MARKETING CONCEPT

a situation where buyers and sellers of a commodity interact. Coming together of buyers and sellers of the same or similar commodities.

MARKETING Marketing is the process of determining consumer demand for a product or service, motivating its sale and distributing it into ultimate consumption at a profit.

MARKETING MANAGEMENT A process of planning and executing the conception, pricing , promotion and distribution of goods and services and ides to create exchanges with target groups that satisfy customer and organizational objectives.

MAREKTING OF FINANCIAL SERVICES Intangibility, inseparability and heterogeneity are manifested at both strategic and tactible levels in services marketing. Marketing strategy provides the organization with a sustainable competitive advantage in the markets it operates. Organization should understand consumer needs and identifies how those consumers should be grouped into different market segments. Product attributes, pricing decisions, methods of distribution and communication should all seek to reflect the chosen position.

BANK MARKETING

Provides services Aimed to satisfy customers needs and wants Needs and wants may be non financial in nature Competitive element, efficiency and effectiveness Organizational objectives are still the driving force Commercial objective to make profit Social Objectives

EXECUTIVE SUMMARY The banking industry is an integral part of any society. The key areas that have impacted on the financial services industry include regulation and legislation in various forms. The 1986 Financial Services Act was brought about to regulate the industry and offer consumer some protection. With the entry of new private and foreign banks in the country already having numerous big and small public sector players, the competition has doubt increased.

The competitive environment is continuously changing and is also under increasing pressure due to the effect of the economic recession, customer spending and confidence. The dynamic nature of banking industry makes environmental monitoring and analysis essential. Delighting the customer is the buzzword for the service industry today. To fulfill this, banks should have an excellent marketing mix. The marketing mix for services is different than the mix for product.

The marketing mix is the organizations overall offer, or value, to the customer. 'The basic marketing mix is often nicknamed "The 4Ps" (product, place/distribution, pricing, promotion); these are elements in the marketers armory - aspects that can be manipulated to keep ahead of the competition' Dibb & Simkin, 1994. The marketing mix can be expressed in a more customer orientated way as the '4Cs': Customer Value 'product' benefits from the buyers point of view Cost to the customer 'price' plus the customers costs - e.g. travel Convenience for the buyer equivalent to 'place'/channels of distribution Communication a two-way dialogue - not just 'promotion'. The marketing of services presents particular problems given characteristics such as: Services cannot be touched or stocked. They are an experience. Production, consumption and distribution are simultaneous. 'Production' staff is also the customer contact. Quality is variable - and customers tend to use Price as an indicator of quality Customers are less easily convinced of reliability than with a tangible product.

To address the special difficulties of services marketing, 3 more 'Ps' can be added to the marketing mix:

PeopleStaff selection, motivation and particularly customer care training are critical. Physical EvidenceThe dcor and ambience are very much part of the product offer as are customer testimonials and celebrity endorsement. ProcessThe efficiency of the process is what provides the benefits for the customer. Efficiency can be monitored by measurers of performance, e.g. based on satisfaction questionnaires and 'mystery customer' surveys. For understanding marketing mix in detail three famous banks were considered for study: ICICI SBI Citibank All these three banks are undergoing drastic changes as far as marketing mix goes. The information about the marketing mix of these banks was collected from various primary and secondary sources. Once the marketing mix structure of these banks was ascertained it was necessary to understand the customers response to this mix of various banks. A study of this was conducted by means of getting the questionnaire filled by 50 customers of these banks. By means of the responses the gap between banks offering under marketing mix desired by customers becomes clear. This gap level shows the areas of problems on the basis of which proper recommendation could be prepared.

Marketing mix in banks

y Product- A product can be defined as the bundle of utilities consisting of various product features accompanying services. Bank services are viewed with not just things that are created with value but they are seen in terms of satisfaction they deliver. For an example a bank account is seen in terms of customer satisfaction such as safety, convenience of paying dues, keeping records, status, transferring funds etc. It is a tangible good or an intangible service that is mass produced or manufactured on a large scale with a specific volume of units. Intangible products are service based like the tourism industry & the hotel industry or codes-based products like cell phone load and credits. Typical examples of a mass produced tangible object are the motor car and the disposable razor. A less obvious mass produced service is a computer operating system. Packaging also needs to be taken into consideration. Every product is subject to a life-cycle including a growth phase followed by an eventual period of decline as the product approaches market saturation. To retain its competitiveness in the market, product differentiation is required and is one of the strategies to differentiate a product from its competitors.

Banks Product:

(1) Deposits: Time Deposits

(2) Advances: They are of two types: Fund oriented: Term loan, Clean loan, Bills discounting, Advances, Pre-shipment finance, Post-shipment finance, Secured and Un-secured lines of credit.

Non-Fund oriented: Guarantees, Letter of credit.

(3) International Banking: Letter of credit, Foreign currency.

(4) Consultancy: Investment counseling, Project counseling,

Merchant banking, Tax consultancy.

(5) Miscellaneous: Travelers cheques, Credit card, Remittances, collections, Sale of drafts, Standing instruction, Trusteeship.

y Market segmentation In Banking Services, the banks are expected to satisfy rural customers, high-earning and low earning customers, small-scale and largescale entrepreneurs and so on. Hence segmentation of market is considered to be important. Since the Banks have to deal with different types of customers from different fields and locations, Banking Services need segmentation. In Indian setting we find the emergence of rural market which is wider. Here it is necessary that the segmentation should be done in tune with the changing socioeconomic conditions of the rural users.

y Pricing in Banking- In Banks, pricing relates to interest paid by the Bankers on deposits, interest charged on loans, overdraft, cash credit, charges for various types of services rendered on Standing Instructions given to the bank and commission charged. The potential customer or investor generally frames their investment decisions on the basis of interest to be received on the investments.

While framing a pricing policy different pricing methods can be used. In cost plus pricing a detailed analysis of cost structure of various bank products and services is to be done.

y Promotion- Banking services can be promoted in two ways: Personal promotion i.e. person to person , person to persons, persons to persons and conferences. Impersonal promotion i.e. advertising, publicity and sales promotion measures. Personal promotion helps in creating impulse buying and generates selling with the help of impersonal communication. In banking service the success of personal selling depends on the behaviour and activities of the bankers. Displays, shows, exhibitions, gifts are some of the important measures to stimulate the users action and bankers effectiveness. Word of mouth is the best form of publicity.

y Place place is an important element in the overall marketing decision. Place represents the location where a product can be purchased. It is often referred to as the distribution channel. While making a place decision the availability of transport, communication, electricity and other necessary facilities for the smooth functioning of the bank should be considered. The banks have to be careful that the general or industrial users of services coming to the banks return safely. In order to serve all customers segment round the clock the banks have introduced ATM, telebanking, home banking, now internet banking.

y People- The products and the seller together constitute the banking product. Banks products cannot be separated from people who market them. The bank products can be implemented only through people. Banks should adopt internal

marketing in order to make the whole business customer-oriented. Most of the banks are moving towards technology based banking. But still matters like investment banking deposit, mobilization, credit evaluation, etc. can be done through personal contacts.

y Process- The process involves all the activities of banking service from the product conception stage till its marketing at all branch level. It also includes the accounting procedure. Previously banks were more activity oriented but due to the technological advances they have shifted their approach to customer oriented service delivery. Banks reduced delays in processing the transaction e.g. loan applications, cheque clearing etc.

y Physical evidence- Physical evidence focuses the bankers attention because banking products are intangible. The environment is changing. It is becoming friendlier. Most of the private and foreign banks portray a new welcoming and friendly look to the customer. Flashy cheque books with the name of the account holder printed, imaginative design of bank brochure, statement of accounts with details of transaction are other tangible aspects.

INTRODUCTION TO PRESENT PROBLEM In January 1993 the guidelines for setting up private sector banks were issued. The banking sector has an uphill task considering the challenges it is facing. The gap between thinking and debating the solutions and the implementation of these is widening. This will erode the viability and the economic value of the business. There are several challenges confronting the banking sector. These could be broadly classified into the deployment of funds in quality assets and management of revenues and costs. Another challenge is that Indian banks will have to embrace the sophisticated risk management practices. Thereafter, it will have to address the risk based pricing and that of capital requirements of banks. This past June, the bank regulators on Basel committee on banking supervision postponed the deadline for finalizing a new version of the 1988 Capital Accord, to provide the basis of determining the capital adequacy. Thus a lot of reforms are required in the banking sector. The foreign and new private sector banks are very mindful of the inefficiencies in the public sector banking. They manage their fee-based income far more aggressively

In 1969 Indira Gandhi nationalized 14 private sector banks. Prior to that most banks like Central Bank owned by the (Tatas), united commercial Bank (Birlas) and Syndicate Bank (Pais) were owned and managed by businessmen. The only exception was the State Bank of India. Known as the Imperial Bank of India before 1955, this came under the purview of the RBI; it had been nationalized in July 1955 under the SBI Act of 1955. The businessmen who owned these banks channelized most deposits into their own companies, often ignoring the governments focus areas, agriculture and small scale industries. That neglect was one of the reasons for the nationalization of banks. Another was Gandhis desire to spread the banking habit in rural and semi- urban areas.

The emergence of new private banks:

The eight new private banks that have emerged on the Indian financial topography since 1994 are clear outperformers in the otherwise troubled sector. In seven years, these banks have grown to account for 6% of the total assets and 10% of the total profits of banking industry. It was the Narsimham committee report dated 1991 that envisaged a larger role for private sector banks. The RBI agreed, and in an effort to make the sector more efficient and competitive, it issued, in January 1993, the guidelines governing the entry of new private banks- a minimum paid-up capital of Rs.100 cr. among others. This was the first time; following the nationalization of banks in 1969that the RBI was issuing fresh banking licenses to the private sector. The NPBs have grown not just organically, but also through mergers and acquisitions. HDFC bank merged with Times Bank in an all stock deal valued at Rs. 200 cr. in Nov 1999, ICICI bank acquired bank of Madura in a stock swap deal in Dec2000 to become the largest among the NPBs.

Vital stats for private sector banks: New private sector bank Total income 7504.26 Operating income 1368.97 Net profit 639.41 397.05 569.42 684.28 124.85 1998-99 4130.49 1999-2000 2000-2001 5407.46

Provisions and contingencies 729.56 Spread 1685.13 NPA (%of net advances) Total advances Figures in Rs. cr. 6.2

287.23

674.43

763.94

1151.71

4.1 14070 22816

5.1 31499

Marketing puts the customer at the center of the organization. The organizations, which do so, reap the profits. In the grocery sector, Sainsbury, and more recently Tesco, have a firm commitment to marketing, putting them amongst the most profitable retailers in the country. It was said several years ago that Marks & Spencer did not even use the word 'marketing'. They believed they placed their customer truly at the center and that their merchandising and customer definition strategy led them to be the most profitable retailer in Europe. But how does this stack up today. It seems that their customers changed. Customer preferences and desires moved on and the company neglected to see how their customer base was becoming more segmented with differing tastes emerging. The company's products and services become seen as less "vibrant", too staid, and insufficiently dynamic. The word got out quickly to customers that the merchandise range was dull, lifeless, and old. Profitability levels and customer confidence dropped. The company that neglected its market research needed to regroup urgently and strengthen its marketing skills. However this required profound management reorientation and development of marketing competencies. The famous retailer is now struggling to make up lost ground and to regain its ascendancy in a much more volatile market.

The seven factors of marketing mix of services are though easier to understand but require a great deal of study. Since in banking services the products are not unique and hence easier to imitate. Therefore an efficient, timely and cost efficient strategy to have the best marketing mix is essential. Since the nature of the product can be easily altered in case of service a dynamic approach should be taken towards other attributes of marketing mix. Therefore to combat the challenges of increasing competition in banking industry environment, a detailed and thorough knowledge about marketing mix is a must. The following dissertation report was made keeping this in mind. The report is hence titled as:

In Depth Study of Marketing Mix of Banking Services

INTRODUCTION TO BANKING INDUSTRY Banking Sector in India The economic reforms initiated in the aftermath of the 1991 crisis have blown winds of change in every segment of the economy. The banking industry, one of the supporting precursors to any rapidly growing economy, has undergone a period of considerable change since the 1990s. The three sectors of the banking industry namely public, private and foreign are the cornerstones of the changing banking industry. The Indian banking sector has a massive geographical reach and the credit- deposit (48%) figures speak volumes of the inherent strength of this industry. Until

recently, the lack of competitiveness vis-a-vis global standards, low technological level in operations, over staffing, high NPAs and low levels of motivation had shackled the performance of the banking industry. The entry of the New Private Sector banks into the market changed the face of this industry. Nurturing collaborative ventures and paying strong emphasis on forex services, the private banks are globalizing Indian banking business. Armed with strategic alliances with foreign collaborators, these banks have opened doors to new positive ideas, concepts and products. These private banks have set a trend for universal banking. For instance Global Trust Bank is the first Indian Bank to have equity participation from International Finance Corporation and Asian Development Bank. Similar trends are seen in Centurion Banks alliance with Keppel Bank, Singapore and HDFC Bank with NatWest Markets, United Kingdom. Recently ICICI successfully completed its ADR issue on New York Stock Exchange (NYSE). The intensification of competition in the banking industry as a result of growing private sector participation coupled with growing customer needs has spurred innovation resulting in new products and services. The private sector banks spearhead this "Innovation Revolution". The new private sector banks are targeting specific products and client group. However with the advent of foreign players participation, the private sector banks position stands threatened. With emphasis on service and technology, it is for the first time that Indian banks (mainly private) are challenging the foreign banks. These banks are making heavy use of technology to give good service at par with foreign banks but to a much wider clientele. Branch size has been reduced considerably by using technology thus saving manpower. This has resulted in an overall cost saving. In addition the Any Time Money (ATM) facility helps draw large customers to a branch. ICICI

Bank has already launched Database Management (referring to using the database of existing clients to generate more revenues).

The new private banks are on an expansion phase and are now moving into semiurban areas and satellite towns to fulfill their branch expansion norms. ICICI bank, HDFC bank, GTB, IndusInd, BOP and UTI Bank have come out with IPOs as per licensing requirement. The other three private sector banks are expected to come out with their IPOs in next fiscal. Their technological edge and product innovation has seen them gaining market share from the slower, less efficient older banks. These banks have targeted non-fund based income as major source of revenue, with their level of contingent liabilities being much higher then their other counterparts viz. PSU and old private sector banks. The new private banks have been consistently gaining market shares from the public sector banks. The major beneficiary of this has been corporate clients who are most sought after now.

Among the list of top 5 wealth creator ICICI stands 3rd with MVA in Rs. Cr. as 833 and total assets in RS. Cr. as 19737 while SBI is 3rd in top 5 wealth destroyer with MVA in Rs. Cr. as -2324 and total assets in RS. Cr.as 316017. Among the top 50 wealth creator ICICI stands 3rd while SBI stands 48.

Economic Backdrop and Banking Environment

The year under review was marked by significant changes in the economic environment. There was some deceleration in GDP during 2000-01 due to sluggish growth in industry, agriculture and services, though critical sectors like information technology and communications remained strong. Growth in the industrial sector was affected by infrastructure bottlenecks, excess capacity in some sectors and an uncertain environment as investors assess the full impact of Indias commitments to the WTO. Exports, which had witnessed a turnaround during the previous year, surged ahead further and rose by 19.9% in 2000-01, substantially higher than the increase of 10.9% recorded in 1999-2000. Along with buoyancy in the global economy, various export-promotion measures taken by the Government facilitated export growth. In contrast, the growth in imports slowed down to 0.2% in 2000-01, and the slowdown would have been more pronounced but for the rise in oil imports reflecting hardening in international crude prices. A significant development during the year was the removal of Quantitative Restrictions (QRs) in compliance with WTO requirements. The Exim Policy also announced several measures to boost exports and position Indian producers and exporters to take advantage of liberalization in world trade. Inflation (WPI yearon-year) remained low at 4.9% in 2000-01 against 6.8% in the previous year. On the monetary front, there was adequate liquidity in the economy during 200001 with year-on-year growth in broad money (M3) at 16.2% as against 14.6% in

1999-2000. The growth was boosted by inflows amounting to Rs.25,711crore (USD 5.5 billion) on account of the India Millennium Deposits. Growth in aggregate deposits of all scheduled commercial banks at 17.8% in 2000-01 was higher than 13.9% in the previous year. The growth in credit at 16.8% in 2000-01 was, however, lower than 18.2% in 1999-2000, reflecting sluggishness in the real sector environment. During the same period, total resource flow to the commercial sector from banks i.e. non-food credit plus investment in bonds, debentures, shares, CPs, etc., rose by 15.2% against 17.8% in the previous year. The strong growth in food credit during the year supported large-scale food procurement operations of the Government. In keeping with its objective of providing sufficient credit for growth consistent with price stability, RBI announced a number of measures to enhance liquidity and reduce the cost of funds to banks. These included reduction in Bank Rate, cut in CRR, reduction in repo rate and cut in savings bank deposit rate. The Union Budget (2001-2002) also signaled a softer interest rate regime by announcing a cut in the interest rates on small savings schemes. During the year under review, RBI announced several new initiatives in banking sector reforms and development of the money market and government securities market. Other measures include guidelines to put in place risk management systems in banks, move towards unified group balance sheet, strengthening financial sector regulation and supervision, and steps to strengthen prudential norms and adopt global financial standards and codes. Financial sector deregulation has increased the opportunities for banks to augment revenues by tapping new areas of business like insurance, asset management, etc. In addition, banks now have greater flexibility in pricing their products. But this has also squeezed margins and intensified the competition for certain banking products. In this milieu, only banks that seize the opportunities thrown up by

technology become customer-centric and offer new products that are cost-effective will be able to stay ahead of the competition. The current slowdown in industrial sector, greater access for domestic corporate to markets including abroad, greater flow of FDI and FII funds into the economy and in general greater volatility in equity markets abroad which impact domestic markets are all developments which highlight the need for strong risk management systems, credit appraisal and follow up as well as prudent provisioning policies in banks. Leveraging its strengths in terms of brand name, market leadership, wide network of branches, technology and skills, the Bank will strive to scale new heights in the coming year. This will be supported by initiatives in insurance, lending to midcorporates, personal banking and priority sector. With technology as a key driver, the Bank will be able to exploit opportunities in cross-selling products, meet customer requirements and enhance profitability and efficiency. The challenge, therefore, is to improve profitability, asset quality along with strong capital backing to support asset expansion, and use the human and financial capital to add value to shareholders of the Bank, while at the same time continuing to ensure strict adherence to statutory and regulatory directives and national policies.

PUBLIC SECTOR BANKS VIS-A-VIS PRIVATE AND FOREIGN BANKS Indian Banking offers a curious combination of excellence and mediocrity. It is one of the biggest banking industries in the world. It comprises three forerunners PSBs, Private Sector Banks, Foreign Banks. The PSBs are gigantic, are fleet flouted and the Foreign Banks are technology savvy. Banks have traditionally functioned as reliable intermediaries between net savers and net borrowers. Ignoring fee-based services, Indian Banks have mainly concentrated on the

earnings from the spread between the lending and the borrowing interest rates. This becomes quite apparent from even a cursory glance at the published journals of any bank, where the income head is split up into Interest Income and Other Income. Unfortunately, these spreads have diminished and savers have started interacting directly with borrowers. The only way around is to increase the services and feebased activities. The key to success in the future is going to be Quality Customer Service, with an innovative use of the most advanced technology available. Over the next few years, Indian Banks will need to introduce some, if not all, of the products or services outlined below, to stay in the game. Thanks to liberalization, the Indian Banking Industry is agog with competition. The players are competing like never before. Now the PSBs have to perform better than others to keep ahead in the race, even to be in the race there is a need to better their own performance levels, lest they are likely to be left far behind. Both the foreign and private banks are giving cutthroat competition to the PSBs, which still predominate an eighty four percent share in the total assets of the industry.

SWOT ANALYSIS

PUBLIC SECTOR BANKS

Strengths: y Public sector has 84% share in the total assets of the industry. y One of the positive outcomes of nationalization has been that of emergence of branch network spread across every nook and corner of the country. This coupled with ownership by the state made these banks enormous in terms of size. y PSBs have a significant individual depositor base rendering stability to the asset base. y The share of investments of Public Sector accounted for87% of the industry, indicating the dominance of PSBs. y PSBs rank higher in deposits, advances and profits, due to their vast network and sheer size of staff. Banking business measured in deposits is still dominated by the PSBs.The market share of PSBs account for 85%Market share on the advances front too is dominated by the PSBs whose advances form 82% of the market.

Weaknesses: y PSBs have low credit to deposit ratio. y Though the PSBs have huge resource base, with competition increasing at a faster pace, they are likely to lag behind in the long run. The complacency could cost them heavily.

y PSBs have a high level of NPAs(bad loans), huge overhead costs and high break-even levels. The lack of customer orientation and low level of computerization too is leading to their inefficiency. y The productivity is less than the other two sectors. y Borrowings of the PSBs have increased more than other two sectors, which is contributing to the losses. y Expenditure per branch is continuously increasing, as the branches are not properly managed. y The PSBs which command about 91% of the total bank branches & about 86% of the banking business in the country, are already saddled with huge work force. This workforce operating under the protective umbrellas of

mechanization & computerization for fear of losses of employment opportunities, present or potential. y PSBs are very much behind in the technology aspect. Services such as neatly printed statements of accounts, automatic and prompt updation of passbooks, ATMs etc are some of the benefits that customers are being deprived of at PSBs.

PRIVATE SECTOR BANKS

Strengths: y Private sector banks have a high credit to deposit ratio and they have kept their operating expenses low. y With technology and customer orientation, Private Sector banks are at the higher level as compared to PSBs and on the level playing field with Foreign banks. y Private sector banks have a high level of capital adequacy ratio. y Private sector banks are fairly advanced in the use of technology. Services such as neatly printed statements of accounts, automatic and prompt updation of passbooks, ATMs etc are some of the benefits that customers are enjoying at these banks.

Weaknesses: y Private sector banks unlike PSBs have less number of branches so their reach and coverage is not very extensive. y Private sector banks have low growth in average advances, this aspect is dominated by the PSBs. y For Private sector banks the average NPAs stand at 15.52%. y Private sector banks do not examine their business with along term perspective. Many of these banks tend to look at short-term opportunities and gains.

FOREIGN BANKS

Strengths: y Foreign banks have high credit to deposit ratio. y Foreign banks are the leaders in technology and customer services. y Foreign banks have high level of capital adequacy ratio. y Foreign banks show that the increase in the borrowings which earlier amounted to losses is now signaling profits. y The average spread enjoyed by the foreign sector is higher than that earned by other sectors. y For Foreign banks the average NPAs stand at less than 10% which is lower than the other two sectors.

Weaknesses:

y Foreign banks have very less number of branches and hence their reach is very low as compared to PSBs. y Foreign banks have concentrated on corporate banking and fee based income. The business focus for most foreign banks must shift to retail mobilization.

The following table shows a general comparison of three main classes of banks. Particulars PS Banks Pvt. Banks Pvt. Banks

(Old) Cost of funds Branch network Level of Automation NPAs Capital Adequacy Employee Productivity Focus on Non- interest Income Low Wide Spread Low High Moderate Low Low Moderate Regional Moderate Low Low Moderate High

(New) High Low High Low High High High

ENVISIONING THE FUTURE OF BANKING

Against the background of the profound structural changes in banking services worldwide, every Indian bank is embarking on a fundamental redefinition of its business and its relationship with the customers. CEOs are attempting to develop strategies to deal with new and pressing business issues: y Declining deposit growth. y Declining spreads and margins. y New market entrants. y Higher customer expectations. y Growing complexities of technology. The increasingly competitive and complex nature of the banking industry has compounded the compulsion for focusing on the key profit drivers and this has led to fundamental question of exploitation of new opportunity areas. The expansion

of banking activities across vertical and horizontal dimensions, in an industry traditionally characterized by high degree of pricing regulations, direct lending and pre-empted investments is the major challenge facing the industry today.

THE NEED FOR BETTER MARKETIN MIX: The following Porters Model shows the amount of competition and difficulties faced by the banks: PORTERS MODEL

New Entrants The PSBs are facing competition from the new private and foreign banks which are coming into the picture. The entry of new private as well as foreign banks which sprang as a result of the dismantling of entry barriers in the industry. The new banks are leaner and have been able to invest in the latest technology. Though the new entrants have many advantages still they have to go a long way. Entry barriers are not so small as being thought. PSBs have strong customer base which are loyal to these banks and so the switching cost for these will be very high. The new banks will have to compete with already established private and foreign sector banks.

Substitutes The main substitutes are Financial Institutions and NBFCs. Commercial Banks have been facing competition from the Fis in the intermediary business. Fis are also into lending business, raising deposits, giving loans for working capital, discounting, leasing, hire - purchase etc.

Suppliers The RBI is the Central Bank of India and it regulates the working of all the banks. The bank has the sole right of issuing currency notes above one rupee in denomination. Being the apex bank, it acts as the banker to all other banks. All Scheduled banks have to keep a certain percentage of their demand and time liabilities with the RBI. The scheduled banks have to submit weekly returns of their business to the RBI which regulates the flow of credit. Every bank has to get a license from RBI to carry out banking business in the country.

Buyers

The individual customers and corporate are the buyers of the facilities being provided by these banks. The PSBs bank on large and loyal customer base. With growing customers demands the focus is now shifting towards high quality and better services. Private and Foreign banks are now offering innovative products and services like convenience banking, ATMs, interbank connections

Marketing of banking services in the globalised scenario- emerging challenges: Change is a continuous process and banking industry is no exception to this law which is natural. Due to the implementation of the financial sector reforms and policies for the country change in the banking industry is inevitable. The main aim of the financial sector reforms is to promote an efficient, competitive and diversified financial system in the country. After liberalization and globalization process that was initiated in 1991, the Indian banking industry has

undergone tremendous transformation. These changes have forced the Indian banking industry to adjust the product mix and to remain competitive in the globalized environment. The following are some of the vital challenges that threaten the Indian banking industry.

1. Competition from foreign banks and now new private sector banks: The competition in the Indian banking industry have intensified with the entry of more and more foreign banks and now private sector banks, with better technology, market orientation and cost-effective measures. Financial institutions have also started entering into the domain of banks. The share of business of public sector banks has considerably declined. Hence there is a compelling need for the Indian banking industry to either change or modify its marketing strategy in order to attract the customers and also to withstand the stiff competition from foreign banks and new private sector banks.

2. Technological advancement: The methodology of banking business has drastically altered due to the advent of technology both in terms of computers and communication. It has opened new vistas in the banking sector and in turn has brought new possibilities for doing the same work differently and in a most cost effective manner. With the help of technology it is now possible to have 24 hours day banking and all seven days in a week. New business potentials and opportunities which have remained unexplored have not opened up with Tele banking, Internet banking and Ebanking.

3. Innovation: It is another important force of change in the Indian banking sector. Now-a-days banks have become innovative and pro-active and offer top-class service to the customers. They play a dynamic role not only as a finance provider but also as a departmental store of finance. Due to this new instruments and new products like factoring, leasing, merchant banking, forfeiting venture capital, corporate advisory services are emerging. These innovative services may increase the revenue with cost effective measures.

4. Diversified Activities: There is a universal trend towards banks diversification normally through insurance depository participant services, investment banking etc. Furthermore banks have diversified their activities by rendering various services like depositing gold, sale of gold, paying tax liability and telephone bills and collecting interest on securities on behalf of the customers.

5. Customer awareness and satisfaction: In the urban and metropolitan sector customers demand more facilities than offered since they are more knowledgeable. They look for services that are cheaper, faster and better in quality. Now a-days customer can know the status of their accounts, request for a cheque book or a financial statement, transfer funds or stop-payment of cheques form his desktop.

6. Development of skills of Banks personnel: In order to meet the new challenges, banks have to develop novel ways of meeting the customers demands. To get sufficient knowledge and exposure to technology, suitable packages relating to hardware and software applications are

to be provided. Furthermore a separate marketing wing may be created in every bank to market their banking services.

7. Profitability Nature: Profit is a barometer for judging the performance of any bank. Profits are needed to meet the expectations of the stake holders, benefit of employees and also for building capital. Banks have to pay attention to the following emerging areas in order to protect and enhance their profitability.

8. Corporate Governance: Corporate Governance plays a highly significant role in corporate governance. It is seen that though the corporate governance revolves around enhancing shareholders value, it has also the responsibility of marketing the banking services by introducing and producing new products and services. In order to survive and succeed the domestic banks must identify their marketing areas, develop adequate resources, convert these resources into efficient services and distribute them effectively so that the customers are satisfied.

Marketing Lessons

OLD Product Price Place Promotion

New Consumer Cost Convenience Communication

INTRODUCTION TO SERVICES MARKETING

SERVICES MARKETING

Services are witnessing a major boom in India. Services like banks, car financing, consumer durable credit, cellular, paging, express, hospitality, travel and tourism, airlines, and, educational services on are today realizing the importance of marketing. Along with these big service businesses, many small businesses ranging

from beauty saloons, pubs, gyms, play schools and so on are realizing the importance of marketing. Even though some of the principles of marketing and advertising services are similar to product marketing, there are significant differences. A service is an act of labour or a performance that does not produce a tangible commodity and does not result in the customer's ownership of anything. Its production may or may not be tied to a physical product. Thus, there are pure services that involve no tangible product (as with psychotherapy), tangible goods with accompanying services (such as a computer software package with free software support), and hybrid product-services that consist of parts of each (for instance, restaurants are usually patronized for both their food and their service).

UNIQUE CHARACTERSTICS OF SERVICES Exactly what is a service, and why should services receive special treatment from marketers? A popular definition describes services as "any act or performance that one party can offer to another that is essentially intangible and does not result in the ownership of anything. Its production may or may not be tied to physical product." Although, the distinction between goods and services is somewhat artificial, since the success of goods manufacturers is vitally dependent on the service they provide, there are four commonly cited characteristics of services that make them different to market from goods: Intangibility, Inseparability, Variability and perishability.

INTANGIBILITY Pure services such as baby-sitting cannot be seen or touched. They are ephemeral performances that can be experienced only as they are delivered. As the above definition of service suggests, intangibility may represent the most critical

difference between services and goods, and its implications for marketing are great. Services are intangible because they can often not be seen, tasted, felt, heard, or smelled before they are purchased. A person purchasing plastic surgery cannot see the results before the purchase, and a lawyer's client cannot anticipate the outcome of a case before the lawyer's work is presented in court. To reduce the uncertainty that results from this intangibility, marketers may strive to make their service tangible by emphasizing the place, people, equipment, communications, symbols, or price of the service. For example, consider the insurance slogans "You're in good hands with Allstate" or Prudential's "Get a piece of the Rock."

Intangible services are difficult to sell because they cannot be produced and displayed ahead of time. They are therefore harder to communicate to prospective customers. A hobbled weekend athlete cannot see the results of elective knee surgery beforehand. The person may be able to talk to other patients who have experienced the same procedure, but their operation does not necessarily reflect the outcome of this particular surgery. Marketers of services can reduce these risks by stressing tangible cues that will convey reassurance and quality to the prospective customers. These tangible cues range from the firm's physical facilities to the appearance and demeanor of its staff to the letterhead on its stationery to its logo. Life insurance companies are particularly savvy about this problem. Their service is, after all, the most intangible service: by definition, the buyer will never know the ultimate result of what he or she has bought! To compensate for this intangibility the major companies over the world have developed strong visual symbols for their firms. Prudential -The rock of Gibraltar All state -Protective hands

Travelers -A red umbrella Nationwide -A blanket Wausau -A train station

INSEPARABILITY This characteristic is interpreted differently by different service marketing marketers, but all interpretations point out that special operations problems exist for the firm's managers. One interpretation of this term is the inseparability of customers from the service delivery process. In particular, many services require the participation of the customer in the production process. A child getting a haircut must sit still; otherwise, the family photo may have to be delayed for a month. The person who comes to a tax prepare at the last minute with boxes of disorganized records may cause the prepare to overlook some possible deductions. Services are inseparable from their production because they are typically produced and consumed simultaneously. This is not true of physical products, which are often consumed long after the product has been manufactured, inventoried, distributed, and placed in a retail store. Inseparability is especially evident in entertainment services or professional services. In many cases, inseparability limits the production of services because they are so directly tied to the individuals who perform them. This problem can be alleviated if a service provider learns to work faster or if the service expertise can be standardized and performed by a number of individuals (as H&R Block, Inc., has done with its network of trained tax consultants throughout the United States). These examples illustrate the fact that, unlike goods, which are often produced in a location far removed from the customer and totally under the control of the manufacturing firm, service production often requires the presence and active participation of the customer - and of other customers. Depending upon the skill,

attitude, cooperation and so on that customers bring to the service encounter, the results can be good or bad, but in any event are hard to standardize. A second interpretation of inseparability refers to the fact that in some service industries the service delivered is inextricably tied to particular individual service providers. Customers may have ground for complaint if their service is not provided by, for example, the surgeon or lawyer they thought they were paying for.

VARIABILITY The fact that service quality is difficult to control compounds the marketer's task. Intangibility alone would not be such a problem in customers could be sure that the services they were to receive would be just like the successful experiences their neighbors were so pleased with. But in fact, customers know that services can vary greatly. Different front-line personnel have different abilities. Even the same service provider has good days and bad days or may be less focused at different times of day. Services are performances, often involving the cooperation and skill of several individuals, and are therefore unlikely to be same every time. This potential variability of service quality raises the risk faced by the consumer. The variability of services comes from their significant human component. Not only do humans differ from one another, but also their performance at any given time may differ from their performance at another time. The mechanics at a particular auto service garage, for example, may differ in terms of their knowledge and expertise, and each mechanic will have "good" days and "bad" days. Variability can be reduced by quality control measures. These measures can include good selection and training of personnel and allowing customers to communicate dissatisfaction (e.g., through customer suggestion and complaint systems) so that poor service can be detected and corrected

The service provider must find ways to reduce the perceived risk due to variability. One method is to design services to be as uniform as possible - by training personnel to follow closely defined procedures, or by automating as many aspects of the services as possible. The appeal of some service personnel - particularly, those involved in such expensive personnel services as beauty parlors treatments or home decoration - lies in their spontaneity and flexibility to address individual customer needs. The danger with too much standardization is that these attributes may be designed right out of the services, therefore reducing much of their appeal. A second way to deal with perceived risk from variability is to provide satisfaction guarantees or other assurances that the customer will not be stuck with a bad result.

PERISHABILITY The fourth characteristic distinguishing services from goods is their time dependence. Services cannot be inventoried, since they are performed in real time. And time periods during which service delivery capacity sits idle represent revenue-earning potential that is lost forever. Periods of peak demand cannot be prepared for in advance by producing and storing services, nor can they be made up for after the fact. A service opportunity occurs at a point in time, and when it is gone, it is gone forever. This can present great difficulty in facilities planning. A survey of service firms found that the greatest operational challenges facing them were posed by the perishability of their products. . Finally, services are perishable because they cannot be stored. Because of this, it is difficult for service providers to manage anything other than steady demand. When demand increases dramatically, service organizations face the problem of producing enough output to meet customer needs. When a large tour bus unexpectedly arrives at a restaurant, its staff must rush to meet the demand, because the food services (taking orders, making food, taking money, etc.) cannot

be "warehoused" for such an occasion. To manage such instances, companies may hire part-time employees, develop efficiency routines for peak demand occasions, or ask consumers to participate in the service-delivery process. On the other hand, when demand drops off precipitously, service organizations are often burdened with a staff of service providers who are not performing. Organizations can maintain steady demand by offering differential pricing during off-peak times, anticipating off-peak hours by requiring reservations, and giving employees more flexible work shifts. Matching service capacity to demand patterns can involve managing one or both elements. PERISHABILITY often puts a greater burden on service marketers to manage demand than it does on goods marketers, who can build up inventories to meet peak demand or can reduce prices later to move the unsold inventory. The cited survey found that the firm's principal method for controlling demand was to increase personnel selling during potentially slow periods. Surprisingly, few firms claimed to use the standard economic solution of price changes to increase or decrease demand, although some service industries, such as resort hotels with seasonal demand, do this routinely.

Few respondents said they developed alternative, counter seasonal service products to use slack capacity, although that has long been a common practice by goods marketers. Many service providers also control demand by requiring appointments. The alternative to controlling demand is to make service capacity flexible. Some service firms keep on call frontline personnel who can arrive on short notice to meet the surges in demand, or cross train support personnel to assist with customer service during busy periods.

EXPANDING THE MARKETING MIX FOR SERVICES MARKETING

Service marketing managers have found that the traditional four P's of marketing are inadequate to describe the key aspects of the service marketer's job. The

traditional marketing mix is said to consist of the following elements of the total offering to consumers: the product (the basic service or good, including packaging, attendant services et cetera); its price; the place where the product is made available (or distribution channels - not generally a real issue for most services, except perhaps for repair and maintenance); and promotion (marketing communication: advertising, public relations and personal selling). Some marketers suggest that the unique requirements of selling services require the manager attend to three additional P's. These are people, physical evidence and process.

PEOPLE Many services require personal interactions between customers and the firm's employees and these interactions strongly influence the customer's perception of service quality. For example, a person's stay at a hotel can be greatly affected by the friendliness, knowledge ability and helpfulness of the hotel staff - in most cases the lowest paid people in the organization. One's impression of the hotel and willingness to return are determined to a large extent by the brief encounters with the front-desk staffs, bellhops, housekeeping staff, restaurant wait staff and so on, many of which take place outside the direct control of the hotel management. In fact, the average hotel patron has very little contact with the hotel supervisors and managers. Therefore, management faces a tremendous challenge in selecting and training all of these people to do their jobs well, and, perhaps even more important, in motivating them to care about doing their jobs well, and, perhaps even more important, in motivating them to care about doing their jobs and to make an extra effort to serve their customers. After all, these employees must believe in what

they are doing and enjoy their work before they can, in turn, provide good service to customers. For this reason, human resources management policies and practices are considered to be of particular strategic importance for in delivering high-quality services. Establishing a customer-oriented culture throughout the firm and empowering employees to provide quality service cannot be established merely by putting up inspiring posters. Management leadership, job redesign and systems to reward and recognize outstanding achievement are among the issues that a successful service manager must address. The term "internal marketing" has been coined to characterize the sets of activities a firm must undertake to woo and win over the hearts and minds of its employees to achieve service excellence. The "people" component of the service marketing mix also includes the management of the firm's customer mix. Because services are often experienced at the provider's facilities, one's satisfaction with a service can also be influenced by other customers who are being served there. Ill mannered restaurants customers at the next table, crying children in a nearby seat on an airplane and commercial bank customers whose lengthy transactions take up the teller's are all examples of unpleasant service conditions caused by a firm's other patrons. On the other hand, the right mix of customers can greatly increase the enjoyment of experience - for example, at entertainment services, such as nightclubs or sporting events. Determining the desirable customer mix for a service, segmenting the market into compatible groups and managing customer arrivals to avoid conflict and enhance the service experience are essential components of service management.

PHYSICAL EVIDENCE This element of the expanded marketing mix addresses the "tangible" components

of the service experience and firm's image referred earlier. Physical surroundings and other visible cues can have a profound effect on the impressions customers form about the quality of the service they receive. The "service scape" - that is, the ambience, the background music, the comfort of seating and the physical layout of a service facility - can greatly affect a customer's satisfaction with a service experience. The appearance of the staff, including clothes and grooming, may be used as important clues. Promotional materials and written correspondence provide tangible reassurance, they can be incorporated into the firm's marketing communications to help reduce customer anxiety about committing to the purchase. Service firms should design these items with extreme care, since they will play a major role in influencing a customer's impression of the firm. In particular, all physical evidence must be designed to be consistent with the "personality" that the firm wishes to project in the marketplace.

PROCESS OF SERVICE PRODUCTION Because customers are often involved in the production of services, the flow and progress of the production process is more important for services than it is for goods. A customer who buys a television set is not particularly concerned about the manufacturing process that made it. But the customer at a fine restaurant is not merely interested in the end result - the cessation of hunger. The entire experience of arriving at the restaurant - of being seated, enjoying the ambiance, ordering, receiving and eating the meal - is important. The pace of the process and the skill of the provider are both apparent to the customer and fundamental to his or her satisfaction with the purchase. The importance of the process is true even for less 'sensual" experiences.

Therefore, when designing service production processes, particular attention must be paid to customer perceptions of that process. For this reason, marketing and operations are closely related in service management.

SERVICES SEGMENTATION The critical point about segmentation in a service is that to be of use it must penetrate through to the frontline, since in a service the final processes of production are simultaneous with purchase or consumption. Indeed, segmentation remains an elegant division, of interest to marketing, but of little practical effect if it does not achieve this. In particular it is important to re-emphasize two aspects, as follows:

INTERNAL CULTURE these are the internal values of the organization related to the values of the customer. Such a connection is a reflection of the ideas developed in the service star. The interaction is not just a part of what the customer buys, but is what the customer buys. The values brought to this by the organization are integral. So, for example, if an external analysis were to suggest a segment of 'professionals' with a need for a wide range of detailed advice available within 'n' timescale there is a need to match this with internal values of delegation so that front line staff are empowered to make decisions, within the timescale and have a reward system which encourages the risks attached to such action. Similarly, defusing a crisis for the customer will work only if, in doing it, you do not create a drama internally because management, in turn, is not good at defusing crises with staff!

DELIVERY Indeed, in some services - a concert hall, for example, or a restaurant - the concept

of distribution is difficult to comprehend. Rather, it is very important to take account of the point about production/consumption. Delivery is about the totality of the way in which the service is accessed before, during and after a sale. In other words, because the interaction forms an integral part of what the customer buys, so the place or places and the feel and values of these must be equally integral. With Taco Bell, for example, 'price' and 'speed' are more compelling reason than 'food' for customers choosing that particular eating place, relative to competition. But taking in to account culture and delivery is inevitably complex since, in essence, one is building a very detailed star. When further considered within broad headings of the service mix, there can be anything up to 50 criteria which govern the market relationship, so it is possible to appreciate just how difficult this can be.

THE MARKETING MIX IN BANKING SECTOR INVOLVES:

SERVICE Recently, banks are in a period that they earn money in servicing beyond selling money. The prestige is get as they offer their services to the masses. Like other services, banking services are also intangible. Banking services are about the money in different types and attributes like lending, depositing and transferring procedures. These intangible services are shaped in contracts. The structure of banking services affects the success of institution in long term. Besides the basic attributes like speed, security and ease in banking services, the rights like consultancy for services to be compounded are also preferred.

PRICE

The price which is an important component of marketing mix is named differently in the base of transaction exchange that it takes place. Banks have to estimate the prices of their services offered. By performing this, they keep their relations with extant customers and take new ones. The prices in banking have names like interest, commission and expenses. Price is the sole element of marketing variables that create earnings, while others cause expenditure. While marketing mix elements other than price affect sales volume, price affect both profit and sales volume directly. Banks should be very careful in determining their prices and price policies. Because mistakes in pricing cause customers shift toward the rivals offering likewise services. Traditionally, banks use three methods called cost-plus, transaction volume base and challenging leader in pricing of their services.

DISTRIBUTION The complexity of banking services is resulted from different kinds of them. The most important feature of banking is the persuasion of customers benefiting from services. Most banks services are complex in attribute and when this feature joins the intangibility characteristics, offerings take also mental intangibility in addition to physical intangibility. On the other hand, value of service and benefits taken from it mostly depend on knowledge, capability and participation of customers besides features of offerings. This is resulted from the fact that production and consumption have non separable characteristics in those services. Most authors argue that those features of banking services make personal interaction between customer and bank obligatory and the direct distribution is the sole alternative. Due to this reason, like preceding applications in recent years,

branch offices use traditional method in distribution of banking services.

PROMOTION One of the most important elements of marketing mix of services is promotion which is consist of personal selling, advertising, public relations, and selling promotional tools.

PERSONAL SELLING Due to the characteristics of banking services, personal selling is the way that most banks prefer in expanding selling and use of them. Personal selling occurs in two ways. First occurs in a way that customer and banker perform interaction face to face at branch office. In this case, whole personnel, bank employees, chief and office manager, takes part in selling. Second occurs in a way that customer representatives go to customers place. Customer representatives are specialist in banks services to be offered and they shape the relationship between bank and customer.

ADVERTISING Banks have too many goals which they want to achieve. Those goals are for accomplishing the objectives as follows in a way that banks develop advertising campaigns and use media. 1. Conceive customers to examine all kinds of services that banks offer 2. Increase use of services 3. Create well fit image about banks and services 4. Change customers attitudes 5. Introduce services of banks 6. Support personal selling

7. Emphasize well service Advertising media and channels that banks prefer are newspaper, magazine, radio, direct posting and outdoor ads and TV commercials. In the selection of media, target market should be determined and the media that reach this target easily and cheaply must be preferred. Banks should care about following criteria for selection of media. 1. Which media the target market prefer 2. Characteristics of service 3. Content of message 4. Cost 5. Situation of rivals Ads should be mostly educative, image making and provide the information as follows: 1. Activities of banks, results, programs, new services 2. Situation of market, government decisions, future developments 3. The opportunities offered for industry branches whose development meets national benefits.

PUBLIC RELATIONS Public relations in banking should provide; 1. Establishing most effective communication system 2. Creating sympathy about relationship between bank and customer 3. Giving broadest information about activities of bank. It is observed that the banks in Turkey perform their own publications, magazine and sponsoring activities.

SELLING PROMOTIONAL TOOLS

Another element of the promotion mixes of banks is improvement of selling. Mostly used selling improvement tools are layout at selling point, rewarding personnel, seminaries, special gifts, premiums, contests.

DEVELOPMENT IN MARKETING SCOPE AT THE ASPECT OF SERVICE

MARKETING Marketing scope develops day to day. These developments carry special significance for service sector in which customer and service producer interact closely.

INTERNAL MARKETING Especially in service sector like external relations, internal relations also have significance. It requires finding and keeping successful personnel. For personnel of the organization to be considered their own goals and service situation, values of the organization are sold to them. The communication techniques carried out for customers are also performed for the personnel in internal marketing and this two techniques go together. For example, the ads that aim creating firms image should be prepared with regarding to audience which is composed of firms personnel.

NETWORK MARKETING This approach takes the organization as a sequence which involves producer and customer that market services to each other in the organization. In this structure, the activities of departments that compose organization would be more focused on market. This will also affect the structure of organization.

RELATIONSHIP MARKETING It was mentioned that close relationship was established between producer and customer in service sector. In addition to this, life cycle of a customer relationship was also mentioned under the product outline. According to the researchers, maintaining the relationship for extant customer increases the profit of firms. It should be emphasized that this fact has an importance for service sector.

Life cycle of a customer relationship is composed of three stages. At the first stage, firms try to be well known and to acquire new customers. At the second stage, the connection between customer and firm has been achieved. During the stage, firms intensified their activities on acquired customers and both of them promises mutually. At the third stage, these promises are accomplished and the service is consumed. During the stage, firms face Reality Instants which could possibly achieve satisfaction of customer and continuous relationship. This could be also true for second stage. So, these instants should be managed successfully. Implementation of close relations with customer successively and true applications at reality instants could not be accomplished by responsibilities of a marketing personnel.

Besides, it should be remembered that consumption and production of service are closely interrelated. At this context, marketing should have role not only in production-consumption between instants, but also at points that these intersect. In this case, 4P that was mentioned at second section would be insufficient. So, we could divide service marketing into two parts as specialist function (marketing mix, marketing researches) and marketing function (buyer seller interactions) Efforts in first stage in which customers are not so clear, at the customer relationship life cycle could be minimized for lasting customers. This is achieved by successful customer relations. In this approach, marketing may be defined as; Marketing is for establishing, keeping, developing relationship with customers in a manner that profit is got (especially in long term). So, objectives of two relevant sides would be achieved. This would be accomplished by shared promises and carrying out the promises.

REQUIREMENTS FOR A SERVICE ORGANIZATION It is said Using industrial models to manage service-based corporations makes as little sense as using farm models to run factories" Service Organizations can outperform the competition if they master what the "rules of the service game" Daniel Bell's work made this most clear to us when he described the steps in the evolution of the nature of work:

(1) STEP 1: The agrarian "game against nature" in which the game was human versus the land. (2) STEP 2: The industrial "game against fabricated nature" in which the game was between human and machines. (3) STEP 3: The postindustrial services "game between persons" in which the game is between a clerk and a customer or a professional and a client. Each of these games requires different resources and rules.

THE THREE TIERS OF A WINNING SERVICE ORGANIZATION Competitive advantage in service derives from unique ways of conceiving and managing service operations. Here, we offer a unique view of service organization - one that treats a service business as comprised of three tiers: a customer tier, a boundary tier and a coordination tier.

THE CUSTOMER TIER Customers are the foundation of every organization. They are the scorekeepers in the service game. It has been suggested that figure skating is now the sport that offers the most appropriate metaphor for the nature of competition in today's world. It is, instead, an individual organization trying to delight and impress a panel of judges and the judges are the customers. A service organization can successfully bash the other organizations but still lose the service game if the organization rings up 4s and 5s with the customers. Management practice should be based on a deep knowledge of customer characteristics in three areas: expectations, needs and competencies. Each service organization must be fitted to its market and its customers particular definition of service quality.

Once customer expectations have been identified and met, respecting customer's subconscious needs is the key to differentiation in a service business.

THE BOUNDARY TIER The second tier of service organizations is where the customers meet the organization. The people who deliver service play some special roles within the boundary tier and deserve special attention. Service characteristics like intangibility and customer contact require employees to display more initiative, to cope more effectively with stress, to be more interpersonally flexible and sensitive and to be more cooperative than their colleagues who work in manufacturing. Although non-personal contacts with the customers do not involve face-to-face interaction, we consider these contacts to be the part of the boundary tier because they have great impact on the customers perception of service quality. . THE COORDINATION TIER Coordination is management's responsibility and in service firms, it may be management's most important task. It includes the coordination of the activities of customers who are often on site helping to co-produce the service and the integration of the customer and boundary tiers. Key coordination problems are to ensure that (1) clear strategic decisions have been made about who the target market is or should be and that the internal functioning of the organization is effectively coordinated to pursue that market. (2) The boundary tier has the logistical, systems and staff support to meet the customer tier's expectations and needs.

(3) The needs and expectations of those who work at the boundary tier are being met. The toughest challenge here is to get the various subsystems of the service organization - e.g. Operations, Marketing, and Human resources management - to act as one system.

MARKETING in BANKS:

Banking is a major industry throughout the world today. Characteristics of banking marketing: INTANGIBILITY: Banking services are generally intangible, but the service providers go t the considerable lengths to tangibles the services for customers, egBank passbook, regular bank statements, gold, and credit cards.

INSEPARABILITY: the degree of inseparability depends upon the type of services and the actual supplier. Many everyday transactions are carried out now via automated services (ATM). Because access to these systems has broadened to allow use of any particular kind of machine by customers of other institutions, the customer will often not be dealing directly with their own provider. Many financial services are sold by brokers, agents of various kinds and this has led to several difficulties and misunderstanding and dissatisfaction in case of wrong advice or unsuitable product.

HETEROGENITY: In this case the complexity of the services transaction process will determine the extent of variability and this can differ to a large extent between institution and even within one institution. The greater the degree of automation within any transaction process, the greater the degree of standardization. Thus simple transactions may be carried out via ATMs and completely standardized or via a branch counter where they might be fairly standardized but subject to some variation in quality.

PERISHABILITY: The degree of perishability depends upon the type of service. If a check needs to be cleared by a certain date and the system causes a delay then the benefits to the consumer are lost so the service could be said to be perishable.

By and large however money and financial services are enduring in nature. If a banks reserves are not fully utilized profitably through lending or investment they will still retain their worth and may be utilized again on a later date.

HIGH INVOLVEMENT PURCHASES/ COMPLEX PRODUCT: Many financial services are high involvement purchases. This will mean that the customer will shop around for the beat advice or best offer and will generally take a long time to plan the purchase, for example with a mortgage or a pension.

HIGH LEVEL OF BRAND LOYALTY: Customers tend to stay with financial services providers and use them to satisfy their different needs at different stages of their life. Banks recognized this well and are keen to provide students overdrafts s in the hope of retaining a professional salaried account holder for many years. Many people choose the same bank as their parents because the parents open an account for them. Children and teenagers are a keen target market for the banks because of the possibility of the future business.

Financial services also tend to be joint purchases, very often, with decisions made by more than one person.

THE MARKETING ENVIRONMENT:

Environmental analysis and monitoring is of critical importance in any industry especially in the dynamic financial services industry with its proliferation of products and services and changing industry structure. External environment analysis usually involves assessing influences on the organizations business activity under the following main headings:

Political/legal: Government attitude towards home ownership State provision of pensions Government encouragement of savings and investment Regulatory control and protection

Economic Personal and household disposable income Discretionary income levels Employment levels The rate of inflation Income tax levels and taxation structures Savings and investment levels and trends stock market performance Consumer spending Consumer credit

Socio/cultural: Changing employment patterns No. of working women The ageing of population Number of first time house buyers

Change in the no. of households Marriage/divorce/birth rates Consumption trends

Technological: Process developments Information storage and handling Database systems

BANK MARKETING MANAGEMENT:

BANK marketing is essentially a three stage process starting with market research to accurately analyze the needs. BANK services must then be designed to fulfil those needs at appropriate prices and then the availability of these services must be communicated effectively to potential customers. Market research is the critical starting point. The success of subsequent marketing planning and policy decisions depend upon a clear understanding of the market. To achieve strategic growth through BANK marketing implementation, three major strategic alternatives are available.

Market penetration: the aim is to gain market share at the expense of the competition. There are three ways of achieving this. Encourage existing customers to buy more of the company's products and services, Persuade non-users to try the products. Attempt to get competitors customers to switch to your offerings. Market development: This means seeking newer target markets segments in which to offer existing products and services. Product development: This strategy calls for product ranges to be upgraded or increased to attract a wider customer base.

MARKETING PLANNING: It is important to assess consumer needs, desires and motivations towards banking services in order to establish levels of market attractiveness to determine key market segments and to plan the most effective marketing programs.

Marketing Planning in Banks: *Development of market research systems in order to determine what consumers want. * Market segmentation * Product planning through objective setting. * Communication to the both consumers and potential consumers, to inform them of the services available and to remind or persuade them by means of

advertisements and Promotion. * Ensuring that the service offering is available and accessible to consumers via an effective distribution program so that they can buy the service at a value (price)

THE BANKING MARKETING MIX:

The marketing mix refers to the blend of ideas, concepts and features which marketing management put together to best appeal to their target market segments.

THE PRODUCT MIX: As mentioned previously, there is little or no room for innovation in product design due to the ease by which competitors can make similar offerings, for example by altering charges or interest rates to meet those of competitors. Additionally, many financial services are affected by other restrictions, such as government directives relating to income tax and investments or constraints on the amounts which can be invested. Differentiation, therefore, can best be achieved through the other elements of the marketing mix. Current accounts are dominated by banks, although the building societies share of this market in which they could not compete until recently is growing. They hold the majority of mortgage account, however, but this stronghold is increasingly under pressure from banks.

THE PROMOTIONAL MIX: The aims of the promotional fall into three main categories: to inform, to remind, and to persuade. It will always be necessary to inform prospective consumers about new products and services, but other issues may also need this type of communication to consumers; new uses, price changes, information to build consumer confidence and to reduce fears full descriptions of service offerings, image building are examples. Promotion designed to persuade consumers would be in line with specific objectives, for example to encourage switching or to build preference.

There are a number of promotional tools available for bank marketing Whatever methods may be used it is important to focus on: Clearly identified segments A unique selling proposition Well defined target audience Creative use of media and media scheduling to reach audiences Monitoring and evaluation of promotional effectiveness.

PROCESS: Reasons for enhancing process in banks are some of the following changes: Rising competition among banks and from outside the traditional banking sector is driving them to improve their customer service level to retain and increase the customer base and hence the need to provide better service. Globalization and liberalization have added to the competition forcing banks to further reduce cost and increase efficiency More mergers and consolidation of banks put pressure on them to improve productivity and reduce costs. Banks have to follow a customer centric approach to prevent rapid shifts in customers choice. Banks face constant pressure to adapt to changes brought about by dynamic environment. This dynamic environment places extreme demands on information systems to provide better customer service, at lowest possible costs and in the shortest possible time The change in the banking environment has happened not only due to competition but also regulation. According to Bart Hellemans, deputy manager Vysya Bank. Hence they are focusing on not just volumes but also on the bottom lines. When you want volumes with profits, you have to bring in sales culture.

That explains why our banks keep inquiring whether we need a personal or a home loan when we go to put some money in the fixed deposit. The mantra now is sales, and there is a tremendous pressure on bankers to turn sellers rather than just being bankers.

PRICING: The price in financial services terms relates to the cost involved to the customer in say, bank charges or credit card rates. These prices seem to evoke low levels of customer sensitivity as many customers enjoy free banking, by maintaining their current accounts in credit, for example, or paying their credit card balances off each month. The introduction of new charges, however, such as the annual credit card fee had a noticeable effect initially, however, and sparked off competitive reaction from lenders prepared to offer cards with no annual charge. Price also relates to the value of the products to the customer and, as such, can be highly sensitive. This can be in terms of interest rates charged on a mortgage, where reductions in interest for first time buyers or preferential rates for existing customers of other services (for example current account holders) are standard promotional tools in the industry, representing a form of discounting. The rates of return offered to investors are another element of the price and different products within the range are frequently priced at differential rates, to attract long-term savers or large sum investors, for example. Pricing can therefore be used to differentiate the offering and is likely to be used by customers in selecting service.

PLACE: Place or location has always been regarded as critical in retail financial services where high street positions are maintained by most of the large institutions. For transaction services where regular and frequent branch contact is required this can

be important. First Direct, however, the telephone banking service, has proved that a bank without branches is possible though its customers still need access to convenient ATM outlets. Some consumers prefer personal, face-to-face contact within a branch and may be more likely to use a local branch or building society. Direct Line and other telephone insurance services are also moving away from the traditional large networks of branches and brokers or agents. Changes in distribution systems, technology and consumer demands are all key influences on the evolution of the place component of the marketing mix. Distribution management is concerned with two things: availability and accessibility.

PHYSICAL EVIDENCE: The environment in banks is changing, moving away from austerity and formality to a more friendly approach reflected in more attractive branch layouts and decor. Other physical evidence plays an important part in financial transactions such as the documentation which must be presented by the salespeople to prove that they are authorized to offer investment advice. This creates confidence and helps to build the relationship between the customer and provider. Physical evidence is also widely used to tangibles the service. Attractive brochures and policy documents, presented in glossy folders, cheque book and credit card holders, gold credit cards, childrens collectable money boxes are all examples of physical evidence being used in this way. Earlier customers used to see a bank as a strong institution and therefore the image portrayed was one of solidarity, strength and seriousness as seen in strong buildings, high ceilings and long cash counters. But when the concept of personalized banking came in with foreign banks it brought about a change in the design of banks.

PROCESS: A customer who applies for a loan at a bank evaluates the purchase not only by the amount of the loan received and the interest rate paid. The speed and sensitivity of the approval process, the interaction with the bank officers, the accuracy of bank statements and the ease of getting redress if mistakes are found all affect the person's attitudes about doing further business with the bank and his or her willingness to recommend it to others.

PEOPLE: Customers are no less a part of a firm's human resource than its employees. If the service organization's customers are sufficiently talented, they can do all sort of things for that organization from co-designing the services to co-designing the human resources management practices. Having the "best customers" can be a source of competitive advantage. The customer tier, then, deals with the three important characteristics: their expectations, their needs and their competencies. Once these are understood, the people who deal with customers, those who manage the service counter, come in to play. We have called the people who interface with customers, members of the boundary tiers. The make-it-or-break-it role service employees play is that of linking customers to the organization. The boundary tier - especially but not exclusively the employees at the boundary tier - is the glue that binds customers to the firm. Because service employees are both physically and psychologically close to the customers they serve, they play at least two important roles for the organization: (1) Impression Managers: For many customers, the service employee is the organization. This means that boundary employees behavior and the experiences their behavior creates for customers are service quality in customer's eye.

(2) Gatekeepers of information: Boundary employees, being in constant interaction with customers, are useful source of insights into customer attitudes, information on competitor strategies and ideas about how to enhance service quality. We emphasize that attention to the constituents of the boundary tier and their individual abilities, attitudes and motivations is only one of many rules for winning the service game. The service organization should try to avoid what we have called the "human resources trap", which is the mistake many companies make of putting all the burden for service quality on how people at the moment of the truth treat customers. Here, we would also like to stress the importance of the non-personal service characteristics (like the physical facility, billing accuracy and timeliness) and the support that must be given to the front-line employees to enable them to contribute most effectively to winning the service game. As with the figure skater who is provided with just the right music and wardrobe, performance by service workers can be only as perfect as the supporting elements permit.

METHOD:

To understand the customers response to the 7 different features of marketing mix a questionnaire was prepared.

ORGANISATION SITE:

For the purpose of finding the customers response towards marketing mix structure of different banks questionnaire was made to be filled by customers of these 3 banks in Delhi and NCR.

SAMPLE:

SAMPLING UNIT: Comprised of all the customers who were -Based in Delhi and NCR. -Customers of any of the banks under study.

SELECTION OF SAMPLE: Selection of the sample was done at random.

SAMPLE SIZE: A sample size of 50 customers was taken.

INSTRUMENTS USED: To understand consumers behavior towards the banks efforts for their marketing mix structure the questionnaire method of data collection was used. The questionnaire interviews were conducted in person, through e-mail and on telephone. The type of questionnaire used was structured, non-disguised. These types of questionnaires are considered to be most effective since they produce more reliable result. Also the data obtained through these are easier for tabulation and interpretation then the data collected by other methods. Also, this type of questionnaire is considered to be more convenient for the interviewee to answer.

PROCEDURE FOLLOWED: For the preparation of the report, firstly, the details of marketing mix for ICICI bank, SBI and Citibank were collected. The sources were both primary and secondary. The secondary sources were collected through articles in print, books, brochures, websites and journals. The primary source was through personal contact at the three banks. A small questionnaire asking about the details of the marketing mix was put forward to an employee in each bank who had sufficient information regarding it. On the basis of this the marketing mix of the three banks were studied. To understand thew consumers response to the available marketing mix of banks, a questionnaire was got filled by a total of 50 customers of these banks. On the basis of these responses the customers attitude was understood and analyzed.

ANALYSIS: INTRODUCTION TO ICICI Group

The Industrial Credit and Investment Corporation of India Limited now known as ICICI Ltd. was founded by the World Bank, The Government of India and representatives of private industry on January 5, 1955. The objective was to encourage and assist industrial development and investment in India. Over the years, ICICI has evolved into a diversified financial institution. ICICIs principal business activities include

 Project Finance Infrastructure Finance Corporate Finance Securitization Leasing Deferred Credit Consultancy services Custodial Services The ICICI Group comprises of ICICI Bank Limited, a commercial bank that provides both retail and wholesale products ICICI Securities and Finance Company Limited (ICICI Securities), an investment bank that offers a wide range of fee based services with the support of ICICI Brokerage services Limited (ICICI Brokerage) ICICI Credit Corporation Limited (ICICI Credit), a non- banking finance company that provides a retail distribution channel for the groups retail products, supported by ICICI Capital Services Limited (ICICI Capital) ICICI Investors Services Limited (ICICI Services), offering quality investor servicing ICICI Venture Funds Management Limited (ICICI Venture), a venture capital company ICICI International Limited, an off shore investment management company ICICI KINFRA Limited (I-KIN), a company that offers infrastructure financing and development assistance in Kerala.

ICICI Bank

ICICI Bank is a commercial banking outfit set up by the ICICI Group. The Bank was registered as a banking company on January 5, 1994 and received its banking license from the Reserve Bank of India on May 17, 1994. The Bank has an authorized capital of INR 300 crore (USD 75.96 million), of which subscribed and paid-up capital is INR 165 crore (USD 41.78 million). The first branch of ICICI Bank was started in Madras in June 1994. As of March 31, 1999, 64 branches were functional across the country. By this year 36 more branches/offices are expected to be added to the network.

The branches are fully computerized with state-of-the-art technology and systems. All of them are fully networked through V-SAT (Satellite) technology. The Bank is connected to the international SWIFT network since March 1995. ICICI Bank offers a wide spectrum of domestic and international banking services to facilitate trade, investment, cross-border business, and treasury and foreign exchange services. This is in addition to a whole range of deposit services offered to individuals and corporate bodies. ICICI Bank's Infinity was the first Internet banking service in the country, and a prelude to banking in the next millennium. Currently the Bank has around 150,000 customers. Need for merger of ICICI Ltd. and ICICI Bank The recent trend in world banking is towards mergers and acquisitions. This is evident from the mergers occurring in Japan, United States and other parts of the world. The need is being felt for stronger and fewer players, offering a wide gamut of services (universal banking). With competition becoming acute and foreign banks entering the Indian market steps have to be taken to sustain growth in the Indian Banking sector. To meet your business banking needs, ICICI Bank, a commercial banking subsidiary of ICICI, provides an array of commercial banking products. With an authorized capital of Rs. 300 crores (USD 70.70 million), of which subscribed and paid up capital is Rs.165 crores (USD 38.89 million), ICICI Bank's financial strength adds to its capability of servicing businesses. The Bank has harnessed state-of-the-art technology to deliver its services to the maximum satisfaction of customers The Value of ICICI Bank share has been ascertained at Rs. 36.12 per share. Taking Price as Rs. 36.12 per share and the EPS of three years from 1998-1999, PriceEarnings Ratio (P/E) has been calculated as follows.

1998-99 19992000 Earnings 3.84 Per Share P/E Ratio 7.77

200001 13.83

9.4

What's IN Objective Interests of Strategies Segment Business NPA Mgt. Concentration HR policy Credit Rating Profitability Shareholders Pro-active Target banking Fee based Recovery mgt. cell Investments Hire & Fire Individual

What's OUT Developmental & social Priority sector Passive Mass banking Fund based Credit monitoring cell Advances Job Security Corporate

As ICICI Bank is a leading private player emphasizing more on what's in rather than what's out in the banking sector? Thus this merger is beneficial for the parties concerned.