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Marketing of Banking Services: A Case of Varanasi District

Nowadays, banking circles in India are abuzz with the task of marketing. It has been witnessedthat every bank, big or small, closely held, widely held or even government held, is marketing its

services to customers by adopting new financial instruments and evolving novel strategies. With

a view to cater to the needs of customers, the government has been enforcing social obligation onthe banks and compelled the banks in urban areas that they should fulfill their socialcommitments through a target-oriented approach. This article throws light on marketing practices

being followed by the officials of both public and private sector banks in Varanasi district.

In conventional marketing, there are four components of market- ing strategy - product, price,place and promotion, but when it comes to services marketing, the scenario is entirely different.

During the last few years, a host of financial products have flooded the market, withcorresponding increase in customer expectations. This has in turn increased the anxiety of banks

to attract the attention of the customers. Due to the intangible nature of service products, thecrying need of the hour is to improve the quality of services provided by banking organizations

in general, and by the public sector banks, in particular.

Banks should have a clear cut idea regarding the needs of the customers. They must accordingly

frame policies for the provision of such services to their clients. The typical characteristics ofservices marketing are customer friendliness, knowledge, skills, attitudes and commitment to

values as banking business stands on the pillars of customer satisfaction. It is pertinent thatpolicy makers and the bank managers think over the problem on a priority basis. Bankers are the

custodians of the customer funds. In case of loans and advances, bankers are financers whoindirectly help the customers increase their standard of operations and living. Hence, they have

to perceive the activities of the customers from various angles. It is crucial that there should beproduction of quality service products due to presence of human factor and keeping all these in

view, the concept of bank marketing strategy has emerged embracing seven components namelyproduct, price, place, promotion, people, procedure and physical evidence-collectively known as

the 7Ps.

7 P's of a Bank's Marketing Strategy

A bank's marketing strategy encompasses seven components, popularly known as 7P's. Let usnow study each of these in brief.

Product

Products offered by banks are segmented into three categories, namely core, formal andaugmented products.

y Core products are those that define the kind of business we are dealing in with, example,for a bank, core products are saving account, current account, cash credit, term loan,overdraft and the like.

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y Augmented products are those that have some ancillary benefits attached to it. e.g., whenan individual opens a Smart Money Account with Hong Kong bank, he can avail himself

of Any Time Money Card.y Formal products are usually a combination of two or more core products having a strong

marketing content for catering to specific needs of the customers, e.g., Kisan bike

scheme, super saving plus, corporate liquid deposit, multiple optional deposit, Janathadeposit, students deposit account.

Price

Price embraces rate of interest for deposits/loan and advances and service charges levied by thebankers to their target markets like persons engaged in agricultural activities, small business, etc.

Place

It does not signify the infrastructural facilities but service area where a host of services are being

offered to the customers. Hence, the working hours of the bank branches should be decided uponkeeping in view operational convenience of the major clientele sections to which the bank caters.

Promotion

Any marketing campaign will have twin objectives to accomplish, i.e., to inform the prospective

customers and to persuade them. Advertising in the banking industry is still at a relativelynascent stage. However, fairs, exhibitions, etc., are being organized for conveying the banking

messages to the urban segment.

People

The human factor plays a pivotal role in services marketing. Personnel should have a positiveattitude towards working and must possess an exhaustive knowledge about the local economy

and gather information regarding customer's background for comprehending accurately theirneeds and aspirations.

Procedure

It encompasses the methods and standards followed for carrying out various activities of thebank. It also includes seating arrangement of the bank's employees and the positioning of

ledgers, machines and records, so that documents can be easily accessed without wasting

precious time on unnecessary and avoidable movements.

Physical Evidence

The seventh "P" - physical evidence - derives its existence from the intangibility principle, asbanking products are intangible. It primarily focuses on transforming the bank's product into a

tangible one and this can be achieved by imaginative designing of the bank's stationery used bythe customers, e.g., cheque books and statement of accounts can be made attractive. The best

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tangibilization strategy is to enhance customer satisfaction by evolving novel products after welldocumented research on customer needs and expectations.

Key Issues in Customer Service

Due to rapidly changing business regulations, the intensity of competition has aggravated whichcalls for an organization, whether producing goods or generating services, to cater to theregulatory needs. Hence, the responsibility of formulating the marketing strategies have to be

vested in the hands of senior executives and bank managers who are not only well experiencedbut also well versed with different elements of marketing strategy.

Technical Dimension

It infers that the banking services should emphasize on arithmetical perfection of transactions bypresenting a clear picture of the accounts.

Efficiency Dimension

It is quite obvious that the customers expect efficient, quick and prompt handling of theirtransactions at the bank. Hence banking organizations should assign due weightage to the

efficiency dimension which the bank managers should implement diligently in order to renderthe desired services to the customers.

Behavioral Dimension

We very well know that the banking services stands on the pillars of customer services. It has

been found that very often customers are not served with complete dedication by the public

sector commercial banks. The front-line personnel, specifically, should try to realize that bydenying to the customers decent behavior, they are endangering their own interests.

Instructional/Advisory Dimension

This dimension advocates that the bankers should extend instructional or advisory or

personalized services by creating awareness among the customers about various investmentplans. They must thereby be assisted to earn more interest as this develops a sense of confidence

and helps in improving personal relations with customers. This will go a long way in retainingand attracting potential customers in the future.

The activities and issues relating to various services are presented below for the purpose ofanalysis

y Prompt servicey Etiquettes while delivering servicesy Facility of modernized servicesy Less procedural complexities while delivering servicesy Customer-friendly approach by bankers

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y Reputation of the banksy Proximity to customersy Improved managerial abilityy Provision of liberal advances.

In the present study, 21 branches of public banks and 11 branches of private sector banks locatedin Varanasi district have been covered. The required data has been collected through interviewswith bank officials and staff. The opinions have been gathered on a five-point scale by assigning

weights from +2 to -2 according to the direction and intensity of the opinion. Thereafter, it isanalyzed by converting to Likert's five point attitude scale.

The attitude scale, thus, helps to understand the relative importance of service features as

perceived by the employees in the bank branches covered during the survey. The weights of

expectations and the coefficient of existence are multiplied to arrive at the Existence of ServiceIndex in the banks in the sample district.

Discussion and Analysis

Service Indices: A Comparison

The service indices for the public and private sector banks are computed and analyzed in Exhibit2.

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It can be inferred that the index of quick service is 2.98 in case of public sector banks as against

8.01 for the private sector. This clearly implies that the private sector banks are providing promptservices when compared to public sector banks.

The index of courtesy is 3.78 for private sector banks as against 1.11 for public sector banks.

This suggests that private sector banks are dealing with their customers showing greater courtesyand etiquette when compared to public sector banks.

The index on facility for modernized services is -2.63 in the case of public sector banks, whereas

it is +3.99 in the case of private sector banks. This reveals that private sector banks are providinga greater variety of modernized services than the public sector banks in the concerned study area.

Further, the results indicate that public sector banks are bogged down with procedural formalitiesand conversely, the index on less formalities is high for private sector banks.

The index of customer-friendly approach indicates that private sector banks are more friendly in

their approach, while public sector banks are comparatively detached on this aspect.

However, public sector banks follow a more liberal policy while advancing loans to customerswhen compared to their private sector counterparts. With regard to proximity to customers and

also managerial caliber, the public sector banks are a point ahead of private sector banks.

On the whole, it would appear from the survey results that public sector banks have an edge in

management skills and assisting with liberal advances, whereas the private sector banks arebetter in other aspects.

Problem Indices: A Comparison

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Exhibit 3 summarizes the problems and obstacles faced by the public and private sector banks inservicing their customers, as perceived by the responding bank employees. The primary obstacle

in public sector banks is slow service, and in case of private sector banks it is overcrowding.Strict procedural complexities are perceived as lesser hindrance by the officials of both the

banks. Physical infrastructure and conventional service mode are not treated as stumbling blocks

by the private sector banks.

The service facilities are more advanced in the case of private sector banks as against public

sector banks. If we analyze the overall hindrances, it can be seen that the public sector banksencounter more problems than private sector banks and is clearly shown by the hindrance index

of public sector banks which is 5.44 as against 4.71 for private sector banks. In this fast-pacedglobal economy, it is imperative for public sector banks to overcome their deficiencies in

rendering services in order to nurture and retain their clients and aim for a larger piece of themarket pie in future.

Conclusion

It has been perceived that a major chunk of customers don't find customer relations satisfactory.

And for removing this deficiency, bank executives must follow the customer feedback methodfrom time to time. The secret of bank marketing lies in communication. Banks should realize and

engrain this watchword in their working operations, as proactive communication plays anindispensable role in customer acquisition, cross selling and retention, because these are the keyobjectives of any bank marketing program. By deploying effective research tools, the relative

expectations of customers can be assessed. Moreover, staff and their officials should be impartedtraining to refine them as active quality conscious personnel whereby they treat customers as

assets and place them in the core of their marketing strategies.