SERVICE MARKETING

INDEX
Chapter No. 1 2 INTRODUCTION IMPORTANCE AND SIGNIFICANCE OF SERVICE MARKETING 3 4 CHARACTERISTICS OF SERVICES MARKET SEGMENTATION FOR BANKS MARKETING OF BANKING SERVICES 6 BANKING SERVICE MARKETING MIX ROLE OF TECHNOLOGY IN BANKING MARKETING OF BANKING SERVICES IN THE GLOBALISED SCENARIO EMERGING CHALLENGES EMERGING CHALLENGES FOR SERVICE MARKETING BANKS 23 13 16 Topic Page No. 1 6

21

32

37

42

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CONCLUSIONS BIBLIOGRAPHY

47

CHAPTER 1 INTRODUCTION
As India moves towards a services economy, marketers need to know more about managing and marketing service products. During the past decade, services have increasingly assumed an important role in the Indian economy. Services have gained dominance ever since this trend was set in the nineties. The competition in the service organization is becoming more professional approach to manage their business. In the 21st century, the business environment conditions are likely to be more volatile. The inventions and innovations have been paving avenues for a qualitative transformation in every area. The globalization and liberalization has opened new vistas for the development of service generating organization.

Marketing a function, by which a marketer plans, promotes and delivers goods and services to the customers or clients. In the marketing of services, the providers are supposed to influence and satisfy the customers or users. An institution or an individual may act as a provides who requires professional excellence to influence the impulse of prospects and to transform them into actual customers. When we buy services offered by a service generating organization in a true sense we buy the time, knowledge, skill or resources. The application of marketing principles in the services sector is the main thing in the services marketing.

The perception of service marketing focuses on selling the services in the best interest of users/customers. It is concerned with a scientific and planned management of services which makes possible a fair synchronization of the interests of providers as well as the users. With a change in the perception of management, we witnessed multi-faceted changes which necessitated an analogous change in the concept of services marketing. The services generating organizations realized the interests of customers and thereafter they were compelled to assign due weight age to the interests of society in the face of the holistic concept of management.

1.1 DEFINITION AND MEANING Definition:

According to American Marketing Association, Services are the activities, benefits or satisfactions which are offered for sale or are provided in connection with the sales of goods.

Meaning:
A service is an act or performance offered by one party to another. They are economic activities that create value and provide benefits for customers at specific times and places as a result of bringing about a desired change in or on behalf of the recipient of the service.

The term service is not limited to personal service like medical services, beauty parlours, legal services, etc. According to marketing experts and management thinkers the concept of services is a wider one. The term services are defined in a number of ways but not a single one is universally accepted.

1.2 HISTORY

The Evolution of Marketing:

Marketing's origins can be traced to people's earliest use of the exchange process: barter (trading one resource for another-for example, food for animal pelts). To accommodate the exchange process, trading posts, traveling salespeople, general stores, and cities evolved along with a standardized monetary system. The Industrial Revolution, in the late 1800s, marked the beginning of the modern system of marketing. Until that time, exchanges were limited because people did not have surplus items to trade. With the onset of mass production, better transportation, and more efficient technology, products could be manufactured in greater quantities and sold at lower prices. People began to turn away from selfsufficiency (such as making all of their own clothes) to purchases (such as buying a new suit or dress). Improved mobility, densely populated cities, and specialization also enabled more people to participate in the exchange process.

The marketing concept, a marketing philosophy, and customer service are the underpinnings of the marketing company era.

In the initial stages of the Industrial Revolution, output was limited and marketing was devoted to the physical distribution of products. Because demand was high and competition was low, firms typically did not have to conduct consumer research, modify products, or otherwise adapt to consumer needs. Their goal was to

increase Production to keep up with demand. This was known as the production era of marketing. Once a firm was able to maximize its production capabilities, it hired a sales force and sometimes used advertising to sell its inventory. But, when the firm developed. New products, consumer tastes or needs received little

consideration. The role for advertising and the sales force was to make the desires of consumers fit the attributes of the products being manufactured.

Over the past 35 to 40 years, marketing's central role has been recognized by a growing number of firms, and the marketing department has become the equal of others in those companies. At those firms, major decisions are made on the basis of thorough consumer analysis. Competition is intense and sophisticated. Consumers must be drawn and kept to the firm's brands. Company efforts are integrated and frequently re-evaluated.

CHAPTER 2 IMPORTANCE AND SIGNIFICANCE OF SERVICE MARKETING

The developed as well as the developing countries have been found making multi-dimensional efforts to market services in a right fashion. The public as well as the private sector organizations has been making innovation efforts to market services. The services sector has been found contributing substantially to development process. The multi-faceted developments in the services sector and the mounting intensity of competition generated by the well established multinational corporations have been engineering a strong foundation for the application of modern marketing principles in the service generating organizations so that they only not survive and thrive but in addition to these things also make a significant contribution to the process of socio-economic emancipating. It is in this context that we find it pertinent to think in favour of practicing marketing principles in the services sector. The following facts make it clear that application of modern marketing principles by the service generating organizations would pave avenues for qualitative-cum-quantitative transformation.

1. Upward trend in the disposable income: We cant negate that of late the disposable income of masses has been found moving upward. This trend is found even in the developing countries like ours where the development-oriented sector has opened new vistas for development. The development of corporate

sector makes ways for then transformation of industrial economy. The positive developments in the development sector thus open doors for an increase in the disposable income. The moment we find an increase in the disposable income, the process of demand generation gains a rapid momentum provided the pressure of inflation and the economic depression are not to slow down the tempo. These facts are mute testimony to the proposition that even in the Indian economy we find positive developments which have been creating new opportunities for the development of services sector. The intensity of competition is found at its peak and this necessitates application of marketing principles.

2. Increase specialization: We are living in as age of specialization in which only perfection is to be rewarded suitably. More and more sophistication in the process of economic transformation is due mainly to the increasing specialization. In the industrial economy, the magnitude of technology sophistication is found increasing. Of course, this is due to the growing importance of specialization. The organizations have now no option but to the promote specialization since this helps them in making possible cost effectiveness. Increasing importance of specialization would activate the demand cycle which would make ways for the development of banking services, insurance services, transportation services, communication services many other services would be motivated.

3. Growing fashion: With the development of corporate culture

and the emergence of a well established services sector, there

would be a basic change in the lifestyles. Since the information technologies would show their influence in almost all the areas, it is natural that fashion would take shape of an industry. The hair dressing, beauty parlours, jogging and gym centers would flourish since the masses would be found more conscious to their physical health. The westernization of culture, craze for western living conditions, the tidal wave of pop culture, the dresses and hair styles would throw a big impact on the society. This makes it clear that there would be a conducive environment for the development of beauty parlours, modeling centers, dry-cleaning centers, studios, hair dressing, tailoring or almost all the centers directly or indirectly helping us in looking smart, handsome and attractive. This makes if essential that we think in favour of practicing modern marketing principles in all the select areas.

4. Professionalism in Education: The development of human resources would be given a transcendental priority by almost all the organization either production goods or generating services. Of course, the corporate culture makes an advocacy in favour of performance-orientation but it is not possible unless we assign due weight age to employee-orientation. The professional excellence thus would get a new priority and the masses would be temped to the professional education. Excellence, perfection, professionalism would be the attraction which would require development of world class educational institutions for almost all the disciplines. The Tourism services, Hotel services, Banking services, Insurance services, Medicare services, Consultancy services, personal care services thus would be professionalized in

which only the world class human resources would get place. The application of marketing principles would make the task easier.

5. Information Explosion: Of late, the developed countries have been found making sincere efforts to build a superhighway for communication have been found fuelling information explosion. It is in this context that we now find globe like a village. To be more specific after the development of satellite communication facilities. The tremendous opportunities generated by communications would influence almost all the sector. The entertainment industry, the advertising industry, the fashion industry and many others would be influence by the latest developments that we find in the world of communications. It is in this context that we find it essential to practice the modern marketing principles so that the marketing information system plays a positive role in improving the quality of decisions. The decision-making, decision-supporting systems would have a new look; the microcomputers would assist decision makers in many ways.

6. Sophistication in Market: With the development of communication services, it is natural that we find sophistication in the market where customers expectations would be found high. The westernized life styles would change the hierarchy of needs and requirements and fashion-orientated, comforts-generating household items would have a profitable market. The living conditions would be changed, the food habits would be changed, the dresses and hair styles would be changed, the drinks would be changed, the vehicles would be changed and the style of homes and

apartments would be changed and so on and so forth. The supermarket culture, the departmental store culture, the fast food culture, the Tele-marketing culture, the Tele-education culture would influence masses.

7. Increasing Governmental activities: The expanding governmental activities due mainly to the participation of state in almost all sectors of the economy would also make ways for the development of services sector. The trade and culture exchange policies, the global partnership, the convention industry, the hospitality industry etc. would have a profitable market.

SIGNIFICANCE OF SERVICE MARKETING:

The services sector if marketed in a right fashion contributes substantially to the process of development. The speed of socioeconomic transformation can be increased sizably if the innovation marketing principles are practiced. We cant deny the fact that in years to come the services sector would get a conducive environment with profitable opportunities. If we market the services in a right direction, the available opportunities can be capitalized on optimally. It is against this background that we make an advocacy in favour of services marketing.

1. Least

possible dependence on technology:

Our

dependence on sophisticated technology has increased. Developed countries are technologically advanced and so they do not face any problem while integrating the national development programme

with sophisticated technologies. The best solution is to raise our dependence on service sector so that the demand for advanced technologies is minimized. The developing countries are technologically backward and so their problems are more complicated. If they import technology, the pressures on foreign exchange reserve increase. Thus, these countries have to maximize their dependence on such sophisticated technologies or they should develop their own technologies.

2. Raising the standard of living: For increasing the standard of living we should increase the rate of capital formation, economic transformation and national income. It is also important that the masses are aware of living style and behavior.

3. Generation and expansion of job opportunities: Services sector also creates and expands job opportunities. In USA, more than 85% of jobs created come from the service sector. Of late, every dollar that consumer spends in US, about half of it goes for services. This confirms the growing global influence of this sector.

Generally in developing countries like India, condition where nonoptimal demographic structure has complicated the problem of unemployment, it is pertinent that state policy makers revamp their policies so that the tertiary sector contributes more to the national economy. It is meant that we increase the contribution of services to GNP and motivate organizations to participate.

4. Optimum utilization of untapped resources:

Service

sector provides opportunity to make optimum utilization of untapped resources. By marketing services, unutilized or underutilized resources are properly utilized. The personal care services, tourism, entertainment, hotel, etc. if not utilized are a national waste. It is more rational that we shift our priority in the best interest of national resources. In an overpopulated country it is our responsibility that conservation of resources gets an overriding priority.

5. Paving avenues for capital formation: The contribution of capital formation to the process of socio-economic transformation is appreciable for transforming national economy, it is essential that we activate our efforts for capital formation. It means our investments are termed to be productive. Almost all the services generated positive results if managed properly and effectively. For accelerating the rate of services in the background of national social-economic condition. In US economy, an economy spends 47cent of a dollar on services. This makes the environment favorable particularly for service sector which encourages the entrepreneurs for flowing their capital in service sector. But it is unfortunate that the same trend is not following in Indian economy or in developing countries.

CHAPTER 3 CHARACTERISTICS OF SERVICES Characteristics of Services

1. Intangibility: Services are intangible we cannot touch them. They are not physical objects. According to Carman and Uhl a consumer feels that he has the right and opportunity to see, touch, hear, smell or taste the goods before they buy them. This is not applicable to services.

2. Perishability: Services too are perishable like labours. Services have a high degree of Perishability. Here the element of time assumes a significant position. If we do not use it today, it is lost forever. If labour stops working, it is a complete waste. It cannot be stored. Utilized or unutilized services are an economic waste. An unoccupied building, an unemployed person, credit unutilized are economic waste.

3. Inseperability: Services are generally created or supplied simultaneously. They are inseparable. For e.g., the entertainment industry, health experts and other professionals create and offer their services at the same given time. Services and their providers are associated closely and thus, not separable. Donald Cowell states good are produced, sold and then consumed whereas the services are sold and then produced and consumed.

4. Heterogenity: This character of service makes it difficult to set a standard for any services. The quality of service cannot be standardized. The price paid for the service may either too high or too low as is seen in the case of entertainment industry and sports. The same type of service cannot be sold to all the customers rate this service in different ways. This due to the difference in perception of individual at the level of provider and user. Heterogenity makes it difficult to establish standard for the output of service firms.

5. Ownership: In the sale of good after the completion of process, the goods are transferred in the name of the buyer and he become the owner of the good. But in the case of service, we do not find this. The user have only an access to service. They cannot own the services. For e.g., a consumer can use personal care service or medical service or can use a hotel room or swimming pool, However the ownership remains with the provider.

6. Simultaneity: - Services cannot move through channels of distribution and cannot be delivered to potential customers and users. Thus, either users are brought to the services or providers go to the users. It is right to say that services have limited geographical area.

7. Quality Measurement: - A services sector requires another tool for measurement. We can measure it in terms of services level. It is very difficult to rate or quantify total purchase. E.g. we can quantify the food served in a hotel but way waiter serves the

customer or the behavior of the staff cannot be ignored while rating the total process. Hence we can determine the level of satisfaction at which users are satisfied. Thus the firm sells good atmosphere, convenience of customers, consistent quality of services, etc.

8. Nature of Demand: Generally, the services are fluctuating in nature. During the peak tourist season there is an abnormal increase in the demand of services. Therefore, while identifying the salient features of services one cannot ignore the nature of demand. For e.g. tourists go to hill stations during summer season whereas public transport utilities are used substantially. This indicates that flexibility is the important feature of services.

CHAPTER 4 MARKET SEGMENTATION FOR BANKS

Market Segmentation

An organization is supposed to cater to the changing needs of customers. It is natural that all customers have their own likes and dislikes. They have some uniqueness which throw a big imprint on their lifestyles. This makes the task of understanding the customer a bit difficult. It is in the context that we go through the problem of market segmentation in banking services.

A study of the needs of customers invites a plethora of problems since in addition to other aspects, the regional consideration also influence the hierarchy of needs. To be more specific in the banking services, the banking organizations are supposed to satisfy different types of customers living in different segments. The segmentation of market makes the task of bank professionals easier. If the market segmentation is done in a right fashion, the task of satisfying customers is simplified considerably. The modern marketing theories advocate the formulation of market policies and strategies for each segment which an organization plans to solicit.

The market segmentation is based on the principle of divide and rule. If we divide market in to different segments, the size of the market is made small and the process of study is found convenient.

We find market segmentation division and subdivision of a market based on certain considerations. It is against this background that E.R.Reidenback and R.E.Pits opine that market segmentation is the recognition that market is composed of different buyers who have different responses to market offerings. No one approach to the market will satisfy all buyers. Each segment represents a somewhat different opportunities for the organization. In its most fundamental form, market segmentation recognizes that the company or its product/service offerings cant be all things to everyone. The definitions presented by the marketing experts clarify that market segmentation is the grouping of customers or strategy of dividing market in order to conquer them. It helps in making and innovating the marketing decisions. It is against this background that the market segmentation assumes a place of outstanding significance particularly in the banking organizations.

The bank professionals have to segment the market in such a way that the expectations of all the potential customers are studied in a right perspective and the marketing resources are developed to fulfill the same. The marketing efforts can be made more proactive if the process and bases of segmentation are right. It is essential that the bank professionals assign due weightage to the difference that we find in market behaviour due to geographical, age, sex, nationality, educational background, income classes, occupation, social and other consideration. If they overlook or underestimate key bases while segmenting, the study result cant be proactive to the formulation of creative marketing decisions. This makes it essential that the bank professionals are aware of the criteria for market segmentation. This would make the segmentation process

right vis--vis the result proactive. The agricultural sector, industrial sector, service sector, household sector are found important in the very context. The gender segment is found important no doubt but we cant underestimate institutional and professional segments. Since the banking organizations serve different sectors and segments the segmentation should be done carefully.

IMPORTANCE OF SEGMENTATION TO THE BANKING ORGANISATION

Like other goods manufacturing and services generating

organizations, we find segmentation important even to the banking organizations. The following facts testify it.

1.

Instrumental

in

exploring

opportunities:

We

find

segmentation very much effective in exploring the profitable opportunities. It is well known to us that while segmenting, the market is divided into different groups and sub-groups and this simplifies the process of studying and understanding the customers in a right perspective. If we known about the rural segment, the opportunities are explored in the rural areas. If we known about the low income group, the opportunities are explored in that group. Thus the segmentation helps bank professionals in exploring the profit opportunities.

2. Instrumental in designing a sound marketing strategy: We cant deny that market segmentation makes it easier to formulate a sound strategy. Since the bank professionals are aware of the changing needs and requirements of a segment, the marketing resources can be developed in tune with needs and requirements of a segment. The formulation of a package is found significant and the bank professional measures can do it successfully on the basis of market segmentation. The promotional measures can be sensitized in the face of the receiving capacity of a particular segment. The pricing strategy can be made operational and the sales promotion measures can be made productive.

3. Helpful to the policy planners: In addition, the policy makers also find segmentation important since they are well aware of the emerging trends in the business environment. They get detailed information about the changing needs and requirements of a segment. The planning is an on going process. The bank professionals transmit necessary information to the policy planners which simplify the process of making a sound policy.

4. A sound management of budget is possible: Formulation of a pragmatic plan and an optimal budget has a far reaching effect on the rate of success. As and when we talk about planning, the budgetary provision, allocation in the face of changing

requirements, optimal distribution of funds to different heads, monitoring of expenses became important. If we known about a segment, we also known about the requirement of that segment .At branch level, the segmentation provides necessary information to a branch manager that help him in studying the requirements of the

command area in which the study is undertaken.

5. Enriching the marketing resources: In addition to other aspects, we find segmentation instrumental in enriching the markets potentials. If we known about the preference, needs, requirements, attitudes, lifestyles; it is found easier for us to develop the marketing resources accordingly. This in a natural way makes it convenient to develop the marketing resources. The process of innovation can be activated. The services, the promotional measures, the pricing tool and the process of offering can be made more competitive. The development of world class marketing resources thus makes it convenient to influence the impulse of prospects. The bank professionals find it easier to get the positive results for their productive marketing efforts.

CHAPTER 5 MARKETING OF BANKING SERVICES

Marketing of banking services is concerned with product, place, distribution, and pricing and promotion decisions in the changing, socio-economic and business environment. It means organizing right activities and programmes at the right place, at the right time, at a right price with right communication and promotion.

The causes of Bank Marketing can be seen as: Rising customer needs and expectations Due to improvements in general standard of living. Entry of foreign and private sector banks in India. Economic liberalization of Indian economy. Phenomenal growth of competition due to economic liberalization. Rise in the Indian middle class with considerable resources. Government intervention in protecting the interests of consumers.

The users of banking services or the prospects play a very significant role in the formulation of overall marketing strategies. The bank marketing activities are concerned with the designing of product strategies keeping in view the needs and requirement of prospects. It is also related with the place decisions i.e. location of a bank at suitable points.

It has the following unique features: (a) Intangibility (b) Inseparability (c) Variability and (d) Perishability

CHAPTER 6 BANKING SERVICE MARKETING MIX

SERVICE MARKETING MIX ELEMENT

PRODUCT

PRICE

PLACE

PROMOTION

PEOPLE

PROCESS

Physical Evidence

The service marketing mix comprises off the 7ps. These include: Product Price Place Promotion People Process Physical evidence.

 PRODUCT:

BANK PRODUCTS (A)DEPOSITS: savings, current, fixed etc. (B)ADVANCES: (1) FUND ORIENTED: a. Term loan, b. Clean loan, c. Bill discounting, d. Advances, e. Pre-shipment finance, f. Post-shipment finance, g. Secured and unsecured lines of credit.

2. NON-FUND ORIENTED: a. Guarantees, and b. Letter of credit C) INTERNATIONAL BANKING: a. Letter of credit, and b) Foreign Currency. D) CONSULTANCY: a. Investment Counseling, b. Project Counseling, c. Merchant Banking, and d) Tax Consultancy.

(E)MISCELLANEOUS: a. Traveller Cheques, b. Credit Card, c. Remittances, d. Collections, e. Sale of Draft, f. Standing instructions, and g. Trusteeship.

In banking the products are services. Services cannot be seen or protected like goods. The potential buyer of the services can form an opinion about the services offered. The product should suit the market needs. Bank services are viewed in terms of the satisfaction they deliver and not just the things that are created with value. The banks primarily deal in services and therefore, the formulation of product mix is required to be in the face of changing business environment conditions. The changing psychology, the increasing expectation, the rising income, the changing lifestyles, the increasing dominations of foreign banks and the changing needs and requirements of the customers at large make it essential that they innovate their service mix and make them of worked class.

In the formulation of service mix, the banks can follow two guidelines, first is related to the processing of product to market needs and the second is concerned with the processing of market needs to product.

Marketing aims not only offering but also at creating/innovating

the services/schemes found new to the competitors vis--vis- to the customers. The additional attraction, the product attractiveness would be a plus point, which would be of great help in many ways.

Thus, the formulation of product mix is found to be difficult task that requires world-class professionalism. PRICE:

Pricing in banking relates to the interest rates paid by the bankers on deposits, interest charged by the banker on loans and demand draft, charges for various types of transactions and fees for certain services. In India deposit and lending rates are prescribed by RBI. Pricing policy of a bank is considered important for raising the number of actual customer.

In the formulation of marketing mix, the pricing decisions occupy a place of outstanding significance. The pricing decision include the decisions related to interest and fee or commission charged by bank. Keeping in view the level of satisfaction of a particular segment, the bank have to frame the pricing strategies.

The banks are required to frame two-fold strategies. Strategies concerned with interest and commissions to be paid to the customer and interest and commissions to be paid by the customers for different types of services.

 PLACE:

The place decision mainly deals with selection of a suitable location for the branch. Sound location decisions help in activating the business. The location should have adequate availability of transportation, communication, electricity and other necessary facilities for the smooth functioning of the banks. Technological development, increased customer satisfaction, inadequacy of the traditional challenge to serve all customer segments have brought about ATM, telebanking, home banking, Internet banking and now SMS Banking. Another significant development is a strategic alliance set up by the private banks to overcome the handicap of limited branch network. In such alliance the branch network of one branch will be used by the other for selected transaction like bill collection, cheque collection, etc. PROMOTION:

The object of a promotion programme are to inform about the new service product, to persuade the customer, to remind the customer, build image of the bank, etc. Banking services can be promoted in two ways: 1. Personal Promotion: The bank marketer gets opportunity to tangibilise the product through personal selling; persuasion is more effective with direct contact. It helps in creating impulse buying. 2. Impersonal Promotion: i.e. Advertising, Publicity and Sales Promotion measures. An advertisement in banking is a promotion measures. An advertisement in banking is a promise- a promise of

satisfaction to prospectus who buy the service offered by the bank. Banks use all types of advertisement such as newspaper, radio, television, magazines and hoardings. Also, sales promotion device such as Point of Purchase material, brochures and advertisement specialties like ball pens, calendars, diaries, etc. Publicity is a major strength as a promotion tool than advertising as customers tend to believe a news item rather than an advertisement. Word of promotion is yet another important promotion tool as it is a better persuader and convincer than advertising and personal selling, as banking services are narrated by customer themselves. Besides, as Social welfare and Corporate Social Responsibility are considered to be an important part of banking services, the publicity measures need due care. PEOPLE:

Banking products cannot be separated from the person (banker) who markets them. The product and the seller together constitute the banking product. Banks should adopt internal marketing in order to make the whole business customer-oriented. The bank products should be marketed to the employees first before they are marketed to customer. The corporate mission should be communicated repeatedly and effectively to all employees by the top management. The placement policy should emphasize that the recruits should not only be conversant with all aspects of banking businesses but also have the skill for social interaction and tolerance for interpersonal contact. The quality for banking sector is an aggregation of all the properties, which are found essential for

generating the efficiency and projecting a fair image. Even efficiency essentially is supported by ethical dimension, humanity and humanism.

The development of human resources makes the way for the formation of human capital. Human resource can be developed through education, training and by psychological tests. Even incentives can inject efficiency and can motivate people for productive and qualitative work.

PROCESS:

It involves all activities right from the product conception stage, to product designing and development down to its marketing at the branch level. Flow of activities: all the major activities of banks follow RBI guidelines. There has to be adherence to certain rules and principles in the banking operations. The activities have been segregated into various departments accordingly. a) Standardization: banks have got standardized procedures got typical transactions. In fact not only all the branches of a singlebank, but all the banks have some standardization in them. This is because of the rules they are subject to. Besides this, each of the banks has its standard forms, documentations etc. Standardization saves a lot of time behind individual transaction. b) Customization: There are specialty counters at each branch to deal with customers of a particular scheme. Besides this the customers can select their deposit period among the available

alternatives. Number of stores: numbers of the steps are usually specified and a specific pattern is followed to minimize time taken. Simplicity: in banks various functions are segregated. Separate counters exist with clear indication. Thus a customer wanting to deposit money goes to deposits counter and does not mingle elsewhere. This makes procedures not only simple but consume less time. Besides instruction boards in national boards in national and regional language help the customers further. Customer involvement: ATM does not involve any bank employees. Besides, during usual bank transactions, there is definite customer involvement at some or the other place because of the money matters and signature requires. PHYSICAL EVIDENCE:

The physical evidences include signage, reports, punch lines, other tangibles, employees dress code etc. The companys financial reports are issued to the customers to emphasis or credibility. Even some of the banks follow a dress code for their internal customers. This helps the customers to feel the ease and comfort.

Signage: each and every bank has its logo by which a person can identify the company. Thus such signages are significant for creating visualization and corporate identity.

Tangibles: banks give pens, writing pads to the internal customers. Even the passbooks, chequebooks, etc reduce the inherent

intangibility of services. Punch lines: punch lines or the corporate statement depict the philosophy and attitude of the bank. Banks have influential punch lines to attract the customers.

Banking marketing consists of identifying the most profitable markets now and in future, assessing the present future needs of the customers, setting business development goals, services marketing.

Most private and foreign banks like ICICI, Citibank and HDFC bank portray a new look to the customers rather than drudgery banking counters. Attractive brand names, logos, symbols, etc. add to the customers perception of service quality.

CHAPTER 7 ROLE OF TECHNOLOGY IN BANKING

Technology has a major impact on many industries including financial services and banking in particular. ATM services which not only provide cash but also allow for bill payments, deposits and instant statements are widely used. From the customers viewpoint, technology has played a major role in the development of the process whereby the service is delivered. Automated queuing systems have made visits to the bank easier and more convenient. Telephone Banking and insurance services are now being used in place of the traditional branch-based service process. Technology has also played a major role within organizations, bringing about far greater efficiency through computerized records and transaction systems and also in business development, through the setting up of detailed customer databases for effective segmentation and targeting.

The main technological developments fall within these categories; Process developments Information storage and handling Database system

ROLE OF TECHNOLOGY IN BANKING

1. AUTOMATED

TELLER

MACHINES

(ATMs):

The trend in banking has evolved from a cash economy to cheque economy and there on to the plastic card economy. One of the channels of banking service delivery is the ATM or the Automated Teller Machines, whose traditional and primary use is to dispense cash upon insertion of a plastic card and its unique PIN.

Current and saving account holders of a bank who hold a certain minimum balance in the account are issued an ATM card. The card is a plastic card with a magnetic strip with the account number of the individual. When the card is inserted into ATM, the machines sensing equipment identifies the account holder and asks for his or her identification code number. Usually this is referred to, as the PIN and is issued by the bank's computers. This number is not known to the bank's staff and is secret and unique to that individual. When the person uses the ATM card is asked for the PIN, that the cardholder identifies himself or herself by pressing the relevant number buttons.

The machines then verify the account number on the ATM card along with the secret code number stored in the ATM. When the match is found, the ATM pops up a menu screen which allows the user to transact almost all types of bank transactions. A typical transaction would be that of cash withdrawal. The bank generally restricts the maximum amount and the frequency with which one can withdraw cash. The amount withdrawn is immediately debited

to the concerned account through accounting entries pre programmed on the ATM. Similarly, cash or cheques can be deposited through the ATM for credit to an account. When the menu screen appears one should indicate that he or she wants to deposit money. The ATM dispenses an envelope which is to be filled with the cheque or cash. The account number to be credited is registered on the envelope and stored. Later the bank staff collects the envelope to credit the account. Account balance queries, fixed deposit details, debits and credits to the account etc. can all be queried at the ATM.

The advantages of an ATM over personal teller are as follows: (1) ATM's can be accessed round-the-clock. (2) No employee interface is necessary. (3) Cash and cheques can be deposited and statement of accounts requirement, transfer of funds etc. can be effected. (4) It offers a cost-effective solution alternative to labour costs. (5) Automatic and instantaneous accounting is possible. (6) It eliminates the need for customers to travel to the branch where his or her account is maintained, if the ATMs are conveniently located and networked. (7) To depositors who do not have a credit card, ATM offers cash availability when necessary. (8) Scope for frauds, robberies and misappropriation is reduced considerably if the PIN is maintained.

2. TELEBANKING AND ELECTRONIC BANKING: -

A customer can access information about his/her account through a telephone call and by giving the coded Personal Identification Number (PIN) to the bank by Telebanking. Some banks like SBI, Andhra Bank, etc. have made this facility available to some branches. Automatic withdrawals and transmission of cash balance data and other information about an account is another facility that is offered by banks in a consolidated form through fax or telex. Some banks have also adopted the use of E-mail service for data and information transmission. Banks have also started with the Electronic display of information through Satellite Communication System and transfer of funds through the same channel for inter branch and inter-bank adjustment and clearance of cheques, drafts, etc.

3. CELL PHONE BANKING AND INERNET BANKING: -

Through Inter-net banking one can visit the web-site of each bank by entering his password and know the account balance and even pass his own credit and debit entries.

This means that we can do our banking through our personal computer sitting at home. Banks may soon allow zero balance savings accounts through Internet facility only.

Customers can now make balance enquiries, download statements

and open fixed deposits over the net. They will soon be able to carry out all their transactions over the net. So visiting a bank would become needless.

Time to come; Mobile phones will drive banking transactions. These mobile phones will be equipped with smart cards that are embedded with banking and other information. This mobile phone banking facility is yet to come but the mechanics of linking the banking with the cell phone is being sorted out.

Teller machines are being installed in the banks for the Electronic banking facility. The use of e-mail for banking will open up new avenues for Internet banking. Banking will be on wheels and mobile by the use of smart banking.

CHAPTER 8 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 globalised environment.

In order to accommodate the changes and challenges that are taking place in the present globalization scenario, the Indian banking industry has to re-orient its strategy towards marketing of banking services. New ways and means have to be found to compete in the future and to survive with profit and business growth.

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 stated 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 costeffective 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 E-banking.

(3) Innovation: Innovation 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. All these diversified activities have made the banks to develop and offer consultancy counseling and customer designed packages for efficient management of funds. The banks traditional roles as financial intermediaries are gradually assuming lesser importance in their overall business as the banks diversify their activities and redefine their roles. It is important to note that the percentage of non-interest income is increasing and the interest income of the banks is decreasing. This shows that the income through service exceeds the income through lendings.

(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. IDBI is offering 110% loan of the cost of the project in case of construction of the building. Such type of loan is given to meet the documentation expenses. 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 from 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. They must be suitably trained to keep pace with everchanging environment. For meeting the challenges the human resource departments in banks have to prepare a proper manpower plans and strategies.

(7) Profitability Nature: Profit is a barometer for a 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 order to protect and enhance their profitability. Product development and management skill. Skills for operating in electronic environment. Modern credit management skills. New risk management practices. New focus on customer and his needs. New internal audit skills in a changing business environment.

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. Accountability at all levels; transparency and enhancing the image of the organization would be the major ingredients of good corporate governance. After the globalization and financial sector reforms, corporate governance has been receiving a lot of-attention in banking sector.

To conclude we say that the recent trend of globalization and liberalization has posed serious problems to the domestic banks. The public sector banks have been pushed to a tight corner because of the aggressive marketing strategies from their foreign counterparts. Potential customers have started moving towards the private sector banks and foreign banks.

The business prospects of our public sector banks have gradually started shrinking as such they are forced to revise their strategy of banking operations so that they can meet the threats posed by the foreign banks.

Lastly 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.

CHAPTER 9 EMERGING CHALLENGES FOR SERVICE MARKETING BANKS

Emerging Challenges for Service Marketing Banks:
"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 are 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 globalize environment.

In order to accommodate the changes and challenges that are taking place in the present globalization scenario, the Indian banking industry has to re-orient its strategy towards marketing of banking services. New ways and means have to be found to compete in the future and to survive with profit and business growth.

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 stated 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 E-banking.

3. Innovation: Innovation 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 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. Further more 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. All these diversified activities have made the banks to develop and offer consultancy counseling and customer designed packages for efficient management of funds. The banks traditional roles as financial intermediaries are gradually assuming lesser importance in their overall business as the banks diversify their activities and redefine their roles. It is important to note that the percentage of non-interest income is increasing and the interest income of the banks is decreasing. This shows that the income through services exceeds the income through landings.

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. IDBI is offering 110% loan of the cost of the project in case of construction of the building. Such type of loan is given to meet the documentation expenses. Now-adays customer can know the status of their accounts, request for a

cheque book or a financial statement, transfer funds or "Stoppayment" of cheques from 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. Further more a separate marketing wing may be created in every bank to market their banking services. For meeting the challenges the human resource departments in banks have to prepare a proper manpower plans and strategies.

7. Profitability Nature: Profit is a barometer Jar a 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.

o Product development and management skill. o Skills for operating in electronic environment. o Modern credit management skills o New risk management practices o New focus on customer and his needs.

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. Accountability at all levels; transparency and enhancing the image of the organization would be the major ingredients of good corporate governance. After the globalization and financial sector reforms, corporate governance has been receiving a lot of attention in the banking sector. The recent trend of globalization and liberalization has posed serious problems to the domestic banks. Lastly in order to survive and succeed the domestic banks must identify their marketing areas, develop adequate resources, and convert these resources into efficient services. And distribute them effectively so that the customers are satisfied.

CHAPTER 10 CONCLUSION

According to data collected by observation and interview to some customer and bank employees in HSBC BANK, AXIS BANK, ICICI BANK, SBI BANK AND SARASWAT CO-OPERATIVE BANK. The following conclusion can be derived like,

HSBC Bank pays the lowest interest on deposits as compared to all the above banks. While the interest rate on fixed deposit is generally identical. The interest rate on fixed deposit ranges from 11- 13 %.

Interest charged on Personal Loan by HSBC Bank is 16% while AXIS bank, ICICI Bank, SBI Bank and SARASWAT COOPERATIVE Bank charges on Personal Loan are 11.50 %, 12 %, 11.75 %, and 14 % respectively. SBI gives a strong lead to all the other banks it has 16000 branches scattered throughout the country. While HSBC lead with the maximum number of ATMs installed all over the country.

HSBC, AXIS ICICI, SBI operates on a large scale thus mostly uses advertisement as a mode of promoting there numerous services while SARASWAT Bank having a small paid up capital using personal selling and publicity for promotion. All the banks provide training at all level.

As per the sample collected HSBC and ICICI process of providing service is quick, AXIS and SARASWAT bank have average process of providing services, while the customers are unsatisfied with the kind the service SBI provides. The physical evidence of all the private bank is attractive, comfortable.

ANNEXURE QUESTIONNAIRE
Name of the Bank: __________________________________________ Address (Branch):

___________________________________________ ___________________________________________
MARKETING MIX IN BANK: PRODUCT'S AND PRICING OF THE BANK

Product's:
_________________ _________________ _________________ _________________ _________________

Pricing
_________________ _________________ _________________ _________________ _________________

Place:
a) Number of Branches in India? ________

b) Number of ATM's in India ?

________

Promotion mix of Bank:

Advertising Personal Selling Publicity

People:
Is training provided? Yes No

Manager Level Staff Level

Process of Bank
Quick Average Slow

Comments:

________________________________________

____________________________________________________

Physical Evidence
Ambience Good levels of lighting Space Dcor Artifact Ease of access Comfortable Parking Cheerful and expensive Good visibility Uncomfortable Entrance and exit Attractive painting

Promotion mix of Bank:

Advertising Personal Selling Publicity

People:
Is training provided? Yes No

Manager Level Staff Level

Process of Bank
Quick Average Slow

Comments:

________________________________________

____________________________________________________

Physical Evidence
Ambience Good levels of lighting Space Dcor Artifact Ease of access Comfortable Parking Cheerful and expensive Good visibility Uncomfortable Entrance and exit Attractive painting

BIBLIOGRAPHY
BOOKS:
AJGAONKAR DR.PARAG MARKETING AND FINANCE, Fourth Edition, Sheth Publishers, Mumbai. MARKETING IN BANKING AND

MASCRENAS

ROMEO,

INSURANCE, Second Edition, Vipul Prakashan, Mumbai. M KRISHNAN, MARKETING IN BANKING SECTOR, First Edition, Navneet Publications, Mumbai.

MAGAZINES:

Article by KUMAR SURESH, DATA BASE OF INDIAN BANKING, IBA Bulletin Special Issue Jan. 04. Article by RAY PARTHA Shri & SENGUPTA INDRANI, SYSTEMATIC RESTRUCTURING OF BANKS IIBF Journal - Oct. Dec. 2003.

WEB SITES:

www.learnmarketing.net www.wikipedia.com