segmentation in Banking Sector
43/56
8- Ado*ting t!e Rifle5 s!ot A**roa%!
If the #anks fail in motivating the prospects, they may think in favour of the
rifle7 shot approach. &his approach is related to aim the target market in such a waythat even the untapped potential customers are motivated. =ere #anks find innovating
the marketing resources essential and the innovation process should keep in mind the
reason which resulted into the failure of their efforts taken earlier.
-rom the a#ove stages we found that, the first stage occupying a place
of outstanding significant since it is the uality of #anks research determines the
magnitude of #anks success. It is due mainly to the fact that the mast profita#le
segment is found of the smallest si"e. &he profita#le segment is to #e tapped
optimally so that the marketing resources or inputs used in the process are one
hundred7 percentage productive. It is in this topic that we find a study of the different
stages of segmentation essentials.
Criteria for an Effe%ti+e ,eg&entation
In processing the marketing activities , of course there are a num#er of steps
and stages #ut of all, find segmentation significant since right segmentation simplifies
the task #anks and makes the marketing efforts sensitive. &his gravitates our attention
on effective segmentation. *n important task #efore the #anks is to have effective
segmentation which makes ways for an optimal utili"ation of the marketing resources.
86
-
8/18/2019 Market Segmentation in Banking Sector
44/56
It is against this #ackground that we find effective segmentation to #e discussed in
detail. Fotler says that any worthwhile effort for market segmentation must satisfy the
following four conditions 2
Measura#ility 27
By Measura#ility in the market segmentation, the degree to which the si"e and
purchasing power of the segments can #e measured. ;o dou#t in it that there
are certain segmentation varia#les which cant help us in the measurement
process. In a true sense, this refers to the e'tent to which the si"e and
purchasing power of the segment can #e fair to a point that is measured. If
#anks fail in measuring the si"e and purchasing power of a segment, it is
natural that #anks fail to assess the #usiness potentials of that segment.
su#stantiality 2
&his is refers to the degree to which the segment are large and profita#le. It is
essential that a segment #elongs to the largest homogeneous group. If the si"eis very small even #anks find it full of potentials, the market would hardly #e
profita#le. Banks can’t negate that su#stantiality is a relative term. In the
#anking #usiness we find some the small segments with tremendous
potentials. &hus we can’t say that su#stantiality would #e an essential criterion
since #anks can develop mi' or a package even for the small segment and
make the #usiness profita#le.
*ccesssi#ility 2
&his is related to the degree to which the segments can effectively or smoothly
#e reached and served of cource, #anks find it essential consideration for
effective segmentation since even if market is profita#le and #ank can reach to
that market smoothly, the #ank professionals are found helpless to capitali"e
on the opportunities.
88
-
8/18/2019 Market Segmentation in Banking Sector
45/56
*ctiona#ility 2
&his is meant the degree to which effective programmes can #e formulated for
attracting and serving the customers. =ence #anks emphasis on the potentials
of customers in uick e'pendition of the formulation process. If the #anking
organi"ation faces the pro#lem of under staffing, the actiona#ility would #e
affected adversely.
&his a#ove conditions needs to #e formulating effectively in which
marketing resources and efforts are found more sensitive.
Market seg&entation for Mo4ile Banking
It is a#solutely true that mo#ile #anking is e'perienced different from one market
to another. It is often the source of a lot of confusion when different people discuss
mo#ile #anking from different conte'ts. Before we discuss mo#ile #anking it is
therefore important to first define the markets that one target when deploying mo#ile
#anking.
&he most o#vious first segmentation of the market for mo#ile #anking is to look at
those consumers with a strong, e'isting relationship with #anks, and those that do not
8:
-
8/18/2019 Market Segmentation in Banking Sector
46/56
have a relationship with a #ank. &his segmentation should range from some7one
without any #anking relationship some7one that does not have a #ank7account and
also never had one!, to on the e'treme right! a sophisticated user of #anking services.
&his would typically #e some7one with a relationship with more than one #ank, have
multiple #ank accounts and5or credit cards.!. *nother dimension should #e an
indication of the degree in which a consumer is connected to other consumers. 4ome
consumers #ecause of their work or role in society have a #igger need to interact with
a more diverse group of consumers, others are much more localised in their
interaction.
In looking at the different segmentations, one would #e a#le to identify
an individual that are typically employed in a low income position or survives off
grants, pensions or money sent from family working in the city or a#road. Gife’s
routine is predicta#le for this individual with activities organised around the work and
family. &he rural citi"en would typically live in a low cost a#ode. Credit worthiness is
low with access to e'pensive micro lending as a source of lending only. *ll
transactions are in cash and almost no savings e'ist. &his is an individual that either
living in a village in some rural area or in slums in or around cities. &hese people are
the masses that turn the economy with their la#our. &heir need for #anking services is
limited to small savings, money remittance and some electronic payments. &hey
usually get access to these financial services in a very e'pensive way, often with high
risks as all of their transactions are in cash. &hey are often referred to as the #ottom of
the pyramid, #ut yet they are active in the economy and represent a large portion of
the population in many countries and can #e reached #y mo#ile #anking with the right
product or service.
*nother segment would consist of individuals that are much more affluent.
&hey are the people that always have the latest gadgets and are more e'pansive in
their e'posure to financial products. &hey typically have the latest phones, have more
than one #ank relationship and travel e'tensively for work and pleasure. &heir assets
include stocks and #onds and they use the Internet e'tensively to transact
electronically. &hey are often aware of transactional risks associated with card
transactions and the Internet and are often uncomforta#le a#out their e'posure to
fraudulent activities. In addition to providing more control and improved security,
8
-
8/18/2019 Market Segmentation in Banking Sector
47/56
mo#ile #anking also delivers an alternative mechanism for the 3ower ser to pay.
&ransactions not usually availa#le can now #e performed. 4ome of the transactions
that the 3ower ser reuires and now #ecomes availa#le are person to person
payments, pro'imity payments, enhanced security for “card7not7present% transactions
to name a few. *ll of these features are availa#le in some format or another.
It is clear that different market segments would reuire vastly different mo#ile
#anking offerings.
Case st'd$
• Introd'%tion
8>
-
8/18/2019 Market Segmentation in Banking Sector
48/56
Barclays is a glo#al #ank. It provides a range of financial services in :<
countries. Barclays provides retail #anking services to customers, whether they are
individuals or #usinesses. It offers a #road range of financial products and services
including current accounts, savings accounts and general insurance.
/ithin the F, Barclays communications are designed to help customers @Take One
Small Step’ to managing their money #etter every day. (ifferent kinds of customers
represent distinct markets for Barclays. &he market for personal #anking services is
very competitive. 3ersonal customers have a choice of #anks on the high street or on
the we# to assist them in managing their finances. -or e'ample, they can have their
salaries paid into accounts, pay #ills through the #ank or save money to
gain interest on their savings. &here is also a competitive market for #usiness #anking
services. Businesses reuire different services such as credit management, payments
for suppliers or loans and overdrafts to help them to survive and grow. -or e'ample,
an e'panding #usiness may need a mortgage to #uy a new #uilding.
Market segments
Each market is capa#le of #eing further su#7divided into segments. * market
segment is a part of a whole customer group that shares particular characteristics.
&hese include such factors as age, life stages, geography or occupation. /ithin the
market of personal #anking, the segments could include categories such as students,
8A
http://www.thetimes100.co.uk/glossary--market-segments-2465.phphttp://www.thetimes100.co.uk/glossary--market-segments-2465.php
-
8/18/2019 Market Segmentation in Banking Sector
49/56
graduates, @new to work’, mature, and families. By identifying different market
segments, organi"ations can ensure they are providing products or services to meet the
needs of these customers.
In addition to this, appropriate promotional techniues can #e used to reach
the people in the separate segments. &hrough segmentation, Barclays has #een a#le to
devise appropriate #anking offers for customers in different segments. &his approach
is helping Barclays to improve its market share of the student accounts market.
Barclays #elieves students constitute a very important market segment for the
#usiness. 4tudents may #e choosing a #ank for the first time and Barclays hopes to
retain these customers. By focusing on the specific needs of this segment, Barclays
hopes to attract more student customers and keep them in the long term. sing market
research has ena#led Barclays to identify the right product offer that will meet their
needs.
&he case study shows how market research ena#led Barclays to improve its
student account offer.
• P'r*ose of &arket resear%!
&he purpose of market research is to gather data on customers and potential
customers. &he collected data aids #usiness decision making. &his therefore reduces
the risks involved in making these decisions. In order to create a
product proposition that would attract new student accounts, Barclays needed to
understand fully the needs of this target market.
8
-
8/18/2019 Market Segmentation in Banking Sector
50/56
-irstly, students provide an opportunity for developing a long7term
relationship. *s the student market segment increases each year in 4eptem#er5Octo#er
as the university term starts, Barclays has an annual opportunity to target new student
customers who need an account and who might not yet have chosen a #ank.
4econdly, the use of this data highlighted that in the years after opening their
accounts, Barclays was a#le to esta#lish a valua#le long term relationship with
students. &his meant that students could now #e seen as an e'tremely important
market segment, and attracting new student customers #ecame a significant
opportunity.
Barclays designed a programme of market research. &he purpose of this was to
esta#lish what students really needed from a #ank. In this way it
could offer appropriate products and services which would add value to students.
:D
-
8/18/2019 Market Segmentation in Banking Sector
51/56
• T$*es of &arket resear%!
Barclays #egan a process that involved #oth primary and secondary research.
Pri&ar$ resear%!
3rimary research involves finding out new information. It finds the answers to
specific uestions for a particular purpose. &hese enuiries may take the form of
direct uestioning. -or e'ample, it may include face7to7face surveys, postal or online
uestionnaires, telephone interviews or focus groups. &his type of direct contact with
people is valua#le as it gives specific feed#ack to the uestions asked.. *lthough
primary research can #e e'pensive and time7consuming, the up7to7date and relevant
data collected can give organisations a competitive advantage
-or e'ample, Barclays found from the uestionnaire that A) of students surveyed
held a savings account and 61 an investment savings account I4*!.
,e%ondar$ resear%!
4econdary research focuses on e'isting information. It uses pu#lished data that
previous research has already discovered. &his covers a wide range of materials, such
as2
• market research reports
• sales figures
• competitor marketing literature
• Kovernment pu#lications, e.g. national statistics.
:)
-
8/18/2019 Market Segmentation in Banking Sector
52/56
4econdary research may #e uicker to carry out #ut may give less specific outcomes
for the topic in uestion. &his part of Barclays research revealed that student accounts
in 1DD amounted to D.8 million out of a total market of :.8 million new accounts.
• Resear%! findings
;umeric data gives a factual #asis for planning 7 a snapshot of a situation. On
the other hand, ualitative information can find out the things that really matter to
consumers.
Resear%! o't%o&es
• 4tudents relied heavily on different forms of credit. &hese included an easily
managea#le #ank overdraft to finance their time at university
• 4tudents wanted and often needed to own high7tech gadgets and electrical
goods, such as laptops
• 4tudents wanted to have separate accounts to manage their student #orrowing
and spending
• *ny incentives offered would not alone motivate students to choose that
product. &hey were e'pected as part of any deal.
&his insight was a real help to Barclays when considering the most
attractive proposition for students. Its o#$ectives were to attract new student accounts.
It also wanted to retain students as customers for life in a profita#le relationship that
met their financial needs.
Barclays could now start to put together an offer that would em#race the main
concerns of the target market.
:1
-
8/18/2019 Market Segmentation in Banking Sector
53/56
• I&*le&entation and e+al'ation
In 1DD, Barclays set up a working group to oversee the setting up of the new
student proposition. It used the insight from the research to esta#lish the key features
and #enefits of the student account. &hese features are valid for the life of students’
studies2
• ;o monthly fee to keep costs down for students
• *n interest7free overdraft facility of up to N1,DDD from starting the account.
3reviously this started at N:DD in the first year and increased through the years
of study. &his e'tension helps students manage their finances.
• Mo#ile #anking and a network of local #ranches for ease of access to
accounts.
=aving developed a student #anking proposition that Barclays felt confident
would appeal, it #egan to communicate the message and promote the new student
offer. *n innovative marketing plan was launched which involved2
• a word7of7mouth campaign through @)DD voices’ which encouraged students
to share their e'periences of managing money whilst at college or university
• 3romotional literature availa#le in #ranches nationwide. &his proved useful
information for Barclays colleagues as well as for students and their parents to
take away
• online advertising through #arclays.co.uk
•
(irect mail to prospective students through the summer #efore going touniversity.
:6
-
8/18/2019 Market Segmentation in Banking Sector
54/56
• Con%l'sion
&he Barclays student account proposition shows how it is crucial for a
#usiness to listen to its market. &o do this effectively means targeting specific market
segments to discover their needs.
Barclays’ new student account proposition was an @insight7led’ approach.
sing carefully constructed and phased market research, the #ank was a#le to
gain an overall insight into the thinking of students. In the early stages of the research,
it was discovered that the student segment provided an opportunity to develop a long7
term relationship. It was found that students were not necessarily @here today, gone
tomorrow’. If the #ank made a valua#le and relevant offer, students were likely to
remain lifelong customers.
Barclays’ initial target was to increase the overall num#er of student accounts
#y 1:. &his target was e'ceeded with an increase of 68. *s a result, Barclays
increased its market share of the student market, moving from third to second among
the top four market leaders.
&he process of meeting customer needs is an ongoing one. Barclays has a
continuing plan for re7evaluating its student proposition to ensure it remains relevant
to the target audience.
:8
-
8/18/2019 Market Segmentation in Banking Sector
55/56
>I,IT REPORT
I had visited to ICICI #ank and =(-C Bank to gather the information a#out
my pro$ect Market 4egmentation. I had visited ICICI #ank at and =(-C #ank. I asked
many uestions which will help me to complete my pro$ect. I met Ms.9oshani 4alion,
#ranch manager of ICICI #ank at dom#ivali and Mr. 4ingh #ranch manager of =(-C
#ank at kalyan #ranch.
=(-C Bank is a young and dynamic #ank, with a youthful and enthusiastic
team determined to accomplish the vision of #ecoming a world7class Indian #ank.
=(-C Bank?s mission is to #e a /orld7Class Indian Bank. &he o#$ective is to #uild
sound customer franchises across distinct #usinesses so as to #e the preferred provider
of #anking services for target retail and wholesale customer segments, and to achieve
healthy growth in profita#ility, consistent with the #ank?s risk appetite.
=(-C Bank offers a wide range of commercial and transactional #anking
services and treasury products to wholesale and retail customers. &he #ank has three
key #usiness segments2 /holesale Banking 4ervices, &reasury and 9etail Banking
4ervices.
India’s second largest #ank ICICI #ank,
-
8/18/2019 Market Segmentation in Banking Sector
56/56
ICICI #ank and =(-C #ank are now trying to target the rural customers .they
started introducing products and services for the rural people.
&his two #anks really doing good $o# #y segmenting the market. I am very
thankful to the managers who provided such an important data a#out Market
4egmentation Banks.