Service marketing by banking sector
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Published: Mon, 5 Dec 2016
New and innovative methods of marketing services used by banking sector
A bank is a financial institution licensed by a government. Its primary activities include borrowing and lending money.Banks no longer restricted themselves to traditional banking activities, but explored newer avenues to increase business and capture new market.
-In the 1990s, greater emphasis being placed on technology and innovation.
-New concept like personal banking, retail banking, total branch automation, etc were introduced
Banks’ activities can be divided into retail banking, dealing directly with individuals and small businesses; business banking, providing services to mid-market business; corporate banking, directed at large business entities; private banking, providing wealth management services to high net worth individuals and families; and investment banking, relating to activities on the financial markets. Most banks are profit-making, private enterprises. However, some are owned by government, or are non-profit organizations.
Banks offer many different channels to access their banking and other services-
1- Bank branch
4- Telephone banking
5- Online banking
6- Mobile banking
7- Video banking
New innovative method of marketing services used by banking sector
1- E-banking-Enables people to carry out most of their banking transaction using a safe website which is operated by their respected bank.
2- Core banking- it include knowing customer needs. Depositing and lending of money. Providing core banking solution.
3- Corporate banking- it includes providing financial solution to large corporate and MNC’s.
4- Mobile banking- it helps in balance inquiry, fund transfer, cheque book request etc.
5- Plastic money-Plastic money are the alternative to the cash or standard money, it is convinent to carry and generic term for all types of bank cards, debit cards, credit cards, smart cards.
6- NRI banking-This facility is designed for diverse banking requirements of the vast NRI population spread across the globe.
7- TOTAL BRANCH AUTOMATION-this is one of the latest towards paper less transactions, it is more customer friendly and flexible that has speed up bank transaction and with less error possibility.
Marketing mix of banking sector
The marketing mix of banking sector includes 7 p’s that are explained below so that they can understand their customers better and provide them good services.
(A) DEPOSITS: Savings, Current, Fixed etc.
(B) ADVANCES:a) Term Loan,b) Clean Loan, c) Bills Discounting, d) Advances, e) Pre-shipment Finance, f) Post-shipment finance, g) Secured and Unsecured lines of credit.
(2) Non-fund oriented: a) Guarantees, and b) Letter of Credit.
(C) INTERNATIONAL BANKING: a) Letter of Credit, and b) Foreign Currency.
(D) CONSULTANCY: a) Investment Counselling, b) Project Counselling, c) Merchant Banking, and d) Tax Consultancy.
(E) MISCELLANEOUS: a) Traveller Cheques, b) Credit card, c) Remittances, d) Collections, e) Sale of Drafts, f) Standing instructions, and g) Trusteeship.
The price mix in the banking sector is nothing but the interest rates charged by the different banks.
Let’s understand this with an example. A particular buyer approaches for a car loan say for a period of 3 years. He is charged Rs. 20,000 as interest. however if a sales representative of another bank comes to know of this deal he will try to attract the customer by giving him a better deal that is a loan at a lower rate on interest. In this way due to the high level of competition the customer benefits.
This type of pricing is mainly done by banks having unique or different products or schemes. 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:
-Mark up pricing:
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. Like population characteristics, commercial, proximity of other commercial outlets.
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
The process mix constitutes the overall procedure involved in using the services offered by the bank.
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
Physical evidence is the overall layout of the place. How the entire bank has been designed. Physical evidence refers to all those factors that helps 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 the place is designed in such a manner so as to ensure maximum convenience to the customer and cause no confusion to him
Interpretation and recommendation
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.
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.
– Since for Indian banks globalization can be a good opportunity that they can exploit that will lead to increased revenue, size and scale.
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