MARKETING CONCEPTMarketA situation where buyers and sellers of a commodity interact.Coming together of buyers and sellers of the same or similar commodities

TYPES OF MARKET

Geographical Area Product Nature of Transaction Volume of Transaction

MARKETING

Marketing is the process of determining consumer demand for a product or service, motivating its sale and distributing it into ultimate consumption at a profit

A management function A Business Philosophy

EVOLUTION OF MODERN MARKETING

Industrial revolution Digital revolution Barter System Customer and market driven Wants of customers CRM Customer Satisfaction Nothing is worthwhile unless it

touches the customer

Selling Marketing

Selling is an operational activity

Marketing is a total management

Selling is product focused Marketing is customer focused

Selling is oriented to the needs of the firms

Marketing is oriented to the needs of the buyer

Selling encashes profitable opportunity

marketing coverts customer needs into such opportunities

Selling aims at maximizing sales volume

Marketing aims at maximizing customer satisfaction

Selling= Factory > Products > Selling and promotion > Profits

Marketing=Target market > Needs > integrated marketing > Profit by customer satisfaction

MARKETING MANAGEMENTA process of planning and executing the conception, pricing , promotion and distribution of goods and services and ideas to create exchanges with target groups that satisfy customer and organizational objectives.

FUNCTIONS OF MARKETING MANAGEMENT

Analysis Planning Implementation Control

IMPORTANCE OF MARKETING FOR INDIAN BANKS

"The relevance of aggressive marketing in banks has come to the fore as never before" - M N Goiporia.

What is a Product?Product is defined as “ anything that can be offered to a market for attention, acquisition, use or consumption.

CHARACTERISTICS OF SERVICES

Intangibility Inseparability Heterogeneity Perishability

SERVICE

A service is any act or performance that one party can offer to another that is essentially intangible and does not result in the ownership of anything. It’s production may or may not be tied to physical product.

S.No.S.No. Physical GoodsPhysical Goods ServicesServices

1.1. TangibleTangible IntangibleIntangible

2.2. HomogeneousHomogeneous HeterogeneousHeterogeneous

3.3. Product and distribution Product and distribution separated from separated from consumptionconsumption

Production, distribution Production, distribution and consumption re and consumption re simultaneous processsimultaneous process

4.4. A thingA thing An activityAn activity

5.5. Core value produced in Core value produced in factory factory

Core value produced in Core value produced in buyer-seller interactionbuyer-seller interaction

6.6. Customers do not Customers do not participate in the participate in the production processproduction process

Customers participate in Customers participate in productionproduction

7.7. Can be kept in stockCan be kept in stock Cannot be kept in stockCannot be kept in stock

8.8. Transfer of ownershipTransfer of ownership No transfer of ownershipNo transfer of ownership

MAREKTING OF FINANCIAL SERVICES

Intangibility, inseparability and heterogeneity are manifested at both strategic and tactible levels in services marketing. Marketing strategy provides the organisation with a sustainable competitive advantage in the markets it operates.Organization should understand consumer needs and identifies how those consumers should be grouped into different market segments.Product attributes, pricing decisions, methods of distribution and communication should all seek to reflect the chosen position.

Types of Financial Markets in India

The credit marketThe money marketEquity and term lending marketDebt marketInsurance marketForeign exchange ,marketStock marketsConsumer finance market

BANK MARKETING Provides services Aimed to satisfy customer’s needs and

wants Needs and wants may be non financial

in nature Competitive element, efficiency and

effectiveness Organizational objectives are still the

driving forceCommercial objective to make

profitSocial Objectives

Essentials for a Banks SuccessCannot exist without customerCreate, win and keep customersOrganizational design should be

oriented to the customerDeliver total satisfaction to the

customer Customer satisfaction is affected by

the performance of all the personnel of the bank.

MARKETING MIX Key concept in the modern marketing Considered to be core of marketing It is the set of tools that the firm uses to

pursue its marketing objectives in the target market

Decisions must be made for both the distribution channels and the final

consumers

Marketing Lessons

Product

Price

Place

Promotion

Consumer

Cost

Convenience

Communication

OLD New

Wining companies are those that can meet customer needs economically and conveniently and with effective communication

Services Marketing Mix – 7P’sProduct, Price, Place, Promotion, People, Physical evidence, Process

Consumer BehaviorPlanning of a marketing mix commences with formulating an offering to meet the target customer’s needs or wants.

Maslow’s Hierarchy of Needs:1)Physiological needs - food, drink, oxygen, sleep2)Safety needs – avoidance/ protection from threatening situation and economic security3)Social needs – friendship, affection and sense of belonging4)Esteem needs – self-respect, recognition, status and success5)Self- actualization – self- fulfillment

Stage Financial situation Banking needs

Young bachelor Per capita income high, as no dependants. Few family burdens

Credit cards, auto loan, low cost banking services

Half nest (married with young children)

Home buying priority, low liquidity

Mortgage loan, credit card, overdraft, durable loans

Full nest (older couple, grown up children)

Income stabilized, good financial position

Home improvement, equity investment

Empty nest (older couple)

Significantly reduced income

Social security services, some loans

Learning and habit development:The marketers break habit by giving free

samples, introductory trial offer and special discount on opening and generate new clientele.

Once consumer makes the purchase, the habit reinforcement is done to get them to remain habitual users.

Influence on Decision making:Face- to-face group many a time gives an individual the support for decision-making.

Customer relationship Management:Objectives:

Long term customer retentionRelationship with external market who influence

or provide referralsIntegrating marketing activities, customer

service and quality standards

Gap Analysis:The CRM tries to close the gap in the customer perception and the firm’s perception by finding and analyzing the “GAP”

1)The first gap is between the service expected by the customer and company perception of consumer expectations.2)The next is between the customer driven service designs and standards vs. company perception of consumer expectations about the service designs and standards.3)The third is about delivery of service perceived by the customer and the firm’s perception about customer expectations.4)The gap between the service delivery to the customer and external communication to the customer by the firm.5)The ultimate gap between expected service and perceived service.

PRODUCTA product is anything that can be offered to a market for attention, acquisition, use or consumption that might satisfy a want or need

PRODUCT PERSONALITY

THE CORE

THE ASSOCIATED FEATURES

THE BRAND NAME & LOGO

THE PACKAGE AND LABEL

PRODUCT LEVELS

Core benefit, basic product, expected product, Augmented product and Potential product.

PRODUCT CATEGORY Durability, tangibility and use Product item, Product Line, Product

mix Banking product

PRODUCT PLANNING

The process of product planning consists of determining the strategies in respect of various elements. Product Line, Product Mix, Branding, Packaging and New product development.

PRODUCT LIFE CYCLEIntroduction, Growth, Maturity, DeclineThe product Life cycle operates at three levels product level, product sub category, brand level.

NEW PRODUCT DEVELOPMENTIdea screeningConcept testingProduct developmentTest marketing

Commercial launch

PRODUCT STRATEGIESStrategies based on Product MixStrategies based on Product Life Cycle

PRODUCT MODIFICATIONQuality ImprovementFeature ImprovementStyle Improvement

PRODUCT ELIMINATIONGROWTH STRATEGIES

IntensiveIntegratedDiversification

Identifying growth opportunities

Products

Market

Market Penetration

Product development

Market development diversification

Existing

New

Existing New

DIVERSIFICATION

Concentric Diversification – technologically related but the target customers are entirely different

Horizontal Diversification – technologically unrelated but the target customers are same

Conglomerate Diversification – no relationship with the existing product

BRANDINGLine ExtensionBrand ExtensionMulti brandsNew Brands

PACKAGING Primary PackageSecondary PackageShipping Package

LABELLINGIdentify the product or brandDescribing informationPromoting the product through 'attractive graphics'

PRICINGPrice is the sum value of all the values that consumers exchange for the benefits or having or using the product or service

Different forms - Goods bought, hire charges, tuition fees

Dynamic Pricing - Varying pricesFlexibility

OBJECTIVE OF PRICINGProfitSurvivalMarket ShareCash FlowStatus QuoProduct QualityCommunicating ImageShort term/Long term

FACTORS INFLUENCING PRICINGInternal factors

External factors

PRICING METHODSMark up PricingVariable costs and contribution for fixed costs

Absorption cost Pricingmargin for profit

Target Return PricingReturn on the investment

Marginal cost PricingDirect variable costs are fully realizedOnly a portion of fixed costs may realized

Perceived Value PricingBuyer’s perception of value

Value PricingProduct with high value at a fairly low price

Going Rate PricingBased on competitor’s prices

PRICING METHODS (Contd..)Auction Type Pricing

English AuctionsOne seller many buyer

Dutch Auctions Sealed Bid

Auctions Group Pricing.

Pricing StrategiesGeographical pricingPrice discount and allowancesPsychological pricingPromotional pricing

Loss-leader pricingLoss is covered by sale of other items

Special event pricingCash rebatesLow-interest financingLonger payment termsWarranties and service contractsPsychological discounting

Pricing Strategies (Contd.) Discriminating pricing

First degreedifferent prices to each customer depending upon their intensity of demand

Second degreeLower prices for buyers of a larger volume

Third degreeCustomer groups – student,

senior citizen

Product formImage pricingChannelLocationTime

Pricing Strategies (Contd.)

Product-mix pricingProduct line pricing –developing

product line

Captive-product pricing – main product at lower price, ancillary product at higher price

Two-part pricing – split into fixed and variable component

By-product pricing – by-products obtained in production of other products

Product-bundling pricing Market skimming pricing Market-penetration pricing

Bank Pricing:There are two major costs, which have to be considered while pricing bank products:1)Interest cost2)Servicing costInterest cost constitutes 67 % of the price and service cost is around 33 % in any bank product.

Table 36.4 – explains charges bank charge for some of the services

Other factors: Risk and return Monetary policy Capital adequacy

Cost-benefit analysis

DistributionDistribution channel

Marketing channels are sets of independent

organizations involved in the process of making a

product or service available for use of consumption.

Functions of distribution channelsMarket informationPromotionContactMatchingNegotiationProduct informationPhysical distributionFinancing

Risk Taking

Channels typesChannel 1, Channel 2, Channel 3, Channel 4, Factor influencing channel section

Product characteristicsPerishable productsConsumer durablesIndustrial products

Market characteristicsCustomer characteristicsCompany resourcesCompetitionProduct lines

Channels for banking productsBranches

Other channelsTele-bankingATMsComputerizationPlastic CardsVirtual branches and automated video banking

Intermediaries in banking servicesDSAAutomobile DealersMerchant establishments

Channel Management:Channel management is also called as IT channel management, distribution channel management, channel sales management and sales channel management.

Channel levels:Zero levelOne levelTwo levelThree level

Channel Dynamics:Vertical marketing system ( VMS):It implies that the producer, wholesaler and retailer acting as a unified system.

Horizontal marketing system:It is one in which two or more unrelated companies put together resources of programmes to exploit an emerging marketing opportunity.e.g.: in-store banking, education loans, housing loans, etc

Multi-channel marketing systems:With the proliferation of customer segments and channel possibilities, more companies have adopted multi-channel marketing.e.g.: a bank may try to sell its products through internet, marketing officials, outsourcing, etc

Advantages:The Interwoven channel Management (ICM) connects businesses with their direct and indirect channels through information, business processes and sales applications to streamline the sales process and realize more profitable channels.

PromotionRole of promotion

PersuasionInformRemindingReinforcing

Promotion mix

AdvertisingPersonal

selling

Sales Promotion

Public Relations

Direct Marketing

Blended Mix of Promotion Tools

Promotion mix strategies• Push strategy -Retailer

• Pull strategy - Customer

Factors influencing promotion mix• Types of product/market• Buyer’s readiness stage• PLC stage

Promotion mix integration

Direct Selling (DS):It is also called as multi-level selling or

network marketing.The company sells door to door or at home

sales parties.e.g.: Amway, Tupperware, etc

Direct Marketing (DM):It is an interactive marketing system that

users one or more media to affect a measurable response or transaction at any location.

e.g.: telemarketing, television direct-response marketing (home shopping network) and electronic shopping (Amazon.com).

Relevance of DS/DM to banks:Banks have transformed from a totally computed environment to core banking system linking all the bank branches as a single branch, data being maintained at a nodal point termed as “ Centralized Data Centre” (CDC).

Channels of delivery in a Bank:ATM counters, Net Banking, Phone banking, mobile banking, online trading accounts, etc.

Benefits of Direct marketing:1)It saves time and introduces customer to the various selection of products.2)It is convenient, easy and hassles free for the customer.3)Various products are available at customer’s disposition.4)It reduces the operational cost.5)It enables deployment of available manpower for other jobs.

Marketing Information System (MKIS)Features of MKIS

Master PlanCoordinationFuture OrientationComputerized EnvironmentAnalyze Quantitative InformationRegular flow of Information

Functions of MKISCollecting and assembling dataProcessing of dataAnalysis of dataStorage of dataDiscrimination of information

Need of MKIS

Complex marketing activityKnowledge /information explosionCommunication gapPrompt decisionNon-price competition

USAGE OF COMPUTERS IN MKISHardware usageSoftware usageFrequency of computer usageCommunications of informationSources of information

Support for marketing management

Support for marketing mix decision

Kinds of information needed• Information about market forces• Information about the bank’s market behavior• Internal information

Components of MKIS• Internal marketing information• Marketing intelligence system

professional market research agencies like ORG, MARG, IMRB, etc.• Marketing research system

information pertaining to specific marketing problems.

Advantages of MKIS