Marketing Strategies
1. Marketing Strategies In depth ( Banking )
Banking Industry is one of the most important service industries which touch the lives of millions of people. Its service is unique both in social and economic points of view of a nation. Earlier the attitude of banking service was that it was not professional to sell one s services and was unnecessary in the sense that traditional relationships and quality of products were sufficient to carry forward the tasks. Before the mid 1950 s the banks had no understanding or regard for marketing. The bank building was created in the image of a Greek Temple to impress the public about the importance of a bank. The interior was austere and the teller rarely smiled. Bankers maintained austere dignity and they hardly maintained friendliness.
11.1 History of Bank Marketing
It was in the late 1950 s that marketing in banking industry emerged in the west. It emergence was in the form of advertising and promotion concept. At that time, personal setting could not get a significant place. Gradually there was a change in the attitude of bankers, probably in time with the attitudinal change in customers. The idea of customerssatisfaction began in the late 1950 s, flourished in 1960 s and became an integral part of the banking services in the 1970 s. But the same trend could not be applicable, especially in developing countries and to be more specific in India because of social economic and political reasons. Marketing came into Indian banks in the late 1950 s not in the form of marketing concept but in the forms of advertising and promotion concept. Soon it was realized that marketing transcends advertising and friendliness. Till 1950 it was recognized that personal selling was not necessary. The bankers went out of their way to avoid being accused of selling. The bankers even eliminated the word sellingand they called the function of customer contact business development function. The bankersattitudes and comprehensions about marketing changed in the 1960 s. They began to realize that marketing was a lot more than smiling and friendly tellers. The idea of customer convenience began in the late fifties and it flourished in the 1960 s. Bankers were beginning to understand the concept of market segmentation in the late 1960 s. The bank marketing profession changed dramatically in the 1970 s. Marketing positions in banks were created and marketing was accepted as an organizational imperative.
11.2 Beginning - Effective Bank Marketing
To understand how banking services can be marketed better, one must examine banking as a service industry, in the content of a swiftly changing environment, redefine marketing to suit a banker s needs, analyze how the marketing of financial services differs from that of other products, identify the tasks involved there in and set forth a series of steps for effective bank marketing.
When modern managers the world over are busy having their marketing skills, bankers in India can ill-afford to shrug it off and keep away from global changes in banking which are in favor of Optimal satisfaction of customerswants and creation of customers for novel products. As a matter of fact competition was not in existence. On the one side of the fence was the State Bank of India alone, which is enjoying Government ownership and on the other side were private Commercial Banks, local by orientation, primarily servicing the interest of the controlling business houses. Therefore neither the State Bank nor the others cared much for the public. Furthermore, their service is confirmed to a limited range of services which included Current Accounts, Term Deposit Accounts and Savings Bank Accounts in Deposit Area. In the area of advances, limits were sanctioned on the basis of security by way of lock and key accounts and bills, purchased limits; their miscellaneous services included issuance of drafts, collection of outstation cheques, executing standing instructions and lockers facility at a few centers. It was the phase of class banking and even the communication through the media was looked down upon with contempt as something against the tenets of banking culture. Even the advertisements released till 1966 were very few.
After nationalization of 14 major commercial banks in 1969, banking system in India was no longer the exclusive preserve of a few Industrial Houses or business families and has become a very important instrument of socio-economic changes. Bankers, after nationalization, woke up from their splendid isolation and found themselves placed in a highly competitive and rapidly changing environment with competition becoming fierce day by day. The traditional description hardly suffices today s needs. Due to this, banks approaches towards customers and market underwent changes and focus was gradually shifted to marketing their products.
11.3 First Major Step ( SBI )
The first major step in the direction of marketing was initiated by the State Bank of India in 1972, when it recognized itself on the basis of major market segments, dividing the customers on the basis of activity and carved out four major market segments. They are commercial and institutional segment, small industries and small business segment, agriculture segment and personal and services banking segment. The new organizational framework embodied the principle that the existence of an organization primarily depends up on the satisfaction of customer needs. The hallmark of the reorganized setup was customer orientation.
It aimed at
having a total view of customersneeds.
meeting the identified needs in the best possible manner.
identification of potential customers, and
conducting activities at the branches on the basis of carved- out market segments instead of job wise.
By 1974, the environment became more demanding with the emphasis on mass banking and canalization of credit into priority areas and lending at differential rates of interest to the weaker sections of the society. This placed strains on the profitability of banks which led to keen competition, which is detrimental to the banking system in the ultimate analysis. This time even though banks were talking of marketing, they were essentially selling.
A notable change during the period was related to two major components, that is product and promotion. The other two Psthat is price and place were highly controlled by central banking authority. Banking began to offer profit security regular income, retirement benefits, money for marriage of the daughter, education for growing children etc.
It was in the early 1980 s that banks realized that marketing was more than that. They started thinking in terms of product development, market penetration arid market development. Moreover banks also accelerated the process of equipping their staff with marketing capabilities in terms of both skill and attitude through internal and external training.
