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3. SECURITIES INVESTMENTS
TREASURIES
AGENCIES
TAX EXEMPTS
CORPORATE BONDS
5. REPOS
6. EURODOLLAR LOANS
7. FIXED ASSETS
THE IMPORTANCE OF MARKETING
Today, businesses around the world, both large and small, cannot
ignore the impact that the global economy is having on their
performance. Globalization, the internet, and information
transparency have led to an increasingly mobile workforce, ever
more fickle customers, and rapidly changing technologies and
business models. One result of this seemingly inexorable trend
is that companies are less able to predict - let alone control - the
short-term shape of their own markets.
Marketing is a very important aspect in business since it
contributes greatly to the success of the organization. Production and
distribution depend largely on marketing. Many people think that
sales and marketing are basically the same. These two concepts are
different in many aspects. Marketing covers advertising, promotions,
public relations, and sales. It is the process of introducing and
promoting the product or service into the market and encourages
sales from the buying public. Sales refer to the act of buying or the
actual transaction of customers purchasing the product or service.
Since the goal of marketing is to make the product or service widely
known and recognized to the market, marketers must be creative in
their marketing activities. In this competitive nature of many
businesses, getting the product noticed is not that easy.
PRODUCT
A product can be defined as a tangible object or an intangible
service that is mass produced or manufactured on a large scale
with a specific volume of units. Bank services are viewed with not
just things that are created with value but are seen in terms of
satisfaction they can deliver.
For example, a bank account is seen in terms of customer
satisfaction such as safety, convenience of paying dues, keeping
records, status, transferring funds, etc. How a bank brings about
changes in the structure of a bank product to transform potential
customers into actual customers is called Product Development
Strategy.
Bank Products are of a wide range. They include:
I) DEPOSITS
Time Deposits
II) ADVANCES
Advances are of two types:
i ) Fund Oriented:
a) Term Loans
b) Clean Loans
c) Bills Discounting
d) Advances
e) Pre-shipment finance
f) Post-shipment finance
g) Secured and unsecured lines of credit
ii) Non-Fund Oriented:
a) Guarantees
b) Letter of Credit
III) INTERNATIONAL BANKING
a) Letter of Credit
b) Foreign Currency
IV) CONSULTANCY
a) Investment Counselling
b) Project Counselling
c) Merchant Banking
d) Tax Consultancy
V) MISCELLANEOUS
a) Traveller’s Cheques
b) Credit Cards
c) Remittances
d) Collections
e) Sale of Drafts
f) Standing Instruction
g) Trusteeship
PRICE
The price is the amount a customer pays for the product. It is
determined by a number of factors including market share,
competition, material costs, product identity and the customer's
perceived value of the product.
In banking, pricing relates to interest paid by bankers on
deposits, interest charged on loans, overdraft, cash credit, charges
for various types of services rendered on Standing Instructions
given to the bank and commission charged. The RBI and the
Indian Banking Association are concerned with this respect. While
framing a pricing policy banks consider different pricing methods.
Banks are required to frame two fold strategies:
Strategies concerned with interest and commission to be
paid to customers.
Interest or commission to be paid by customer for different
types of services.
Banks also have to take the value satisfaction variable into
consideration while formulating pricing strategies.
PLACE
Place represents the location where a product can be
purchased. It is often referred to as the distribution channel. It can
include any physical store as well as virtual stores on the Internet.
Location of a bank at places accessible to the actual and
potential users will bring momentum in the banking activities.
While making a place decision the availability of transport,
communication and other necessary facilities for the smooth
functioning of the bank should be considered. It is essential that
branches are located at points where security arrangements can
be made available easily.
Promotion
Promotion represents all of the communications that a marketer
may use in the marketplace. Promotion has four distinct elements:
advertising, public relations, personal selling and sales promotion.
Banking services can be promoted in two ways:
Personal promotion i.e. personal selling.
Impersonal promotion i.e. advertising, publicity and sales
promotion measures.
With the help of different promotional tools, a manager can
transform a potential customer into an actual customer
Advertising covers any communication that is paid for, from
cinema commercials, radio and Internet adverts through print
media and billboards. Public relations are where the
communication is not directly paid for and includes press releases,
sponsorship deals, exhibitions, conferences, seminars or trade
fairs and events. Word of mouth is any apparently informal
communication about the product by ordinary individuals, satisfied
customers or people specifically engaged to create word of mouth
momentum. Sales staff often plays an important role in word of
mouth and Public Relations.
Extended Marketing Mix (3 Ps)
Now a days three more Ps have been added to the marketing mix
namely People, Process and Physical Evidence. This marketing
mix is known as Extended Marketing Mix.
People
All people involved with consumption of a service are important. For
example workers, management, consumers etc. Bank products
cannot be separated from the people who market them. Banks should
adopt internal marketing in order to make the entire business
customer oriented. The corporate mission should be communicated
effectively to all employees by the top level management. Recruits
should be conversant with all aspects of banking and also have social
interaction skills.
Process
The process involves all the activities of banking service from the
product conception stage till its marketing at the branch levels. It also
includes the accounting procedure. Previously, banks were more
activity oriented but due to the technological advances they have
shifted their approach to customer oriented service delivery.
Physical Evidence
Physical evidence focuses the customer’s attention since banking
products are intangible. Many private and foreign banks portray a
new and welcoming look to the customer. Flashy cheque books,
logos, symbols, attractive brand names, etc. add to the customer’s
perception of service quality. Bank branches represent state of the art
services for the benefits of their clients.
MARKETING SEGMENTATION
SEGMENTATION IN BANKS
I) Agricultural Sector
Sub segmented as:
a) 10 acres and above
b) 2 acres and below
c) Landless
II) Household Sector
Sub segmented as:
a) Above Rs. 1 lakh p.a.
b) Rs. 50,000 to Rs. 1,00,000
c) Rs. 25,000 to rs. 50,000
d) Rs. 25000 and below
e) Above Rs. 5000
f) Rs. 2,000 to Rs. 5,000
g) Below Rs. 2,000
III) Institutional Sector
a) Religious
b) Educational
c) Charitable and clubs
IV) Service Sector
a) Financial Sevices
b) Non-financial Services
V) Trade and Commerce
a) Wholesalers
b) Retailers
c) Merchant Exporters
VI) Industrial Sector
a) Private sector
b) Public sector
c) Co-operative sector
d) Large-scale sector
e) Small-scale sector
Banks adopt different strategies for the various sectors to whom they
provide their marketing services to. The various strategies under the
various sectors of banking include:
The urban areas of India are developed taking into account all
parameters of development. The level of income of the people, the
literacy rate and level of education as well as awareness of the
people about rights of the customer are higher than that of the rural
and even semi urban areas. Thus here, for effective bank marketing a
different approach is necessary than that of rural areas. Here the
marketing strategy should be based on customer service and the use
of modern technology in banking.
Under competitive environment for the success of the business,
better customer service is of paramount importance. Attracting new
customers and retaining existing customers is possible only with
customer service. Use of modern technology in urban areas will also
go long way for marketing of banking services. Technology based
service like credit card, debit card, ATM, anywhere banking, internet
banking, and mobile banking are necessary for urban areas. This is
because it enables customers to perform banking transactions at their
convenience.
Business hours of a bank are also an important factor for urban
banking. Banking services for long hours, say 12 hours and seven
days a week is preferred by urban customers. It is suitable to urban
life style. In India many private sector banks, especially co-operative
banks and now even some of the public sector banks have also
started this practice and they find it successful. To attract business
and wholesale customers, banks need to adopt technology based
products and services which are suitable to such classes of
customers. For instance RTGS, collection of out station cheques,
issuing the cheques at par at any branch in the country, cash
management facility, DD boutiques etc. are necessary.