Banking Industry

SUBMITTED BY: -
SUBMITTED TO:-
Dipak Kumar Sah
Dr. Preeti Sharma
BBA 5TH SEM.
Asst.Professor
1. Explain how marketing concepts can be applied in banking industry.

For business development in a competitive environment banks need to sharpen their marketing
skills. Bank marketing starts with systematic marketing plan. Banks marketing plan defines its
marketing strategy and identifies its customers and markets.
In order to develop an effective marketing plan banks need to understand and analyze its
environment. Banks environment has three dimensions, macro level, micro level and internal
environment.
Macro level environment comprises of political factors, economic factors, socio cultural factors,
technological factors, ecological factors and legal factors.
Micro environment can be analyzed using Porters model for competitive markets.
Analysis of internal environment of banks includes its employees, financial strengths, systems,
information dissemination and its customers.
The internal factors can be addressed through the SWOT analysis format.
Based on the analysis of environment banks can identify appropriate marketing strategies. Ansoffs
model as applicable to banks is given below.
The strategy chosen by the bank for its marketing plan is to be justified for its suitability,
acceptability and feasibility.
The marketing mix for a service industry like banks includes product / service, price / cost,
promotion, place, people, process and visibility.
Banks can apply balanced score card method to assess its performance in marketing of its services
and brand.
2. Describe an effective marketing plan for a commercial bank.

Marketing plans expand upon the marketing section of business plans to lay down
comprehensive strategies for creating and marketing products to a defined target market.
Commercial banks serve consumers and businesses by providing deposit accounts, loans and
other personal finance products and services. The commercial banking industry is highly
saturated in the India, requiring banks to rely on solid, innovative marketing plans to attract
customers from competitors.
Following are effective plan for a commercial bank:
Market segmentation
Competitive analysis
Product and services
Market communications
Marketing budget
Market Segmentation
Commercial banks serve a wide range of customers, making it challenging to define a single
target customer group. Thinking in broad terms, however, can lead you to a target market
definition broad enough to cover the majority of your customers. Although people of all
demographics patronize commercial banks, these institutions can serve consumers with
specific psychological or geographic characteristics. A bank may choose to target lowerincome individuals and families, for example, or to target people within a certain state.
Competitive Analysis
After defining your target market as specifically as you can, move on to list all of the existing
commercial banks serving that market. Perform extensive research to build a chart or matrix
listing your competitors' names, product offerings, interest and fee structures, number and
location of outlets, relative size and any other strategic information that will help you craft
your own suite of services. Identify the strengths and weaknesses of each competitor, and look
for opportunities and threats arising from their presence in the market.
Products and Services
Thoroughly describe your products and services. Your product and service descriptions should
flow naturally from the identification of your target and the analysis of competition. Describe
exactly how your products and services meet the needs of your target market while going
beyond your competitors' offerings. Describe any unique features of your checking accounts,
savings accounts and loan products, as well as any additional services you provide, such as
budget assistance, online bill payment services or identity-protection programs.
Marketing Communications
Advertising, promotions, sales, customer service and public relations are what most people
think of when they hear the word "marketing." These five components make up the core of
your marketing strategies, addressing the challenge of informing consumers about your bank
and persuading them to do business with you. Craft an integrated strategy linking all five
elements of marketing communications to one another to send a clear, unified message about
your services to the market.
Marketing Budget
Comprehensive marketing plans should include a budget to govern all marketing expenses.
Complete this section last, after you have considered all other elements of your marketing
strategies. Use the information laid out above to determine how much money you need for
advertising, promotions, market research and any other costly element of your strategy.
3. What are the factors to be considered for marketing innovative products and
services of banks?
Today we have electronic payment system along with currency notes. Indias financial sector
is moving towards a scenario, where it can have new instruments along with liquidity and
safety.
Important events in the evolution of new age payment systems in India:
Arrival of card- based payments- debit card, credit card- late 1980s and early 1990s.
Introduction of Electronic Clearing Service (ECS) in late 1990s
Introduction of Electronic Funds Transfer/ Special EFT (EFT/SEFT) in the early 2000s
Introduction of NEFT (National Electronic Funds Transfer)as a replacement for
EFT/SEFT in 2005/06
Plan for implementation of cheque truncation system as a pilot program in New Delhi
in 2007.
Migration from cash and cheque based payment system, it has become a necessity to
electronic fund transfer system on account of the following reasons:
1. Large volumes of transaction,
2. High cost of physical handling and storage of paper instruments.
3. Delay in realization is a common feature.
Above are the innovation done by banking sector to promote banking services. Since along
with this following factors are required to be considered for the marketing innovative of
products and services of banks which are given below:
Customer needs and expectations

Demand
Technological opportunity
Attractiveness of investments
Intensity of competition
Company size
Targeting
Offer activation
Privacy protection
Customer needs and expectations

Customer needs and expectations (hereafter: needs) are essential for process innovations that
improve process effectiveness. Orientation to customers and their satisfaction are well-known
concept in the field of a Total Quality Management. The companies oriented to customers are
responsive to final customer needs, measure their satisfaction level and improve the processes
in order to satisfy customers.
Demand
The point of view that market demand presents the main factor of innovations comes from
Schmookler (1962). In his work on determinants of technical changes, the author gives
arguments that demand determines the rate and activities of an invention because each rational
company that tends to make profit is responsive to economic stimuli. According to
Schmookler, demand growth is prior to the growth in innovative activities, i.e. Market requests
guarantee stimuli for companies to innovate and take up new technologies.
chnological opportunity
The debate on the importance of technological opportunity against market demand dates back
to the time of Schumpeter (1934). He emphasizes that entrepreneurs are led by technological
opportunities. Contrary to Schmookler's position, this approach, well-known in literature as
"technology push", suggests that the direction and rate of technological change is defined, not
by demand, but by appropriateness of technology in special industrial usage.
Attractiveness for investments
The capability of controlling and benefiting from innovations plays an important role for
investment into innovations. Only if a company does expect to benefit from innovations, it will
have an intention to innovate. For a purpose of this analysis, telling the difference between
product and process innovations will be important if one of the two types of innovations might
be assessed as a more innovative" comparing to the other or if one of them has more failures
in the market.
According to Ox era Consulting (2005) two main questions to consider are:
What type or innovation is more innovative, i.e. which of these types of innovations
Might generate more innovations?
Do these types of innovation face different market failures and to what extent?
Intensity of competition
In theoretical literature there are a small number of works on the theme of intensity of
competition and the choice between product and process innovation. The literature mostly
considers overall innovation activities (that is, the sum of product and process innovation).
Schumpeter (1943) emphasizes that market concentration is a stimulus to innovation. Arrow
(1962) challenges this view and establishes the reverse proposition that more competitive
environments would give a greater incentive to innovate.
Company size
Returns on process innovations grow proportionally with company size while returns on
product innovation remain constant. That is why, product number growth has to have bigger
positive effect on process innovations than product innovations causing the organization to
turn from product to process ones. Accordingly, as a company grows, it decides on business
process innovations.
Targeting
A third factor to consider is targeting the ability to accurately target offers to consumers.
Solution providers have different levels of access to transaction history and targeting
capability. For example, several solutions only have the capability to target based on whether
or not a consumer has previously done business with a particular retailer. This binary
targeting capability can affect both campaign targeting and post-program analytics.
Offer Activation
A fourth consideration is Offer Activation which refers to a solution that requires a consumer
to accept the offer.
Solutions that do not require Offer Activation come with huge challenges for retail customers.
Without the consumer providing the specific act of showing interest in a specific offer, the
retailer is unable to prove what drove the customer action. This results in reward subsidization
and fee subsidization where retailers end up paying for revenue they were going to obtain
anyway.
Privacy Protection
Privacy is the most critical consideration to the industry.
In general, the closer the relationship with the bank, the tighter the controls are on consumer
privacy. No personally identifiable or transaction level data should ever leave the security of
the bank.
Some loosely integrated solutions require that transaction data be taken outside of the banks
secure environment, collected by the provider and housed at the providers facilities. This
solution requires transaction data to be placed under the control of someone other than the
bank. Other providers have absolutely no integration with the bank, requiring the consumer to
enter their personal information including their card details.

Banking Industry

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Banking Industry

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SUBMITTED BY: -

Dipak Kumar Sah

Dr. Preeti Sharma

BBA 5TH SEM.

1. Explain how marketing concepts can be applied in banking industry.

2. Describe an effective marketing plan for a commercial bank.

Product and services

Customer needs and expectations

Customer needs and expectations

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