CHAPTER NO 1

INTRODUCTION
SERVICE SECTOR
MARKETING
 A PROJECT ON MARKETING OF BANKING SERVICES

AN INTRODUCTION TO THE BANKING SECTOR IN INDIA

Banks are the most significant players in the Indian financial market. They are the biggest purveyors of
credit, and they also attract most of the savings from the population. Dominated by public sector, the banking
industry has so far acted as an efficient partner in the growth and the development of the country. Driven by the
socialist ideologies and the welfare state concept, public sector banks have long been the supporters of
agriculture and other priority sectors. They act as crucial channels of the government in its efforts to ensure
equitable economic development.

The Indian banking can be broadly categorized into nationalized (government owned), private banks
and specialized banking institutions. The Reserve Bank of India acts a centralized body monitoring any
discrepancies and shortcoming in the system. Since the nationalization of banks in 1969, the public sector
banks or the nationalized banks have acquired a place of prominence and has since then seen tremendous
progress. The need to become highly customer focused has forced the slow-moving public sector banks to
adopt a fast track approach. The unleashing of products and services through the net has galvanized players at
all levels of the banking and financial institutions market grid to look anew at their existing portfolio offering.
Conservative banking practices allowed Indian banks to be insulated partially from the Asian currency crisis.
Indian banks are now quoting al higher valuation when compared to banks in other Asian countries (viz. Hong
Kong, Singapore, Philippines etc.) that have major problems linked to huge Non Performing Assets (NPAs)
and payment defaults. Co-operative banks are nimble footed in approach and armed with efficient branch
networks focus primarily on the ‘high revenue’ niche retail segments.

The Indian banking has finally worked up to the competitive dynamics of the ‘new’ Indian market and
is addressing the relevant issues to take on the multifarious challenges of globalization. Banks that employ IT
solutions are perceived to be ‘futuristic’ and proactive players capable of meeting the multifarious
requirements of the large customer’s base. Private Banks have been fast on the uptake and are reorienting their
strategies using the internet as a medium The Internet has emerged as the new and challenging frontier of
marketing with the conventional physical world tenets being just as applicable like in any other marketing
medium.
 The Indian banking has come from a long way from being a sleepy business institution to a highly
proactive and dynamic entity. This transformation has been largely brought about by the large dose of
liberalization and economic reforms that allowed banks to explore new business opportunities rather than
generating revenues from conventional streams (i.e. borrowing and lending). The banking in India is highly
fragmented with 30 banking units contributing to almost 50% of deposits and 60% of advances. Indian
nationalized banks (banks owned by the government) continue to be the major lenders in the economy due to
their sheer size and penetrative networks which assures them high deposit mobilization. The Indian banking
can be broadly categorized into nationalized, private banks and specialized banking institutions.

The Reserve Bank of India acts as a centralized body monitoring any discrepancies and shortcoming in
the system. It is the foremost monitoring body in the Indian financial sector. The nationalized banks (i.e.
government-owned banks) continue to dominate the Indian banking arena. Industry estimates indicate that out
of 274 commercial banks operating in India, 223 banks are in the public sector and 51 are in the private sector.
The private sector bank grid also includes 24 foreign banks that have started their operations here.

The liberalize policy of Government of India permitted entry to private sector in the banking, the
industry has witnessed the entry of nine new generation private banks. The major differentiating parameter that
distinguishes these banks from all the other banks in the Indian banking is the level of service that is offered to
the customer. Their focus has always centered around the customer – understanding his needs, preempting him
and consequently delighting him with various configurations of benefits and a wide portfolio of products and
services. These banks have generally been established by promoters of repute or by ‘high value’ domestic
financial institutions.

The popularity of these banks can be gauged by the fact that in a short span of time, these banks have
gained considerable customer confidence and consequently have shown impressive growth rates. Today, the
private banks corner almost four per cent share of the total share of deposits. Most of the banks in this
category are concentrated in the high-growth urban areas in metros (that account for approximately 70% of the
total banking business). With efficiency being the major focus, these banks have leveraged on their strengths
and competencies viz. Management, operational efficiency and flexibility, superior product positioning and
higher employee productivity skills.
The private banks with their focused business and service portfolio have a reputation of being niche players in
the industry. A strategy that has allowed these banks to concentrate on few reliable high net worth companies
and individuals rather than cater to the mass market. These well-chalked out integrates strategy plans have
allowed most of these banks to deliver superlative levels of personalized services. With the Reserve Bank of
India allowing these banks to operate 70% of their businesses in urban areas, this statutory requirement has
translated into lower deposit mobilization costs and higher margins relative to public sector banks.
 THE 4 I’s OF BANK MARKETING

There are four distinctive characteristics of service, which create challenges and opportunities. They are
commonly known as the four I’s namely:

1. Intangibility
2. Inconsistency
3. Inseparability
4. Inventory.

1.) Intangibility

It is that characteristics of a service indicating that it has no physical attributes that a person may feel, hear,
taste before they buy it.
For example, a person who is new to a bank and wants to open up an account in the bank cannot feel or taste
it and ascertain whether the bank is good or bad before opening an account. He has to experience it, feel how the
service is, how humbly do people or the staff members behave with him, is his money invested or put in a safe
account or not. It is only then he would come to know about the services. This could be done only from the
‘trust’ that he would have built up, as these things cannot be inspected before the use. Therefore, most banks
now a days, indulge in “tangibilizing the intangibles” i.e. they provide tangible clues to the prospective
customers like the different awards that they have received for their superior services, their annual records, etc.
this helps the customers in selecting the banks more easily.

2.) Inconsistency

It refers to variability or heterogeneity. In case of a bank, a new customer or a rarely going customer may not
get the same type of service as a regular customer may get. This may be the case because the staff members
know the person well as he comes often but they don’t know that person who does not come in again and again.

Also another point for inconsistency is that there is variability in the service delivered by different
people, that is services delivered differs from people to people. Like in case of a bank, different staff members
would provide different services. In the bank, a person may have lot of work and may not attend to a
customer .On the other hand, some other person with the same work may attend him with great enthusiasm. In
order to tackle this inconsistency aspect, adequate training and motivation must be provided to the employees.
This will result in higher number of customers for the bank, higher profits and subsequently lower retention rate.

E.g. “PUNJAB NATIONAL BANK” prides itself for providing “crown of quality for customer who is the king”
and is an ISO 9002 certified bank. Thus, they will have to ensure that their service quality level is always
consistent and up to the mark to meet the tall expectations of their customers.

3.) Inseparability

Inseparability is that characteristics of a service indicating that it cannot be separated from creator-seller of
the product. Many services are created, delivered and consumed simultaneously through interaction between
customers and service producers. This is a source of major limitation for the bank. But technology has in a big
way helped the banks to cope with this problem.

Production of services, when it comes to banks can be performed in the following 3 ways:

(i) Co- production: In this case both the service provider and the customer work together to produce services.
When a customer wants to withdraw cash from the banking premises, then both the customer and the service
provider needs to be present.

(ii) Isolated production: It is that part of service that is done outside to an organization. Eg. Tele-Banking.

(iii) Self Service production: In this case, the customer uses the equipment’s of the service providers and self
serves it. E.g. ATM.

4.) Inventory
Inventory relates to the perishable characteristics of the service marketing. If a customer starts his day at eight in
the morning and ends it at four, but if bank is open only from 9:00 a.m. to 1:00 p.m. in the afternoon, then one
might not be able to attend it. The demand for banking services also fluctuates by day and hour. The day before
the holiday, weekend, most Mondays and Saturdays, pension and salary days are heavier than normal banking
hours. So, service faces a lot of problem from inventory as it cannot be stored, saved and then used later.
 MARKET SEGMENTATION

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

The study of the needs of customers invites a plethora of problems since in addition to other aspects; the
regional considerations 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 the customers is simplified considerably. The modern marketing theories
advocate the formulation of marketing policies and strategies for each segment, which an organization plans to
solicit.

The marketing segmentation is based in the principle of divide and rule. If we divide the market into
different segments, the size of market is made small and the process of study is found convenient. We find
market segmentation division and subdivision of a market based on considerations. The bank professionals have
to segment the market in such a way that the expectations of all 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 the
market behavior due to geographical, age, sex, nationality, educational background, income classes, occupation,
social and other considerations. If they overlook or underestimate key bases while segmenting, the study results
can’t be proactive to the formulation of creative marketing decisions. This makes it essential that the bank
professionals are well aware of the criteria for market segmentation. The agriculture sector, industrial sector,
services sector, household sector are found important in the very context. The gender segment is found
important no doubt but we can’t underestimate institutional and professional segments. Since the banking
organizations serve different sectors and segments, the segmentation should be done carefully.
 IMPORTANCE OF SEGMENTATION

 Instrumental in exploring opportunities: We find market 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 know about the rural segment, the opportunities are explored to the rural areas. If we
know about the women segment, the opportunities are identified in that area. If we know about the low- income
group, the opportunities are identified in that group. Thus the segmentation helps the bank professionals in
exploring the profitable opportunities.

 Instrumental in designing a sound marketing strategy : We can’t deny that market segmentation
makes it easier to formulate a sound strategy. Since the banking professionals are aware of the changing needs
and requirements of a segment, the marketing resources can be developed in tune with the needs and
requirements of a segment. The formulation of a package is found significant and the bank professionals can do
it successfully on the basis of market segmentation. The promotional measures can be satisfied in the face of
receiving capacity of a particular segment. The pricing strategy can be made operational and the sales promotion
measures can be made productive.

 Helpful to the policy planners: In addition, the policy makers also find segmentation 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 banking professionals
transmit necessary information to the policy planners, which simplifies the process of making a sound policy.

 Enriching the market resources: In addition to other aspects, we find segmentation instrumental in
enriching the marketing potentials. If we know 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 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.
 CRITERIA FOR SEGMENTATION

Segmentation in a right fashion makes the way for profitable marketing. This helps policy planners in
formulating and innovating the policies and at the same time also simplifies the task of banking professionals
while formulating and innovating the strategic decision. The following criterion makes the segmentation right.

ECONOMIC SYSTEM

An important criterion for market segmentation is the economic system in which we find agricultural sector,
industrial sector, services sector, household sector, and rural sector requiring the weight age while segmenting.

A). AGRICULTURAL SECTOR: In the agricultural sector, there are four categories since the needs of all
categories can’t be identical.

The mechanization of agriculture, the improved or scientific system of cultivation, the help of nature, the
magnitude of risk, the availability of infrastructural facilities influence the level of expectations vis-à-vis the
needs and requirements. The banking organizations are supposed to know and understand the changing
requirements of different categories of farmers.

B). INDUSTRIAL SECTOR: The banking organizations are supposed to have an in-depth knowledge of the
changing needs and requirements of the industrial sector. The large –sized, small- sized co-operative and tiny
industries use the services of the banks. The expectation of all the categories can’t be uniform.

The banking organizations are supposed to have an in-depth knowledge of the changing needs and
requirements of the industrial segment. The emerging tends in competition, the pressure of inflation, the use of
sophisticated technologies, and the business regulations are some of the important aspects influencing the
hierarchy of needs.
C). SERVICES SECTOR: It is an important sector to the economy where the banking organizations get
profitable business. The two categories of organizations such as profit-making and non- profit making are found
important in the very context.

PROFIT MAKING ORG.

BANK INSURANCE,
TRANSPORT HOTEL,
TOURISM, PERSONAL CARE,
CONSULTANCY ELECTRICITY
PERSONAL

SERVICE SEGMENT MULTIPLE SEGMENTS

NON PROFIT MAKING ORG.

EDUCATION, HHHOSPITAL,
RELIGIOUS
POLITICAL AND SOCIAL
WELFARE.

The banking organizations need to identify the changing needs and requirements of the services sector
with the frequent use of IT and with the mounting pressure of inflation and competition, we find a change in the
hierarchy of needs.
 HOUSEHOLD SEGMENT

This also constitutes an important sector where different income groups have different needs and
requirements. In the below figure we can see the different segments of household sector.

A). HOUSEHOLD SEGMENT: The high income group, middle income group, subsistence level group and
marginal income group have different hierarchy of needs which influence the level of their expectations.

B). GENDER SEGMENT: In the gender segment we find males and females having different needs and
requirements. The banking organizations are supposed to identify the level of expectations of both sexes as
shown in the below figure.

Housewives

Working Ladies

Some of the women are housewives and therefore they have different needs and requirements whereas
some of them are working ladies having different needs and requirements.
 PROFESSION SEGMENT

In the profession segment, we find different categories of professions and therefore we find a change in their
needs and requirements. As shown in the figure below:

Technocrats

Bureaucrats

Corporate
Executives
Intellects
Profession Segment Public/ Private Formal/Informal
White - Collar
Employees
Blue – Collar
Employees

The technocrats, bureaucrats, corporate executives, intellects, white-collar and blue collar employees
have different needs and requirements and therefore the banking organizations should know their expectations.
 INSTITUTIONAL SECTOR

In this sector we find different categories of organizations. Some of the organizations are known as
charitable organizations, some of them are cultural/ social organizations, some of them are industrial and many
of them are profit making and many are philanthropic and many of them are related to trade and commerce. It is
natural that the needs and requirements vis-à-vis the level of expectations cant be identical in all cases. To
satisfy and to increase the market share it is imperative that the banking organizations are familiar with
changing needs and requirements. The emerging trends in the social transformation process determine the
hierarchy of needs.

Charitable Trusts

Individual
Originations
Chamber of
Commerce
Trade and
InstitutionalSegment Sub- Segment
Commerce
Health/Education
Sports Org
Philanthropic
Organizations
 7 P’S of BANKING SECTOR

It is very important for any bank to identify the 7 P’s of services so was understands their customers better
and provide them with best of service. The 7 P’s are:

1. PRODUCT MIX
2. PRICE MIX
3. PLACE
4. PROMOTION
5. PEOPLE
6. PROCESS
7. PHYSICAL EVIDENCE

PRODUCT MIX

The product mix of a company includes all different product lines a company offers to its customers. The
product line of a bank might easily include more than 100 different services. In today’s competitive scenario it
has become very necessary for a bank to provide it’s customers with a wide variety of services and the best
technology in order to attract them. Here is an example of some of the products offered by UTI Bank to its
customers.

SAVING ACCOUNT

Offering

Axis Bank's Savings Account is just the right product for everyone, salaried, employees or businessmen, high
net worth individuals and NRI's. The unmatched package of Axis Bank Savings Bank account given below
brings the benefits of better, efficient and hassle free banking.
  ATM Network

A Savings Bank Account with Axis Bank entitles you to a free ATM card, which enables you to access your
account anytime and at any ATM centre across the country. You can withdraw and deposit money and cheques
with your ATM card. Unlike most other ATMs, a Axis Bank ATM allows you to withdraw up to Rs. 20,000 a
day. In addition, cash can be withdrawn from any of the ATMs against your MasterCard
(domestic/international).

 7-Day Banking

At select branches spread over the country, you can bank on all the 7 days of the week (except for public
holidays), over extended working hours.

 Telebanking

Telebanking service provides you instant access to your account. It offers you a wide range of services over the
phone such as account information, Balance Enquiry, Transaction Details, Statement of Account, Status of your
Cheque, etc.

 iConnect-Internet Banking

This is the concept of "the Bank on your desk-top". You can look-up the status of your account, query and
undertake a range of financial transactions, simply by clicking the mouse. Now don't you think you have a great
opportunity to see yourself laughing your way to the bank?

CREDIT CARDS

Offering

Axis Bank has joined hands with Citibank, to give rise to a new kind of card power - unique and unmatched
benefits and international utility at the most competitive rates. The Axis Bank Citibank International Silver
Card, the MasterCard and 'Unique' Card offers quite a few benefits.
Rewards

Axis Bank Citibank Card combines dual conveniences of high purchase power and flexible payment facility.
Purchase of high-value items is now convenient and when it comes to payback time, your bill can be paid in
installments, depending on your financial liquidity at a given moment. The Revolving Credit Facility lets you
pay as little as 5% of your total 00outstanding every month. Giving you the power to buy now and pay later in
parts!

Dial-A-Draft

One can use your Axis Bank Citibank Card to pay for your personal expenses at places where credit cards are
not accepted yet. Like paying for investments, telephone and electricity bills, school fees and much more. Just
call CitiPhone and the draft you need will be delivered to you!

Credit Limit Increase

You can call CitiPhone and ask for a Credit Limit Increase in the event that you have to make a large purchase
on your card urgently. It's especially handy for paying off vehicle repairs, telephone bills and electricity bills.
And for anniversaries, weddings, birthdays, or business trips or when a holiday goes beyond budget

24-Hour ATMs

One can withdraw emergency cash up to 60% of your credit limit from 24-Hour ATMs in Ahmedabad,
Bangalore, Calcutta, Chennai, Delhi, Hyderabad, Mumbai and Pune. While traveling overseas you can draw
cash from MasterCard ATMs spread across the globe. The same is applicable for any Citibank branch. Also the
cash you withdraw is insured against theft for a period of 12 hours after withdrawal. A never before facility is
brought to you with the UTI Bank Citibank Card at a transaction fee of 2.5% or Rs.50 whichever is higher. All
cash advances also carry a service charge from the date of the transaction. The cash withdrawal limit for the first
year is Rs. 5,000.

Photo card

One may choose to have your photograph and signature digitally imprinted on the front of your Card in color.
So that you get the extra recognition and security you expect as a Axis Bank Citibank card member
Concession on Personal Remittances

Do you often need to remit funds to other cities using facilities such as Drafts/Telegraphic Transfers, etc.? Here's
a benefit you would most appreciate. A 25% rebate on standard commission is offered on personal remittances
at Axis Bank branches.

Overdraft facility

Axis Bank Citibank credit card provides you with an overdraft facility to the extent of 75% of the value of your
holdings of Demat Shares and Units! Moreover, you get a waiver of 0.5% on interest rate chargeable under the
scheme. All you need to avail yourself of these benefits is a Demat A/c with Axis Bank.

Free ATM Card

The Axis Bank Citibank Credit Card offers you a free ATM Card, which can be used at over 250 Axis Bank
ATM centers all over India. All you have to do is open a saving bank/current Account with Axis Bank.

Other features

Axis Bank Citibank Card has the widest possible reach - welcomed by 1,10,000 Merchant Partners across India
and Nepal and yet another 160 lakh Merchant Establishments worldwide. The card can be used both for major
occasions, and also for everyday purchases like groceries, cosmetics, and petrol and auto accessories. It can also
be used to buy high-value items like consumer durables (refrigerators, washing machines, microwave ovens,
etc.). And even paying customs duty and hospital bills becomes convenient with the Card.
 PRODUCT WIDTH AND DEPTH

Width

Width of the product mix is the number of product lines a company is offering. The product width could
be a narrow one or a wide one depending from bank to bank. A wide mix encourages more sales since the banks
are able to diversify and provide more to their customers and they also appeal to a larger target market.

Depth

Depth of the product mix is the number of product items in each product line. Banks with more schemes
and services have more depths than those offering only a few.

Here is table giving an example of Width and Depth in the Product Mix:

Similarly, different banks plan out their product portfolios and based on that, the depth and width of their
product mix can be determined.

In today’s scenario, where there is cutthroat competition and new foreign banks entering the Indian
markets, it has became more or less like a law to have very wide product lines with more and more number of
products in each line.
 PRODUCT LEVELS

Core Benefit:

It is the main or core reason why the customer will buy the service of the bank. More like the basic
purpose or necessity.

Basic Product:

The core benefit is converted into a basic product. That is the service can used by the customer in order
to fulfill his/her needs.

Expected Product:

It refers to the set of attributes and conditions expected by the customers when they purchase the service.

Augmented Product:

It is the additional feature that the banks provide which exceeds the customer’s expectations.

Potential Product:

Innovations and product differential is the bases of a Potential Product. If the banks alter its services
according to the requirements of the individual customers it reaches this level.

Core Basic Expected Augmented Potential

Product Product Product Product Product
The basic Safety of Timely service Goods waiting Mobile and
necessity to use deposits Long banking rooms internet
 banking Loanable funds hours Extensive ATM Banking
services in etc. Low interest network New Schemes
order to handle rates Promotional tailored for
finance more Discounts specific
efficiently customers

Thus it can be seen how a particular product passes through different levels. In today’s competitive
scenario most banks try offering services at the Augmented and Potential level.
 PRICE MIX

The price mix in the banking sector is nothing but the interest rates charged by the different banks. In
today’s competitive scenario where customer is the king, the banks have to charge them interest at a rate in
accordance with the RBI directives. Banks also compete in terms of annual fees for services like credit cards,
DMAT etc. Another important aspect of the bank’s pricing policy today is the interest charged on the Home
Loans and Car Loans. With India’s economy progressing, there are more and more buyers seeking these loans
but at a very competitive interest rate.

Let’s understand this with an example. A particular buyer approaches a bank for a car loan for a period of 3
years. He is charged Rs. 20,000 as interest. However, if a sale representative of another bank comes to know of
this deal, he will try to attract the customer by giving him a better deal i.e. a loan at a lower rate on interest. In
this way, it is the customer that ultimately benefits.

Here is an example of some of the prices charged by ICICI bank for their services

ATM Card Issue Free – 2 ATM cards issued free if it joint

account
Add – on Card RS. 100 – Beyond 2 cards
Duplicate Card Rs. 100

Other General Charges

Current Account Savings Account

Transaction Charges NIL NIL

Charges for issue of NIL NIL
Cheques book
Issue of duplicate statement Rs. 25 per page Rs. 25 per page
Account closure Rs.100 Rs.100
 This example evinces some of the charges that the customer has to pay for the services provided by the
bank.

The pricing factor is very important because of the kind of competition that is prevailing today in the
Indian market. However it is very important to understand that in the banking sector, the main pricing policy is
concerned with the interest rate charged. This interest rate is however regulated by the RESERVE BANK OF
INDIA and THE INDIAN BANKING ASSOCAITION. Any one particular bank or a group of banks does not
regulate it. The interest rate charged cannot be higher than that decide by the RBI and the INDIAN BANKING
ASSOCIATION.

Thus, inspite of the constraints in the pricing policy due to the RBI directives there are mainly three
types of pricing methods adopted by banks. They are:

Value pricing:

Banks having unique or different products or schemes mainly do this type of pricing. They usually
charge a combination of high and low prices depending on the customer loyalty as well as the products. This
type of pricing strategy is usually coupled with promotion programmes.

Going Rate pricing:

The most commonly used pricing technique is the going rate pricing. In going rate pricing, the bank
bases its price largely depending on the competitor’s prices. The banks however have to stay within the RBI
directives and compete. The banks may charge higher or lower than their competitors. After 1991 when the
foreign banks entered the Indian market this method of pricing has gained increasing importance.

Mark up pricing:
 This is a pricing technique wherein the cost of the service is determined and a small margin is added to it
and then the final price is offered to the customers. This type of pricing is the not very popular since in the
banking sector it is not very easy to arrive at the cost of the service. Thus most banks use a combination of mark
– up pricing and going rate pricing.

THE MOST FAVORABLE PRICING STRATEGY

 This model shows a pricing strategy, which should be adopted in order to ensure maximum satisfaction
to both the bank as well as the customers.

The price should be set in such a manner that the customer is assured that he is not being cheated or
overcharged by the bank and at the same time the bank is able to reap maximum profits. Such a pricing stand
helps the bank get maximum sales as well as profits since the customer feels that by entering such a transaction
he is winning.

PLACE MIX
 Place mix is the location analysis for banks branches. There are number a factors affecting the
determination of the location of the branch of bank. It is very necessary a bank to situated at a location where
most of its target population is located.

Some of the important factors affecting the location analysis of a bank are:

1. The trade area

2. Population characteristics
3. Commercial structure
4. Industrial structure
5. Banking structure
6. Proximity to other convenient outlets
7. Real estate rates
8. Proximity to public transportation
9. Drawing time
10. Location of competition
11. Visibility
12. Access

It is not necessary that all the above conditions have to be satisfied while selecting the location but it should be
tried to satisfy as many of them as possible.

1. The Trade Area:

The trade area is a very important factor determining the place where a bank branch should be set up.
For e.g. a particular location maybe a huge trading place for textiles, diamonds or for that case even the stock
market. Such locations are ideal for setting up of bank branches.

2. Population Characteristics:

The demography of a place is a very important factor. This includes:

  The income level of the population
 The average age
 The average male female population
 The caste, religion, culture and customs
 The average spending and saving habit of the people.
These factors are very important for a bank as the help them decide the kind of business the branch will
get.

3. Commercial Structure:

The commercial structure refers to the level of commerce i.e. business activities taking place at a
particular location. The higher the level of business activities taking place in a particular location the more
preferable it is for setting up a bank branch.

4. Industrial Structure:

This is nothing but a combination of the trade area analysis and the commercial structure. However the
industrial structure focuses more on the kind of industries operating in a particular location. For example, an
area like SEEPZ is marked with a lot of electronic manufacturing units. Thus the industrial stricture determines
the kind of financial transactions that could take place in a particular location.

5. Banking Structure:

The Banking structure refers to the existence of other banks in the area. Whether there is already an
efficient network of other bank branches operating at that particular area. Thus the overall infrastructure needed
for the working of a bank.

6. Proximity of other convenient outlets:

 This refers to the other branches of the same bank as well other commercial, entertainment and industrial
outlets.

7. Real Estate Rates:

This is mainly dealing with the cost factor involved in opening up a bank branch at a particular location.
The real estate rate is a very strong factor influencing the location decision for a bank branch.

8. Proximity to public transportation:

The location should be proximate to public transportation facilities. This means it should have bus stops
close by as well as it should be proximate to railway stations so as to make it convenient for the common man.

9. Drawing Time:

Drawing time refers to the time period during which a customer can draw money from the banks. It
should be convenient to the customer and somewhat flexible to accommodate the customer’s needs. No bank
has more than a certain amount with them and in case a customer wants to withdraw an amount more than that
available with the bank, the bank needs to draw that amount from other banks. Hence, a location must be such
that it facilitates minimum drawing time.

10. Location of Competition:

The existence of other banks also means competition. If the level of competition is very high in a
particular location, it is necessary that a bank does a lot of market research before opening a branch so as to
estimate the kind of business it would get.

11. Visibility:

The location of a branch should be such that it is visible and easily noticed by the customers as well
other people.

12. Access:
 The bank branch should be very easily accessible to the customers. If this is not the case, the customer
might switch to some other bank, which is more convenient to him and very easily accessible. The location
should be such that it is very convenient for the customer to reach.

Promotion Mix
 Promotion is nothing but making the customer more and more aware of the services and benefits
provided by the bank. The banks today can use a lot of new technology to communicate to their customers. Two
of the fastest growing modern tools of communicating with the customers are:

1. Internet Banking
2. Mobile Banking

This can be better explained with the example of ICICI bank.

SMS services

SMS functions through simple text messages sent from your cellular phone. These messages are
recognized by ICICI bank to provide you with the required information.

For example, when you enter ‘IBAL’ your cellular phone screen will display the current balance in your
primary account. Thus with the help of SMS a wide range of query based transactions can be performed without
even making a call.

ICICI was the first organization in India to provide Wireless Application Protocol (WAP) based services.
Mobile commerce using WAP technology, allows secure online access of the web using mobile devices. With
WAP one can directly access the ICICI WAP server, check one’s account details and use other value added
services.

Thus different methods are used by different banks to promoter its services.

A bank may have very attractive schemes and services to offer to their customers but they are of no use
if they are not communicated properly to the customers. Promotion is o inform and remind the individuals and
persuade them to accept, recommend or use of product, service or idea. However there some very important
points that is to be considered before the promotion strategy is made. These points are:

Finalizing the Budget

Before the bank decides the kind of promotion that should be done, it very important to finalize the
budget for it. The formulation of a sound budget is essential to remove the financial constraints in the process.
The budget is determined on the basis of volume of business of the bank. In addition to this the intensity of
competition also plays a decisive role.

Selecting a suitable vehicle

Another very important task is to select a suitable vehicle for driving the message. There are a number of
devices to advertise such as broadcast media, telecast media and the print media. The selecting of the mode of
advertising is strongly influenced by the kind of budget decided. Usually for promoting banks the most effective
and economical form of advertising has been the print media.

Making possible creativity

Making possible creativity is nothing but the kind of slogans, punch lines etc. that are supporting the
message. They should be very creative but yet simple to be understood by the common man. It should appeal to
the customers. It should be distinct from that of the competitors and should be successful in informing and
sensing the customers.

Testing the Effectiveness

It should be borne in mind that the advertisement is first tested for its effectiveness. This should be done
with the help of various techniques like testing effectiveness on a sample group. This helps determine the
success of the advertisement and in case of any problem the advertisement can be altered and remedied.
Instrumentality of Branch Managers
At a micro level, it is the responsibility of the branch managers to promote and drive the message to the
people in the local area. They should organize small programs in order to attract people and crate awareness in
the local area about the new schemes of the bank.

Different Ways of Promotion

Public Relations:

In today’s competitive scenario developing strong public relations is very important for any bank to be
successful. Most banks today have a separate Public Relations department. However primarily it is considered
as a responsibility of the various bank managers to develop a steady and strong relationship with their present
customers as well as potential customers. This can be done by a constant follow up, small programmes etc.

Personal Selling:

Personal selling is found to be one of the most effective and popular forms of promoting bank business.
The main reason for this is that banking is a service in which trust plays a very important role. In personal
selling, a bank representative goes to the customers and explains the scheme to the customers. Also he gives the
customers any kind consultation he might need. He provides the customers all the information sought by him.
The representative tries to persuade the customers to go for the scheme provided by the bank by telling him all
the benefits. Here are some of the important features of personal selling
 It is a direct relation between the buyers and the seller
 It is oral presentation in conversation
 It is personal and social behavior
 It is found to be more effective in service oriented organizations
 It is based on the professional excellence or expertise of an individual

Sales Promotion:

Sales promotions are basically giving the customers some additional benefits, maybe at times just some
small gifts, in order to promote the schemes. The more innovative the sales promotions the more positive are the
results. Some of the most popular sales promotions techniques are gifts, contests, fairs and shows, discounts and
commission, entertainment and traveling plans for bankers, additional allowance, low interest financing etc. It is
very important that the sales promotions benefits are designed in such a manner that they are better than those of
the competitors.

Word – of – mouth Promotion:

This form of promotions is not only very effective in banking services but in any kind of service.
However it is more important in banking for the only reason that this is a service where trust plays a very
important role. If a particular bank’s services are recommended by friends, relatives, or other well wishers the
person is more influenced and inclined towards that bank. It is very important to note that the internal
employees of the bank play a very important role in word – of – mouth promotion technique. This is because
they can start the process by recommending the bank to their friends and relatives and after that it is like a chain,
which spreads like a wild fire.

Telemarketing:

In recent times telemarketing has gained increasing importance as an effective tool for promotion. The
telemarketing is a process of making use of sophisticated communication network for promoting the banks. This
includes promoting through television, telephone, and radio. Nowadays, cell phones are used extensively for the
same. This is the most popular form of promotion. Banks today have started using ‘SMS’ and many other
services supported by cell phones to provide benefits to their customers and thus have tried to increase their
sales. In today’s competitive and modern scenario it very important that banks makes use of telemarketing
techniques very efficiently to have desirable results.

Internet:

The use of Internet as a promotional tool is increasing. More and more banks are using Internet to
promote their services. The online banking has made it even easier for the customers to avail the bank’s
services. No longer do people have to go to their bank branches for small petty matters like checking their
balance etc. All this can be done with the help of a few clicks.

Thus, these were the numerous ways in which a bank can promote its services and create more
awareness amongst the people.
 People

People are the employees that are the service providers. In a banking sector, the service provider plays a
very important and determinant role in rendering the customers a satisfactory and a good service. It is extremely
essential that the service provider understand what his customers expect from him. In the banking sector, the
customer needs to be guided in a lot of matters, which is possible only with the help of the service provider.

The position in the eyes of the customer will be perceived by appearance, attitude and behavior of the
customer contact employees. Not only does the customer contact employee influence the customer’s perception
but also the customer base of the organization does so.

Process Mix

The process mix constitutes the overall procedure involved in using the services offered by the bank. It is
very necessary that the process is very customer friendly. In other words a process should be such that the
customer is easily able to understand and easy to follow. Today if particular banks formalities are long and the
procedure very complicated the overall process fails and the customer may not be inclined towards using that
banks services.

Let’s take for example the process for application for a car loan.
Now this mainly involves 3 things.

1. Producing of proper documents

2. Filling up of application form
3. Paying for the initial down payment.

Here the process may fail in the following cases:

 1. If the customer is asked to produce a number of forms out of which some may not be necessary at all.
Thus it is very necessary that the customer be asked for the minimum but most necessary document and
not the other unnecessary documents.

2. In case of application form, the application form must be in a language best understood by the customers
and it should not be very lengthy one or demanding a lot of unnecessary information.

3. Finally the payment of initial amount. The customer should be given options as to how he would like to
pay by cheques or by credit card. Once again the amount should be very competitive not very high above
the regular rates prevailing in the markets.

The smaller and simpler the procedure, the better the process, and the customer will be more satisfied.

PHYSICAL EVIDENCE

Physical evidence is the overall layout of the place i.e. how the entire bank has been designed. Physical
evidence refers to all those factors that help make the process much easier and smoother. For example, in case of
a bank, the physical evidence would be the placement of the customer service executive’s desk, or the location
of the place for depositing cheques. It is very necessary that the place be designed in such a manner so as to
ensure maximum convenience to the customer and cause no confusion to him.

Let us see an example as to how banks try to make little changes so as to make the service better for
their customers.

The Hong Kong Shanghai Banking Corporation (HSBC) has decided in introducing a common uniform
for all the employees in all its branches all over India. The plan is possibly in line with the aggressive retail
banking adopted by HSBC. A common uniform its nothing like a revolutionary change but however this little
change makes it very easy for the customer to identify with his service provider and makes the entire process
very easy for him. The more the bank does to make the service easier and better the more satisfied will be the
customer.

Thus, these are the 7 P’s of services. Each of them plays a very important and a pivotal role in
determining the quality of the service provided to the customer.

CHAPTER NO 2

RESEARCH METHODOLOGY
The present market scenario of banking industry shows that, all public and private sector banks are updating
themselves according to the technological changes and providing convenient banking to increase the customer
base. Hence, there is also a need to identify the customer satisfaction of public and private sector banks and
problems faced by them. It will help to adopt appropriate policy service designing and service improvements to
increase customer satisfaction. Perceived service quality and customer satisfactions are major areas in the
business and marketing research literature. It is defined collectively as the ultimate goal of a firm in customer
retention or customer loyalty. There are number of research work conducted under the various branches of
business studies. Most of these works stressed the overall customer satisfaction in the banking industry rather
than transaction specific satisfaction. Measurement of transaction-specific requires assessing each aspect of the
banking services. It refers to a customer’s evaluation of an array of different attributes of the service after having
an experience with it.

RESEARCH TYPE
Mainly following are the two types of research:

• Exploratory Research: collecting information in an unstructured and informal manner, from all the available
sources and review them to find the core research issue, here this is done in the form of review of literature.

• Descriptive Research: is used to describe characteristics of a population or phenomenon being studied. It does
not answer questions about how/when/why the characteristics occurred. Rather it addresses the "what" question
(What are the characteristics of the population or situation being studied?). Descriptive research methods are
used when the researcher wants to describe specific behavior as it occurs in the environment. There are a variety
of descriptive research methods available, and once again, the nature of the question that needs to be answered
drives which method is used. Traditionally, descriptive research involves three main categories: observation,
case studies, and surveys.
The study is Descriptive and Exploratory both in nature and the private and public sector respectively were
selected with the target areas of Maharashtra state.

SAMPLE DESIGN
A procedure or plan drawn up before any data are collected to obtain a sample from a given population is called
the sample design.
SAMPLE SIZE
Sample size, or the number of observations being used to make population estimates, is critical in research.
Without an appropriate sample size, data may not be reliable, and conclusions may be based on misinformation.
In the present research, Data is collected from randomly selected samples. All the units under consideration are
called as population.

RESEARCH DESIGN
The research design of the present study is based upon understanding of the paucity of research on this
particular topic. This research using descriptive research designs as there were many variables already studied
and existed in the phenomena. And descriptive study is one in which information is collected without any
manipulation. So the author wants to measure the intensity of the same variables in this study in Indian context
which were already studied earlier by different researchers. Moreover, this research also using exploratory
research design as the researcher has proposed to explore important variables which affect the mobile banking
services offered by banking sector in Maharashtra by questioning from the bank managers/officials. The author
conducted the in-depth interviews of forty bank managers of different banks (Public & Private) before finalizing
the questionnaires.

DEVELOPING A QUESTIONNAIRE

It is a case of structured questionnaire. The types of questions have been both closed and open types. The data
was collected through personal delivery and mailing of questionnaires to customers. A well-structured
questionnaire was prepared for the collection of necessary primary data on different aspects of marketing
promotional strategies as adopted by the banks for customers. The questions were framed in consultation with
leading bank executives, trainers and academicians. Interview method was adopted to know the opinion of
employees and key post holders in bank, about impact of promotional activities on banks growth.

DATA COLLECTION

Data collection is an important aspect of any type of research study. Inaccurate data collection can impact the
results of a study and ultimately lead to invalid results. Data collection is the process of gathering and measuring
information on variables of interest, in an established systematic fashion that enables one to answer stated
research questions, test hypothesis, and evaluate outcomes. The data collection component of research is
common to all fields of study including physical and social sciences, humanities, business, etc. While methods
vary by discipline, the emphasis on ensuring accurate and honest collection remains the same.
DATA COLLECTION METHODS PRIMARY DATA

Data observed or collected directly from first-hand experience. Primary data is important for all areas of
research because it is unvarnished information about the results of an experiment or observation. It is like the
eyewitness testimony at a trial. No one has tarnished it or spun it by adding their two opinions or bias so it can
from the basis of objective conclusions. Primary data are always collected from the source. It is collected either
by investigator himself or through his agents. There are many collection techniques that can be used to collect
the required primary data such as: observation, questionnaires, indirect oral interview, schedule method and
interviews (Saunders et al, 2003). Primary data collection has many advantages such as its suitability for the
problem in hand, and it has the possibility of updating the collected data, and flexibility in collecting the data. It
also enables the researchers to control the environment of data collection (Kent, 2007). The main disadvantage
of primary data collection is related to its high costs and long time it needs, which are often limited for most of
researchers (Bradley, 2007).

SECONDARY DATA
Secondary data is the data that have been already collected by and readily available from other sources. Such
data are cheaper and more quickly obtained than the primary data and also may be available when primary data
cannot be obtained at all. Secondary data is the collected and assembled data before by many researchers for
many purposes. Secondary data is used to help researchers in solving their problems, and to develop an
approach for answering certain research problems, (Kent, 2007). In this research secondary data collection is
used to collect the basic information regarding the impact of customer relationship marketing on customer
satisfaction, to be used in placing research hypothesis and designing the relevant questionnaire. Secondary data
collection has many advantages such as low-cost collection and time saving. In contrast, it has some
disadvantages such as its generality and it may be outdated and less accurate (Bradley, 2007). 135 The resources
of secondary data for this research are books, periodicals, journals, published printed sources, magazines,
newspapers, published electronic sources, e-journals, general website, weblogs, unpublished personal records,
references and the Internet.

The analysis and interpretation of the primary and secondary data collected was thus used to derive the
conclusions.
RESEARCH APPROACH

Research may be deductive or inductive. Deductive research approach begins with the development of a theory
or hypothesis and later a development of a strategy to test it in a context to verify or reject its claims. So, it is
thinking from general to specific. On the other hand, the approach is inductive where the research begins with
an observation of a phenomenon in an environment, then data is collected upon through which a theory is
developed and it is generalized. In this study, we have used applied empirical theories which test the impact of
factors influencing customer satisfaction with mobile banking services. Therefore, the study is deductive.
Qualitative approach is associated with the nature of services and the items which have been constructed in
accordance with the quality of services and the quantitative approach is associated in terms of statistical tools
which has helped researcher to measure the variables and come to the final conclusion. On the basis of this
approach the hypotheses are tested statistically.

SAMPLING TECHNIQUE

The sample is selected from a larger group of persons which is identified as the population. Sampling
techniques offer a range of methods to reduce the quantity of data that needs to be collected by considering only
data from a subgroup rather than all possible cases. If data is collected and analyzed from every possible case or
group, it is a census. However, it is not necessarily true that a census survey would produce more useful results
than a well-planned sample survey. Sampling offers a valid alternative to a census as it would be impractical to
survey the full set of cases (the population) because the cost would be too high and enough time is not available
and results are needed quickly from gathered data. For this study random sampling method has been used as the
chance of probability of each case being selected from the population is known with the former which makes it
possible to estimate statistically the characteristics of the population from the sample. This technique also
provides effective coverage at low cost.
 OBJECTIVES OF THE STUDY

The aim of this study is to determine the underlying factors that influence customers‟ satisfaction with mobile
banking Services in Maharashtra.

 To find out the different types of banking services offered by banks to bank users.

 To measure the extent of usage of banking service in Maharashtra region.

 To evaluate the effectiveness of the services provided by the banks.

 To measure the extent of satisfaction level amongst the customer of mobile banking.

 To suggest appropriate measures and strategies to enhance the use of banking services and its usage in
Maharashtra.
 Limitations of the study

The researcher is well aware of following limitations with which the study has been undertaken. They are as
follows:

1. The study is related to many more customers of Maharashtra state.

2. The study is limited to area of Maharashtra region only.

3. The awareness and popularity of banking focus only on the customer’s satisfaction. Other aspects are not
covered. Only customer prospective studied by the researcher.

4. There are number of factors effect on the smooth any secure banking services which are not covered.

5. Limitation of primary data and sampling will remain with study.

Scope of the study

Marketing scope develops day to day. These developments carry special signi cance for service sector in
which customer and service producer in-teract closely.

Internal Marketing

Especially in service sector like external relations, internal relations also have signi cance. It requires nding
and keeping successful personnel. For personnel of the organization to be considered their own goals and
service situation, values of the organization are sold to them. The com-munication techniques carried out for
customers are also performed for the personnel in internal marketing and this two techniques go together.
For example, the ads that aim creating rm's image should be prepared with regarding to audience which is
composed of rm's personne

Network Marketing

This approach takes the organization as a sequence which involves pro-ducer and customer that market
services to each other in the organization. In this structure, the activities of departments that compose
organization would be more focused on market. This will also a ect the structure of organization.

Relationship Marketing

It was mentioned that close relationship was established between producer and customer in service sector. In
addition to this, life cycle of a customer relationship was also mentioned under the product outline.

According to the researchers, maintaining the relationship for extant cus-tomer increases the pro t of rms. It
should be emphasized that this fact has an importance for service sector.

Life cycle of a customer relationship is composed of three stages. At the rst stage, rms try to be well
known and to acquire new customers. At the second stage, the connection between customer and rm has
been achieved. During the stage, rms intensi ed their activities on acquired customers and both of them
promises mutually. At the third stage, these promises are accomplished and the service is consumed. During
the stage, rms face \Reality Instants" which could possibly achieve satisfaction of customer and continuous
relationship. This could be also true for second stage. So, these instants should be managed successfully

Implementation of close relations with customer successively and true applications at reality instants
could not be accomplished by responsibilities of a marketing personnel. Besides, it should be remembered
that consumption and production of service are closely interrelated. At this context, marketing should have
role not only in production-consumption between instants, but also at points that these intersect. In this case,
4P that was mentioned at second section would be insufficient. So, we could divide service marketing into
two parts as specialist function (marketing mix, marketing researches) and marketing function (buyer-seller
intertes in first stage in which customers are not so clear, at the customer relationship life cycle could be
minimized for lasting customers. This is achieved by successful customer relations. In this approach,
marketing may be de ned as; \Marketing is for establishing, keeping, developing relationship with customers
in a manner that pro t is got (especially in long term). So, objectives of two relevant sides would be
achieved. This would be accomplished by shared promises and carrying out the promises."
 SIGNIFICANCE OF THE STUDY

The study is given a clear picture of customers prospective for innovative banking services provided by
their banks. It indicates whether, the customer is satisfied with his or her bank or not. It is also pay an
attention towards the problem faced by the customers while using the internet banking services or innovative
banking services provided by the bank.

 It may help the bank to take necessary action against the problem of their customers and to make the
innovative banking service more and more popular.
 The study gives an idea of customer’s mind set, their habit of using traditional banking services and
the awareness regarding modern and latest internet banking services. Because of this study not only
customer or bank got the idea for improvement about innovative banking services or the customers
awareness regarding the use of easy e-banking services but also it will guide the society, a lay man,
Government and future researcher for the tremendous modern way of thinking for better innovative
services and the implementation of the appropriate steps against the difficulties of internet banking
services.
 Banks can come to know the challenges of the banking services and by this study; banks can convert
the challenges into future opportunities.
 This research will definitely meet the need of maximum satisfaction of the customers and this
satisfaction make the internet banking service easy, approachable, popular and available for each and
every customer who wants to use it.

46
CHAPTER NO 3
LITERATURE REVIEW

47
The financial sectors involvement with marketing has had a relatively short and turbulent history, almost all
organizations have adopted the concept since it came in to fashion in the mid 1960's, but few have
implemented it fully. Much research studies have not been undertaken in the field of financial service
marketing in India. The commercial banks in their administered and over controlled set up were not
concerned with market research. The continuous deterioration in the quality of customer services voiced by
various sections of the people and the press forced the Government of India and Reserve Bank of India to
appoint committees and working groups to examine the matter in detail. Besides the Indian Bankers
Association, also conducted certain studies regarding customer service through National Institute of Bank
Management, Pune and other institutes. Commercial banks had also studied the different marketing aspects
but the results were used only for their internal use.

Though, a number of studies are available on banking industry, there is a dearth of comprehensive academic
study on the impact of promotional activities on the growth of banking industry. A review of the available
literature on banking reveals that no exclusive study on impact of promotional activities on the growth of
banking sector has so far been attempted in India. In this context, the present study can fill the gap to a
certain extent. Further it would throw the study of several promotional activities and banking business
growth that affect the relationship management and its implementation throughout the organization.

Uppal, R. K. (2011) studied the post reform-era banking sector from 2003 to 2008. He found out that due to
fierce competition in post reform-era and emerged challenges alarmed banks to adopt marketing strategies to
retain their market share, retain customer base and to attract new customers. He concluded that PSBs are in
the dominant position in terms of total assets in all scheduled commercial banks. But they witnessed the least
profitability along with the highest cost and decreasing spread as a percentage of total assets even succeeded
to bring down their NPAs and intermediation cost. Profitability has deteriorated in all banks.

Uma Rani T.S. and Panchantham, N. (2011) studied the CRM and provided that customer relations are the
foundation of bank’s productivity, profitability and competitiveness. The bank has to implement CRM with
latest IT development.

Bihari, Suresh Chandra and Pradhan, Sudeepta (2011) attempted to map the corporate social responsibility
practices of major players in the Indian Banking and found that CSR has positive impact on the performance
and image of the bank. They concluded that increase of CSR activities among Indian banks will enhance
their mage and value.

Bena, Irina, (2010) evaluated customer satisfaction in Romanian banking sector and found out that new
competitive market conditions, where companies need to fight for their survival, rendered evident that

48
building and managing relationship with customers is vital. They should conduct survey to restructure and
re-invent their service portfolio, interaction procedure and complaint redressed mechanism.

Bedi, Monica, (2010) studied the relationship between service quality, overall customer satisfaction and
behavioral intentions across public and private banks in India. Her findings indicate that service quality is a
significant determinant of customer satisfaction irrespective of the type of bank. The banks should redefine
their corporate image by customer focused marketing strategies and these strategies should be driven by
service quality.

Mohanty, Vandana, (2010) has suggested following marketing strategies to refrain India from global
recession:

1. Focus on core business

2. Improved process and efficiency

3. Strategic divestment

4. Contingency planning

5. Acquisitions and strategic alliances

6. Increased advertising and marketing

7. Research and Development

8. Human factor She has been of the view that 2008 recession would provide a huge opportunity for India to
rebuild its banking.

Sharma, Seema and Gupta, Sanjeev (2010) revealed that most of the customer analyses productivity and
efficiency of a bank before selection. Authors have evaluated different performance measures viz.
productivity growth, technological change, technical efficiency and scale efficiency for the period 1996-
2006. Their results show that banks have implemented their marketing strategies to increase their
performance.

Prajapati, Sadhana (2010) analyzed the critical issues of consolidation in Indian Banking with particular
emphasis on the views of shareholders and managers. She has concluded that mergers and acquisitions may
be marketing strategies for the benefit of customer and bank.

49
Katkar, Medha M. (2010) suggested implementing Universal banking as it will benefit bank and customer
also. The satisfaction will be more if customer will be served by all financial needs under one roof.

Uppal, R.K. (2010) studied the efficiency of Indian commercial banks during the period 1997-98 to 2007-08
and concluded that profitability and productivity is much higher in new private sector and foreign banks as
compared to PSBs. He also suggested measures to improve the efficiency of PSBs by implementing
relationship marketing.

Shimizu, Santoshi (2010) studied Indian banking during financial crisis. He concluded that Indian Banking
is strong enough and unaffected by global financial crisis. India’s rapid growth since 2000 has been
accompanied by a rise in the savings and investments rates. He also concluded that in spite of all type of
banking in India, financial saving still account for a small percentage of household savings. The growth in
SME and Financial Inclusion is not up to mark as per potential in India. 111 He also suggested that the
mergers of small banks should be considered to increase the size of banks.

Mosahab, Rahim, Mahamd, Osman and Ramayah, T. (2010) conducted their research in Bank of Tehran-
Iran and studied the relationship between service quality, satisfaction and loyalty. They concluded that in all
aspects customers’ expectation are higher than their perceptions of bank’s operations. Customer satisfaction
is the mediator in the effects of service quality on service loyalty.

Mishra, Uma Shankar, Das, Jyoti Ranjan, Pattnaik, Sanjib and Mohanty, Ayasa Kanta (2010) revealed that
service delivered should always match with customer’s expectations. They proposed two Structural Equation
Models (SEMs), one for Public and other for private banks to find out the relationship between customer
satisfaction and service quality attributes.

Mittal, Arun and Mittal, Priya (2010) concluded that consumer behavior is the base of all marketing and
promotional strategies in banking sector. Banks are required to redesign their promotion mix as per
consumer behaviour. They also revealed that mass media advertising is the most preferred mode of
promotion of banking services.

Siddiqui, Masood H and Tripathi, Shakini N (2010) analyzed the complaint attitudes in the banking sector
and suggested that service failures in retail banking tend to have a negative impact on service quality and
also affect the customer satisfaction. They have divided customer into four segments: non-complainers,
switchers, prompt complainers and positive thinkers. Bank has to design effective and customized service
recovery strategies.

50
Verma, Arjun and Anit Roy Parul, (2010) revealed that a bank has to implement promotion strategies on
continuous basis, as Bank of Baroda has implemented. The implementation focused promotion strategies
such as celebrity brand ambassador (Rahul Darvid, Indian Cricket player), expansion, focused publicity,
corporate color of logo and regular advertisement on electronic and paper media.

Popli, G S and Rao, D N (2010) conducted a brief study on the CRM implementation in Indian Banks at
Delhi and found out private banks have 112 implemented CRM more effectively compared to PSU banks.
This revealed that private banks are more innovative in understanding their customers and building good
relations with system marketing.

Dardad, Rashmi (2010) observed that CRM is the new innovative marketing strategies in the Indian banking
and emerged as a powerful tool for effective management of customer needs and satisfaction. Bhattacharya,
Sujoy and Singh, Deepali (2010) analyzed the CRM in Indian Retail Banking with predictive purchase
behavior, predicative contact behavior, predicative retention behavior, predicative response behavior and
predicative migration and defection behavior. They concluded that all banks have realized the importance of
CRM but neither the time frame nor a road map is clear to them. They also suggested a clear road map for
CRM implementation in Indian banking.

Mishra, Uma Shankar (2010) compared the service quality in between public and private sectors banks in
India. He concluded that Indian banking has implemented service quality dimensions fully but still there is
lot of scope to achieve service objectives. PSBs have to redefine their customer service parameters to
compete with other banks. They have to minimize service gaps in expected service to perceived service.

Sharma, Nishi (2010) studied the CSR in Indian Banking. She studied that developed countries have
incorporated CSR in their annual budget while in developing countries it is under implementation. She
concluded that due to absence of stringent compliance and regulations, Indian banking has not adopted CSR
in full sprit. While some of banks have implemented CSR as marketing tool to increase loyalty of customers.
She also analyzed the CSR practices and its reporting models in the Indian Banking.

Ravichandran, K., Mat-Nor, Fauuzias and Mohd-Said, Rasidh (2010) analyzed the efficiency and
performance using CRAMEL (C-Capital Adequacy, R- Resources, AAsset Quality, M-Management Quality,
E-Earning Quality, L-Liquidity ). They studied that the merger of selected public and private banks was
initiated by market forces. They concluded that mergers did not seem to enhance the productive 113
efficiency of the banks. Before mergers, two main parameters such as total advances to deposits and
profitability should be considered.

Singh, Rajesh Kumar (2009) focused on the Indian banking sector reforms and assessed selected bank-
specific and macro-economic determinants (investment, advances, deposits and assets) which have
significant effect on profitability. During the last decade Indian banking sector has transformed with high
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level of technology, diversity and sophistication in products and services and improved efficiency. The
broad-based reforms have made the banking sector competitive and positioned it to support sustained
economic growth.

Nath, Prithwiraj, Mukherjee, Avinandan and Pal, Manabendranath (2009) explored the linkage between
strategic grouping and performance of the Indian banking sector. They grouped the PSBs based on similar
asset quality, operational efficiency and profitability using the graphical display method of Co-plot. Relative
performance of the banks in terms of their efficiency of converting the resources to financial outputs was
obtained using Data Envelopment Analysis technique. They provide a framework to commercial banks to
make the policy decisions informed about their competitive positioning in the target market, develop long-
term strategic focus and identify a benchmark for improving their performance.

Masood, Omar Bora Aktan and Sahil Chaudhary (2009) investigated the cointegration and causal
relationship between Rerun on Assets and Return on Equity of Saudi Banks. They found that there is a
strong co-integration in between these two variables which reflect the bank profitability. Dutta, Kirti and

Dutta, Anil (2009) analyzed the customer expectations and perceptions across the Indian Banking Industry
through factor analysis and Cronbach’s Alpha. They concluded that the expectations of bank customers are
higher than their perceptions. The gap is wider in PSBs than foreign banks. Factor analysis showed that
tangibility, assurance, empathy and reliability dimensions are explanatory variables predicting customer
satisfaction. Tangibility factor has the highest impact on overall customer satisfaction.

Girdhar, Seema (2009) studied the relationship built through internal customer in cooperative banks and
concluded that the success of these type of banks depends on 114 the relationship. Such relationship will be
possible through quality service by employees.

Uppal, R. K. (2009) conducted an empirical study on the customer service in Indian commercial banks and
highlighted that highly satisfied and delighted customer is a very vital non-financial asset for bank. He
studied PSBs, Private and Foreign Banks operating at Amritsar district of Punjab and concluded that
customers have shifted to technology based banks for fast quality service.

Fatima, Johra Kayeser and Razzaque, Mohammed A, (2009) stressed the customer– employee relationship.
They conducted their study for private commercial banks in Bangladesh. They found that despite general
economic growth and increased amount of savings, there was no concomitant growth in the number of
depositors. Banks have taken steps to attract customers and satisfy them by adopting service orientation.
They focused to develop customer–employee relationship through suitable strategy and tactics and develop
sustainable relationship with customers to improve their performance. Their study intends to identify the

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personal and social antecedents of customer involvement in the context of banking. Marketing of bank
services has become increasingly competitive in many third world countries.

Jham, Vimi (2009) conducted empirical investigation of customer satisfaction with multi channel banking
and sought three major banking channels i.e. Branch Banking, ATM and Internet banking. These channels
have reduced the turnaround time of customer and bank and have also increased the customer satisfaction.

Das, Sh Kallol & Gupta, Hirak Das, (2009) focused on the Indian Banking system and their Service Quality-
CRM (Customer Relationship Management). They have revealed that CRM implemented in banks still needs
significant improvement to increase marketing performance.

Zahid, Md. Shahidul Islam, (2008) studied the marketing of Private Bank in Dhaka city. He contributed that
banks should reinvent their marketing strategy for long term growth and for satisfaction of customers.

Lynette M. McDonald and Sharyn Rundle Thiele (2008) suggested that managers have to understand the
CSR and its impact on the customer satisfaction. They 115 studied the gaps in CSR implementation and its
total impact on performance and its outcome for the organizations.

Gupta, S L and Mittal, Arun (2008) concluded that in India, PSBs are more reliable but not up to mark in
quality and innovation. While private sector banks are not reliable due to hidden charges and false hidden
information in advertising but they are good at service quality. Both kinds of banks have adopted similar
type of promotional tools but private banks are adopting push strategies to attract and catch the customers.

Agnus Lind (2008) stressed that bank should implement relationship strategy to cater to and facilitate the
corporate. They should understand the underlying business model of the corporate in order to support its full
supply and demand chain. The treasury plays an important role in the corporate dealing. Jham, Vimi and

Khan, Kaleem M. (2008) studied the customer satisfaction of five banks based on financial distribution
channel. They found that today banks are offering their products and services through enchased distribution
channels. The Place among 7Ps is important in this intense competition and can generate customer
satisfaction through less time consumption.

Cornelia, Mitran Paula and Mihaela, Bebeselea (2008) have advised efficient marketing strategies in the
banking field during crisis conditions. The economic and financial crisis during 2008 has created a
propitious ground in which all banking experts have to come out with efficient marketing strategies. The
banks can themselves measure their performance and design many service standards with good marketing
strategies. These marketing strategies should be aligned with social responsibility to generate long term
return for bank.

Kottler, Philip (2008), revealed that marketing management is related to products and services according to
customer needs and wants. He has described marketing mix i.e. 4Ps (Product, Price, Place, and Promotion).
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He has considered the marketing management concepts and change in these concepts according to the
environment. He also narrated the importance of sales force and their control mechanism.

Verma, Satish and Saini, Rohit (2008) studied the level of competition and market power in Indian banking
during 1992-2006. They found that Indian banking is characterized by a relatively higher degree of
competition compared to that of counterparts particularly in the European countries. The average mark-up
over marginal cost has been 10% during the said period. The foreign banks charge nearly twice the mark-up
level as compared to PSBs and Private Banks. The average markup level declined from 20% at the beginning
of reforms to 5% in 2006, reflecting a sharp decline in market power.

Gopinath, Shyamala (2008) in her writing concentrated on the customer satisfaction issues. She provided
complete picture about the banker’s relationship with customer and suggested that to increase the customer
satisfaction banks must strengthen its own grievance redressal machinery, insist on transparency in dealings
with the customers and be reasonable in pricing. Singh, P K and Pachory, Meenal (2008) studied the
promotion mix in Indian banking and concluded that banks are implementing appropriate promotion mix to
attract customers and creating brand loyalty.

Leeladhar, V. (2008) contributed on customer service by stressing on payment and settlement system in
India. He said that payment and settlement system is the backbone of the financial sector and they should be
offered to satisfy the customer.

Zeithaml, Valarie A. and Jobitner, Mary (2007), revealed that service marketing management should fill the
gaps of expected service to perceived service. This can be achieved by adopting a comprehensive package of
7Ps (Products, Price, Place, Promotion, People, Physical Evidence, Process) and also customize the Pre-Sale
Service to Post-Sale Service in order to deliver maximum satisfaction. For better understanding of the
service marketing they have divided the service marketing and have provided important topics such as focus
on the customer, listening to the customer requirements-GAPS model, aligning strategy, service design,
delivering and performing service and managing service promises by bridging all the gaps. Sharma, Jyoti
(2007) revealed that customer satisfaction and loyalty in Indian banking should be reviewed. Banks should
create a service package to win customers loyalty through different marketing strategies.

Mukherjee, Kaushik (2006) in his paper “CRM in Banking-Focus on ICICI Bank’s initiatives” had focused
on CRM in Banking and its applications in ICICI Bank. The CRM in ICICI is being used for targeting
customers, sales, and consistent interface with customers, etc. ICICI Bank has managed to focus better on
customers by undertaking a serious approach that has enabled it to manage its operations effectively. It

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included better targeting of customers; higher share of wallet; more effective channel strategies; database
marketing, etc. The bank is able to evaluate customer usage pattern through CRM data warehouse. New
products are developed through extensive customer profiling. Through CRM, ICICI is able to manage its
data centrally.

Ramudu, P Janaki and Rao, S Durga (2006) have suggested that the investor should be cautious on risk and
return involved in banking as Indian banking is opened for MNCs. They have advised that due to stiff
competition and new IPOs in banking, careful analysis should be done on the profitability of the banks.
Their study brought out a comparative efficiency of SBI, ICICI, and HDFC banks on the Operating Profit
Margin, Net Profit Margin, Return on Equity, Earning Per Share, Price Per Share, Price Earning Ratio,
Dividend per Share and Dividend payout Ratio.

Joshi, Manoj Kumar (2006) studied the service aspects of banks in retail banking. He highlighted that
customer service of high standard and quality in service is due to modern technology. Only advertisement
can bring the customers to doorstep of a bank and the employees of the banks can develop long-standing
relationship.

Mohanty, Ajaya Kumar (2006) presented an overview on the customer service in Indian Banking. Customer
service measures started in 1972 on the recommendations of 1st Banking Commission headed by Shri R G
Saraiya. The Talwar Committee (1977) and Goiporia Committee (1990) have studied the customer service in
banks and submitted their reports with measures to be taken. Goiporia Committee has submitted 97 customer
service measures which would be implemented by banks (66), RBI (15), GOI (9) and by union consultation
(7). Mohanty has reveled that recommendations of the Goiporia committee still remain unimplemented in
PSBs. He suggested that PSBs should adopt standardized customer service code to remain competitive and
profitable. 118 Parthasarathi, B R (2005) stressed on the paramount importance of customer service in banks
and suggested some tools to deliver best customer service. He suggested that a bank has to adopt innovative
strategies to meet customer requirements by involvement of people.

Lakshminarasimha, and Murali, S (2006) suggested some measures based on 5 dimensions viz. Tangibles
(appearance of physical facilities, equipment and personnel); Reliability (ability to perform service
dependably and accurately); Responsiveness of bank personnel to various requests and demands of the
customers, Assurance to customers as reflected through knowledge and trust of people in the banks and
finally Empathy caring of bank towards customers.

Sathye, Milind (2005) analyzed the Indian government steps of dilution of equity in PSBs from 1990 to
improve efficiency and performance. He analyzed the data from 1998-2005 on the parameters of deposit per
employee with synchronic approach and historical approach. He concluded that these steps have deep impact
on PSBs and have improved the performance and efficiency.

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Ratnam, N Vijaya and Kumari, V Suguna (2005) stressed the importance of customer focus. They stated that
from 1950 to 60, the focus was on serving the customer, between 1960-80, the focus was on satisfying the
customers; during 1980- 90, the focus was on pleasing the customer, during 1990-2000, the focus was on
delighting a customer and beyond 2000 focus has been on retaining the customer. They have concluded that
a satisfied customer is the best ambassador for a bank and he must be served quick and immediate services.

Maher, Jill K. & Clark, John, (2005) implemented the SERVQUAL dimensions model to find the variations
in service quality in banking sector. They advised to recognize intense competition well in advance and
develop marketing strategies that differentiate themselves from the competitors. They should judge the
service quality through service encounters and varying level of customer satisfaction. The paper with title
“Expectations and Perceptions of Service Quality in Old and New Generation Banks- A study of select banks
in the South Canara Region” by Joshina, A.J. and Koshi, Moli. P. (2005) showed that service marketing was
different from goods marketing because of inherent differences in service as 119 compared to goods. The
service was intangible, heterogeneous, production and consumption took place simultaneously and it was
perishable. The results showed the challenges based by the service business and had given rise to the need
for new concepts and approaches for marketing and managing service businesses. New generation banks like
ICICI, UTI Bank exceeded expectations of service quality in dimensions of reliability, empathy and price. In
case of other dimensions like tangibility, responsiveness and assurance, there was negative gap in perception
and expectations but it was much smaller in new generation banks than old generation banks.

Swarup, K. Santi (2004) studied Indian banking and its service quality. He suggested that for delivering
quality service, it is imperative to have customer orientation as culture in the bank. Customer orientation
builds long term relationship resulting in customer satisfaction and cash flows to the bank.

Maharaja, H.R. (2004), revealed that commercial banks play an important role in the development of
economy. Banks are the prime vehicle through which credit and monetary policies are transmitted to the
whole economy. They deal in variety of assets and accommodate different type of borrowing. They accept
deposits for short period and deploy the funds by way of loans and advances, overdraft, working capital
requirements, purchase/ discount to industry. The banking system is classified into branch banking and unit
banking. In branch banking the bank has different branches all over the country and in unit banking the bank
operation is confined to a single office.

Bhaskar, P. V. Anantha (2004) has concluded that once good service is extended to a customer, a loyal
customer will work as an ambassador to the bank and facilitates growth of business. Ramesha, Hundekar,
S.G. and Khumbar, B.D. (2004) reveal that marketing strategies are the base to generate customer friendly
banking services. These offer broad– based service package to face stiff competition. Singh, Sultan (2004)
appraised the customer service in PSBs. He concluded that the level of customer service and satisfaction is
determined by branch location and design, variety of service, rates and charges, systems and procedures,
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delegation and 120 decentralization, mechanization and computerization, competitive efficiency, complaint
redressal and most important are staff skills, attitudes and responses. Titus, A.P. Sebastian and Lawrence,

Albin D. Robert (2004) in their paper titled “Customer Focus in Banking Services” had stressed on
importance of customer relationship management. The aim of the banks should be to retain the existing
customers and acquire the new customers. In order to add value to the services offered, the banking industry
has to efficiently and effectively utilize the technology with an eye on the cost of product and the services
offered. To win the customers, the modern banking should integrate technology and deploy marketing
strategies that would enable banks to maximize profits through customer satisfaction. In market with fierce
competition providing the customers with value addition is the only way to achieve complete sustained
customer satisfaction.

Thaneshwor, Gautam, (2004) analyzed the customer satisfaction of Nepalese commercial banks. He revealed
that customer satisfaction is long term strategy and totally depends on marketing strategies and products
portfolio. He concluded that customers are more satisfied with the second–generation joint venture banks.
The customers were found satisfied with banks taking less transaction time and where the behaviour of
employees is The paper titled “Learning’s from, Customer Relationship Management (CRM)
Implementation in a Bank” by Gupta, M.P. and Shukla, (2004) attempted to highlight the learnings from
CRM implementation in the banking sector. CRM systems were particularly relevant to retail financial
services companies, allowing much of the management of the customer relationship to be automated with
the objective of maximizing the profitability of individual customer relationships while minimizing the cost
of managing those relationships. The study was supported by a case study of CRM systems in major
Japanese Bank—Bank of Mitsubishi and also a field survey of scenario in Indian banking sector. The various
issues examined included organizational information, the CRM strategy, strategic changes resulting from
CRM implementation, implementation priorities for the banks and the factors indicating the performance
after CRM implementation. The study revealed that CRM was gradually picking up and was definitely
considered as a viable proposition 121 by banks in improving services to their customers. One of the major
challenges experienced during implementing CRM was resistance to change. To get CRM to work, high
commitment was required in those who were implementing it. Lau, Kin-nam (2003) has written in his
writing that bank marketer should always provide a right solution to the customer. This should be the terms
of ‘Next product to offer’ to increase their customer satisfaction. ‘Next product to offer’ model selects the
products to cater to the needs and priorities of each selective customer. He has also put stress on
implementing CRM system with major components – (a) data cleansing and fusion (2) integrating bank
strategies with customer information. This system will be helpful in designing marketing strategies.

Gulati, V.P. and Sivakumar an, M.V. (2003) in their paper titled “CRM in Banking and Financial Services
CRM for Banks in India” emphasized on the value added by CRM in banking. With more and more
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advancement in technology taking place and an equally higher level of implementation of technology would
be totally irrelevant and unproductive unless they were made after a well-thought-out business strategy,
supported by exhaustive business intelligence and customer information systems and solutions. Meaningful
CRM was just a matter of time and not a matter of choice. The sharper focus provided by CRM would help
the bank management in making key decisions and impact analysis on various groups of customers and their
contribution to the bank. A carefully planned CRM strategy and initiative would bring in the following
benefits to the customers namely: improved customer service, effective and timely delivery, value added
services, personalization and closeness, variety of products and packages, availability, reliability and
affordability of products and services, more satisfaction, a sensitive market with equally good choices. The
initiative would also bring in the following benefits to the banks namely: Growing customer base, Increasing
levels of customer loyalty, Stable and vibrant business potential, Higher volumes, Lower costs, Sensitized
and productive workforce, Proper and functional customer segmentation, Focused and cost-efficient
marketing, Business process reengineering on scientific lines, An attractive and profitable product mix,
Proximity to customer, Improved bottom line.

Samuel, Joshua Madan (2003) in his paper titled “CRM – With special emphasis on financial services and
banking”, emphasized about growing need of managing customers better in banking. CRM applications
applied in banking were customer knowledge, sales effectiveness, customer retention, customer
segmentation, product presentation, customer fulfillments, customer acquisition, channel management,
marketing intelligence, campaign management. The processes need to be redesigned in order to be able to
utilize CRM for the customers and organizational benefits. The three S’s of banking i.e., Size, Speed,
Service; are better managed by CRM. In the world of banking CRM technology was the answer to the
question of increased growth with less cost.

The paper titled “Impact of Information Technology on the Indian Banking Sector” by Soch, Harmeen K.
and the purpose of the paper named “Impact of Information Technology management practices on customer
service”, by Karimi, Jahangir, Somers, Toni M. and Gupta, Yash P. (2002) was to gauge whether IT
management practices differ among firms where IT has a major role in transforming marketing, operations,
or both, which gave the firms advantage by affecting customer service. Several research hypotheses were
tested using data obtained from a survey of 213 IT-leaders in the financial services industry. The results
clearly indicated that the IT leader firms had a higher level of IT management sophistication and a higher
role for their IT leaders compared to IT-enabled customer focus, IT-enabled operations focus, and IT-laggard
firms. The study concluded that IT management practices differed among IT leader firms, IT-enabled
customer focus, IT-enabled operations focus and IT-laggard firms. This paper was silent on other aspects of
IT like functional integration, technological integration, etc., besides customer service. In paper titled
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“Capturing the customer’s voice-A case study in banking” by Bhattacharyya, S.K. and Rahman, Zillur
(2002), customer needs and wants in a bank were properly emphasized. Customer needs were categorized as
Basic needs, Performance needs and Excitement needs. The various banking services like tangibility,
reliability, competence, courtesy, understanding customers, communication, access, responsiveness,
credibility, and security; were related with these needs. This paper helped to identify how customers
perceived services of a bank.

A paper titled “Technology-Key to success” by Sen, Ashish (1997), had discussed about the importance of IT
in banking. He said that the competition unleashed by the reforms process have improved the services of
banks thus making them more customer-oriented. Technology has played an important role in making this
happen. Computerization in commercial banks has indeed traveled a long way. Starting with reconciliation
of inter-branch transaction and providing whole-bank MIS reports, on a selective basis, computerization was
confined to bank head offices alone for quite some time. In subsequent phases, computerization spanned
many areas including branches, back office and front office operations. Use of modern, state of the art
technology in banking, is being increasingly seen as essential not only for good customer service, but also
for good housekeeping. About four decades of public sector banking has widened the bank’s branch network
and customer base to such gigantic proportions that time tested manual systems of yesteryears are now
bucking under the pressure of sheer volume and variety of transactions. Most of the foreign banks and all the
newly established private sector banks operating in India are fairly advanced in the use of technology.
Services such as neatly printed statement of accounts, automatic and prompt updating of pass books, ATMs,
etc. are some of the benefits that customers are enjoying. However, Indian banks unlike their western
counterparts have failed to achieve inter-connectivity amongst branches.

Holmlund, Maria & kock, Soren, (2002), have described customer service factors under retail product
financing. They studied the behavior of customers in PSBs and Private Banks and concluded that quality of
service is the main factor to increase satisfaction and profit.

Narayan P C, Ramesh G (2001) stressed that the market for banking product and services has become more
competitive after liberalization. With the steady fall in interest rates, customers are looking for better
alternate avenues for savings and investment. A rapid growing middle class with appetite to borrow from
banks for a better lifestyle has given an opportunity to banks and bank has to reinvent their strategies to
assess their changed needs and wants.

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