A PROJECT ON

Marketing Mix in Banking Sector

In The Subject
Financial Services
Submitted By
Sonali Malhotra
A019
M.Com Part I (Banking & Finance)
Under The Guidance Of
Prof. Amogh Gothoskar
To
University Of Mumbai
For
Master Of Commerce Programme (Semester - I)
In
Banking & Finance
Year: 2014-15
SVKMS
NARSEE MONJEE COLLEGE OF COMMERCE &ECONOMICS
VILE PARLE (W), MUMBAI 400056.

EVALUATION CERTIFICATE

This is to certify that the undersigned have assessed and evaluated the project on Marketing
Mix in Banking Sector submitted by Sonali Malhotra student of M.Com. Part - I
(Semester I) In Banking & Finance for the academic year 2014-15. This project is
original to the best of our knowledge and has been accepted for Internal Assessment.

Name & Signature of Internal Examiner :

Name & Signature of External Examiner :

Principal
Shri Sunil B. Mantri

DECLARATION BY THE STUDENT

I, Sonali Malhotra student of M.Com(Part I) In Banking & Finance , Roll No.: A019,
hereby declare that the project titled Marketing Mix in Banking Sector for the subject
Financial Services submitted by me for Semester I of the academic year 2014-15, is based
on actual work carried out by me under the guidance and supervision of Prof. Amogh
Gothoskar. I further state that this work is original and not submitted anywhere else for any
examination.

Place: Mumbai
Date: 12th October , 2014.
Name & Signature of Student
Name : Sonali Malhotra

Signature : _________________

ACKNOWLEDGEMENT
Projects have always been fun Learning experience, but with growing age, at this Masters
Level, it surely demands Corporate and Depth Approach.
This project was a great learning experience and I take this opportunity to acknowledge all
those who gave me their invaluable guidance and inspiration provided to me during the
course of this project by my guide.
I would like to thank Mr. Amogh Gothoskar - Professor of Financial Services.
I would also thank the M.Com Department of Narsee Monjee College of Commerce &
Economics who gave me this opportunity to work on this project which provided me with a
lot of insight and knowledge of my current curriculum and industry as well as practical
knowledge.
Would sincerely thank our coordinator Mr. Harish Sharma for constant guidance over the
projects and curriculums.
I would also like to thank the library staff of Narsee Monjee College of Commerce &
Economics for equipping me with the books, journals and magazines for this project.
I would also like to thank my friends and fellow students who helped me in the cause of the
project.

INDEX
Sr. No.

Particulars

Page No.

Chapter I- Introduction
1.1

Definition of Marketing Mix

Pg 6

1.2

Objectives

Pg 7

1.3

Features of Marketing Mix

Pg 8

Chapter II- Conceptual Data

2.1

Introduction of Banking Sector

Pg 9

2.2

Classification of Banks

Pg 11

2.3

7Ps of Banking Sector

Pg 16

2.4

4Cs model of Marketing Mix

Pg 22

2.5

Principle aspects of Bank Marketing

Pg 25

2.

Concept of Bank Marketing

Pg 27

2.5

4Is of Bank Marketing

Pg 28

2.6

Marketing Strategies used by Banking Sector

Pg 31

Chapter III- Collection of Data Analysis

3.1

Case Study Marketing Mix of SBI

Pg 32

Chapter IV-Conclusion
4.1

Conclusion

Pg 38

Chapter VI-Appendix
5.1

Bibliography

Pg 39

MEANING OF MARKETING MIX

Marketing mix is one of the most fundamental concepts in marketing management. For
attracting consumer and for sales promotions, every manufacture has to concentrate on four
basic elements or components these are: product, price, promotion and place. A fair
combination of these marketing elements is called as Marketing Mix. It is the blending
of four Ps which core of marketing system.
The four components of marketing mix are also called Marketing Mix Variables
or controllable as they emanate from within the enterprise and marketing manger can use
them freely as per his desire or need of the situation

DEFINITION OF MARKETING MIX

According to William Stanton, Marketing mix is the term used to describe the combination of
the four inputs which constitute the core of the companys marketing system: the product, the
price, the promotional activates, and the distribution system.
According to Philip Kotler,Marketing mix is the mixture of controllable marketing
variables that the firm uses to pursue the sought level of sales in the target market.

OBJECTIVES OF MARKETING MIX

Marketing objectives are the expected outcomes a business is trying to attain through
its marketing activities at the end of a given time period

Ideally - marketing objectives must be SMART

S = Specific: i.e. state what the firm is seeking to achieve e.g. increase sales
M = Measurable i.e. set in terms of a number value e.g. increase market share to 15% etc
A = Achievable i.e. the target can be met within the resources of the firm
R = Realistic the target must be achievable in terms of financial and human resources

available.
T = Time bound i.e. within a given period of time e.g. 12 months

Marketing objectives need to be in line with the other objectives for the business

Marketing objectives can be used as a way of measuring performance over time

FEATURES OF MARKETING MIX

Marketing mix is the combination of four basic marketing variables namely, product,

price, promotion, place.

Marketing mix aims at achieving marketing target in terms of sales, profit and

consumer satisfaction.
Marketing mix is the marketing mangers instrument for attainment of marketing

objectives.
Marketing mix is a flexible combination of variables.
So, it is necessary to adjust the variables in the marketing mix from time to time per

the changes in the marketing environment.

A marketing manager has to function as mixer of marketing ingredient and has to achieve desired

result through skillful combination of four Ps.

He needs maturity, imagination and intelligence for appropriate blending of the

variables.
The main focus of marketing mix is the consumer. His satisfaction and support are

important.
Marketing mix variables are interrelated. Decisions in one area affect the action in the
other areas. An integrated approach is needed while making changes in the marketing

variables.
The concept of marketing mix is applicable to business as well as to nonprofit making
organizations such as clubs and associations.
Marketing mix is a consumer oriented activity as its purpose is the satisfaction and
pleasure of consumers.

AN INTRODUCTION TO THE BANKING SECTOR

A bank is a financial institution that provides banking and other financial services to their
customers. A bank is generally understood as an institution which provides fundamental
banking services such as accepting deposits and providing loans. There are also nonbanking
institutions that provide certain banking services without meeting the legal definition of a
bank. Banks are a subset of the financial services industry.
A banking system also referred as a system provided by the bank which offers cash
management services for customers, reporting the transactions of their accounts and
portfolios, throughout the day. The banking system in India, should not only be hassle free
but it should be able to meet the new challenges posed by the technology and any other
external and internal factors. For the past three decades, Indias banking system has several
outstanding achievements to its credit. The Banks are the main participants of the financial
system in India. The Banking sector offers several facilities and opportunities to their
customers. All the banks safeguards the money and valuables and provide loans, credit, and
payment services, such as checking accounts, money orders, and cashiers cheques. The
banks also offer investment and insurance products. As a variety of models for cooperation
and integration among finance industries have emerged, some of the traditional distinctions
between banks, insurance companies, and securities firms have diminished. In spite of these
changes, banks continue to maintain and perform their primary roleaccepting deposits and
lending funds from these deposits.

10

NEED OF THE BANKS

Before the establishment of banks, the financial activities were handled by money lenders and
individuals. At that time the interest rates were very high. Again there were no security of
public savings and no uniformity regarding loans. So as to overcome such problems the
organized banking sector was established, which was fully regulated by the government. The
organized banking sector works within the financial system to provide loans, accept deposits
and provide other services to their customers.
The following functions of the bank explain the need of the bank and its importance:
To provide the security to the savings of customers.
To control the supply of money and credit
To encourage public confidence in the working of the financial system, increase savings
speedily and efficiently.
To avoid focus of financial powers in the hands of a few individuals and institutions.
To set equal norms and conditions (i.e. rate of interest, period of lending etc) to all types of
customers

11

CLASSIFICATION OF BANKING SECTOR

Indian banking industry has been divided into two parts, organized and unorganized sectors.
The organized sector consists of Reserve Bank of India, Commercial Banks and
Co-operative Banks and Specialized Financial Institutions (IDBI, ICICI, IFC etc). The
unorganized sector, which is not homogeneous, is largely made up of money lenders and
indigenous bankers.
An outline of the Indian Banking structure may be presented as follows:1. Reserve banks of India.
2. Indian Scheduled Commercial Banks.
a) State Bank of India and its associate banks.

12

b) Twenty nationalized banks.

c) Regional rural banks.
d) Other scheduled commercial banks.
3. Foreign Banks
4. Non-scheduled banks.
5. Co-operative banks.

RESERVE BANK OF INDIA

The reserve bank of India is a central bank and was established in April 1, 1935 in accordance
with the provisions of reserve bank of India act 1934. The central office of

13

RBI is located at Mumbai since inception. Though originally the reserve bank of India was
privately owned, since nationalization in 1949, RBI is fully owned by the Government of
India. It was inaugurated with share capital of Rs. 5 Crores divided into shares of Rs. 100
each fully paid up.
RBI is governed by a central board (headed by a governor) appointed by the central
government of India. RBI has 22 regional offices across India. The reserve bank of India was
nationalized in the year 1949. The general superintendence and direction of the bank is
entrusted to central board of directors of 20 members, the Governor and four deputy
Governors, one Governmental official from the ministry of Finance, ten nominated directors
by the government to give representation to important elements in the economic life of the
country, and the four nominated director by the Central Government to represent the four
local boards with the headquarters at Mumbai, Kolkata, Chennai and New Delhi. Local Board
consists of five members each central government appointed for a term of four years to
represent territorial and economic interests and the interests of cooperative and indigenous
banks.
The RBI Act 1934 was commenced on April 1, 1935. The Act, 1934 provides the statutory
basis of the functioning of the bank. The bank was constituted for the need of following:
- To regulate the issues of banknotes.
- To maintain reserves with a view to securing monetary stability
- To operate the credit and currency system of the country to its advantage.

Functions of RBI as a central bank of India are explained briefly as follows:

Bank of Issue: The RBI formulates, implements, and monitors the monitory policy. Its main
objective is maintaining price stability and ensuring adequate flow of credit to productive
sector.

14

Regulator-Supervisor of the financial system: RBI prescribes broad parameters of banking

operations within which the countrys banking and financial system functions.
Their main objective is to maintain public confidence in the system, protect depositors
interest and provide cost effective banking services to the public.
Manager of exchange control: The manager of exchange control department manages the
foreign exchange, according to the foreign exchange management act, 1999. The managers
main objective is to facilitate external trade and payment and promote orderly development
and maintenance of foreign exchange market in India.
Issuer of currency: A person who works as an issuer, issues and exchanges or destroys the
currency and coins that are not fit for circulation. His main objective is to give the public
adequate quantity of supplies of currency notes and coins and in good quality.

Developmental role: The RBI performs the wide range of promotional functions to support
national objectives such as contests, coupons maintaining good public relations and many
more.
Related functions: There are also some of the related functions to the above mentioned main
functions. They are such as; banker to the government, banker to banks etc.
Banker to government performs merchant banking function for the central and the state
governments; also acts as their banker.
Banker to banks maintains banking accounts to all scheduled banks.

Controller of Credit: RBI performs the following tasks:

It holds the cash reserves of all the scheduled banks.
It controls the credit operations of banks through quantitative and qualitative controls.
It controls the banking system through the system of licensing, inspection and calling for
information.

15

It acts as the lender of the last resort by providing rediscount facilities to scheduled banks.
Supervisory Functions: In addition to its traditional central banking functions, the
Reserve Bank performs certain non-monetary functions of the nature of supervision of banks
and promotion of sound banking in India. The Reserve Bank Act 1934 and the banking
regulation act 1949 have given the RBI wide powers of supervision and control over
commercial and co-operative banks, relating to licensing and establishments, branch
expansion, liquidity of their assets, management and methods of working, amalgamation,
reconstruction and liquidation. The RBI is authorized to carry out periodical inspections of
the banks and to call for returns and necessary information from them. The nationalization of
14 major Indian scheduled banks in July 1969 has imposed new responsibilities on the RBI
for directing the growth of banking and credit policies towards more rapid development of
the economy and realization of certain desired social objectives. The supervisory functions of
the RBI have helped a great deal in improving the standard of banking in India to develop on
sound lines and to improve the methods of their operation.
Promotional Functions: With economic growth assuming a new urgency since
independence, the range of the Reserve Banks functions has steadily widened. The bank now
performs a variety of developmental and promotional functions, which, at one time, were
regarded as outside the normal scope of central banking. The Reserve bank was asked to
promote banking habit, extend banking facilities to rural and semi-urban areas, and establish
and promote new specialized financing agencies.

MARKETING MIX IN BANKING SECTOR

16

A major task of marketing management is to blend together the 7Ps of the marketing mix in
such a way that they fulfill the needs of selected target markets. In many senses, the
marketing mix provides a bridge between marketing strategy and marketing tactics. The aim
of marketing strategy is to establish a match between the banks skills and capabilities and the
needs of the target market. Marketing tactics are more closely concerned with decisions about
how to deliver the product or service offer, which reflects this matching process.
The marketing mix has both strategic and tactical dimensions. The strategic dimension is
primarily concerned with decisions about the relative importance of mix elements for a
particular product. While the tactical dimension works within the framework created by
decisions regarding the balance of the mix and is primarily concerned with the specification
of precise details of each element in the mix

7 PS of BANKING SECTOR

17
It is very important for any bank to identify the 7 Ps of services so was
understands their customers better and provide them with best of service. The 7 Ps
are:
1. PRODUCT MIX
2. PRICE MIX
3. PLACE
4. PROMOTION
5. PEOPLE
6. PROCESS
7. PHYSICAL EVIDENCE

18

PRODUCT MIX
1. Deposits: Banking sector offers wide variety of Deposit Products to suit our requirements.
These are Savings Account, Senior Citizen Services, Fixed Deposits, Recurring Deposits,
, Bank Salary Account etc.
2. Investments: Along with Deposit products and Loan offerings, Banks provide various
investment options such as Mutual Funds, Life insurance, Gold Bonds.
3. Anywhere Banking
4. Loan: It offers a wide range of loans like Home Loans, Personal Loans, Car Loans, and
Two Wheeler Loans, Commercial Vehicle Loans, Loans against Securities, Farm Equipment
Loans, Construction Equipment Loans, Office Equipment Loans, and Medical Equipment
Loans etc.
5. Cards: Credit Card, Debit cum ATM Card, Travel Card
6. Demat Services
7. Mobile Banking
8. Online Money Transfer: The facility available to NRIs worldwide through the click of a
button.

PRICING MIX
The pricing decisions or the decisions related to interest and fee or commission charged by
banks are found instrumental in motivating or influencing the target market. The RBI and the
IBA are concerned with regulations. The rate of interest is regulated by the RBI and other
charges are controlled by IBA.
The pricing policy of a bank is considered important for raising the number of customers
vis--vis the accretion of deposits. Also the quality of service provided has direct
relationship with the fees charged. Thus while deciding the price mix customer services rank
the top position.

19

The banking organizations are required to frame two- fold strategies. First, the strategy is
concerned with interest and fee charged and the second strategy is related to the interest paid.
Since both the strategies throw a vice- versa impact, it is important that banks attempt to
establish a correlation between two. It is essential that both the buyers as well as the sellers
have feeling of winning.
Another element to consider in the pricing of earning assets is the risk of loss. Most notably,
this is relevant in loan pricing. Many banks assign a risk weighting to individual loans over a
certain size or based on loan type and assign a credit risk charge based on those ratings.
Customer relationships are difficult to assign a value to in the pricing process. Customers will
generally press for some price concessions in consideration of other relationships they have
with the bank.
Asset and liability mix also impacts pricing results. Generally speaking, banks operating with
higher loan-to-asset ratios are able to afford to pay more for deposits. Likewise, banks can
afford to be more competitive on certain deposit products if they have fewer maturities in a
particular timeframe or less total outstanding balances in a product line.

PLACE
This component of marketing mix is related to the offering of services. The services are sold
through the branches. The two important decision making areas are: making available the
promised services to the ultimate users and selecting a suitable place for bank branches.
The Reasons for selecting specific place as branch The selection of a suitable place for the establishment of a branch is significant with the
view point of making place accessible.
The safety and security provisions
Convenient to both the parties, such as the users and the bankers
Infrastructure facility
Near to station
Market coverage

20

PROMOTION MIX
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.

PEOPLE
All people directly or indirectly involved in the consumption of banking services are an
important part of the extended marketing mix. Knowledge Workers, Employees,
Management and other Consumers often add significant value to the total product or service
offering. It is the employees of a bank which represent the organization to its customers. In a
bank organization, employees are essentially the contact personnel with customer. Therefore,
an employee plays an important role in the marketing operations of a service organization.
To realize its potential in bank marketing, banking sector become conscious in its potential in
internal marketing the attraction, development, motivation and retention of qualified
employee-customers through need meeting job-products.
Internal marketing paves way for external marketing of services. In internal marketing a
variety of activities are used internally in an active, marketing like manner and in a
coordinated way. The starting point in internal marketing is that the employees are the first
internal market for the organization. The basic objective of internal marketing is to develop
motivated and customer conscious employees. A service company can be only as good as its
people. A service is a performance and it is usually difficult to separate the performance from
the people.

21

PROCESS

Flow of activities: All the major activities of banks follow RBI guidelines. There has to be
adherence to certain rules and principles in the banking operations. The activities have

been segregated into various departments accordingly.

Standardization: Bank have got standardized procedures got typical transactions. In fact
not only all the branches of a single-bank, but all the banks have some standardization in
them. This is because of the rules they are subject to. Besides this, each of the banks has
its standard forms, documentations etc. Standardization saves a lot of time behind

individual transaction.
Customization: There are specialty counters at each branch to deal with customers of a
particular scheme. Besides this the customers can select their deposit period among the

available alternatives.
Number of steps: Numbers of steps are usually specified and a specific pattern is

followed to minimize time taken.

Simplicity: In banks various functions are segregated. Separate counters exist with clear
indication. Thus a customer wanting to deposit money goes to deposits counter.
This makes procedures not only simple but consume less time.

Customer involvement: ATM does not involve any bank employees. Besides, during usual
bank transactions, there is definite customer involvement at some or the other place
because of the money matters and signature requires.

PHYSICAL EVIDENCE

22

Physical evidence is the material part of a service. Strictly speaking there are no physical
attributes to a service, so a consumer tends to rely on material cues. There are many examples
of physical evidence, including Internet/web pages, Paperwork, Brochures, Furnishings,
Business cards, The building itself. The physical evidences also include signage, reports,
punch lines, other tangibles, employees dress code etc.
Signage: Each and every bank has its logo by which a person can identify the company. Thus
such signages are significant for creating visualization and corporate identity.
Financial reports: The Companys financial reports are issued to the customers to emphasis or
credibility.
Tangibles: Bank gives pens, writing pads to the internal customers. Even the passbooks,
chequebooks, etc reduce the inherent intangibility of services.
Punch lines: Punch lines or the corporate statement depict the philosophy and attitude of the
bank. Banks have influential punch lines to attract the customers.
Employees dress code: Many banks follow a dress code for their internal customers. This
helps the customers to feel the ease and comfort.

4CS MODEL OF MARKETING MIX

23

The traditional Marketing mix is a 4 Ps model and is business oriented. The 4 Cs model of
marketing on the other hand is more consumers oriented. Because of its focus on consumers,
the 4 Cs model is mainly used for Niche Marketing. However, just like the traditional
marketing mix, it can also be used for mass markets. The four variables in the 4 Cs model
are
1.

Consumer

2.

Cost

3.

Convenience

4.

Communication

24

Consumer
The principle of four Cs of marketing states that your customer should be your prime focus.
Unlike the traditional marketing mix where the primary focus is on Products, in the 4 Cs
model, the primary focus is on the customer. Thus the companies which follow this model
believe in making products which satisfy their customers. They are generally ready to offer
customizable products and because they have a general set of target customers, this principle
is only applicable for smaller market segments and not for mass markets. For mass markets,
the traditional marketing mix can be used.

Cost
Cost is equivalent to Pricing in the traditional marketing mix. Cost is a very important
consideration during consumer decision making and hence in the 4 Cs principle, the cost
variable is given special attention. The 4 Cs model generally plans on the basis of Customers
and not products. And hence they have to plan the cost of the product on the basis of their
customer. If you are targeting a SEC A segment, then the costing of the product needs to be
premium to have proper psychological positioning. On the other hand, if your product is for
the SEC B and SEC C classes, then it needs to have a lower costing. Thus over here, costing
of the product depends on the customer.

Communication
The concept of communication remains same for both, the traditional marketing mix as well
as for the 4 Cs of marketing. Off course, the marketing communications for a company
following the 4 Cs of marketing is completely different as it needs a completely different
Segmentation, targeting and positioning. As said before, the 4 Cs of marketing are generally

25

used for Niche products. The media vehicles used for marketing communications for a mass
product and that for a niche product are different. A niche marketing company might use
more of BTL rather than ATL whereas in a mass marketing company, ATL communications
are very important.

Convenience
Convenience is equivalent of distribution or placement of the traditional marketing mix.
When you have a niche customer base, the convenience of the customer in acquiring your
product plays a critical role. Take a niche product like Heavy machinery as an example or
even products like television and air conditioners. What if the companies who sell these
products do not give you delivery and installation. You will not buy the product as you wont
be ready to pick up the machine and install it yourself. You will be looking out for your own
convenience. Thus convenience, like distribution, plays a critical role. The customer will not
buy your product if it is not convenient to him.

Many marketing specialists are now seeing the 4Ps as too product-oriented and have adopted
the 4Cs marketing mix. This model looks at the marketing from the customers point of view.
1. Place becomes Convenience
2. Price becomes Cost to the user
3. Promotion becomes Communication
4. Product becomes Customer needs and wants

26

PRINCIPAL ASPECTS OF BANK MARKETING

Customer Oriented Services

Services offered by the banks are to be worked out in such a manner that they fulfill the needs
of the customers. Traditionally, bankers have been accustomed to think in terms of what
banks can offer and not what customers want. However, bank marketing concept requires
them to change this orientation, and start working out schemes and services by keeping
changing customer needs as the focus of their new and novel products. In order to design and
deliver customer needed services, the banks must learn to seek information about the existing
and potential customers, and their perceived and latent needs on a regular and systematic
basis.

Design & Delivery of Such Services

The word design implies that good marketing services need to be properly designed and
crafted so as to suit a particular well-defined group of clients. Moreover, such properly

27

designed services must be properly traded. The quality of delivery is to be ensured not only
through focused advertisement, but also through proper customer services offered at the
bank's retail outlets. Customer satisfaction is a dynamic process and it is necessary to keep
pace with rising expectations of the customers. Further, the development of IT and spread of
Internet are opening up newer mechanisms of customer contact and services.

Corporate Objectives of the Bank

The corporate objectives of the bank are to be worked out within the broad framework of the
national policy. The corporate objectives are of two types, Short Term and Long Term.
1. The Short Term Objectives could be of the type: a) Increasing profitability of the bank next year.
b)Widening customer base by offering new services,
c)Increasing growth rate of credit next year, etc.
2. The Long Term Objectives could be: a)To rise to number one position in five years,
b)To become the universal bank over the period of next 3 years, etc. Once the corporate
objectives are clearly spelt out, various schemes can be designed to fulfill the needs of the
customers within the framework of the chosen corporate objectives. Further, the resources
made available for systematic marketing efforts are also constrained by policies, vision and
attitudes of the management.
Environmental & Other Constraints
Environmental and other constraints play an important role in bank marketing decisions.
Generally, the environmental constraints fall into four categories:
Economic, Cultural, Legal and Political
. A thorough understanding of local and national economy is essential for taking effective
decisions about what product to be offered, where it is to be offered, at what price it is to be
offered, and how it is to be offered? Thus, the knowledge of environmental constraints is an
essential factor in the designing and delivery of various types of customer-oriented schemes
and services.

28

CONCEPT OF BANK MARKETING

Bank marketing has been generally viewed by various bank marketers as that part of the
management activity, which seeks to direct the flow of banking services profitably to
selected customers". From a strategic managerial perspective bank marketing is an
integrated business activity directed at identifying, creating and servicing demand.
Because marketing focuses on the customers, the success of the bank is depended on its

capacity to satisfy consumer wants and needs.

According to Deryk Weyner bank marketing is "identifying the most profitable markets
now and in the future, assessing the present and future needs of customers, setting the
business developments goals and making plans to meet them and managing the various
services and promoting them to achieve the plans- all in the context of a changing
environment in the market. So the adoption of marketing concept by banks recognizes

that customers needs are changing and banks must satisfy them at a profit to the bank.
Bank marketing is the creation and delivery of financial services suitable to meet the
customers needs at a profit to the bank. Two important functions of bank marketing are:

(i) To attract and mobilize deposits, and

(ii) Attract borrowers and users of services.

29

Marketing scope in banking sector should be considered under the service marketing
framework. But bank marketing does not only include service selling of the bank but also
is the function which gets personality and image for the bank on its customers mind. The
reasons for marketing scope to have importance in banking and for banks to interest in
marketing subject can be arranged as:

1. Change in demographic structure: Differentiation of population in the number and

composition affect quality and attribute of customer whom benefits from banking services.
2. Intense competition in financial service sector: The competition became intense due to the
growing international banking perceptiveness and recently being none limiting for new
enterprises in the sector. Increase in liberalization of interest rates has intensified the
competition.
3. Banks wish for increasing profit: Banks have to increase their profits to create new
markets, to protect and develop their market shares and to survive on the basis of intense
competition and demographic chance levels.

THE 4 Is OF BANK MARKETING

There are four distinctive characteristics of service, which create challenges and
opportunities. They are commonly known as the four Is 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

30

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 dont
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.
Eg. 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:

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(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.

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MARKETING STRATEGIES USED BY BANKING SECTOR

Banking Sector has carried out various marketing initiatives to enhance its reach. They
included

Segregating and targeting existing high value customers,

Cross sales of other products,
Setting up call centers and outbound sales force to secure new customers.
Plans are also made to utilize database marketing to pursue large and medium sized

corporate, government and trade finance customers.

Database marketing is expected to draw increased revenue from cross selling, lower

costs and increased customer loyalty.

Banks have also introduced various other ways of reaching out to customers like
extension of hours of work(increased daily working hours by two hours and Sunday

banking was introduced)

Aggressive marketing through print and television media.
It is the part of banking sector philosophy to open new branches .The sector is forging
ahead with cutting edge technology and innovative new banking models, to expand its
Rural Banking base, looking at the vast untapped potential in the hinterland.

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It is also focusing at the top end of the market, on whole sale banking capabilities to
provide Indias growing mid / large Corporate with a complete array of products and

services.
It is consolidating its global treasury operations and entering into structured products
and derivative instruments.

CASE STUDY

OBJECTIVES OF THE STUDY

To analysis the 7 Ps of Marketing Mix used by SBI.

RESEARCH METHODOLOGY
For this study we have collected secondary data through Internet and books. Internet and
annual financial report of SBI are the main sources of data collection. We have collected the
data regarding the Marketing Mix of SBI.
STATE BANK OF INDIA

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State Bank of India (SBI) is a multinational banking and financial services company based in
India. It is a government-owned firm with its headquarters in Mumbai, Maharashtra. As of
December 2013, it had assets of US$388 billion and 17,000 branches, including 190 overseas
offices, making it the largest banking and financial services company in India by assets
State Bank of India is one of the Big Four banks of India, along with ICICI Bank, Punjab
National Bank and Bank of Baroda.
The bank traces its origin to British India, through the Imperial Bank of India, to the founding
in 1806 of the Bank of Calcutta, making it the oldest commercial bank in the Indian
Subcontinent.
Bank of Madras merged into the other two presidency banksBank of Calcutta and Bank of
Bombayto form the Imperial Bank of India, which in turn became the State Bank of
India. Government of India owned the Imperial Bank of India in 1955, with Reserve Bank of
India taking a 60% stake, and renamed it the State Bank of India. In 2008, the government
took over the stake held by the Reserve Bank of India.
SBI is a regional banking behemoth and has 20% market share in deposits and loans among
Indian commercial banks. With numerous competitors gaining ground in Indian Territory,
SBI was facing steady threat of takeover. The exhibit below maps the banking industry using
porters five forces model. The model shows that there is huge rivalry in the banking industry
and that the customer is the king. Banks that provide high-quality customer service and are
responsive to the market in the long run would win.

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7 PS OF MARKETING MIX USE BY SBI

1. Product: - The product in service marketing mix is intangible in nature. Like material
products such as detergent or soap, service products cannot be calculated. Banking
Industry can be a brilliant example. At the same time service products are heterogeneous,
perishable and cannot be owned. The service product thus has to be designed with care.
The given figure shows Product Mix of SBI.

2. Price: - Pricing in case of services is quite more difficult than in case of products. The
price of the product depends upon the services provided by the Bank on the individual
product to the customers. The pricing strategies of SBI are discussed below. The pricing
decisions and the decisions related to interest and fee or commission charged by banks are
found instrumental in motivating or influencing the target market. The IBA and the RBI

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are concerned with regulations. The rate of interest is regulated by the RBI and other
charges are controlled by IBA. The banking industry is required to frame two- fold
strategies. First, the strategy is concerned with interest and fee charged and the second
strategy is related to the interest paid.

3. Place: - The place part of the marketing mix is where the customer receives the product or
service. Place in case of services determine where is the service product going to be located.
SBI has 17,000 branches in India, as on December 2013, of which 9,851 (66%) were in Rural
and Semi-urban areas and had 190 overseas offices extend over 34 countries.
The selection of a appropriate place for the establishment of a branch is important with the
View point of making places accessible. Researchers find the following reasons why SBI
select a specific place as a branch?
The safety and security provisions
Infrastructure facility
Market coverage
Convenient to both the parties, such as the users and the bankers
4. Promotion: - Strategies to craft the consumer aware of the existence of a product or
service. Promotions have become a serious factor in the service marketing. Visualization
tangibilizes services through hoardings, print and TV campaigns or advertisements. Physical
Representation in services has a good promotional application to customers like use of colors
to symbolize status and wealth. Service providers use documentation in their promotions in
support of their claims for dependability, responsiveness and popularity. SBI incurred huge
Advertising & Publicity The given figure shows Promotion Mix of SBI.

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4. People: - The word Peopleis used in services marketing into two perspectives. One for
employees, i.e., internal marketing while another for customers, i.e., external marketing. In
this way the term people indicate both employees and customers in services marketing. All
people directly or indirectly involved in the consumption of banking services are an
important part of the extended marketing mix. Knowledge Workers, Employees, Management
and other Consumers often add significant value to the total product or service offering. It is
the employees of a bank which represent the organization to its customers.
SBI become conscious in its potential in internal marketing the attraction, development,
motivation and retention of qualified employee-customers through need meeting jobproducts.
Internal marketing paves method for external marketing of services. In internal marketing a
variety of activities are used internally in an active, marketing like manner and in a
coordinated way.
6. Process: - Service process is the way in which a service is delivered to the end customer. A
process is a particular operation or method of a series of actions, typically involving multiple
steps that often need to take place in defined sequence. Process is something related to:
How do people consume services?
What processes do they have to go through to obtain the services?

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Process includes the way things are actually done and the steps taken to achieve bottom line
results has been given considerable attention over the years in the areas of manufacturing,
engineering, computer programming and banking sector. The process of SBI possess
following component. International Journal of Research in Management, Economics
Flow of activities: All the major activities of SBI banks follow RBI guidelines. There has to
be adhered to sure rules and principles in the banking operations. The activities have been
segregated into a range of departments accordingly.
Standardization: SBI bank has got standardized procedures got typical transactions. In fact
not only all the branches of a single-bank, but all the banks have some standardization in
them. This is because of the rules they are subject to. Besides this, each of the banks has its
standard documentations, forms etc. Standardization saves a lot of time behind individual
transaction.
Customization: There are specialty counters at every branch to deal with customers of a
particular scheme. Besides this the customers can select their deposit period among the
available alternatives.
Number of steps: Numbers of steps are usually specified and a exact pattern is followed to
minimize the time taken.
Simplicity: In SBI banks a variety of functions are segregated. Separate counters exist with
clear indication. Thus a customer wanting to deposit money goes to depositscounter and
does not mingle elsewhere. This makes procedures not only simple but consume less time.
Besides instruction boards on national boards in national and regional language help the
customers further.
Customer involvement: ATM does not involve any bank employees. Besides, during usual
bank transactions, there is definite customer involvement at some or the other place because
of the money matters and signature requires.
7. Physical evidence: - Physical evidence is the material part of a service. Strictly speaking
there are no physical attributes to a service, so a consumer tends to rely on material cues. The

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physical evidences include signage, reports, punch lines, other tangibles, employee dress
code etc.
Signage: Each and every bank has its logo by which a person can identify the company.
Thus such signages are significant for creating visualization and corporate identity.
Financial reports: The Companys financial reports are issued to the customers with emphasis
or credibility.
Tangibles: Bank gives pens, writing pads to the internal customers. Even the passbooks,
checkbooks, etc. reduce the inherent intangibility of services.
Punch lines: Punch lines or the corporate statement depicts the philosophy and attitude of the
bank. Banks have influential punch lines to attract the customers.
Employees dress code: SBI bank follows a dress code for their internal customers. This
helps the customers to feel the ease and comfort.

CONCLUSION

Project is all about identifying the Role of marketing in banking industry. Use of marketing
mix in banking sector is increasing day by day with 4Cs. So bank marketing concept is very
important for every bank. The main purpose of this study is to get an overview of bank
marketing and to find out of role of marketing in the banking industry and see that how
marketing mix (product, price, place, & promotion) is most important for a bank. Use of 4p
and4c (customer solution, customer cost, communication, convenience) for bank and
implementation of that thing in bank marketing concept and way marketing is making
important for a bank? And combinations of extra 3Ps (people, process, Physical evidence)
are also very important for a bank in present scenario.
To summarize all these, the project comprises detailed study of the role of marketing in
banking sector. Bank Marketing has become a necessary survival weapon and is
fundamentally changing the banking industry worldwide. The rise of Bank Marketing is
redefining business relationships and the most successful banks will be those that can
truly strengthen their relationship with their customers.

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Technology innovation andfierce competition among existing banks have enable a wide array
of banking products andservices, being made available to retail and wholesale customer throu
gh an electronicdistribution channel, collectively referred to as ebanking. Technology is alteri
ng the relationships between banks and its internal and external customers.

BIBLIOGRAPHY

http://www.scribd.com/doc/197154959/Marketing-Mix
http://www.academia.edu/6595987/BANK_MARKETING_MIX_NEW_STRETEGY

_IN_TODAY_BANKING_SECTOR
http://businesscasestudies.co.uk/business-theory/marketing/the-marketing-

mix.html#axzz3EgNrWGux
http://www.getbusymedia.com/the-4-ps-and-4-cs-of-the-marketing-mix/
http://www.marketing91.com/alternate-marketing-mix-marketing/
http://www.slideshare.net/pratikaloni/marketing-in-banking-sector
http://extension.umd.edu/agmarketing/marketing-101/marketing-mix-4ps-and-4cs
http://www.indusedu.org/IJRMEC/April14/1.pdf