Nitish India Banking 00923009001533

BMS PROGRAMME MUMBAI UNIVERSITY

UNIVERSITY OF MUMBAI

PROJECT REPORT ON “MARKETING OF BANKING SERVICES”

IN PARTIAL FULFILLMENT OF BACHELOR OF MANAGEMANT STUDIES

(BMS SEM –V)2010-2011

SUBMITTED BY“NITISH KUMAR”

PROJECT GUIDE“MISS NITYA VARGHESE”

KARNALA SPORTS ACEDAMY BARNS COLLEGE OF ARTS, COMMERCE AND SCIENCE

NEW PANVEL: - 410406

BARNS COLLEGE OF ARTS, SCIENCE AND COMMERCE


CERTIFICATE

CLASS: - TYBMS YEAR:-2010-2011

This is to certify that the work entered in this journal is the work ofMr. /Mr.………………………………………………………………………

………………………………………………………………………………. of …………… division ………….. Have successfully completed the project report on the topic

“……………………………………………………… ”.Terms of the year………………….. In the college as laid down by the college authority.

……………… ……………….Mrs. NITYA VARGHESE Mr.(Project guide) (Principle)Date…. /…/….

OBJECTIVES OF PROJECT



i) To analyze the role and need of banking as it is an upcoming era of Banking

ii) To know how marketing of banking services can be beneficial in growth of Indian

economy.

iii) To know about the emergence of Banking in market.

iv) To understand the nature of services rendered and various investment areas

provided by banks

v) To know about the recent trends & services of banking in Indian market

vi) To understand the future prospects and challenges faced by banking activity

CONTENTS



AN INTRODUCTION TO BANKING SECTOR IN INDIA

PEST ANALYSIS

7P’s OF BANKING SECTOR

BLUEPRINTING

4I’s OF BANKING

RATER ANALYSIS FOR INDIAN OVERSEAS BANK

MARKET SEGMENTATION

COMPLAINT HANDLING–HDFC BANK

CASE STUDY-I

RATER

SERVICE RECOVERY

FISH BONE

CASE STUDY-II (ICICI BANK)

RATER

BIBLIOGRAPHY

ARTICLES

SERVICE SECTOR



MARKETING

A PROJECT ON MARKETING OF BANKING SERVICES



AN INTRODUCTION TO THE BANKING SECTOR IN INDIA

Banks are the most significant players in the Indian financial market. They are the

biggest purveyors of credit, and they also attract most of the savings from the population.

Dominated by public sector, the banking industry has so far acted as an efficient partner in

the growth and the development of the country. Driven by the socialist ideologies and the

welfare state concept, public sector banks have long been the supporters of agriculture and

other priority sectors. They act as crucial channels of the government in its efforts to ensure

equitable economic development.

The Indian banking can be broadly categorized into nationalized (government

owned), private banks and specialized banking institutions. The Reserve Bank of India acts

a centralized body monitoring any discrepancies and shortcoming in the system. Since the

nationalization of banks in 1969, the public sector banks or the nationalized banks have

acquired a place of prominence and has since then seen tremendous progress. The need to

become highly customer focused has forced the slow-moving public sector banks to adopt a

fast track approach. The unleashing of products and services through the net has galvanized

players at all levels of the banking and financial institutions market grid to look anew at

their existing portfolio offering. Conservative banking practices allowed Indian banks to be

insulated partially from the Asian currency crisis. Indian banks are now quoting al higher

valuation when compared to banks in other Asian countries (viz. Hong Kong, Singapore,

Philippines etc.) that have major problems linked to huge Non Performing Assets (NPAs)

and payment defaults. Co-operative banks are nimble footed in approach and armed with

efficient branch networks focus primarily on the ‘high revenue’ niche retail segments.

The Indian banking has finally worked up to the competitive dynamics of the ‘new’

Indian market and is addressing the relevant issues to take on the multifarious challenges of

globalization. Banks that employ IT solutions are perceived to be ‘futuristic’ and proactive

players capable of meeting the multifarious requirements of the large customer’s base.

Private Banks have been fast on the uptake and are reorienting their strategies using the

internet as a medium The Internet has emerged as the new and challenging frontier of



marketing with the conventional physical world tenets being just as applicable like in any

other marketing medium.

The Indian banking has come from a long way from being a sleepy business

institution to a highly proactive and dynamic entity. This transformation has been largely

brought about by the large dose of liberalization and economic reforms that allowed banks

to explore new business opportunities rather than generating revenues from conventional

streams (i.e. borrowing and lending). The banking in India is highly fragmented with 30

banking units contributing to almost 50% of deposits and 60% of advances. Indian

nationalized banks (banks owned by the government) continue to be the major lenders in

the economy due to their sheer size and penetrative networks which assures them high

deposit mobilization. The Indian banking can be broadly categorized into nationalized,

private banks and specialized banking institutions.

The Reserve Bank of India acts as a centralized body monitoring any discrepancies

and shortcoming in the system. It is the foremost monitoring body in the Indian financial

sector. The nationalized banks (i.e. government-owned banks) continue to dominate the

Indian banking arena. Industry estimates indicate that out of 274 commercial banks

operating in India, 223 banks are in the public sector and 51 are in the private sector. The

private sector bank grid also includes 24 foreign banks that have started their operations

here.

The liberalize policy of Government of India permitted entry to private sector in the

banking, the industry has witnessed the entry of nine new generation private banks. The

major differentiating parameter that distinguishes these banks from all the other

banks in the Indian banking is the level of service that is offered to the customer. Their

focus has always centered around the customer – understanding his needs, preempting

him and consequently delighting him with various configurations of benefits and a wide

portfolio of products and services. These banks have generally been established by

promoters of repute or by ‘high value’ domestic financial institutions.



The popularity of these banks can be gauged by the fact that in a short span of time,

these banks have gained considerable customer confidence and consequently have shown

impressive growth rates. Today, the private banks corner almost four per cent share of the

total share of deposits. Most of the banks in this category are concentrated in the high-

growth urban areas in metros (that account for approximately 70% of the total banking

business). With efficiency being the major focus, these banks have leveraged on their

strengths and competencies viz. Management, operational efficiency and flexibility,

superior product positioning and higher employee productivity skills.

The private banks with their focused business and service portfolio have a reputation

of being niche players in the industry. A strategy that has allowed these banks to

concentrate on few reliable high net worth companies and individuals rather than cater to

the mass market. These well-chalked out integrates strategy plans have allowed most of

these banks to deliver superlative levels of personalized services. With the Reserve Bank of

India allowing these banks to operate 70% of their businesses in urban areas, this statutory

requirement has translated into lower deposit mobilization costs and higher margins relative

to public sector banks.

PEST ANALYSIS



TECHNOLOGICAL ENVIROMENT

Technology plays a very important role in bank’s internal control mechanisms as well

as services offered by them. It has in fact given new dimensions to the banks as well as

services that they cater to and the banks are enthusiastically adopting new technological

innovations for devising new products and services.

The latest developments in terms of technology in computer and telecommunication

have encouraged the bankers to change the concept of branch banking to anywhere banking.

The use of ATM and Internet banking has allowed ‘anytime, anywhere banking’ facilities.

Automatic voice recorders now answer simple queries, currency accounting machines makes

the job easier and self-service counters are now encouraged. Credit card facility has

encouraged an era of cashless society. Today MasterCard and Visa card are the two most

popular cards used world over. The banks have now started issuing smartcards or debit cards

to be used for making payments. These are also called as electronic purse. Some of the banks

have also started home banking through telecommunication facilities and computer

technology by using terminals installed at customers home and they can make the balance

inquiry, get the statement of accounts, give instructions for fund transfers, etc. Through ECS

we can receive the dividends and interest directly to our account avoiding the delay or chance

of loosing the post.

Today banks are also using SMS and Internet as major tool of promotions and giving

great utility to its customers. For example SMS functions through simple text messages sent

from your mobile. The messages are then recognized by the bank to provide you with the

required information.

All these technological changes have forced the bankers to adopt customer-based

approach instead of product-based approach.

ECONOMICAL ENVIROMENT



Banking is as old as authentic history and the modern commercial banking are

traceable to ancient times. In India, banking has existed in one form or the other from time to

time. The present era in banking may be taken to have commenced with establishment of

bank of Bengal in 1809 under the government charter and with government participation in

share capital. Allahabad bank was started in the year 1865 and Punjab national bank in 1895,

and thus, others followed

Every year RBI declares its 6 monthly policy and accordingly the various measures

and rates are implemented which has an impact on the banking sector. Also the Union budget

affects the banking sector to boost the economy by giving certain concessions or facilities. If

in the Budget savings are encouraged, then more deposits will be attracted towards the banks

and in turn they can lend more money to the agricultural sector and industrial sector,

therefore, booming the economy. If the FDI limits are relaxed, then more FDI are brought in

India through banking channels.

POLITICAL/ LEGAL ENVIROMENT

Government and RBI policies affect the banking sector. Sometimes looking into the

political advantage of a particular party, the Government declares some measures to their

benefits like waiver of short-term agricultural loans, to attract the farmer’s votes. By doing so

the profits of the bank get affected. Various banks in the cooperative sector are open and run

by the politicians. They exploit these banks for their benefits. Sometimes the government

appoints various chairmen of the banks.

Various policies are framed by the RBI looking at the present situation of the country

for better control over the banks.

SOCIAL ENVIROMENT



Before nationalization of the banks, their control was in the hands of the private

parties and only big business houses and the effluent sections of the society were getting

benefits of banking in India. In 1969 government nationalized 14 banks. To adopt the social

development in the banking sector it was necessary for speedy economic progress, consistent

with social justice, in democratic political system, which is free from domination of law, and

in which opportunities are open to all. Accordingly, keeping in mind both the national and

social objectives, bankers were given direction to help economically weaker section of the

society and also provide need-based finance to all the sectors of the economy with flexible

and liberal attitude. Now the banks provide various types of loans to farmers, working

women, professionals, and traders. They also provide education loan to the students and

housing loans, consumer loans, etc.

Banks having big clients or big companies have to provide services like personalized

banking to their clients because these customers do not believe in running about and waiting

in queues for getting their work done. The bankers also have to provide these customers with

special provisions and at times with benefits like food and parties. But the banks do not mind

incurring these costs because of the kind of business these clients bring for the bank.

Banks have changed the culture of human life in India and have made life much easier

for the people.

7 P’S of BANKING SECTOR



It is very important for any bank to identify the 7 P’s of services so was understands

their customers better and provide them with best of service. The 7 P’s are:

1. PRODUCT MIX

2. PRICE MIX

3. PLACE

4. PROMOTION

5. PEOPLE

6. PROCESS

7. PHYSICAL EVIDENCE

PRODUCT MIX

The product mix of a company includes all different product lines a company offers to

its customers. The product line of a bank might easily include more than 100 different

services. In today’s competitive scenario it has become very necessary for a bank to provide

it’s customers with a wide variety of services and the best technology in order to attract them.

Here is an example of some of the products offered by UTI Bank to its customers.

SAVING ACCOUNT

Offering

Axis Bank's Savings Account is just the right product for everyone, salaried, employees or

businessmen, high net worth individuals and NRI's. The unmatched package of Axis Bank

Savings Bank account given below brings the benefits of better, efficient and hassle free

banking.

• ATM Network


http://www.utibank.com/atm/atmlocate.asp


A Savings Bank Account with Axis Bank entitles you to a free ATM card, which enables you

to access your account anytime and at any ATM centre across the country. You can withdraw

and deposit money and cheques with your ATM card. Unlike most other ATMs, a Axis Bank

ATM allows you to withdraw up to Rs. 20,000 a day. In addition, cash can be withdrawn

from any of the ATMs against your MasterCard (domestic/international).

• 7-Day Banking

At select branches spread over the country, you can bank on all the 7 days of the week

(except for public holidays), over extended working hours.

• Telebanking

Telebanking service provides you instant access to your account. It offers you a wide range of

services over the phone such as account information, Balance Enquiry, Transaction Details,

Statement of Account, Status of your Cheque , etc.

• iConnect-Internet Banking

This is the concept of "the Bank on your desk-top". You can look-up the status of your

account, query and undertake a range of financial transactions, simply by clicking the mouse.

Now don't you think you have a great opportunity to see yourself laughing your way to the

bank?

CREDIT CARDS

Offering

Axis Bank has joined hands with Citibank, to give rise to a new kind of card power - unique

and unmatched benefits and international utility at the most competitive rates. The Axis Bank

Citibank International Silver Card, the MasterCard and 'Unique' Card offers quite a few

benefits.

Rewards


https://www.utibank.co.in/BANKAWAY?IWQRYTASKOBJNAME=bay_sign_on&BAY_BANKID=211

http://www.utibank.com/telebank/telebanking.html


Axis Bank Citibank Card combines dual conveniences of high purchase power and flexible

payment facility. Purchase of high-value items is now convenient and when it comes to

payback time, your bill can be paid in installments, depending on your financial liquidity at a

given moment. The Revolving Credit Facility lets you pay as little as 5% of your total

outstanding every month. Giving you the power to buy now and pay later in parts!

Dial-A-Draft

One can use your Axis Bank Citibank Card to pay for your personal expenses at places where

credit cards are not accepted yet. Like paying for investments, telephone and electricity bills,

school fees and much more. Just call CitiPhone and the draft you need will be delivered to

you!

Credit Limit Increase

You can call CitiPhone and ask for a Credit Limit Increase in the event that you have to make

a large purchase on your card urgently. It's especially handy for paying off vehicle repairs,

telephone bills and electricity bills. And for anniversaries, weddings, birthdays, or business

trips or when a holiday goes beyond budget

24-Hour ATMs

One can withdraw emergency cash up to 60% of your credit limit from 24-Hour ATMs in

Ahmedabad, Bangalore, Calcutta, Chennai, Delhi, Hyderabad, Mumbai and Pune. While

traveling overseas you can draw cash from MasterCard ATMs spread across the globe. The

same is applicable for any Citibank branch. Also the cash you withdraw is insured against

theft for a period of 12 hours after withdrawal. A never before facility is brought to you with

the UTI Bank Citibank Card at a transaction fee of 2.5% or Rs.50 whichever is higher. All

cash advances also carry a service charge from the date of the transaction. The cash

withdrawal limit for the first year is Rs. 5,000.

Photo card

One may choose to have your photograph and signature digitally imprinted on the front of

your Card in color. So that you get the extra recognition and security you expect as a Axis

Bank Citibank card member



Concession on Personal Remittances

Do you often need to remit funds to other cities using facilities such as Drafts/Telegraphic

Transfers, etc.? Here's a benefit you would most appreciate. A 25% rebate on standard

commission is offered on personal remittances at Axis Bank branches.

Overdraft facility

Axis Bank Citibank credit card provides you with an overdraft facility to the extent of 75% of

the value of your holdings of Demat Shares and Units! Moreover, you get a waiver of 0.5%

on interest rate chargeable under the scheme. All you need to avail yourself of these benefits

is a Demat A/c with Axis Bank.

Free ATM Card

The Axis Bank Citibank Credit Card offers you a free ATM Card, which can be used at over

250 Axis Bank ATM centers all over India. All you have to do is open a saving bank/current

Account with Axis Bank.

Other features

Axis Bank Citibank Card has the widest possible reach - welcomed by 1,10,000 Merchant

Partners across India and Nepal and yet another 160 lakh Merchant Establishments

worldwide. The card can be used both for major occasions, and also for everyday purchases

like groceries, cosmetics, and petrol and auto accessories. It can also be used to buy high-

value items like consumer durables (refrigerators, washing machines, microwave ovens, etc.).

And even paying customs duty and hospital bills becomes convenient with the Card.

PRODUCT WIDTH AND DEPTH

Width

Width of the product mix is the number of product lines a company is offering. The

product width could be a narrow one or a wide one depending from bank to bank. A wide



mix encourages more sales since the banks are able to diversify and provide more to their

customers and they also appeal to a larger target market.

Depth

Depth of the product mix is the number of product items in each product line. Banks

with more schemes and services have more depths than those offering only a few.

Here is table giving an example of Width and Depth in the Product Mix:

Similarly, different banks plan out their product portfolios and based on that, the

depth and width of their product mix can be determined.

In today’s scenario, where there is cutthroat competition and new foreign banks

entering the Indian markets, it has became more or less like a law to have very wide product

lines with more and more number of products in each line.

PRODUCT LEVELS

Core Benefit :



It is the main or core reason why the customer will buy the service of the bank. More

like the basic purpose or necessity.

Basic Product :

The core benefit is converted into a basic product. That is the service can used by the

customer in order to fulfill his/her needs.

Expected Product :

It refers to the set of attributes and conditions expected by the customers when they

purchase the service.

Augmented Product :

It is the additional feature that the banks provide which exceeds the customer’s

expectations.

Potential Product :

Innovations and product differential is the bases of a Potential Product. If the banks

alter its services according to the requirements of the individual customers it reaches this

level.

CoreProduct

BasicProduct

Expected Product

Augmented Product

Potential Product

The basic necessity to use

banking services in

order to handle finance more

efficiently

Safety of deposits

Loanable funds etc.

Timely serviceLong banking

hoursLow interest

rates

Goods waiting rooms

Extensive ATM network

Promotional Discounts

Mobile and internet Banking

New Schemes tailored for

specific customers

Thus it can be seen how a particular product passes through different levels. In

today’s competitive scenario most banks try offering services at the Augmented and Potential

level.

PRICE MIX



The price mix in the banking sector is nothing but the interest rates charged by the

different banks. In today’s competitive scenario where customer is the king, the banks have to

charge them interest at a rate in accordance with the RBI directives. Banks also compete in

terms of annual fees for services like credit cards, DMAT etc. Another important aspect of

the bank’s pricing policy today is the interest charged on the Home Loans and Car Loans.

With India’s economy progressing, there are more and more buyers seeking these loans but at

a very competitive interest rate.

Let’s understand this with an example. A particular buyer approaches a bank for a car

loan for a period of 3 years. He is charged Rs. 20,000 as interest. However, if a sale

representative of another bank comes to know of this deal, he will try to attract the customer

by giving him a better deal i.e. a loan at a lower rate on interest. In this way, it is the customer

that ultimately benefits.

Here is an example of some of the prices charged by ICICI bank for their services

ATM Card Issue Free – 2 ATM cards issued free if it joint account

Add – on Card RS. 100 – Beyond 2 cardsDuplicate Card Rs. 100

Other General Charges

Current Account Savings Account

Transaction Charges NIL NILCharges for issue of

Cheques bookNIL NIL

Issue of duplicate statement Rs. 25 per page Rs. 25 per pageAccount closure Rs.100 Rs.100

This example evinces some of the charges that the customer has to pay for the

services provided by the bank.

The pricing factor is very important because of the kind of competition that is

prevailing today in the Indian market. However it is very important to understand that in the



banking sector, the main pricing policy is concerned with the interest rate charged. This

interest rate is however regulated by the RESERVE BANK OF INDIA and THE INDIAN

BANKING ASSOCAITION. Any one particular bank or a group of banks does not regulate

it. The interest rate charged cannot be higher than that decide by the RBI and the INDIAN

BANKING ASSOCIATION.

Thus, inspite of the constraints in the pricing policy due to the RBI directives there are

mainly three types of pricing methods adopted by banks. They are:

Value pricing :

Banks having unique or different products or schemes mainly do this type of pricing.

They usually charge a combination of high and low prices depending on the customer loyalty

as well as the products. This type of pricing strategy is usually coupled with promotion

programmes.

Going Rate pricing :

The most commonly used pricing technique is the going rate pricing. In going rate

pricing, the bank bases its price largely depending on the competitor’s prices. The banks

however have to stay within the RBI directives and compete. The banks may charge higher or

lower than their competitors. After 1991 when the foreign banks entered the Indian market

this method of pricing has gained increasing importance.

Mark up pricing :

This is a pricing technique wherein the cost of the service is determined and a small

margin is added to it and then the final price is offered to the customers. This type of pricing

is the not very popular since in the banking sector it is not very easy to arrive at the cost of

the service. Thus most banks use a combination of mark – up pricing and going rate pricing.

THE MOST FAVORABLE PRICING STRATEGY



This model shows a pricing strategy, which should be adopted in order to ensure

maximum satisfaction to both the bank as well as the customers.

The price should be set in such a manner that the customer is assured that he is not

being cheated or overcharged by the bank and at the same time the bank is able to reap

maximum profits. Such a pricing stand helps the bank get maximum sales as well as profits

since the customer feels that by entering such a transaction he is winning.

PLACE MIX

Place mix is the location analysis for banks branches. There are number a factors

affecting the determination of the location of the branch of bank. It is very necessary a bank

to situated at a location where most of its target population is located.

Some of the important factors affecting the location analysis of a bank are:

1. The trade area

2. Population characteristics



3. Commercial structure

4. Industrial structure

5. Banking structure

6. Proximity to other convenient outlets

7. Real estate rates

8. Proximity to public transportation

9. Drawing time

10. Location of competition

11. Visibility

12. Access

It is not necessary that all the above conditions have to be satisfied while selecting the

location but it should be tried to satisfy as many of them as possible.

1. The Trade Area:

The trade area is a very important factor determining the place where a bank branch

should be set up. For e.g. a particular location maybe a huge trading place for textiles,

diamonds or for that case even the stock market. Such locations are ideal for setting up of

bank branches.

2. Population Characteristics:

The demography of a place is a very important factor. This includes:

The income level of the population

The average age

The average male female population

The caste, religion, culture and customs

The average spending and saving habit of the people.

These factors are very important for a bank as the help them decide the kind of

business the branch will get.



3. Commercial Structure:

The commercial structure refers to the level of commerce i.e. business activities

taking place at a particular location. The higher the level of business activities taking place in

a particular location the more preferable it is for setting up a bank branch.

4. Industrial Structure:

This is nothing but a combination of the trade area analysis and the commercial

structure. However the industrial structure focuses more on the kind of industries operating in

a particular location. For example, an area like SEEPZ is marked with a lot of electronic

manufacturing units. Thus the industrial stricture determines the kind of financial transactions

that could take place in a particular location.

5. Banking Structure:

The Banking structure refers to the existence of other banks in the area. Whether there

is already an efficient network of other bank branches operating at that particular area. Thus

the overall infrastructure needed for the working of a bank.

6. Proximity of other convenient outlets:

This refers to the other branches of the same bank as well other commercial,

entertainment and industrial outlets.

7. Real Estate Rates :

This is mainly dealing with the cost factor involved in opening up a bank branch at a

particular location. The real estate rate is a very strong factor influencing the location

decision for a bank branch.

8. Proximity to public transportation:

The location should be proximate to public transportation facilities. This means it

should have bus stops close by as well as it should be proximate to railway stations so as to

make it convenient for the common man.



9. Drawing Time:

Drawing time refers to the time period during which a customer can draw money from

the banks. It should be convenient to the customer and somewhat flexible to accommodate

the customer’s needs. No bank has more than a certain amount with them and in case a

customer wants to withdraw an amount more than that available with the bank, the bank

needs to draw that amount from other banks. Hence, a location must be such that it facilitates

minimum drawing time.

10. Location of Competition:

The existence of other banks also means competition. If the level of competition is

very high in a particular location, it is necessary that a bank does a lot of market research

before opening a branch so as to estimate the kind of business it would get.

11. Visibility:

The location of a branch should be such that it is visible and easily noticed by the

customers as well other people.

12. Access:

The bank branch should be very easily accessible to the customers. If this is not the

case, the customer might switch to some other bank, which is more convenient to him and

very easily accessible. The location should be such that it is very convenient for the customer

to reach.

Promotion Mix

Promotion is nothing but making the customer more and more aware of the services

and benefits provided by the bank. The banks today can use a lot of new technology to

communicate to their customers. Two of the fastest growing modern tools of communicating

with the customers are:

1. Internet Banking

2. Mobile Banking



This can be better explained with the example of ICICI bank.

SMS services

SMS functions through simple text messages sent from your cellular phone. These

messages are recognized by ICICI bank to provide you with the required information.

For example, when you enter ‘IBAL’ your cellular phone screen will display the

current balance in your primary account. Thus with the help of SMS a wide range of query

based transactions can be performed without even making a call.

ICICI was the first organization in India to provide Wireless Application Protocol

(WAP) based services. Mobile commerce using WAP technology, allows secure online

access of the web using mobile devices. With WAP one can directly access the ICICI WAP

server, check one’s account details and use other value added services.

Thus different methods are used by different banks to promoter its services.

A bank may have very attractive schemes and services to offer to their customers but

they are of no use if they are not communicated properly to the customers. Promotion is o

inform and remind the individuals and persuade them to accept, recommend or use of

product, service or idea. However there some very important points that is to be considered

before the promotion strategy is made. These points are:

Finalizing the Budget

Before the bank decides the kind of promotion that should be done, it very important

to finalize the budget for it. The formulation of a sound budget is essential to remove the

financial constraints in the process. The budget is determined on the basis of volume of

business of the bank. In addition to this the intensity of competition also plays a decisive role.

Selecting a suitable vehicle



Another very important task is to select a suitable vehicle for driving the message.

There are a number of devices to advertise such as broadcast media, telecast media and the

print media. The selecting of the mode of advertising is strongly influenced by the kind of

budget decided. Usually for promoting banks the most effective and economical form of

advertising has been the print media.

Making possible creativity

Making possible creativity is nothing but the kind of slogans, punch lines etc. that are

supporting the message. They should be very creative but yet simple to be understood by the

common man. It should appeal to the customers. It should be distinct from that of the

competitors and should be successful in informing and sensing the customers.

Testing the Effectiveness

It should be borne in mind that the advertisement is first tested for its effectiveness.

This should be done with the help of various techniques like testing effectiveness on a sample

group. This helps determine the success of the advertisement and in case of any problem the

advertisement can be altered and remedied.

Instrumentality of Branch Managers

At a micro level, it is the responsibility of the branch managers to promote and drive

the message to the people in the local area. They should organize small programs in order to

attract people and crate awareness in the local area about the new schemes of the bank.

Different Ways of Promotion

Public Relations:

In today’s competitive scenario developing strong public relations is very important

for any bank to be successful. Most banks today have a separate Public Relations department.

However primarily it is considered as a responsibility of the various bank managers to

develop a steady and strong relationship with their present customers as well as potential

customers. This can be done by a constant follow up, small programmes etc.

Personal Selling:



Personal selling is found to be one of the most effective and popular forms of

promoting bank business. The main reason for this is that banking is a service in which trust

plays a very important role. In personal selling, a bank representative goes to the customers

and explains the scheme to the customers. Also he gives the customers any kind consultation

he might need. He provides the customers all the information sought by him. The

representative tries to persuade the customers to go for the scheme provided by the bank by

telling him all the benefits. Here are some of the important features of personal selling

It is a direct relation between the buyers and the seller

It is oral presentation in conversation

It is personal and social behavior

It is found to be more effective in service oriented organizations

It is based on the professional excellence or expertise of an individual

Sales Promotion:

Sales promotions are basically giving the customers some additional benefits, maybe

at times just some small gifts, in order to promote the schemes. The more innovative the sales

promotions the more positive are the results. Some of the most popular sales promotions

techniques are gifts, contests, fairs and shows, discounts and commission, entertainment and

traveling plans for bankers, additional allowance, low interest financing etc. It is very

important that the sales promotions benefits are designed in such a manner that they are better

than those of the competitors.

Word – of – mouth Promotion:

This form of promotions is not only very effective in banking services but in any

kind of service. However it is more important in banking for the only reason that this is a

service where trust plays a very important role. If a particular bank’s services are

recommended by friends, relatives, or other well wishers the person is more influenced and

inclined towards that bank. It is very important to note that the internal employees of the bank

play a very important role in word – of – mouth promotion technique. This is because they

can start the process by recommending the bank to their friends and relatives and after that it

is like a chain, which spreads like a wild fire.



Telemarketing:

In recent times telemarketing has gained increasing importance as an effective tool for

promotion. The telemarketing is a process of making use of sophisticated communication

network for promoting the banks. This includes promoting through television, telephone, and

radio. Nowadays, cell phones are used extensively for the same. This is the most popular

form of promotion. Banks today have started using ‘SMS’ and many other services supported

by cell phones to provide benefits to their customers and thus have tried to increase their

sales. In today’s competitive and modern scenario it very important that banks makes use of

telemarketing techniques very efficiently to have desirable results.

Internet:

The use of Internet as a promotional tool is increasing. More and more banks are

using Internet to promote their services. The online banking has made it even easier for the

customers to avail the bank’s services. No longer do people have to go to their bank branches

for small petty matters like checking their balance etc. All this can be done with the help of a

few clicks.

Thus, these were the numerous ways in which a bank can promote its services and

create more awareness amongst the people.

People

People are the employees that are the service providers. In a banking sector, the

service provider plays a very important and determinant role in rendering the customers a

satisfactory and a good service. It is extremely essential that the service provider understand

what his customers expect from him. In the banking sector, the customer needs to be guided

in a lot of matters, which is possible only with the help of the service provider.

The position in the eyes of the customer will be perceived by appearance, attitude and

behavior of the customer contact employees. Not only does the customer contact employee

influence the customer’s perception but also the customer base of the organization does so.



Process Mix

The process mix constitutes the overall procedure involved in using the services

offered by the bank. It is very necessary that the process is very customer friendly. In other

words a process should be such that the customer is easily able to understand and easy to

follow. Today if particular banks formalities are long and the procedure very complicated the

overall process fails and the customer may not be inclined towards using that banks services.

Let’s take for example the process for application for a car loan.

Now this mainly involves 3 things.

1. Producing of proper documents

2. Filling up of application form

3. Paying for the initial down payment.

Here the process may fail in the following cases:

1. If the customer is asked to produce a number of forms out of which some may not be

necessary at all. Thus it is very necessary that the customer be asked for the minimum

but most necessary document and not the other unnecessary documents.

2. In case of application form, the application form must be in a language best

understood by the customers and it should not be very lengthy one or demanding a lot

of unnecessary information.

3. Finally the payment of initial amount. The customer should be given options as to

how he would like to pay by cheques or by credit card. Once again the amount should

be very competitive not very high above the regular rates prevailing in the markets.

The smaller and simpler the procedure, the better the process, and the customer will be

more satisfied.



PHYSICAL EVIDENCE

Physical evidence is the overall layout of the place i.e. how the entire bank has been

designed. Physical evidence refers to all those factors that help make the process much easier

and smoother. For example, in case of a bank, the physical evidence would be the placement

of the customer service executive’s desk, or the location of the place for depositing cheques.

It is very necessary that the place be designed in such a manner so as to ensure maximum

convenience to the customer and cause no confusion to him.

Let us see an example as to how banks try to make little changes so as to make the

service better for their customers.

The Hong Kong Shanghai Banking Corporation (HSBC) has decided in introducing a

common uniform for all the employees in all its branches all over India. The plan is possibly

in line with the aggressive retail banking adopted by HSBC. A common uniform its nothing

like a revolutionary change but however this little change makes it very easy for the customer

to identify with his service provider and makes the entire process very easy for him. The

more the bank does to make the service easier and better the more satisfied will be the

customer.

Thus, these are the 7 P’s of services. Each of them plays a very important and a

pivotal role in determining the quality of the service provided to the customer.

BLUEPRINTING

A service blueprint is a picture or a map that accurately portrays the service system so

that different people involved in providing it can understand and deal with it objectively

regardless of their roles or their individual points of view. Blueprints are particularly useful at

the designing and redesigning stages of service development. A service blueprint visually

displays the service by simultaneously depicting the process of service delivery, the points of

customer contact, the roles of customers and employees, and the visible elements of the



service. It provides a way to break the service down into its logical components and to depict

the steps or tasks in the process, the means by which the tasks are executed and the evidence

of the service as the customer experiences it.



Standard Beginning

Regardless of our mapping objective (to describe a new process or an existing process), type of map selected (flow chart, risk management, cross-functional, time elapsed), and state (as-is, should be, could be) selected, all process maps will have the same common beginning steps.

1. Begin by defining the objective and the process

boundaries. Our objective in this case is to document the

existing savings-deposit process for the purpose of training

new cashiers. The process boundaries will begin with the

customer’s bringing a deposit into the bank (the input) and

end with the last step in the cashier’s handling of the

transaction: issuing a receipt to the customer (the output).

2. List the basic steps that produce the output, using as brief a

description as possible, such as a verb followed by a noun.

These may include: complete deposit slip, greet customer,

count cash, inspect deposit slip, post deposit, post

passbook, authenticate passbook posting, store cash, store

deposit slip, thank customer. Arrange these processes in

the sequence in which they occur; this will help you

construct your map logically and easily.

3. Record the map title and reference number at the top and

centre of a landscape-formatted sheet. In the sample

below, use “B1” as the reference number, where “B” refers

to a series of savings-related process maps and “1” is the

first map in the series.

4. Record your name and the date prepared below the map

title line, at the left hand margin.

Constructing the Map: What Symbols Do I Use?



5. The starting point for this process is the customer. Use the

“Start” symbol and place this symbol in the upper left hand

corner of your paper.

6. Symbols must be connected by arrows to show flow, which may represent either the

sequence of the processes or the movement (transportation) of the inputs from process to

process. Automatically enter an arrow after posting a process, inspection, document/input, or

decision symbol to your map. By convention, movement is from left to right, and from top to

bottom; both directions are shown in the sample below. Alternating the vertical and

horizontal flows can help you show activities that occur almost simultaneously, and can also

save space on your sheet. For example, a down arrow is used to connect the Start Process

(customer) with the first two inputs (passbook and cash). You could have just as well used a

horizontal arrow and placed the two inputs to the right of the Start Process symbol. The

choice is yours. Just remember, our objective is to present as clear and understandable a map

as possible.

7. The customer’s deposit has three component inputs: the cash, the deposit slip (the

bank’s voucher), and the passbook (the customer’s receipt). These three inputs have different

processes performed on them, and are stored in different places at the end of the process, so

they need to be identified by distinct symbols. Note that the passbook and deposit slip use the

“Document” symbol, while the “Input” symbol is used to represent the cash. For the sake of

clarity, insert the document name into the centre of the symbol. From this point forward

assume that these documents flow with the arrows (transportation symbols) until otherwise

indicated. At this point in the process, you have only two inputs: the passbook and the cash.

Place these next to each other, with one arrow to the right, indicating that they flow together.

8. Your option for this step is to use either the “Process” or “Manual Operation” symbol.

Because the customer must hand-write the document (rather than it being computer-

generated, for example), the better option is to select the “Manual Operation” symbol.

9. At this point, the cashier processes the deposit. The first step is to ensure that the

customer has submitted a valid deposit slip containing all required information (which is

listed in the process description). Since this activity serves as a control point as well as a

process point—the process cannot continue if the amount is not recorded, for example—you



can select either a process or an inspection symbol to represent the action. Because this step

is an important control for the further processing of the deposit, the better option is to select

the Inspection symbol.

10. There is not sufficient space left on the sheet to post the next step, even though there

is space below the existing line of symbols. Since arrows move from left to right and top to

bottom, you cannot, by convention, draw a big arrow from the right side of the paper across

to the left margin in order to continue the flow in the space remaining on the paper. This

means you continue on another sheet of paper. Select the “On Map” connector symbol from

the list. This symbol is used twice: first where you discontinue, or break, the process, and

second, where you resume it. (If you have two breaks on a map, you will have four On Map

symbols.) To let the reader know which connectors go together (form a pair), insert a letter or

number, assigned sequentially, in each symbol. The first pair, for example, might be labeled

“A,” while the second pair would be labeled “B.” The reader knows which one of the pair

represents the break in the flow, because there are no more symbols below or to the right of

the connector symbol. The reader knows which one of the pair represents the resumption of

the flow, because symbols will appear below or to the right of the connector symbol.

11. In this step, the cashier counted the cash and found it to be either correct or incorrect.

This results in two possible courses of action that must be shown in the process. Use the

decision symbol. Insert a word or two inside the symbol to reflect what condition is being

decided; in this case, you are answering the question: “Amount correct?” The question has to

be phrased so that it can be answered either “Yes” or “No.” Both courses of action are

mapped. The decision symbol, therefore, has two arrows attached to it, one representing the

“Yes” course of action, and the other, the “No” course of action.



A. NO: This course of action represents a rework loop. The customer has to either make

the correction to the deposit slip and initial the change, or make up/receive the

difference in the amount of cash deposited so that it will equal the amount shown on

the deposit slip. After the correction process, the arrow points back to the decision

diamond because the cashier now decides again whether the actual cash counted

agrees with the amount reflected on the deposit slip. If it does, then the process

resumes the flow from the “Yes” arrow leaving the decision diamond.

B. YES: The cashier has answered “Yes” to the question, “Does the amount of cash

received agree with the amount shown on the deposit slip?” The process continues to

the next step.

12. Up to this point, the three inputs—the passbook, deposit slip, and cash—have been

flowing together. It is now time to separate their flow and to show storage of the cash. The

deposit slip and the passbook will continue to flow together; redraw and label the document

symbols for each of these inputs next to each other, followed by one arrow. (To emphasize

that these documents flow together, you can overlap the documents as shown in the sample.)

Redraw and label the cash symbol, followed by an arrow. Use the Storage symbol, and place

it after the arrow leading from the Cash symbol to show that the cash has been dropped from

the flow. If it adds clarity and not clutter, you can label the storage symbol (in this case,

“Till”). Note that the act of the cashier placing the money in the till does not need a process

box; it is sufficiently clear to show through the use of the cash symbol, arrows, and storage

symbol that the cash is going into the till. This illustrates how the use of symbols can

eliminate unnecessary and redundant process boxes.

13. The details of the inspection performed by the back office supervisor can be described in

the second tier of the map. Alternatively, you can shadow the inspection box (refer to the

“Tier Your Maps” section) and create a sub process map that describes what the back office

supervisor actually does.

14.This step demonstrates a teaching point discussed above. Which point is represented

here? Hint: Describe what is happening here.



15.The passbook/receipt, posted with the deposit (the output), is returned to the customer.

This is the end of the process. Use the End Process symbol, (which is the same as the Start

symbol) and label it to show that the Customer is the endpoint. This now completes the first

tier of your Process Map.

16.In the second tier, record the description for each step. This task serves a dual purpose,

because it forces you to proofread your symbols to make sure that you have complied with

the requirements described in the “Proofread Map” section above. You will also be able to

see for yourself whether your process map makes sense. Alternatively, you can complete

these descriptions as you draw your symbols; you may find, however, that keeping up with

the text while also posting symbols on your map is cumbersome.

17.Lastly, since you have used a second page, carry forward the Process Map title and

number the map pages in the upper right hand corner.



Cashier Process of Savings Deposit-B1 (Ref-1)

Prepared by: Your Name

18 August 2005

Customer enters banking hall bearing passbook and cash.

Customer completes deposit slip.

Customer hands deposit slip, passbook, and cash to cashier.

Cashier greets customer, then checks deposit slip for name, account number, agreement of written and numerical amounts.

Cashier counts cash and ticks to amount on deposit slip.

BARNS COLLEGE OF ARTS, SCIENCE AND COMMERCE Page 36

Customer

Passbook

Cash

Deposit Slip

A

(Ref-2)

(Ref-3)

(Ref-4)

(Ref-1)


Cashier Process of Savings Deposit-B1

No: Customer corrects and initials correction on deposit slip or adjusts amount of cash tendered.

Yes: Cashier posts transaction to bank’s books of account.

Cashier places cash in till.

Cashier posts deposit to customer’s passbook, calculates and posts new balance, initials passbook balance, then passes passbook and deposit slip.

Cashier thanks customer, placing the deposit slip on spindle for end of day balancing.

Cashier passes passbook to customer; thanks customer; customer leaves banking hall.


A

No

Amount?

Yes

PassbookDeposit Slip

Cash

Till

Passbook

Deposit Slip

Customer

Spindle

(Ref-5)

(Ref-6)

(Ref-7)

(Ref-8)


Process Mapping Symbols

This symbol is used to indicate both the beginning and the end of your program.

Identifies an activity or task in the process that changes an output. Usually the name of the activity or task is written inside.

Manual Operation. If it is important to indicate that an operation is manually performed, you can use this instead of the square Operations Process symbol.

Document: indicates a physical paper on which information is recorded.

The document symbol, superimposed on itself, indicates the presence of multiple copies of a document. At left, for example, a document in triplicate is shown. When a document is shown in this manner, usually the destination of each copy is traced.

Input: The materials, equipment, information, people, money, or environmental conditions that are required to carry out the process.

Identifies a decision or branching point in the process. Write the decision inside. Label each path emerging from the Decision Diamond with the appropriate options, usually “yes” or “no.” Decision diamonds must post a question. Questions should be worded as specifically and objectively as possible, so that everyone will interpret them in the same way.


Start/End

Operation, Process

Multi-part document

Document

Manual Operation

Decision

Input


Indicates that the flow has been stopped in order to evaluate the quality of the output or to obtain an approval to proceed.

Indicates when something must wait or is placed in temporary storage.

Indicates movement of the output between locations.

Indicates that an output is in storage. Storage differs from delay based on the duration of the wait and the need for some type of authorization to retrieve the item.

An On-Map connector indicates that an output from this process is continued elsewhere on the process map. It is used to reduce awkward or confusing lines across a map. In order to help the reader follow the path, the same letter is used in a corresponding connector posted where the process resumes.

Off-Page connector: This indicates that the flow continues on another process map. Record the page index (H) and the connector number (6) inside the symbol to show where the reader will pick up the flow. Conversely, on the continuation map, record the page index (C) for the previous map, but use the same connector number (6) so that the reader can follow the path.


Inspection/ Measurement

Transportation

Storage

A

H6

Delay


Ref 1&2 Ref 3&4 Ref 5 Ref 6 Ref 7&8 TotalActual Time

2 mins 2 mins 1 min 1.5 mins 2 mins 8.5mins

Target Time

1 min 1.5 mins 0.5 min 1 min 1 min 5 mins

Improvement Opportunity = 8.5 mins – 5 mins = 3.5 mins

Is the incident critical

N Y N N Y

Partici-pants

Customer Customer, Cashier

Customer, Cashier

Custo-mer, Cashier

Custo-mer, Cashier

Visible Furnishings, Appearance, Behaviour, Simplicity of processEvidence of staff of staff

THE 4 I’s OF BANK MARKETING

There are four distinctive characteristics of service, which create challenges and

opportunities. They are commonly known as the four I’s namely:

1. Intangibility

2. Inconsistency

3. Inseparability

4. Inventory.

1.) Intangibility



It is that characteristics of a service indicating that it has no physical attributes that a

person may feel, hear, taste before they buy it.

For example, a person who is new to a bank and wants to open up an account in the

bank cannot feel or taste it and ascertain whether the bank is good or bad before opening

an account. He has to experience it, feel how the service is, how humbly do people or the

staff members behave with him, is his money invested or put in a safe account or not. It is

only then he would come to know about the services. This could be done only from the

‘trust’ that he would have built up, as these things cannot be inspected before the use.

Therefore, most banks now a days, indulge in “tangibilizing the intangibles” i.e. they

provide tangible clues to the prospective customers like the different awards that they

have received for their superior services, their annual records, etc. this helps the

customers in selecting the banks more easily.

2.) Inconsistency

It refers to variability or heterogeneity. In case of a bank, a new customer or a rarely

going customer may not get the same type of service as a regular customer may get. This

may be the case because the staff members know the person well as he comes often but

they don’t know that person who does not come in again and again.

Also another point for inconsistency is that there is variability in the service

delivered by different people, that is services delivered differs from people to people.

Like in case of a bank, different staff members would provide different services. In the

bank, a person may have lot of work and may not attend to a customer .On the other

hand, some other person with the same work may attend him with great enthusiasm. In

order to tackle this inconsistency aspect, adequate training and motivation must be

provided to the employees. This will result in higher number of customers for the bank,

higher profits and subsequently lower retention rate.

E.g. “PUNJAB NATIONAL BANK” prides itself for providing “crown of quality for

customer who is the king” and is an ISO 9002 certified bank. Thus, they will have to

ensure that their service quality level is always consistent and up to the mark to meet the

tall expectations of their customers.



3.) Inseparability

Inseparability is that characteristics of a service indicating that it cannot be separated

from creator-seller of the product. Many services are created, delivered and consumed

simultaneously through interaction between customers and service producers. This is a

source of major limitation for the bank. But technology has in a big way helped the banks

to cope with this problem.

Production of services, when it comes to banks can be performed in the following 3

ways:

(i) Co- production : In this case both the service provider and the customer work together

to produce services. When a customer wants to withdraw cash from the banking

premises, then both the customer and the service provider needs to be present.

(ii) Isolated production : It is that part of service that is done outside to an organization.

Eg. Tele-Banking.

(iii) Self Service production : In this case, the customer uses the equipments of the

service providers and self serves it. Eg. ATM.

4.) Inventory

Inventory relates to the perishable characteristics of the service marketing. If a

customer starts his day at eight in the morning and ends it at four, but if bank is open only

from 9:00 a.m. to 1:00 p.m. in the afternoon, then one might not be able to attend it. The

demand for banking services also fluctuates by day and hour. The day before the holiday,

weekend, most Mondays and Saturdays, pension and salary days are heavier than normal



banking hours. So service faces a lot of problem from inventory as it cannot be stored,

saved and then used later.

RATER Analysis For Indian Overseas Bank

There are many reasons why a customer should be given QUALITY SERVICES. The

most of them are:

1. Industry being so competitive that a customer should be given the best services as

they have many competitors (the company) and if even a single customer is lost in

today’s JLT world then it very difficult to win back the customer.

2. Most of the customers do not complain as they just opt out and do get satisfied

with better services elsewhere.

When it comes to services, there are 10 quality dimensions. Each of the dimensions is of

utmost importance since human element is involved and it relates to services.

But Zeithaml, Bitner and Parsuraman have developed a new and concise model

by clubbing some points. This model consists of the following dimensions:

Reliability

Assurance

Tangibility

Empathy

Responsiveness

RELIABILITY



RESPONSIVENESS ASSURANCE

EMPATHY TANGIBILITY

RELIABILITY

It is defined as the ability to perform the promised service dependably and

accurately. In its broadest sense, reliability means that the company delivers on its

promises–promises about delivery, service provision, problem resolution, and pricing. It

is also known as the “No Excuses” service delivery.

Indian Overseas Bank faces stiff competition from many other banks within its

vicinity and some of these banks are foreign banks. But the existing customers have faith,

loyalty and trust in this bank. The customers are well aware that the bank will provide

them back the best and reliable services. For e.g., no person likes to wait to withdraw

his/her money. In order to correct this problem, Indian Overseas Bank has ensured that

whoever comes in for cash withdrawal will receive his/her cash within five to ten

minutes.

ASSURANCE



Assurance is defined as employee’s knowledge and courtesy and the ability of the

firm and its employees to inspire trust and confidence. It includes the ability, knowledge,

genuineness, and honesty to provide the best services to the customer from the frontline

staff. In this dimension the front line staff is more important rather than the owner.

At Indian Overseas Bank, every customer who comes is treated with utmost care and

any problem that takes place is solved with great enthusiasm. It assures the customers

coming up to the bank that the money they invest is secure; the interest rate that is being

provided to them is at par or sometimes even higher as compared to other banks. Also, it

assures the customers that the money they have invested will be returned to them as and

when required with proper interest. It tries to empower their customer contact people and

regularly train them in skills to build trust and loyalty between employess and the

customers. They have assigned some of their staff members to build relationships with

the customers by getting to know them personally.

TANGIBLITY

Tangibles are defined as the appearances of physical facilities, equipments,

personnel and communication materials. All of these provide physical representations or

images of the service that customers, particularly new customers, will use to evaluate

quality.

At Indian Overseas Bank, the entire premise is air-conditioned. They have

computerized systems in place and therefore quick, accurate and efficient service can be

provided to the customers. The tables and chairs are conveniently located for the

customers. The personnel always have a cheerful and helping veneer and are always

ready to help out the customers. The entire place is done up in bright colours and thus the

customer can immediately feel the warmth and the radiance of the place.

EMPATHY



Empathy is defined as the caring, individualized attention the firm provides its

customers. The essence of empathy is conveying, through personalized or customized

service, the customers are unique and unique special.

The empathy shown by the employees of the Indian Overseas Bank is good as they

are always polite humble and helpful. There was a case where once a customer misplaced

Rs. 1,00,000 within the premises of the bank. He panicked but the bank personnel put

him at rest and assured him that they would locate the same for him. Since he was a

regular customer, they knew him very well and took the situation under control. They

quickly located the cash and thus, the customer was placated. The bank personnel went

out of their way to help this customer and thus understood his predicament. This bank

regularly holds seminars and training workshops so that they can understand the

consumer better and thus serve him better.

RESPONSIVENESS

Responsiveness is the willingness to help the customer and provide him with

immediate and fast service.

The Indian Overseas Bank is prompt at providing its customers with the

information and services that they seek. It is extremely prompt when it comes to

resolving the complaints of the customers. The customers, in their feedback form,

mentioned this as one of the most important factor that has prompted them to continue

with this bank.

All the five dimensions basically aim at serving the customers to the best of their

ability, giving them quality services and if things are followed as they are demanded,

(i.e., according to the customers demand) then there would be no problems in facing any

type of people. The successful service organizations set up speeds for service standards.

MARKET SEGMENTATION



An organization is supposed to cater to the changing needs of customers; it is only

natural that all customers have their own likes and dislikes. They have some uniqueness,

which throws a big imprint on their lifestyles. This makes the task of understanding a bit

difficult. It has the context that we go through the problem of market segmentation in the

banking service.

The study of the needs of customers invites a plethora of problems since in

addition to other aspects; the regional considerations also influence the hierarchy of

needs. To be more specific in the banking services, the banking organizations are

supposed to satisfy different types of customers living in different segments. The

segmentation of market makes the task of bank professionals easier. If the market

segmentation is done in a right fashion, the task of satisfying the customers is simplified

considerably. The modern marketing theories advocate the formulation of marketing

policies and strategies for each segment, which an organization plans to solicit.

The marketing segmentation is based in the principle of divide and rule. If we

divide the market into different segments, the size of market is made small and the

process of study is found convenient. We find market segmentation division and

subdivision of a market based on considerations. The bank professionals have to segment

the market in such a way that the expectations of all potential customers are studied in a

right perspective and the marketing resources are developed to fulfill the same. The

marketing efforts can be made more proactive if the process and bases of segmentation

are right.

It is essential that the bank professionals assign due weightage to the difference

that we find in the market behavior due to geographical, age, sex, nationality, educational

background, income classes, occupation, social and other considerations. If they overlook

or underestimate key bases while segmenting, the study results can’t be proactive to the

formulation of creative marketing decisions. This makes it essential that the bank



professionals are well aware of the criteria for market segmentation. The agriculture

sector, industrial sector, services sector, household sector are found important in the very

context. The gender segment is found important no doubt but we can’t underestimate

institutional and professional segments. Since the banking organizations serve different

sectors and segments, the segmentation should be done carefully.

IMPORTANCE OF SEGMENTATION

Instrumental in exploring opportunities : We find market segmentation very

much effective in exploring the profitable opportunities. It is well known to us

that while segmenting, the market is divided into different groups and sub-

groups and this simplifies the process of studying and understanding the

customers in a right perspective. If we know about the rural segment, the

opportunities are explored to the rural areas. If we know about the women

segment, the opportunities are identified in that area. If we know about the

low- income group, the opportunities are identified in that group. Thus the

segmentation helps the bank professionals in exploring the profitable

opportunities.

Instrumental in designing a sound marketing strategy : We can’t deny that

market segmentation makes it easier to formulate a sound strategy. Since the

banking professionals are aware of the changing needs and requirements of a

segment, the marketing resources can be developed in tune with the needs and

requirements of a segment. The formulation of a package is found significant

and the bank professionals can do it successfully on the basis of market

segmentation. The promotional measures can be satisfied in the face of

receiving capacity of a particular segment. The pricing strategy can be made

operational and the sales promotion measures can be made productive.



Helpful to the policy planners : In addition, the policy makers also find

segmentation since they are well aware of the emerging trends in the business

environment. They get detailed information about the changing needs and

requirements of a segment. The planning is an on going process. The banking

professionals transmit necessary information to the policy planners, which

simplifies the process of making a sound policy.

Enriching the market resources : In addition to other aspects, we find

segmentation instrumental in enriching the marketing potentials. If we know

about the preference, needs, requirements, attitudes, lifestyles it is found

easier for us to develop the marketing resources accordingly. This in a natural

way makes it convenient to develop marketing resources. The process of

innovation can be activated. The services, the promotional measures, the

pricing tool and the process of offering can be made more competitive. The

development of world-class marketing resources thus makes it convenient to

influence the impulse of prospects. The bank professionals find it easier to get

the positive results for their productive marketing efforts.

CRITERIA FOR SEGMENTATION



Segmentation in a right fashion makes the way for profitable marketing. This helps

policy planners in formulating and innovating the policies and at the same time also

simplifies the task of banking professionals while formulating and innovating the

strategic decision. The following criterion makes the segmentation right.

ECONOMIC SYSTEM

An important criterion for market segmentation is the economic system in which we

find agricultural sector, industrial sector, services sector, household sector, and rural

sector requiring the weight age while segmenting.

A). AGRICULTURAL SECTOR: In the agricultural sector, there are four categories

since the needs of all categories can’t be identical.

The mechanization of agriculture, the improved or scientific system of cultivation,

the help of nature, the magnitude of risk, the availability of infrastructural facilities

influence the level of expectations vis-à-vis the needs and requirements. The banking

organizations are supposed to know and understand the changing requirements of

different categories of farmers.

B). INDUSTRIAL SECTOR: The banking organizations are supposed to have an in-

depth knowledge of the changing needs and requirements of the industrial sector. The

large –sized, small- sized co-operative and tiny industries use the services of the banks.

The expectation of all the categories can’t be uniform.



The banking organizations are supposed to have an in-depth knowledge of the

changing needs and requirements of the industrial segment. The emerging tends in

competition, the pressure of inflation, the use of sophisticated technologies, and the

business regulations are some of the important aspects influencing the hierarchy of needs.

C). SERVICES SECTOR: It is an important sector to the economy where the banking

organizations get profitable business. The two categories of organizations such as profit-

making and non- profit making are found important in the very context.

The banking organizations need to identify the changing needs and requirements

of the services sector with the frequent use of IT and with the mounting pressure of

inflation and competition, we find a change in the hierarchy of needs.

HOUSEHOLD SEGMENT


PROFIT MAKING ORG.BANK INSURANCE,

TRANSPORT HOTEL, TOURISM, PERSONAL CARE, CONSULTANCY

ELECTRICITY PERSONAL

MULTIPLE SEGMENTS

SERVICE SEGMENT

NON PROFIT MAKING ORG. EDUCATION, HHHOSPITAL,

RELIGIOUSPOLITICAL AND SOCIAL

WELFARE.


This also constitutes an important sector where different income groups have

different needs and requirements. In the below figure we can see the different segments

of household sector.

A). HOUSEHOLD SEGMENT: The high income group, middle income group,

subsistence level group and marginal income group have different hierarchy of needs

which influence the level of their expectations.

B). GENDER SEGMENT: In the gender segment we find males and females having

different needs and requirements. The banking organizations are supposed to identify the

level of expectations of both sexes as shown in the below figure.

Housewives

Some of the women are housewives and therefore they have different needs and

requirements whereas some of them are working ladies having different needs and

requirements.

PROFESSION SEGMENT


Working Ladies


In the profession segment, we find different categories of professions and therefore we

find a change in their needs and requirements. As shown in the figure below:

Profession Segment Public/ Private Formal/Informal

The technocrats, bureaucrats, corporate executives, intellects, white-collar and

blue collar employees have different needs and requirements and therefore the banking

organizations should know their expectations.

INSTITUTIONAL SECTOR

In this sector we find different categories of organizations. Some of the

organizations are known as charitable organizations, some of them are cultural/ social

organizations, some of them are industrial and many of them are profit making and many

are philanthropic and many of them are related to trade and commerce. It is natural that

the needs and requirements vis-à-vis the level of expectations cant be identical in all

cases. To satisfy and to increase the market share it is imperative that the banking

organizations are familiar with changing needs and requirements. The emerging trends in

the social transformation process determine the hierarchy of needs.


Technocrats

Bureaucrats

CorporateExecutivesIntellects

White - CollarEmployeesBlue – CollarEmployees


Institutional Segment Sub- Segment

Complaint Handling-HDFC BankBARNS COLLEGE OF ARTS, SCIENCE AND COMMERCE Page 54

Charitable Trusts

Individual OriginationsChamber of CommerceTrade and Commerce

Health/EducationSports Org

Philanthropic Organizations


Whatever a service firm may do for customer, even the best firms are going to

find themselves facing complaints from customers who feel that they are not being

treated fairly. In dealing with these situations, it is important to know how to diffuse them

and then turn them into positive experiences for all involved.

However, when it came to complaint handling, HDFC Bank turned to the airline

industry for inspiration. Impressed by the way an airline takes care of its customers from

the time they enter the airport till they collect their luggage after landing, the bank maps

the customer flow at its branch. The first change it brought to its branches was the 'May I

help you' desk at the reception to guide the customer to the right counter. Next, it laid

down efficiency parameters for each sub-process carried out at the branch. "We are

constantly fine-tuning our processes to reduce time taken, especially on routine tasks. We

monitor how long it takes for customer transactions as well as complaints to get

processed".

The bank's 'moments of truth' surveys too are modeled after the airline industry's

satisfaction surveys. These are given to customers just before they exit a branch after a

transaction.

HDFC Bank introduced changes for consumer convenience, starting with the

reception area and with good reason. A traditional branch has always been an infrequent

user's nightmare: cryptic boards are placed on counters leaving one as confused as ever,

bank officials sit behind wire-meshes making it impossible to seek any guidance, and the

long queues are frustrating, all the more so when you realize you stood in the wrong long

line. But HDFC branch models are trying to address this confusion, as well as the jail-like

counters.



HDFC believes that unless they change to create convenience for that customer,

and add to his brand experience, they will fail to capture the loyalty they're trying so hard

to earn. And unless they achieve this loyalty and increase their share of the customer's

wallet substantially, the majority of their retail customers will continue to be unprofitable

for them.

COMPLAINT RESOLUTION MODEL (CRM)

HDFC bank takes complaint not as a mere complaint but as an issue. They have

got this unique CRM technique where in if there is any complaint either by an employee

or a customer in any branch; it will be looked into and resolved in 24 hours. Within 24

hrs, if the branch manager does not handle the complaint it goes to the higher authority.

And then again if the same complaint is not handled in 12 hours by the higher authority it

goes to the Managing Director. Once if it reaches the MD, either the branch manager is

sacked or necessary action is taken against him.

CASE STUDY-I

Phase I



The reason why the customer decided to open an account with ABC Bank was

their constant boasting of being the best online trading bank in India. So one day the

customer called their customer center to open an account. The lady was very polite and

after talking with her for some 5 minutes, she told the customer that one of their

representatives will visit her soon. She gave the lady her office address and asked her to

send the person to her office. The next day the customer gathered all the necessary

documents to open an account. It took exactly a week for their representative to turn up

and on her inquiring about the delay, he gave her a silly reason, like he was busy with

many more clients and so could not come on the promised date. She felt that the

employees attitude towards the customers depend upon their mood on that particular day.

Phase II

Within a month the customer got a letter from the bank saying that her account

has been activated. So the next day she went to her nearest branch to deposit a cheque. As

she entered inside, it was over crowded with people in each and every corner; most of

them were the employees themselves. In most of the branches that she had visited in last

5 months, she had got the feeling that the branches were over employed.

Phase III

After going through all this she decided to use their Phone banking facilities, and

it’s did not turn out any better than Central Railway Inquiry. Every hour you find some

different people to answer your query, and most of the time you are put on HOLD.

Phase IV

They used to claim that their trump card was the ATM. To some extent it was ok

but what the customer noticed is that most of the ATMs are located in a very isolated

place and its down during evening time.

The Finale



Here is something that made the customer to finally say GOODBYE to ABC.

Initially they told her that their share trading service is free, so she did most of her trading

through ABC direct. The service was not of much help. Just a week from then, she got a

mail asking her to pay for using share-trading service. Again she got in touch with the

concerned person and informed them about the mail and also that she was no more

interested in continuing her account in ABC. Then they informed her that this mail is not

for current year it’s the advance payment for the coming year. In the end she had to pay

them for the service, which she never utilized. She stopped using ABC Bank and asked

all her colleagues never to have an account with the bank after her experience.

ANALYSIS OF THE CASE

As can be seen in this case, there is a definite failure in the service delivery. Now

apply the different dimensions of service quality to this particular case and find out

reasons for the failure.

RATER

Reliability: The lady assured the customer that the representative would visit her the next

day. Instead he took a week to turn up. Also instead of apologizing to the customer, he

gave the excuse that he was busy with other clients and so he could not attend to him. In a

service industry the customer is the king and you should make each customer feel special.

As can be seen, the attitude of the employees in the bank is indifferent. In fact, the

customer concludes his review by saying that the employee’s attitude towards the

customer depends on their mood. This shows tremendous inconsistency in service

delivery.

Assurance: Here the staff has failed to live up to its promise. Instead of coming in a day

as promised, the representative came after a week. He didn’t even apologize for his

mistake. As a result the customer was inconvenienced. The customer was angry that the



bank made false promise just to woo customers. Also she was told that the share trading

service was free. Afterwards she was made to pay for the service, which she had hardly

used.

Tangible: The tangible cues here will be the facilities that they provide, like the phone

banking and the ATM. The customer here describes the ATM service as okay. She says

that it works only sometimes. She compares their phone banking facility to the central

railway enquiry, where every hour different people come to answer his query and most of

the time he was put on hold.

Empathy: From the case, it seems that they are not understanding towards the customer

grievances. All the branches this customer has gone to have been very crowded. There

was no effort on the part of the employee’s to help this customer. Also in the case of their

phone banking, they make the customer wait for long periods of time without answering

their query.

Responsiveness: In the case of this customer, the bank and its staff were not able to

respond quickly. When the particular representative was not able to reach the next day,

the bank should have sent another representative in his place. Also they should not have

charged this customer for using the share trading service, especially since it was a

mistake on their part.

Service recovery

Service recovery pertains to the actions taken by an organization In response to a

service failure. When a customer complains he expects 3 types of fairness.

Outcome fairness: In this case the customer decided to use the share trading service as

she was told it was free. She did not find the service of much help. In the end she had to

pay for a service, which she hardly used. The bank should not have charged the customer

for this service especially since it was a mistake on their part.



Procedural fairness: When the customer entered the bank to deposit a cheque, she found

it overcrowded. There was no effort made by any of the employees to help this customer.

Using the phone banking facility was also not of much help.

Interaction fairness: After promising the customer that the representative would come

the next day, he came after a week. After committing this mistake, he made no effort to

apologize for it. Instead he gave the excuse that he was too busy with other clients to

attend to him.

Fish-Bone

CUSTOMER EQUIPMENT FRONT PROCEDURE

DELAY IN SERVICE

OTHERS MATERIAL SUPPORTING INFORMATION

Equipment: - Phone banking system of ABC Bank was really bad. Every hour there was

a new person on the phone and most of the time the customer had to wait as the phone

was kept on hold. The customer had some difficulty using the ATM machines, as they

were located on isolated places, which was very inconvenient for the customer to access.

Secondly, during the evening time they were not working. The customer had been told

about that the share trading facility was free but later on they charged for the next year’s

trading in advance. So, there was certainly a failure in equipments.



Material: The material aspect of HDFC bank would be its ATM and Phone Banking

services that are described by the customer as a “total flop” and a waste of time. This

shows a complete material failure, as the services are not up to the extent of the

customer’s perception and expectations.

Front line staff: The customer has rated employee’s attitude towards him as ‘depends

upon the mood’. In a service industry this is not acceptable, whatever might be the mood

his attitude towards the customers should be good. The front line staff’s job is to make

the work easier for the customer and not to complicate further which is not the case in

this particular case study.

Supporting Activities: The supporting staff in this case would include the front desk

receptionist who fails to act in haste and inform the same to the concerned representative.

Also, the customer is not informed about the different service charges, which the back

office should have notified by sending some mails or notifications

Procedure: In the second phase the customer went to the bank to deposit cheque, she

found out that the place was very crowded and there were no proper signboards for the

counters to guide her.

Information: In phase 1, the customer was told that the bank representative would be

coming to his place in a day’s time. But these representatives came after a week. So there

was wrong information given on the part of the customer. Again in the final phase, the

customer was not given any information about the next year’s share trading charges and

charged her in advance.

Company Profile



ICICI Bank is India's second-largest bank with total assets of over Rs. 1 trillion

and a network of about 540 branches and offices and over 1,000 ATMs. ICICI Bank

offers a wide range of banking products and financial services to corporate and retail

customers through a variety of delivery channels and through its specialized subsidiaries

and affiliates in the areas of investment banking, life and non-life insurance, venture

capital, asset management and information technology. ICICI Bank's equity shares are

listed in India on stock exchanges at Chennai, Delhi, Kolkata and Vadodara, the Stock

Exchange, Mumbai and the National Stock Exchange of India Limited and its American

Depositary Receipts (ADRs) are listed on the New York Stock Exchange (NYSE).

ICICI Bank was originally promoted in 1994 by ICICI Limited, an Indian

financial institution, and was its wholly owned subsidiary. ICICI's shareholding in ICICI

Bank was reduced to 46% through a public offering of shares in India in fiscal 1998, an

equity offering in the form of ADRs listed on the NYSE in fiscal 2000, ICICI Bank's

acquisition of Bank of Madura Limited in an all-stock amalgamation in fiscal 2001, and

secondary market sales by ICICI to institutional investors in fiscal 2001 and fiscal 2002.

ICICI was formed in 1955 at the initiative of the World Bank, the Government of India

and representatives of Indian industry. The principal objective was to create a

development financial institution for providing medium-term and long-term project

financing to Indian businesses. In the 1990s, ICICI transformed its business from a

development financial institution offering only project finance to a diversified financial

services group offering a wide variety of products and services, both directly and through

a number of subsidiaries and affiliates like ICICI Bank. In 1999, ICICI become the first

Indian company and the first bank or financial institution from non-Japan Asia to be

listed on the NYSE.

After consideration of various corporate structuring alternatives in the context of

the emerging competitive scenario in the Indian banking industry, and the move towards

universal banking, the managements of ICICI and ICICI Bank formed the view that the

merger of ICICI with ICICI Bank would be the optimal strategic alternative for both

entities, and would create the optimal legal structure for the ICICI group's universal



banking strategy. The merger would enhance value for ICICI shareholders through the

merged entity's access to low-cost deposits, greater opportunities for earning fee-based

income and the ability to participate in the payments system and provide transaction-

banking services. The merger would enhance value for ICICI Bank shareholders through

a large capital base and scale of operations, seamless access to ICICI's strong corporate

relationships built up over five decades, entry into new business segments, higher market

share in various business segments, particularly fee-based services, and access to the vast

talent pool of ICICI and its subsidiaries. In October 2001, the Boards of Directors of

ICICI and ICICI Bank approved the merger of ICICI and two of its wholly owned retail

finance subsidiaries, ICICI Personal Financial Services Limited and ICICI Capital

Services Limited, with ICICI Bank. Shareholders of ICICI and ICICI BANK approved

the merger in January 2002, by the High Court of at Ahmedabad in March 2002, and by

the High Court of Judicature at Bombay and the Reserve Bank of India in April 2002.

Consequent to the merger, the ICICI group's financing and banking operations, both

wholesale and retail, have been integrated in a singularly.

CASE STUDY-II

The Customer’s Association with the Bank

The customer became an ICICI bank customer in 1998 when he became an NRI

customer. Things were rather mundane and normal. Compared to the other big



nationalized banks and Citibank, the customer felt ICICI Bank was the best and got some

great feedback from friends and relatives alike. His initial relationship was excellent. This

continued till 2001. All the facilities were of the highest grade. Their email follow-ups,

request resolution, customer service and everything they served were of the highest

grade. They also baffled him by calling him overseas with regard to certain transactions

and request. So, he would have given a 5 star rating in 1998. But it did not continue for

long.

What has changed since then?

This bank grew leaps and bounds ever since the IPO in 1998 as well as the NYSE

listing in 2000. The numbers of customers were huge and the merger with Bank of

Madura added to the woes of the service. As there is a saying “Quality is inversely

proportional to Quantity”, ICICI bank yielded to this very true philosophy. The customer

sent a letter to their NRI center regarding a change of address for his NRI account. This

took considerable amount of time since ICICI misplaced the letter twice and he head o

mail the letter again. This frustrated and infuriated the customer. Then, they sent a courier

to the customer but at the wrong address. They sent one to the wrong address, and other

one to the right address but with the wrong password for the bank account.

Snippets from mail correspondence that took place between the customer and the banking

personnel are provided as follows providing us with an insight:

If doing an address change should take such a long time and if your processes

are so sterner and baseless with a mediocre customer-care follow-up, I definitely need to

reconsider my options. I had opened an account in ICICI though I had quite a few

options for an NRI account, in hope of having an excellent customer service.

I’ll have to rethink if my decision was correct. I have received similar complaints from

my friends as well stating that the ’’Quality of ICICI has gone down with Quantity’’, I

would definitely like to talk to some manager for NRI Services, for the same

matter. Revert to me, if you still have any queries.



Mr. XYZ

The Reply

NRI Cell <[email protected]> wrote: Dear Mr. XYZ, We apologize for the delay in our response. With reference to your mail we would like to informyou that we have not received your letter for address change.Blah Blah Blah………

In this letter instead of requesting the customer for sending the letter again and

apologizing to him, the bank authority says that the customer hasn’t send any letter at all

thus making it a CRITICAL INCIDENCE for the customer.

Customer’s Final Conclusion of the Bank

All things considered, the ICICI bank is far ahead of many of the nationalized

banks. As an NRI customer and a person used to excellent banking for quite sometime, I

feel that this bank has some mediocre facilities and service. I will be reevaluating the

opinion at a later point. I am just having an account after many unpleasant services and

incidents.

Will the customer recommend ICICI Bank to anyone? A big NO at least for the time

being until the bank makes efforts to upgrade their services.

Case Study Analysis: RATER

R: Reliability

The Case Study shows that the bank was extremely reliable and trustworthy

initially. But after the surge and swelling of customers, inefficiency has crept in r to the

bank. The bank is unreliable only on the basis of the service that it provides, but when the

question of financial reliability arises the bank seems to be in very sound and secure.



A : Assurance

The customer Mr. XYZ was rest assured about the fact that the bank was very

professional in its approach. But after the bank conducted the mistakes of sending the

password at the wrong address and then sending the wrong password at the right address

made sure that the bank lost the dignity of being a financial institution that provides

assurance. This had a deep impact on the customer.

T: Tangibility

As we can see when the customer Mr. XYZ wanted to change the address for his

NRI account he had to send 3 mails to the bank out of which 2 of them were lost by the

company, later on the first confirmation was sent at the wrong address and the second

confirmation was sent at the right address with the wrong password. The whole process

took around 2 months, which is a very long time to take by any standards.

E: Empathy

The bank was very co-operative and sympathetic towards customers before the

phase of their IPO, the best example of this would be that the company also called its

NRI customers overseas for certain transactions this showed that the bank was indeed

very good towards its customers, but after the IPO, the bank just lost all loyalty it earned,

it took the bank almost 2 months to change the address and when the customer Mr. XYZ

wrote a mail to the bank for its mediocre service provided the bank in reply blamed the

customer for its mistake. Thus, ICICI Bank performs miserably on this count too and thus

loses the customer.

R: Responsiveness

The company lost this quality after the IPO. The company took almost 2 months



to change the address and only after sending 3 mails was the job done, the bank

management was also very unresponsive in apologizing to its customers.

BIBLIOGRAPHY

SERVICES MARKETING– M.K.RAMPAL & S.L.GUPTA

SERVICES MARKETING–VALARIE.A.ZEITHAML & MARY JO BITNER

SERVICES MARKETING–CHRISTOPHER LOVELOCK

MARKETING MANAGEMENT–PHILIP KOTLER

WWW.ICICI.COM

WWW.HDFC.COM



WWW.INDIANOVERSEASBANK.COM

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