International marketing strategy in the retail banking industry: The case of ICICI Bank in Canada

Received (in revised form): 15th August, 2008

Leighann C. Neilson*
is Assistant Professor of Marketing in the Sprott School of Business at Carleton University (Canada). Her research interests are related to social and cultural inuences on marketing, interpretative and qualitative research methods, marketing history, and marketing in cultural institutions.

Megha Chadha
is a Master of Business Administration graduate from the Sprott School of Business at Carleton University (Canada).

Abstract This study presents an overview of the marketing strategy that a retail bank may pursue when it targets home country nationals in a foreign market. An analysis of the marketing strategy of ICICI Bank in Canada reveals that a transnational strategy coupled with an ethnocentric stafng policy allows the parent rm to retain control, while the choice of a subsidiary as an entry mode allows for local responsiveness. Further analysis illustrates that the blend of various variables in the services marketing mix (ie price, place, promotion, participants, physical evidence, and process) can help in attaining customer satisfaction. Journal of Financial Services Marketing (2008) 13, 204220. doi:10.1057/fsm.2008.21 Keywords International bank marketing, customer satisfaction in banking, retail banking

INTRODUCTION In the context of retail banking, customer satisfaction has been found to be the ultimate measure of service performance.1 Once customer satisfaction has been created, loyalty is often formed, which in turn enhances rm protability.2 Over the past few decades, retail banks have faced an increasingly dynamic environment that has heightened standards for attaining customer satisfaction, making it difcult to sustain growth in the existing marketplace. In response, banks could choose to diversify into new product lines or expand into new markets.3 Since customers, however, believe that product offerings across banks are similar,4 the option of product diversication would likely be an inefcient strategy. Many

*Correspondence: Sprott School of Business, Carleton University, 1125 Colonel By Drive, Ottawa, Ont., Canada K1S 5B6.

retail banks, therefore, may choose to expand into new international markets.5 A retail bank considering international expansion faces several obstacles including a lack of cultural awareness and understanding of the market, and language differences that may hinder effective communication.6 One strategy retail banks could adopt to overcome these obstacles is to target home country customers in the foreign market. Although revenue can be enhanced by targeting similar markets, careful analysis suggests that similarity alone is not sufcient to ensure success. Customer needs are a function of their socio-economic status, culture, and the environment of the country in which they are residing.7 Since these elements are continuously changing, it will be necessary to adapt certain elements of the retail banking marketing mix in order to create a more localised approach. By employing a case study of ICICI Bank Canada, this research

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International marketing strategy in the retail banking industry: The case of ICICI Bank in Canada

illustrates how an international bank that targets home country nationals in a foreign market can successfully adapt its marketing mix. In doing so, this research seeks to answer the following questions: When a retail bank targets home country nationals in a foreign market, which of the marketing mix variables are customised? Of the variables that have been customised, why have the adaptations been made? The paper is organised as follows: rst, an overview of the retail banking environment in North America and new opportunities arising in Canada are discussed. Then, a literature review develops a conceptual framework of marketing in the retail bank industry. Next, the research methodology is described and results of the data analysis are presented. Finally, implications for managers and future research are identied. THE CHANGING NATURE OF THE RETAIL BANKING INDUSTRY Over the past two decades, retail banking institutions in North America have been facing an increasingly competitive and dynamic business environment. First, there has been a reduction in government regulation creating a hybrid industry structure.8,9 Second, new technologies, in particular the internet, have facilitated the entry of foreign banks into new markets irrespective of physical presence.10 And nally, consumers are now more informed, face lower switching costs, and are showcasing an ever increasing set of diverse needs.11 The combination of these various forces has escalated the competitive forces faced by retail banks. In order to sustain sales growth, banks could diversify into new products or expand into new international markets.3 Customers have been found, however, to perceive little difference between banks in terms of product offerings,4 making product diversication less attractive. Banks therefore may pursue the second alternative, and in fact, it is common to see international

expansion as an opportunity to increase sales of existing products. When expanding into new geographic markets, a retail bank needs to ensure that it is knowledgeable of the target market so as to cater to customers needs appropriately. Gaining knowledge of an international market, however, requires a greater investment. This is because the rm lacks competence with the foreign market due to the unfamiliar culture,6 buyer loyalties to other service providers may already exist,12 language differences may hinder effective communication despite translation techniques,13 and extensive resources such as management capacity and capital will be required to be rmly established.12 To mitigate the risks, rms may choose to target markets similar to their home countrys market. Research suggests that market similarity, dened as the degree of resemblance between a foreign market and a rms home market,14 could be a vital criterion for market selection. Banks may choose to target similar markets because the similarity creates an opportunity to standardise some elements of the marketing strategy15 and share knowledge between subsidiary and parent.7 Demand for a product will tend to be greatest in countries with markets similar to that for which the product was originally developed16 and greater brand awareness may exist.17 Although revenue can be enhanced by targeting similar markets, a careful evaluation suggests that this alone can be misleading;7 only considering potential cash ows may mislead rms into standardising their marketing strategy. Excessive centralisation of marketing decision making at the parent and failure to adapt marketing strategy to subsidiary market conditions has been found to contribute to poor performance of subsidiaries.15 This apparent conict exists because customers needs are a function of their socio-economic status, culture, and the environment of their country of residence,7 which are always

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developing, that is, changing from what they were in their country of origin. Therefore, it will be necessary to adapt certain elements of the marketing mix in order to create a more localised approach. The international strategy of retail banks targeting home country customers in a foreign market will entail a focused approach. The service encounter is more personal than the purchase of a good and at least some portion of the service must be produced locally.18 As such, exporting is not an entry mode option that retail banks could pursue. Banks also face strict regulations; many countries limit the entry of foreign banks to subsidiaries, while others may prefer branches. Research suggests that if a bank wishes to operate in retail banking and target a focused clientele, a strategy of organic growth (ie subsidiary) is most protable and an appropriate vehicle.19 This way, the bank can differentiate itself from existing competition. This mode also allows for greater response to changing market conditions, which is necessary now with the increasingly dynamic environment faced by retail banks. The Canadian opportunity The Canadian marketplace is changing. Census data reveal that the visible minority population is growing faster than the total population; between 1996 and 2001, the total population increased by 4 per cent while the visible minority population rose 25 per cent. It is estimated that by the year 2017, visible minorities will account for between 19 and 23 per cent of the countrys population.20 The visible minority population consists mainly of three segments: immigrants successfully settled in Canada, immigrants that have arrived recently and immigrants that are still in their homeland and are in the process of relocating to Canada. The latter two segments have been found to have special banking needs largely unfullled by traditional bank offerings.21,22

Researchers have found three primary stages through which a typical immigrant proceeds in order to adapt to his/her new country. The rst two years of the stay is phase one, and the immigrants major preoccupation is nding a job, maintaining contact with family members back home, and sending money to relatives back home. During this phase, immigrants banking needs are typically focused on nancial remittance. Phase two begins in the following three or four years. If things are going well, the immigrant will apply for consumer loans to purchase a residence, and will get used to having an account and a credit card. In Phase Three and onwards, the immigrant requires the full range of nancial products and services that a retail bank normally offers.21 Domestic banks usually do not recognise the international credit history of new immigrants. This lack of a credit history prevents immigrants from accessing personal credit, which in turn inhibits their ability to integrate into Canadian society. Without a credit history, immigrants are unable to obtain a credit card, a mortgage, and educate themselves in order to obtain the appropriate certication for suitable employment. This situation creates a vicious circle, wherein the immigrant needs employment to develop a credit history, credit history to obtain a loan, a loan to enrol in studies, and studies to gain employment. Without a credit history, immigrants are also unable to obtain a loan to establish a business.22 Further, it is likely that domestic banks may lack an understanding of immigrants cultural values, may not be present in immigrant communities, and may not have personnel capable of conversing in the language with which the new immigrant is most comfortable.22 These special needs require new marketing strategies on the part of retail banks. For example, the traditional approach to lending money involves analysing the applicants nancial history. Although domestic banks are attempting to capture this lucrative market

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segment, senior levels of the hierarchy are primarily Canadian, which limits understanding of the appropriate ways to tailor marketing strategies. In contrast, foreign banks that belong to the home country of the immigrants may have stronger ties with the ethnic group, and are discovering this area of opportunity. HSBC Canada, for instance, has beneted by targeting the Chinese community.23 One immigrant population that is increasing in number in Canada is the South Asian. Here, the descriptor South Asian identies individuals from a diverse set of ethnic backgrounds, including Bangladeshi, Bengali, East Indian, Goan, Gujarati, Hindu, Ismaili, Kashmiri, Nepali, Pakistani, Punjabi, Sikh, Sinhalese, Sri Lankan, and Tamil ancestries.24In the 2001 Canadian Census, South Asians numbered 917,100; representing 3.1 per cent of Canadas population and 23 per cent of the visible minority population.25 The same census estimated that the Chinese represent the largest visible minority group. The South Asian population, however, is forecasted to reach 1.8 million by the year 2017 (a 96 per cent increase from 2001), and have a higher fertility rate than the Chinese.25 Analysts forecast that the share of South Asians in the Canadian population will soon be on par with the Chinese, creating a market opportunity for retail banks. RETAIL BANKING MARKETING FRAMEWORK This section develops a conceptual framework of the marketing approach that retail banks may pursue by drawing together the main themes from the retail banking literature that focuses on the marketing mix and international strategies. Operating within the services sector, the efciency with which retail banks conduct their marketing activities through the 7 Ps of the services marketing mix aids in creating customer satisfaction. Results of the literature review are presented in terms of the services marketing mix.

Product When services offered match the needs of the target customer, satisfaction results.26 When applied to retail banks, however, customers have been found to perceive little difference between banks in terms of product offerings. A Canadian study found that the personal relationships Canadians experience with their retail bank outweigh the services offered, and those banks able to manage the customer experience stand a better chance to develop relationships,27 denoting the lesser importance of product differentiation. Furthermore, banks that enter into a new national market typically offer essentially the same banking services provided by domestic banks.28 Price Customers are unwilling to pay a price that is perceived as unfair because of the impact on their nancial situation.29,30 Previous research has found that banks located in a geographic region within which customers are able to switch banks maintain similar fee structures.31 Furthermore, even though banks maintain divergent pricing policies across countries, the overall structure manages to converge within a country, including Canada where the banks have focused less on pricing as a strategy leading to competitive advantage.32 Because of the similarity of competitor offerings, customers are not likely to switch banks regardless of any dissatisfaction with the pricing policies of their current bank.31 Place There are several channels through which a bank may offer its services, including branch networks, automated teller machines (ATMs), telephone banking, and internet banking.33 Research within nancial services supports the view that convenience is a criterion customers utilise to select a bank so that they

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may easily conduct their banking activities.34,35 Banks must consider such factors as target market lifestyle, experience, and buying habits when deciding through which channels services will be offered, because customers only adopt those innovations that offer benets.36 Promotion Promotion is an essential component of a retail banks marketing mix because although people may purchase manufactured products from an unknown vendor, they will always look for a trustworthy bank.37 Marketing communications, therefore, should maintain a positive image of the bank and emphasise its nancial strength.37 Value-added promotions are increasingly a useful means of obtaining customer satisfaction. This is a legal form of selling in Canada, and consists of offering the customer a gift for purchasing a product or service.38 Direct marketing is an effective way to create a regular dialogue with customers and update them on the latest offerings of the bank. Research suggests that effective use of direct marketing to an existing customer base will likely increase customer retention by at least 25 per cent.39,40 Participants Customers consider it important to have a relationship with their local bank;41 a Canadian study found that it makes a difference in customer satisfaction.42 Strong relationships between customers and bank personnel benet the bank because they are difcult for competitors to replicate.43 Several personnel-related characteristics are key in helping to achieve customer satisfaction. These include ensuring the appropriate appearance of staff by making certain that tting attire is worn;44 the need for personnel to be sincere, demonstrate enthusiasm in solving customers problems,44 and appear to be committed to giving their utmost performance;43 a requirement for

personnel to be competent, communicate efciently, and handle conicts satisfactorily;45 the need for personnel to have the authority to make decisions, so as to allow for customisation to the particular needs of the client;46,47 perceived employee effort to reduce waiting times, and appropriate employee interactions with customers (such as attempting to apologise when customers must wait to be served)48 and nally, similarity of personnel with customers in terms of appearance, lifestyle, social class, and education level. When personnel are similar to customers, interpersonal barriers are reduced and trust is established.46 To ensure that these elements are showcased by personnel, banks need to employ internal marketing to instil a culture that emphasises how every service encounter with a client effects satisfaction. Employee training should focus on educating service personnel about the companys services, products, policies and practices, and providing them with the necessary tools to solve customers problems and respond to requests efciently.49 Physical evidence Research has found that the physical evidence at a bank branch has an inuence on customer satisfaction,50 likely because it is one of the few tangible elements available to evaluate a banks offerings.51 Figure 1 outlines the various components of a retail bank branch physical environment. Modern branch styles are most effective at producing customer satisfaction since they tend to have more open layouts, a greater emphasis on self-service terminals and technology infrastructure, glass frontages, greater space for customers, and limited use of bandit screens. Larger windows are also present, and act to promote the image and offerings of the bank.51 Some features inherent in modern branch styles, however, are associated with customer dissatisfaction, such as the increased presence of ATMs, and a clear view into the

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Physical Factors

1. 2. 3. 4. 1. 2. 3. 4. 5. 1. 2. 3. 4.

Visual (e.g. lighting, colors, view into branch) Aural (e.g. music, background noise) Olfactory (e.g. air conditioning) Tactile (e.g. materials, texture, comfort) Aesthetics (e.g. pictures, plants) Safety (e.g. bandit screens, cctv) Modernity (e.g. age of layout) Space (e.g. branch volume, branch area) Privacy (e.g. desk spacing) Information factors (e.g. displays, signs, zones) Staff factors (e.g. uniforms, name badges) External factors (e.g. frontage, entrance) Internal factors (e.g. queue lines)

Emotional Stressors

Use Facilitators

Service Facilities

1. Personal (e.g. staff, service desks) 2. Impersonal (e.g. ATMs, pens & writing surfaces)

Figure 1 Key components of the branch environment adapted from: Greenland and McGoldrick51

branch. It is thus crucial that a bank evaluate the preferences of its target market when designing branches. Process Process in the services marketing mix refers to the systems used to deliver services. Customers may not instantly switch banks after experiencing a problem during service production, but may respond in the form of making a formal complaint. Customer satisfaction in such cases depends upon the efcient and effective response of bank personnel.52 Strategies for establishing and maintaining a robust service delivery process are predicated on effective communication to develop shared understanding. This is achieved by implementing an open dialogue with customers, resolving complaints received, and keeping customers informed of changes to product and service offerings.53 Banks need to signal commitment to the customer by showing responsiveness to their changing needs and by investing in the relationship.53 For conicts that arise on a day-to-day basis, it is important that personnel are empowered

to take corrective action.53 In unexpected circumstances, the bank should accept responsibility and where possible offer compensation to the customer.53 RESEARCH METHOD The context of the case study was ICICI Bank Canada (hereafter referred to as the Bank). The Bank is a wholly owned subsidiary of ICICI Bank Limited. ICICI Bank Ltd., headquartered in Mumbai, India, offers a wide range of banking products and nancial services to corporate and retail customers, and, through various subsidiaries and afliates, is also active in the area of investment banking, insurance, and wealth management. The company is Indias second largest bank, the countrys most valuable bank in terms of market capitalisation, and is ranked third among all the companies listed on the Indian stock exchanges in terms of Free Float Market Capitalisation.54 (Free Float Market Capitalisation is dened as that proportion of total shares issued by the company that are readily available for trading in the market. It excludes promoters and

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government holdings, strategic holding, and other shares under any type of lock-in clause that would not come into the market for trading in the normal course.55) The brand equity ICICI Bank has developed in South Asia positions it as a bank that has the potential to successfully target home country immigrants in a foreign market. ICICI Bank Canada is licensed as a foreign bank subsidiary (Schedule II Bank) under the Bank Act (Canada). Since its entry into the Canadian market in December 2003, the Bank has been successful in constantly increasing returns. As of November 2007, the Bank had seven branches and $2bn in assets, over 125,000 customers across Canada, an ATM network, and a robust direct banking platform, all of which it achieved within two years.56 ICICI Bank targets South Asians with the goal of positioning itself as not only an Indian nancial institution, but as a premier South Asian bank.57 The Banks marketing strategies will help exemplify the key success factors. Data collection To explore those marketing mix variables that are of most signicance for a retail bank targeting home country nationals in a foreign market, a case study approach was adopted. A case study approach was appropriate because the research focused on determining how and why the marketing mix variables were adapted questions that had to be traced over time, rather than through incidence.58 Although direct observation provided useful and relevant information, the case study approach also allowed for the use of a variety of other evidence including content analysis of the Banks marketing communications, which helped to round out the kinds of data collected. To facilitate an intensive, detailed analysis, multiple data collection methods were employed. In the rst method, data were collected through personal observation of the marketing strategy of ICICI Bank Canada.

The second author completed a 2.5-month internship (45 h/week) at the Banks Canadian head ofce, working on projects in the areas of marketing management and customer complaint processing, interacting primarily with the senior manager and assistant managers of the Department of Marketing & Public Affairs, assistant managers of the Customer Service department, and managers of Product Development. In-depth discussions allowed the researcher to develop a coherent understanding of the marketing strategy of ICICI Bank in Canada. The data that will be utilised to interpret the marketing strategy, however, are those which are available for access to the general public. The Banks branches located in one of Canadas largest cities were also visited so as to develop a deeper understanding of the physical dcor at the branches. All relevant information observed and obtained was documented in a research journal. ICICI Bank Canadas television advertisements were viewed and analysed over an extended time period, totalling over 40 viewings. Additional materials, such as white papers published by private rms, government policy documents, and information contained on retail banking industry websites helped to round out the contextual information necessary for analysing this case. Data analysis A grounded theory approach to data analysis was employed.59 The grounded theory approach is appropriate for open-ended research in order to generate theory out of the data collection,60 and was therefore a relevant basis for attaining the research objectives. During analysis, data were broken down through coding whereby those marketing variables identied as important during the review of the bank marketing literature guided the labelling process.60,61 The literature review also served as the basis for exploring relationships between categories in order to determine the relative importance

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of each of the marketing variables and its sub-elements. Following the constant comparison method, new data being collected were evaluated for its potential to illuminate the concepts being coded. Data collection and coding ended when a degree of certainty had been reached with respect to the research objective and theoretical saturation had been achieved. This approach allowed the researchers to determine those marketing variables that are of most signicance when targeting the same customer base as the home country in the context of retail banking. DISCUSSION Results from the analysis of ICICIs retail banking marketing strategy are presented in this section. The discussion is organised into three parts. The rst part will discuss the international strategy of the Bank, and then part two will discuss the strategies that have been pursued for the various marketing mix elements. This will be followed by a brief examination of performance management variables to determine whether the strategies have been successful in achieving customer satisfaction. Strategy of ICICI Bank in Canada Mode of entry The Canadian government has established that foreign banks wishing to operate in the retail banking sector need to enter either as a subsidiary or as a branch.62 ICICI Bank elected to enter as a subsidiary, a decision inuenced by several factors. Under Canadian regulations subsidiaries are able to offer the full range of retail banking services, allowing the Bank to act as a one-stop solution for the banking needs of new South Asian immigrants. Foreign bank subsidiaries are also eligible for insurance provided by the Canada Deposit Insurance Corporation.62 Canada Deposit Insurance Corporation (CDIC) is a federal Crown corporation that insures the

savings of Canadians (up to $100,000) in case their nancial institution fails or goes bankrupt.63 Being insured with CDIC enhances the perceived trustworthiness of the Bank, thereby enhancing its ability to attract market share. By entering the Canadian market as a subsidiary, the Bank also has greater control over strategic decision making, which allows for swift response to changes in the external market.64 A strategy of organic growth allows for autonomy in decisions pertaining to the marketing mix, which in turn allows the Bank to differentiate its offerings from the competition. By attracting customers at the early stages of entry into Canada, or as they are preparing to enter, the Bank hopes to establish long-term relationships with clients, recognising their banking needs will change as they integrate into the new society. The organic entry mode allows the Bank to exploit the long-term potential of its investment in Canada. International strategy The international strategy of ICICI Bank in Canada resembles a transnational strategy. The Writing Lab, located in India, is mandated to make a content quality check on all written customer communication such as servicerelated responses to customers, marketing communications, web content, internal promotional e-mails, and welcome letters to customers sent when an account has been opened with the Bank. ICICI Bank has implemented a policy for corporate branding entitled ICICI Bank Corporate Brand Guidelines, which outlines the ways in which the ICICI Bank corporate brand name and image may be utilised throughout the international operations. The policy helps ensure a consistent brand image on all marketing communications. The subsidiary monitors the local market environment to decipher emerging customer needs and possible opportunities for growth. It then determines the appropriate marketing strategies it would

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like to pursue (eg a campaign that promotes money transfer to India versus a campaign to promote the mortgage business). The subsidiary also has autonomy in prioritising campaigns. The transnational strategy allows ICICI Bank to exploit core competencies throughout the subsidiary and parent rm. A centralised policy for corporate branding, written communications, and creative development allows the Bank to maintain cohesion with respect to maintaining a consistent brand image. This allows the Bank to exploit the relationships it has developed with South Asians back home. The autonomy given to the subsidiary in terms of determining appropriate marketing strategies allows the Bank to respond to the needs of the local market. Organisational factors The human resource policy of the Bank is categorised as ethnocentric, whereby home country personnel are selected for management jobs.65 Benets of this approach include enhanced marketing communications managers are largely familiar with the culture and customs of customers and can implement effective marketing strategies, and enhanced control employing home country nationals allows headquarters to replicate its policies and practices.66 Maintenance of control is necessary because the subsidiary is currently in its early stages of growth and depends on headquarters for direction with respect to corporate strategy. According to Hofstedes cultural dimensions,67,68 Canada is ranked as a society with a more individualistic attitude, with the populace being more self-reliant and private. In contrast, India has a high power distance and is more collectivist. Owing to such differences, it is likely that employing Canadian managers could result in crosscultural conict. The disadvantages to this strategy are that exibility to new management approaches is reduced, and training expenses increase

because expatriates are unfamiliar with the Canadian environment.69 To mitigate the risks, the Bank holds training sessions throughout the year for new expatriate arrivals. These sessions are hosted by Canadian consultants and provide an overview of the local business environment, along with the areas where business practices differ between India and Canada.

Marketing framework of ICICI Bank Canada Product ICICI Bank Canada has positioned itself as a full-service bank by offering the full range of retail banking products. The Bank has attempted to build relationships with new South Asian immigrants by offering innovative products, such as the Hello Canada account that allows immigrants coming to Canada to open a Canadian bank account from a foreign country and transfer funds into the account prior to arrival.70 A second product, the Hello Canada Newcomers Account, permits customers to obtain credit cards, and car and house loans prior to arrival.71 ICICI Bank Canada targets this market niche by recognising the credit history of the South Asian immigrants from their home country.70 These specialised products allow customers to access money upon arrival, easing their transition to Canadian society. Although these products may seem novel, further analysis reveals similar product offerings are available through other Canadian banks. For instance, the Royal Bank of Canada has implemented a Secured Visa Option that allows immigrants to build a credit history more easily. The company has also launched an internet-based account opening procedure that allows immigrants to deposit funds prior to arrival.72 Thus, product differentiation is not the primary basis through which ICICI Bank competes in the Canadian market.

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Price In order to attract new immigrants, the Bank promotes its money transfer business by allowing customers holding a chequing account to transfer money to South Asia without any charge. In comparison, ICICI competitor Bank of Montreal charges between $15 and $125 Cdn for wire payments.73 This is a viable strategy because in the rst few years after arrival customers are more focused on transferring money back home. In order to maintain relationships with new South Asian immigrants during phase two of the immigration lifecycle, the Bank maintains competitive prices for various investment and mortgage products by offering a higher interest rate than other Canadian banks.71,74 Specically, mortgages are priced lower, whereas investment products such as term deposits and GICs are priced higher. Table 1 illustrates the interest rate offerings of ICICI Bank Canada, as of 17th October, 2007, vis--vis the average for major
Table 1 200775 Interest rate offerings (in %), on 17th October, Mortgage 5 year Bank of Montreal Bank of Nova Scotia Comtech Credit Union Equitable Trust Grand River Credit Union HSBC Bank Canada ICICI Bank Canada ING Direct Laurentian Bank Canada Libro Financial Group Manulife Bank National Bank ResMor Trust Royal Bank of Canada TD Canada Trust Average of all institutions 7.440 7.440 5.790 7.190 6.700 7.440 5.750 5.790 7.100 7.100 5.850 7.190 5.790 7.400 7.440 6.761 Term deposit 1 year 4.000 2.350 2.300 4.550 4.500 2.450 4.300 3.900 2.750 2.750 4.600 2.450 4.300 2.350 2.450 3.33 GIC 5 year 3.600 3.600 5.010 5.050 4.650 3.600 5.000 4.650 4.500 4.500 4.800 3.700 4.400 3.600 3.600 4.284

Canadian nancial institutions. For each product, the price of the Bank is more attractive than the average. The Banks competitive pricing is made possible by the cost savings it realises by retaining some of its workforce in India, where wages are lower. While international banks such as HSBC and Citibank save approximately 30 per cent by outsourcing low-end functions of data entry, call centre jobs, and payment processing to India, ICICI Bank claims to save as much as 70 per cent with both low- and high-end jobs such as product innovation and technology development based in India.74 Additional benets to ICICIs pricing strategy can be observed. By offering free money transfers, the rm creates customer satisfaction during the initial phase of immigrants adjustment to Canada. Thereafter, competitive mortgages and investment product pricings help maintain satisfaction during phase two. After this, immigrants enter into phase three, by which time they have integrated and settled into Canada. At this stage, the Bank has also been able to develop customer loyalty, and therefore, customer switching is less likely to occur allowing the Bank to focus on other variables to maintain satisfaction. Consider the pricing strategy the Bank pursues for traditional banking products. From phase three of the immigrant lifecycle onwards, a savings account or chequing account would be the primary focus.76 At least one competitor, Presidents Choice Financial, provides a higher interest rate on savings accounts and charges no daily banking or account maintenance fees on chequing accounts.77 Pricing is one variable through which ICICI Bank Canada maintains customer satisfaction. By focusing on immigrants changing needs, the Bank is able to develop customer loyalty with the aim of building relationships for the long term. The Bank, in a sense, defers prot taking until immigrants enter phase three when it is able to charge more and not lose customers.

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Place The Bank offers its products through various channels. It has strategically established seven branches in Canadian cities that have a prominent South Asian community.24,74 Moreover, the South Asian population in these areas is expected to increase,57 which makes the branch strategy viable and sustainable. The Bank has ATM machines located at each of its branches which can operate in English, Hindi, Tamil, Punjabi, Chinese, and French.78 Operating machines in diverse South Asian languages enhances customer satisfaction. Customers are also allowed to utilise ABM machines with the Interac or Cirrus logo located worldwide. This is an excellent strategy for satisfaction since it is likely that customers travelling to their home country will need access to their accounts. The Bank offers credit card products, and clients are allowed to transfer funds to South Asia via their credit card, enhancing customer convenience. As a sales tactic, kiosks are placed at various South Asian grocery stores in the Greater Toronto District. These kiosks are staffed by South Asian sales personnel whose primary role is to attract customers to open accounts with ICICI. Although the multichannel strategy enhances market coverage, customer convenience, and allows for cross-selling opportunities, similar channels are also being pursued by other banks to target the South Asian immigrant market. For instance, the Canadian Imperial Bank of Commerce (CIBC) has located several branches in South Asian neighbourhoods and also offers ABM services in ethnic languages.79 Bank of Montreal is also increasing branch penetration in the ethnic communities to deepen relationships with the local population.80 Thus, channel of distribution alone is not a key source of competitive advantage and is largely utilised as the foundation to enhance market penetration and customer convenience.

Promotion A strong corporate identity is seen as an effective means for differentiation in retail banking.81 The Bank creates and maintains a strong image through marketing communications and event sponsorship. To create a trustworthy image, ICICI Bank Canada showcases Shahrukh Khan, a wellknown Indian actor, in its marketing communications. Khan is currently ranked as one of the most famous and inuential celebrities in South Asia. Since the target markets of the Bank are those people preparing to immigrate, and those that have recently immigrated, the audience is largely familiar with, and likes, the actor. This makes ads featuring Khan both persuasive and effective.82 Research on the use of celebrity endorsers nds that the symbolic properties of the celebrity are transferred onto the product, and thereafter onto the customer.82 Shahrukh Khan is believed to embody the Indian winning spirit in terms of energy and innovation.83 This image may t with the aspirations of the audience as they migrate to a new nation. In addition, the Bank is able to utilise Shahrukh Khan in the explicit mode of I endorse this product. For instance, as a commercial on money transfers to India concludes, the actor states, Take my word for it. Utilising a trustworthy source enhances the trustworthiness of the product, implying that it is safe, secure, and stable.84 The Bank emphasises television and radio in its promotion strategy. These media are effective for image advertising because they enhance awareness and improve customers attitudes toward the advertiser.37 In print advertisements, the headline and illustration are emphasised, highlighting Shahrukh Khan and providing a broader appeal.37 The ads are large sized, which has the effect of making the audience feel that the Bank is stronger and large and hence trustworthy.37 The Banks membership in CDIC is also stated, adding to the credibility of the Bank.

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ICICI Bank also sponsors various highbrow South Asian cultural events. Immigrants who are in phase two and onwards would be attracted to these shows, because they have the nancial capability and leisure time to attend. Linking the event experience to the brand results not only in favourable publicity and increased brand awareness but also enhanced brand image,85,86 as an impression of sophistication and seriousness is formed.87 Participants There are three primary ways through which the Bank ensures that personnel are competent, communicate effectively and reliably, and handle conicts satisfactorily. First, upon selection, personnel are exposed to various materials outlining the banks history, industry overview, market reach, and strategy. Second, training and guidance are given on a regular basis to existing employees, so as to instil a culture focused on customer satisfaction. And nally, an internal marketing programme has been implemented which consists of distributing internal newsletters to update staff on the latest company developments, future objectives, and success factors for customer satisfaction. Similarity of personnel with clients also effects customer satisfaction. The Bank recruits South Asian personnel and ensures that as a whole the staff speaks various South Asian languages such as Arabic, Gujarati, Hindi, Punjabi, Tamil, and Urdu.70 This raises comfort levels,70 and helps in changing attitudes and opinions of the clients.46 Other Canadian banks, however, also recruit ethnic personnel in order to attract ethnic markets. For example, Toronto Dominion Bank ensures that the branches located in communities with high ethnic populations are staffed with personnel able to speak minority languages,72 and CIBC pursues a similar strategy.78 These examples illustrate that the element of personnel on its own is not likely to allow ICICI to achieve differentiation.

Physical evidence Several components of the Banks branch environment enhance its competitiveness. Branches have a fairly modern layout with open-space designs and limited use of bandit screens. Spacing between the desks is sufcient to ensure privacy. These elements help to enhance perceived trustworthiness, prevent robbery/fraud, and serve to reduce emotional stressors. Brochures and posters featured in branches focus primarily on money transfers and investment products. This is in contrast to other Canadian banks, where posters designed to support cross-selling activities focus primarily on traditional retail banking products. Process Although ICICI strives to perform its activities accurately, customers may sometimes experience a problem during the service process. Upon receipt, complaints are reviewed by the Customer Service Group located in India, who strive to address the issue within two to three business working days. In case the issue needs a localised response, it is transmitted to the Customer Service Team located in Canada. Customers may be compensated for an error whose fault lies with the Bank. And in cases where the customer has signicant business with the Bank, a gift may be offered and senior managers may also get personally involved. These gestures show that the Bank is trustworthy and has accepted responsibility for its faults,53 and allow stable relationships to be built.88 To summarise, ICICI Bank is able to leverage its cultural insights and knowledge so as to successfully attract the South Asian immigrant market in Canada. To create the foundation for sustainable growth, the Bank established itself as a subsidiary, operating as a full-service bank and maintaining autonomy in key areas of strategic decision making. An ethnocentric stafng policy maintains control with the parent rm, necessary as

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the subsidiary is still in its early stages of growth. In terms of the services marketing mix, the product variable has been found to not be a source of differentiation. On the other hand, place and personnel are variables through which the bank is able to enhance market penetration and customer convenience. In order to attract and retain customers, the primary differentiators are pricing, promotions, processes, and physical dcor. Specically, a competitive pricing strategy allows the Bank to attract its target market at its early stages of entry into Canada, creating the opportunity to form long-term relationships. By emphasising the trustworthiness of the Bank in promotions, and establishing stringent processes for addressing customer complaints, the Bank is able to maintain clients. In terms of physical dcor, use facilitators and the presence of ICICI Bank brand name and image, allow for customer attraction and cross selling, while modern branch styles help in enhancing trustworthiness and prevent robbery/fraud. The strategic blend of these elements allows the Bank to achieve customer satisfaction, which in turn generates loyalty and bank protability. The following model summarises the ndings from this section (Figure 2).

ICICI Bank Canadas protability analysis To determine the effectiveness of the marketing strategy of ICICI Bank Canada, it is necessary to measure whether customer satisfaction has been produced. Research suggests that the value of deposits is an important way to determine whether a retail bank has been successful in maintaining relationships with its customers.89 Since ICICI Bank entered the Canadian market, the value of customer deposits, measured in Indian rupees, has risen from 1,599,785 rupees in 2004 to 24,044,875 rupees in 2005 and 60,890,218 rupees in 2006. Interest income (ie revenue from loans) measured over the same time period has grown from 48,392 to 552,685 rupees in 2005 and 2,559,708 rupees in 2006.90 The rise in interest income has reduced the Banks net loss, with the likelihood of positive returns in a few years. From our analysis, it is evident that the marketing strategies that ICICI Bank Canada has implemented are leading to customer satisfaction and enhanced protability. It is likely that as immigrants move through later phases of their integration into Canadian society, they will continue to conduct their banking activities with ICICI Bank Canada, and augmented with positive word of mouth, and innovative marketing

Subsidiary entry mode Transnational strategy Ethnocentric staffing policy

Price Place Promotion Participants Physical Evidence Process

International Strategy

Marketing Mix

Customer Satisfaction

Enhanced Profitability

Figure 2 The marketing model of ICICI Bank Canada

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strategies, the Bank will likely continue to attract and retain its target market. MANAGERIAL IMPLICATIONS AND SUGGESTIONS FOR FUTURE RESEARCH ICICI Bank was able to expand into Canada by targeting home country customers and leveraging its home country success. Other retail banks considering a similar expansion strategy need to ensure that they have established a successful network and presence in the country of origin of the target market and that the targeted segment has future growth potential in the new country. In addition, this research highlights the need to showcase commitment to the target market through various factors largely controllable by managers. Managers should select staff who are able to effectively communicate with customers in order to meet the needs of the target market. To allow for relationship development at early stages of immigration, new strategies to recognise the credit history of applicants are required and changes to pricing policies may be called for. Finally, managers need to create a trustworthy image, and instil a culture focused on the customer through ongoing employee training. For domestic banks seeking to attract the growing new immigrant segment, there is a serious lack of academic research to provide guidance and direction.22 Our research highlights the need to understand not only the differences between the banking systems of the home and new country, in order to understand the customers potential confusion, but also the customers stage of adaptation to the new country and consequent nancial service needs. Some larger banks have initiated targeted marketing campaigns that include new product lines and websites especially designed for new and potential immigrants, which might serve as models (see eg the Royal Banks Welcome to Canada site).91 Additional guidance can

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