MARKETING OF BANKING PRODUCTS

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MARKETING OF BANKING PRODUCTS
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What is banking?

• Basic Definition A system of trading money
  which
• provides a safe place to save excess cash, known
  as deposits.
• supplies liquidity to the economy by loaning this
  money out to help businesses grow and to allow
  consumers to purchase consumer products, homes,
  cars etc.

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What are banks

• Institutions which deals in money and credit.
• An intermediary, which handles other peoples
  money both for their advantage and to its own
  profits.
• A financial institution that links the flow of
  funds from savers to the users.
• Plays an important role in the economy of any
  country as they hold the saving of the public.

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Types of banks in India

• Central Bank The Reserve Bank of India is the
  central Bank that is fully owned by the
  Government
• Public Sector Banks State Bank Group, Regional
  rural banks
• Private Sector Banks Foreign Banks, Scheduled
  and Non- Scheduled Banks
• Co-operative Sector State Co-operative Banks,
  Central Co-operative Banks, Primary Agriculture
  Credit Societies
• Development Banks/Financial Institutions IDBI,
  ICICI, NABARD

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Commercial Role of Banking

• Issue of banknotes (promissory notes issued by a
  banker and payable to bearer on demand)
• Processing of payments by way of telegraphic
  transfer, internet banking or other means
• Issuing bank drafts and bank cheques.
• Accepting money on term deposit
• Lending money by way of overdraft, installment
  loan or otherwise

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Commercial Role of Banking

• Providing documentary and standby letters of
  credit (trade finance), guarantees, performance
  bonds, securities underwriting commitments and
  other forms of off-balance sheet exposures
• Safekeeping of documents and other items in safe
  deposit boxes
• Currency exchange
• Acting as a 'financial supermarket' for the sale,
  distribution or brokerage, with or without
  advice, of insurance, unit trusts and similar
  financial products

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Economic Role of Banking

• Issue of money, in the form of banknotes and
  current accounts subject to cheque or payment at
  the customer's order.
• Settlement of payments.
• Credit intermediation
• Credit quality improvement
• Maturity transformation

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What is bank marketing?

• Bank marketing is the aggregate of functions,
  directed at providing services to satisfy
  customers financial (and other related) needs and
  wants, more effectively and efficiently than the
  competitors keeping in view the organizational
  objectives of the bank.

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Why bank marketing necessary?

• The existence of the bank has little value
  without the existence of the customer.
• Aim is not only to create and win more and more
  customer but also to retain them through
  effective customer service.
• Appropriate promise to a customer through a range
  of services (products) and also to ensure
  effective delivery through satisfaction is
  important.

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Concept of bank marketing

• Identifying the most profitable markets now and
  in future
• Assessing the present and future needs of
  customers
• Setting business development goals and making
  plans to meet them
• Managing the various services and promoting
  them to achieve the plans
• Adapting to a changing environment in the market
  place.

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Marketing strategies

• Designed after taking into account the strengths
  and weaknesses of the organization.
• bank with clientele from various segments could
  think of market penetration by offering the
  existing range of services to existing
  customers. 
• Bank which are not facing acute competition could
  think of Market Development by offering the
  existing services to new customers.
• design new product range for their customers of
  various segments

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Segmentation

• How the sellers determines which buyers
  characteristics produce the best partitioning of
  the particular market?
• The seller does not want to treat all customers
  alike nor does he want to treat them all
  differently

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Segmentation

• Banks deal with individuals, group of persons and
  corporates
• More or less homogenous groups in terms of their
  needs and expectations.
• Market segments, targeting one or more segments,
  developing products and marketing programs
  tailor-made for these segments.

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Criterion for Market Segmentation in India

• Agricultural Sector
• Marginal
• 2 to 5 acres
• 5 to 10 acres
• 10 acres and above
• Industrial Sector
• Tiny
• Co-operative
• Small-sized
• Large- sized

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Criterion for Market Segmentation in India

• Services Sector
• Household Sector
• Marginal
• Low Income
• Middle Income
• High Income

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• Market Targeting in which each segments
  attractiveness is measured and a target segment
  is chosen based on its attractiveness.
• Positioning which is the act of establishing a
  viable competitive position of the firm and its
  offer in the target segment chosen.

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Types of Marketing
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Traditional external marketing

• consists of usual four Ps of Product, Price,
  Place and Promotion of marketing mix
• Product The products offered are the services
  which includes various types of bank accounts,
  different types of loans, investment services,
  Credit cards, Demat accounts, online banking,
  mobile banking and many more.

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Pricing
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• Buyers look for satisfaction which differs from
  person to person.
• Keeping in view the level of satisfaction of a
  particular segment, the banks have to frame the
  pricing strategies.
• The interest charged and the interest paid should
  have a co-relation between them.

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General steps for pricing
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Place

• It refers to the establishment and functioning of
  a network of branches and other offices through
  which banking services are delivered.
• Objective is to get the right product ,at right
  places at right time at the least cost.
• Extensive branch network- access to large section
  of people
• Proximity may play a determinant role in
  selecting the bank.

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• Banks are coming up with extension counters,
  specialized branches, mobile branches, banks
  acquisition and amalgamation so as to have
  sufficient point of contacts with the customer.
• With the advent of technology other point of
  contacts have come up. Such as
• ATM
• Telephone banking
• Online banking
• Mobile banking
• Video banking etc.

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Promotion

• Advertising
• Publicity
• Sales Promotion
• Personal Selling
• Push and Pull Strategies

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Internal marketing

• It involves the people(5th P) of the bank i.e.
  the employees.
• Employees should also be treated as internal
  customers, and sort of marketing mix should be
  followed.
• Quality Human resource can be a point of
  differentiation

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Interactive marketing

• The quality of service provided during the
  buyer-employee interaction.
• Efforts for previous strategies will turn futile
  if the interaction does not takes place
  satisfactorily.
• It involves
• Process (6th P)
• Physical evidence (7th P)

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Process

• Refers to the systems used to assist the
  organization in delivering the service.
• Aids to the promotion of customer satisfaction
• It involves
• speeding delivery of services
• reducing the paper work
• standardization of procedures
• customization as per individual demand
• simplicity etc.

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Physical evidence

• It includes signage, reports, punch lines, other
  tangibles, employees dress code etc.
• The companys financial reports are issued to the
  customers to emphasis or credibility.
• Signage Each and every bank has its logo by
  which a person can identify the company. It
  creates visualization and corporate identity for
  the banks.
• Tangibles banks give pens, writing pads to the
  customers.
• Punch lines Depicts the philosophy and attitude
  of the bank. Banks have influential punch lines
  to attract the customers.

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Current Marketing Strategies

• Referral services
• Direct mailing
• Cold calling
• Offering items having your brand identity
• Using the media
• Getting celebrities to endorse the product or
  service.
• Sponsoring events
• Using permission-based Marketing

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Customer satisfaction

• Recommendation of Talwars committee,1975
• Establishment of customer service committee/staff
  committee in the every ranch.
• Customer meets to be held at the branches at
  least once in a half year.
• 15th of every month (next day if 15th is a
  holiday) to be observed as customers day at
  branches and administrative offices. 
• Provision of complaint-cum-suggestion box in
  every branch.

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• Provision of May I help you counter in
  branches.
• Immediate credit of cheques up to Rs.2,500 which
  has since been increased to Rs.15,000.
• Payment of penal interest in case of delay of
  collection of cheques.
• In the year 1995 Banking Ombudsman was
  established by RBI with objective of resolving
  customer grievances in a quick and inexpensive
  manner.

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Rural bank marketing

• Follows 80-20 Parato principal
• Bankers need to understand the rural psychology
• Employing local literate youth for confidence
  building
• Banker must be aware of agriculture aspects,
  cultural and communal aspects, institutional
  facilities etc.
• Process of change should be known to him
• Status of various development plans should be
  known

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RURAL Strategy

• RRetail Business for Rural Community As
• (Consumer Producer)
  
• U Urban facilities, Investment, Infrastructure
• R Animal Husbandry Allied Activities
• A Agri Production(Field Crops, Plantation)
• L Linkages Synergy

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New Avenues for Rural Business Special Focus

• Horticulture, Plantation, Vegetable growing,
  Floriculture, aromatic and medicinal plants,
  Bio-diesel plants etc. for high investment
  Opportunities
• Post Harvest and Food Processing
• Seed Multiplication Processing
• Dairy Farming, Sericulture, Aqua-Culture
  Others.
• Irrigation Projects Wasteland Developments.
• Rural Tourism Other emerging areas.

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ICICI Bank A Case study
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• Industrial Credit and Investment corporation of
  India bank - largest private sector bank in
  market capitalization
• Second largest overall in terms of assets.
• largest issuer of credit cards in India

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MARKETING OF SERVICES BY ICICI BANK

• Product
• Saving account offers a power packed Savings
  Account with a host of convenient features and
  banking channels to transact through.
• Senior citizen services convenience with
  benefits
• Fixed Deposits Safety, Flexibility,
  Liquidity and Returns

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• Recurring Deposits Affordability and higher
  earnings.
• Roaming Current access your accounts at over
  500 networked branches across the country.
• Loans Home Loans. Personal Loans. Car Loans, two
  Wheeler Loans, Commercial Vehicle Loans. Loans
  against Securities, educational loans etc
• Investments ICICI Bank Tax Saving ,Foreign
  Exchange Services, Senior Citizens Savings
  Scheme, 2004.
• Cards Credit card, ATM card, travelers card
• Demat services
• Online money transfer
• Mobile banking

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7 Ps of ICICI Bank

• Pricing
• Pricing Decisions related to interest, fee or
  commission.
• RBI and IBA
• Raising Number of Customers
• 4. 2 Fold Strategies

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7 Ps of ICICI Bank

• Place
• Services are sold through branches
• Making Promised Services available to the
  ultimate users.
• 3. Branches OF ICICI
• 1900 in India and 33 in Mumbai.

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7 Ps of ICICI Bank

• Promotion
• Advertising - Television, radio, movies, theatres
• Print Media- Hoardings, newspaper, magazines
• Publicity- Road shows, campus visits, sandwich
  man, Sponsorship
• Sales Promotion- Gifts, discount and commission,
  incentives, etc.
• Personal Selling- Cross-sale (selling at
  competitors place), personalized service
• Telemarketing- ICICI one source Call center
  (mind space)

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7 Ps of ICICI Bank

• Process
• Standardization- ICICI bank has got standardized
  procedures got typical transactions
• Customization- Specialty counters at each branch
  to deal with customers of a particular scheme
• Simplicity- Separate counters exist with clear
  indication
• 4. Customer Involvement- Money matters and
  signature

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7 Ps of ICICI Bank

• Physical Evidence
• Signage
• Financial Reports- The Companys financial
  reports are issued to the customers to emphasis
  or credibility
• Tangibles- Pens, Writing Pads to the internal
  customers. Passbook and Cheque books to the
  customers.
• Punch lines- Hum Hai Naa
• 5. Employees Dress Code- ICICI bank follows
  a dress code for their internal customers

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7 Ps of ICICI Bank

• People
• All people directly or indirectly involved in the
  consumption of banking services.
• Workers, Employees, Management and other
  Consumers
• Employees of a Bank represents the organization
  to its customers.
• 4. Internal Marketing

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