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   JM International Journal of Management Research (JMIJMR) 35 MARKETING OF BANK PRODUCTS – EMERGING CHALLENGES & NEW STRATEGIES Dr. R.K. Uppal Director, UGC Sponsored Major Research Project D.A.V. College, Malout (Punjab )  Abstract . The present paper acknowledges with same limitation that Indian  private sector banks and foreign bank’s marketing strategies are quite better than our public sector banks. On the basis of performance parameters like deposits, advances, interest income, other income and operating profits, the growth in performance is much better in foreign banks and private sector banks. The paper also suggests some strategies for the enhancement of bank marketing. Only those banks will survive in the future which will adopt effective and realistic strategy to win the trust of the customer. Keywords: Bank Marketing, Customer, Challenges and Strategies   Introduction Human being is a social being. Throughout the life, all we do is try our best to fulfill our needs. The  place where things are exchanged or say mutual needs are satisfied, is called the market and the efforts to make people aware of your offerings encouraging them to deal with you and let them  believe that in doing so, they are satisfying their needs at its best is called marketing. After the  banking sector reforms, marketing has developed as a more integrated function within financial service organizations like banks largely as a result of rapid changes in the operating environment. Banks Marketing is defined as a aggregate of function directed at providing service to satisfy customer’s financial needs and wants, more effectively than the competition keeping in view the organizational objective of the bank. The bank marketing has become a very complex yet interesting subject as it requires the knowledge of economics, sociology, psychology, banking and also core marketing concept (Sasanee, M.K. p. 5) . In marketing, it is the customer who has the upper hand. The mantra of effective marketing bank products lies in the systematic and professional approach towards satisfying customers needs (Ojha, V.K. p. 19). Thus, banks have to set up “Research and Market Intelligence” wings so as to remain innovative to ensure customer satisfaction and to keep abreast of market development (Ananthakrishnan, G. p. 9). Product and Service A product is defined as “Anything that has the capacity to provide the satisfaction use or perhaps, the  profit desired by the customer”. Product and service are the words used interchangeably in banking  parlance. The bank products are deposit, borrowing or other product like credit card or foreign exchange transaction which are tangible and measurable whereas service can be such products plus the way/manner in which they are offered that can be expressed but cannot be measured i.e. intangibles.Better service is more important than just a good product in the marketing of banking service, so the focus should be on the want and need of satisfying that product or service.    J   M   I   J   M   R   N  o  v  e  m   b  e  r ,   2   0   1   0   ©   J   M    A   C   A   D   E   M   Y   I   S   S   N   2   2   2   9  -   4   5   6   2  JM ACADEMY OF IT MNAGEMENT 36 Different Products and Services ·   Deposits – Banks accept the deposits of the public. In order to attract the savings of the  people, the bank provides every sort of facility and inspiration to them and collects the scattered savings of the society. The bank opens an account of those people who deposit their savings with the bank. These deposit accounts can mainly be of three types and people can open any of these three types of accounts according to their wish. These accounts are current account, saving bank account, fixed deposit account. ·   Loans  – The bank just don’t keep with themselves the deposited amount of the people, rather they advance them in the form of loans to the  businessman and entrepreneurs, just to earn profits for their partners. The loanee keeps some gold, silver, fixed and variable assets in the form of security with the bank. The bank can advance loan to their customers in three ways: overdrafts, money at call, discounting bills of exchange.  Marketing Approach to Banking Services ·   Identifying the customer’s financial needs and wants.   ·   Develop appropriate banking products and services to meet customer’s needs.   ·   Determine the prices for the products/services developed.   ·   Advertise and promote the product to existing and potential customer of financial services.   ·   Set up suitable distribution channels and bank  branches.   ·   Forecasting and research of future market needs.   From the above discussion of bank marketing , it can be understood that the existence of the bank has little value without the existence of the customer. The key task of the bank is not only to create and win more and more customers but also to retain them through effective customer service. Customers are attracted through promises and are retained through satisfaction of expectations, needs and wants. Marketing as related to banking is to define an appropriate promise to a customer through a range of services (products) and also to ensure effective delivery through satisfaction. The actual satisfaction delivered to a customer depends upon how the customer is interacted with. It goes on to emphasise that every employee from the topmost executive to the junior most employee of the bank is market. Due to the introduction of LPG policy and IT Act of 2000 the scope of the market has enhanced. Customer’s expectations are high from the service industry like a banking industry. Only those banks will survive who will provide efficient and customer desired services. Scheme of the paper The paper has been divided into six sections. After the brief introduction, second section reviews some studies related to the present theme. Third section highlights objectives and research methodology. Fourth section discusses results. Section five reflects strategies and last section concludes the paper. II. Review of related study Dwivedi, R. (2007) explained that finance functions are important but not as important as the marketing functions. Friction between the marketing and finance functions would be detrimental to Bank Marketing is the aggregate function directed at providing service to satisfy customer’s financial needs and  wants, more effectively than the competition keeping in view the organizational objective.   JM International Journal of Management Research (JMIJMR) 37 the smooth development and functioning of any business organization. Finance objectives like value maximization to shareholders are integral parts of any new strategy adopted by the organization. But this objective seems to have been lost amidst the flurry of marketing activities focusing on market share. Conscious efforts must be taken to avoid the missing core objective and for sales growth. Dixit, V.C. (2004) concludes that for successful marketing and to make it more effective, identify the customer needs by way of designing new products to suit the customers. The staff should be well-equipped with adequate knowledge to fulfill the customer’s needs. We should adopt long-term strategies to convert the entire organization into a customer-oriented one. Gupta, O. (1997)  described the emergence of services sector and banks experience in service marketing. He emphasized customer satisfaction as the key to success and suggested a few measures to meet the needs and expectations of the customers. Gurumurthy, N. (2004) asserts that technology today is claimed to be a ‘leveler’ and not a ‘differentiator’. After the ‘wow’ feelings die down, technology would become a must for most clients. Banking products can be easily copied and replicated by competitors unlike manufactured products. It is also not a viable model for marketers to compete on price. The solution, therefore, would lie in effective application of marketing strategies. Jain, A. (2007) described that marketer has to know that each and every country is having various marketing environment. Comparatively, it has to be very clear that the international marketer is bound to hold on the reorganization that every marketing environment differs from place to place as well as nation to nation than that of the same country state. It is also evident from the study that the global  business transactions have to be sound planned and objectives oriented in nature.  Malik (1996)  explained the importance of human capital for successful banking. He described the various aspects of human resources development in banks. He observed that skill level of a significant segment of the workforce in Indian banks was not up to standard and they opined that banks seeking major performance improvements had no option but to overcome these obstacles speedily. Patnaik, U.C. and Chhatoi, B. (2006)  assess the marketing efforts of the Staten Bank of India, which enjoy the status of premier bank in India. He also concludes that banks have a wide network of  branches for delivery of products. It has taken up some measures to improve the quality of its employees and customer service at branches. But, its pricing are wilting under competition without any regard to costs and it is yet to give due emphasis to its promotional measures. Sreedhar (1991)  have dealt with marketing in commercial banks. They have emphasized motivation research, marketing research and promotional aspects in marketing of services and suggested to improve the marketing strategies to cope with the changing environment. Objectives, Research Methodology, Database Objectives ·   To study and analyze the marketing developments regarding products and services in various  bank groups. ·   To suggest some strategies for the enhancement of bank marketing. Research Methodology Research Design Marketing has suddenly become a buzzword in the banking sector. Customer has suddenly moved to the centre-stage and he has now a choice. How do banks then attract a customer to use their product and services? One has to reckon the fact that the old loyalty can no longer be taken for granted. Banks have to make efforts to retain the existing customers and also use strategies to attract new customers to their fold. Sample Design The universe of the study is Indian banking industry. The Indian banking industry has been divided into three major bank groups.  JM ACADEMY OF IT MNAGEMENT 38 ·   Public Sector Bank Group – G-I (28) ·   Private Sector Bank Group – G-II (28) ·   Foreign Bank Group – G-III (29) Parameters of Study ·    Nature of competition in the banking industry pre and post 1993   ·   Performance parameters of public, private sector and foreign bank group  i.   Deposits  ii.   Advances  iii.   Interest Income  iv.   Other Income  v.   Operating Profit   All the parameters have been analyzed for the period 1993 and 2007 Growth rate is measured with the help of following formula Growth rate = Y t -Y t-1 -------------- Y t-1 Y t= Current Year, y t-1 =Base Year Database ·   Report on Trend and Progress of Banking in India 1993 and 2007 RBI, Mumbai Results and discussion Nature of competition in the banking industry pre and post 1993 A glance at the table 1 reveals that there is a lot of difference in the nature of competition in the  banking industry before and after banking reforms. Many new products have been introduced. Now all the work is done by technological tools. Many e-delivery channels like ATM, credit card, M- banking, Tele-banking, I-banking have come into existence. Now banks take profit into consideration rather than price. Customer was slave to the bank before 1993 but now he has become the king of the  bank. Customer can get feedback as per his own wish. Table 1: Nature of Competition in the Banking Industry Pre and Post 1993 Indicator Pre-1993 Post-1993 Customer Service Mandated by committee reports and law Consciously practiced as a way of banking Customer feedback Done based on regulator’s guideline complaint/suggestion boxes symbolized this Willingly attempted Product innovation Minor variations of vanilla products New products with value additions Tools Manual Technology driven Delivery channel Branch More alternate delivery channels like ATMs,  phone banking, internet banking, mobile  banking, DSAs Pricing Price=cost plus profit Profit=price-minus cost Orientation Inward looking Outward looking Status of the consumer Slave to the bank King because  more bankers chasing him Branch ambience Resembled erstwhile government offices Aims to simulate supermarket buying experience   JM International Journal of Management Research (JMIJMR) 39 Performance parameters of public, private sector and foreign bank group Table 2 reflects the marketing of services by the Indian banks during reform period and after reform  period. It is clear from table that all the parameters have shown the remarkable performance after the  banking reforms. But public sector banks lags behind the private sector and foreign banks. The gains of private sector banks are more in terms of deposits, advances and operating profit. Private sector  banks and foreign banks are growing fast than the public sector banks. Thus the table implies that  private sector and foreign banks are more efficient in the marketing of their products and services. Table 2: Performance Parameters of Public, Private Sector and Foreign Bank Group Rs. in Crore   Parameters G-I G-II G-III 1993 2007 Growth % 1993 2007 Growth % 1993 2007 Growth % Deposits 263254 19,94,199.57 676 15445 551,97.07 3474 20875 1,50,793.58 622 Advances 153880 14,40,122.88 836 8012 4,14,754.81 5077 10433 1,26,338.57 1111 Interest Income 31885 1,68,107.66 427 1677 51144.55 2949 3628 18,018.92 396 Other Income 3958 20,871.65 428 209 11120.66 5220 310 6,937.14 2137 Operating Profit 3134 42,268.16 1248 233 14048.58 5930 580 9,599.81 1555 Source: Report on Trend and Progress of Banking in India 1993 and 2007 RBI, Mumbai Challenges of bank marketing ·   Technology Marketing by private sector banks and foreign banks is more effective than public sector banks  because these banks are IT oriented. Private sector banks and foreign banks are attracting more customers by providing e-services. Thus, technology has become a challenge before the public sector  banks. ·   Untrained Staff Often it happens that when a prospective customer approaches the branch, the employees seem to have very little knowledge about the scheme. This reflects an ugly picture of our bank’s image. Banks are not losing one prospective customer but 10 more customers who would be touch of this man. Attitude of the employees towards customers is also not very well. Thus, it is a need of time to reorient the staff. ·   Rural Marketing This is a big challenge before the Indian banks to enhance rural marketing to increase their customers. Banks should open their branches not only in the urban and semi-urban areas but also in the rural areas. ·   Trust of Customers Marketing can be enhanced only by increasing the customers. Customers can be increased or attracted only by winning the trust of the customers. ·   Customer Awareness Customer awareness is also a challenge before the banks. Bank can market their products and services  by giving the proper knowledge about the product to customer or by awarding the customer about the  products. Bank should literate the customers.
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