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Bank Marketing
I saw a bank that said "24 Hour Banking,"
but
I don't have that much time.
- Steven Wright
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Bank Marketing - Background
Sahukars, pedhis
Initial days low level of economic activities & littlebusiness prospects
State Bank of India was set up in 1806 (formerly the
Imperial Bank of India) and was nationalized in 1955 14 commercial banks were nationalized in 1969 for
contribution to social development of India
1970- ATMs, Direct deposit of payrolls, pay by phone,credit & debit cards, etc.
Competition with newly emerged private banks andentrance of multi-national banks have compelled thenational banks to adopt the concept called BankMarketing
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Bank Marketing concept
Bank offers B2B as well as B2C products
B2B : letter of credit, OD, current account,
salary accounts, term loans, projectfinancing, Forex services etc
B2C : savings accounts, RD/ FD, personal
loans, vehicle/ housing loan, ATM & net
banking facilities, safety deposits, etc
Banks support industries and build nation.
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Why banks do marketing ?
Justification
Understanding the customers
Satisfying the customers
Excelling competition
Formulating & innovating the mixes
Social orientation
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Users of banking services
General users - Public accounts/individuals use bank for safety, savingsand loans. Also cover NRI accounts
Industrial Users- Industries, business firmsuse banks for funding, credit andtransactional operations
Prospects- The general users or firms whohave potential to avail bank services andmay take up services in future.
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Behavioral profile of bank users
Purchase & use
strategy
Family/ competition
Influence
Social
Influence
Business
Influence Economic
Influence
Cultural
Influence
Needs Motivation
PerceptionAttitudes
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Influences in buying behaviour
Social Influence : Influence of age on saving, impact ofconsumerism
Economic Influence : ability to pay, income class,economic situation, the area in which the firm operates
Business Influence : Service strategy of the banks,products and schemes, past reviews, etc
Family/ competition Influence : type of family orcompetition, position in family/ market, influencing
person in family or in organiozation Cultural Influence : cultural background, religion, local
& state background
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Marketing Information System
in Banks A marketing information system has four components: The internal reporting system : Funds, deposits
received, transactions done, inventory records, etc
The marketing research systems : customer feedback
, market feedback etc. The marketing intelligence system: study of market
research and interpretations presented to topmanagement.
Marketing models : means of interpreting information in
order to give direction to decision. These models may becomputerized or may not. Ex : Linear programming, whatif analysis, etc.
Operates at various levels such as branches, regionaloffices and HO
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Marketing Information system in
banks Individual segment Inputs : Individual
customer feedback, dailybank transactions,
demographic information( retirements, newemployments, incomes ofcustomers, loanapplications, FD amounts
etc)
Corporate segment
Inputs : Licenses,company registrations,letter of credits, OD limits
availed, current accountsstatistics, transactionaldata
Branches take operational decisions,
regional offices take control decisions and
& head offices take strategic decisions
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Segmentation
Market segments are the groups of
consumers according to such
characteristics as income, age, gender,
literacy and other social, demographic,
cultural and geographical factors.
Market segmentation is the dividing of
markets into more defined specific smallmarkets called as niche markets.
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Criteria for segmentation
Should be distinct from other segments
(different segments have different needs)
Should be homogeneous within thesegment (exhibits common needs)
Should respond similarly to a market
stimulus
Should be substantial in numbers/
business
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Market Segmentation in Banks
Economic Segmentation
Agricultural sector : by land , market,crops
Industrial sector : by size , operationalcharacteristics
Institutional sector : by type, turnover
Services sector : nature of service, size Household/ Individual sector : by gender,
by profession, by status ( local/ NRI)
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Advantages of segmentation
Distinguish between various consumer
groups
Segment focused marketing Divide & conquer policy
Accuracy in predictions & forecasting
Concentrate over A sectors Segment-wise analysis, review and
remedial actions
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Marketing mix for banking services
Product mix
Price Mix
Place mix Promotion mix
People
Processes Physical evidences
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Product mix
In a bank, Products are services not goods.Thus we can call it a services mix.
The product portfolio will include both servicesfor individuals and services for industries
Products are customized and sometimes evendifferentiated in nature.
Main components of product are safety, corecomponent and added features.
It is not only important to offer services but alsoto carefully design & customize servicesaccording to market needs.
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Product portfolio
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Price mix
Decisions related to interests, commission
fees are important in motivating the
customers.
Pricing has to be competitive and mainly
the prices are regulated by Government
and reserve bank of India. Segment-wise
the prices may be different.
Component of flexibility in pricing is less
thus the formulation of price mix is bit
challenging.
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Place mix
Proximity to the users is very much importantand sometimes the prime factor of choice by thecustomers. They usually select the nearestconvenient bank.
Strategic placing of branches among thegeographic region is a crucial decision
ATM centers, net banking, cheque books, Debitand credit cards are the components of a place
mix offered by a bank. Now a days bank officials also visit theircustomers for reasons like opening newaccounts, loan offerings & sanctions, etc.
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Promotion mix
Personal selling of Debit/ credit cards, currentaccounts, personal & housing loan schemes.Presentations in offices/ corporates for groups.
Sales promotion techniques such as loanschemes, interest schemes, etc. Banks alsomake tie-ups with housing schemes, vehicledealers etc.
Public relations , press conferences, articles bybankers is a usual practice.
Advertisement is a fast emerging promotionalcomponent in banks.
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People mix
Qualified staff selected through tough bankexams to ensure functional competitiveness
Need to build service aspirations
Experiences with nationalized and private banksmay be different.
Every body is offering similar services at similarprices.What makes difference is the personal
service and customer relations. People Mix can be a major tool is selling bank
solutions.
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Processes mix
ISO certifications apply to bank services.Used as marketing tool
Movement of transactions, flow of work
and methodology / formats used by banks
Filing, paperwork, computerization,systems, net securities
Standardization of processes in allbranches, similar code of conduct createsa formal & professional atmosphere.
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Physical evidence
Attractive bank premises, adequate andstate of the art infrastructure, properlighting, equipments/ tools & security
system etc create an impression andbuilds image of a bank
Forms, application formats, paymentreceipts, cheque books, transaction slips,bank stamps, statements, passbooks, etccreate a sense of confidence among theconsumers