DISSERTATION PROJECT

MARKETING MANAGEMENT

SUBMITTED BY ABEESH.P.A STUDENTS NO: S1AA8A61118A

GREAT EASTERN MANAGEMENT SCHOOL THRISSUR 2011-2012

CERTIFICATE
This is to certify that the Project work of Marketing Management submitted to the College by the candidate ABEESH.P.A bearing Reg. No: S1AA8A61118A is the product of bonafide research carried out by the candidate under my supervision in Marketing Management.

THRISSUR NOVEMBER, 2011

(GUIDE) Mrs. Clelia John Lecturer, Marketing Gems B-School

ACKNOWLEDGEMENT
If words are considered as a symbol of approval and token of acknowledgement, then the following words play the heralding role of expressing my gratitude. A great deal of time and much effort have gone into developing and researching this project. Many people have participated directly or indirectly in the completion of this project. I express my deepest and sincere thanks to Mr. Prof: Rama Bharatha Varma, Dean, Gems B-School for providing all the facilities to carry out the study. I deem it my pride and privilege to render my deep sense of gratitude to my guide and supervisor Mrs. Clelia John for her intellectual and invaluable guidance and constant encouragement through out the progress of the study. Her fascination and inspiration in the form of help provided me in making this study more successful I owe special thanks debt to the other staff members of this esteemed college and all the friends and family members for being favorable and compassionate, and for encouraging me through out this project to make it a grand success.

ABEESH.P.A

CONTENTS
SL NO: CHAPTER I 1.1 1.2 1.3 1.4 1.5 1.7 INTRODUCTION OBJECTIVE OF THE STUDY STATEMENT OF THE PROBLEM SCOPE OF THE STUDY RESEARCH METHODOLOGY LIMITATION OF THE STUDY CHAPTER II 2.1 2.2 2.3 2.4 INDUSTRY PROFILE COMPANYPROFILE PRODUCT PROFILE SWOT ANALYSIS CHAPTER III 3.1 3.1 THEORETICAL BACKGROUND OF THE STUDY REVIEW OF LITERATURE CHAPTER IV 4.1 DATA ANALYSIS AND INTERPRETATION CHAPTER V 4.1 4.2 4.3 FINDINGS SUGGESTIONS CONCLUSION 70 71 72 51 38 41 18 29 33 34 6 12 13 13 14 16 DESCRIPTION PAGE NO:

Chapter -1

INTRODUCTION

INTRODUCTION

Today, many business such as banks, insurance companies and other service providers realize the importance of customer relationship (CRM) and its potential to help them acquire new customers retain existing ones and maximize their life time value. At this point, close relationship with customers will require a strong coordination between IT and marketing departments to provide a long-term retention of selected customers. CRM is a sound business strategy to identify the banks most profitable customers and prospects, and devotes time and attention to expanding account relationship with those customers through individualized marketing, reprising, discretionary decision making, and customized service all delivered through the various sales channels that bank uses.

In this project an attempt is made by me to analyze the effectiveness

of customer relationship in PDC bank palakkad

Customer relationship management

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In literature, many definitions were given to describe CRM. The Main difference among these definitions is technological and relationship Aspects of CRM. Some authors from marketing background emphasize Technological side of CRM while others consider IT prospecting of CRM. From marketing aspects, CRM is defined by (Could well 1998) as a combination of business process and technology that seeks to understand A companys customers from the prospective of who they are, what they do, And what they are like. Technological definition of CRM was given as the Market place of the future is undergoing a technology driven metamorphosis.(Pepper&Rogers 1995).Consequently IT& marketing departments must work closely to implement CRM efficiently. The CRM in banking sector was focused on the evaluation of the critical satisfaction dimensions and the determination of customer group with distinctive preferences and expectation in the private bank sector. Specifically the customer relationship of new technology based firmes has been studied was interested in total sales activities both volume related and non-volume related . it was also emphasized that customer relationship management based on social exchange and equity significantly assists the firm in developing collaborate, cooperative and profitable long term relationship. In addition to working with partners called partner relationship management many companies are intent on developing stronger bonds with their customers called customer relationship management. This is the process of managing detailed information about individual carefully managing all customers touch points maximize customer loyalty.
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A Customer touch points is any occasion on which a customer encounters the brand and product-from actual experience to personal or mass communication to casual observation Customer relationship management enables companies to provide excellent customer services through the effective use of individual account information . companies are now moving away from wasteful mass marketing designed to build strong customer relationship. As a companies has grown proficient at gathering information about individual customers and business partners and as their factories are designed more flexibly they have increased their ability to individualize market offering massagers , and media.

Attracting Relating , and Growing Customers

Customers are becoming harder to please. They are smarter, more price conscious, more demanding , less forgiving , and they are approached by many more competitors with equal or better offers. Companies seeking to expand their profits and sales have to spend considerable time and resources searching for new customers. To generates leads , the company develops ads and places them in media that will reach new prospects: it send direct mail and make phone calls to possible new new prospectors ; it purchase names from list brokers; and so on. All this activity produces a list of suspects. Suspects are people or organization who might conceivably have an interesting buying the companies product or services, but may not have the means real intention to buy. The next task is to identify witch suspects are really good prospects-customers with the motivation, ability and opportunity to make a purchase by interviewing them, checking on the financial standing, and so on. Thgen it is the time to send out the sales people. Some companies think they are getting a sense of customer satisfaction by tallying complaints, but 96% of dissatisfied customers dont complain; they just stop buying. The best thing a company can do is to make it easy for the customer to complain. Suggestion forms, toll-free numbers, Web sites and e-mail addresses allow for quick, two-way communication. Companies are also recognizing the importance of the personal component to CRM and what happens once customers make actual contact.

Some of the groundwork for customer relationship management was laid by Don Peppers and Martha Rogers in a series of books. They Out-line four-step framework for one-to one marketing that can be adapted to CRM marketing as follows:

1. Identify your prospects and customers 2. Differentiate customers in terms of (1) their needs and (2) their Value to your company. 3. Interact with individual customers to improve your knowledge About their individual needs and to build stronger relationships. 4. Customize products, services, messages to each customer. 5. Reducing the rate of customer defection. 6. Increasing the longevity of the customer relationship. 7. Making low profit customers more profitable or terminating them. 8. Focusing disproportionate effort on high- value customers.

CRM objective in banking sector

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The idea of CRM is that helps business use technology and human resources gain insight in to behaviour of customers and value of those customers. If it works as hoped, a business can provide better customer service, make call center more effective, cross sell products more effectively, help sales staff close deals faster, simplify marketing And sales process, discover new customers and increase their revenue. For CRM to be truly effective, the organization must first decide what it intends to do with that information. For example, many financial institutions keep track of customers life stages in order to market appropriate banking products like mortagages or IRAS to them at the right time to fit their needs. Next, the organization must look into a business, where and how this data is stored and how it is currently used. One company, for instance, many interact with customers in a myriad of different ways including mail campaigns, website, brick-and mortar stores, call centers, mobile sales force staff marketing and advertising efforts. Solid CRM systems link up each of these points. This collected data flows between operational systems (like sales and inventory systems) and analytical systems that can help sort through these records for patterns.

OBJECTIVE OF THE STUDY

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1. To analyze the effectiveness of customer relationship in PDC bank palakkad 2. To obtain suggestion for improvement of service provide by the bank 3. To find effectiveness of after sales service 4. To find satisfaction level of customers 5. To find overall performance of PDC bank

Scope of the study

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This study is exclusively conducted for customers of PDC bank palakkad which are dispersed in different areas of palakkad. The main scope of the study is to give some important suggestion to make customer service more effective. In personal the study helped me to identify the importance of customers and customers relationship management within the banking industry as well as to gain knowledge on different banking operation. Finally this project was done with a wishful thinking that this project study will be an inspiration for those who conducting a perusal of this project.

Research Methodology
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Research design Population of the study Type of data Sample unit Sample size Period of the study

- Descriptive - customers of PDC bank palakkad - primary and secondary data - customers in PDC bank - 100 samples - 10 days

Research design
Descriptive research includes surveys and fact finding enquiries of different kinds of project mainly intend to find the effectiveness of customer relationship in PDC bank.

Sampling design
Convenient sampling technique was used for the study. Sample size was fixed as 100. Sample were taken from palakkad area

Data collection method

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The data is collecting both primary and secondary source. Primary data is collected from well structured questionnaire and secondary data is collected from bank records , website, magazines etc.

Research instruments:
The structured questioner carefully organized and systematically designed was used by the researcher to collect data

Tools for analysis and interpretation

Analysis is done using percentage and average. Graphs and chart is used for representation.

Limitation of the study

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 Time constraint was one of the major limitation of the study The data collected through questionnaire and interview schedule are not accurate On few occasion respondent were unwilling to give information The type of sampling conducted by convenience sampling. So it was difficult to get detailed and complete information

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CHAPTER -2 COMPANY PROFILE

Industry profile

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Nature of banking industry

Banks safeguard money and valuables and provide loans, credit, and payment services, such as checking accounts, money orders, and checks. Banks also may offer investment and insurance products, which they were once prohibited from selling. As a variety of models for cooperation and integration among finance industries have emerged, some of the traditional distinctions between banks, insurance companies, and securities firms have diminished. In spite of these changes, banks continue to maintain and perform their primary role- accepting deposits and lending funds from these deposits. There are several types of banks, which differ in the number of services they provide and the clientele they serve. Although some of the difference between these types of banks have lessened as they begin to expand the range of products and services they offer, there are still key distinguishing traits. Commercial banks, which dominate this industry, offer a full range of services for individuals, businesses, and governments. These banks come in a wide range of sizes, from large global banks to regional and community banks. Global banks are involved in international lending and foreign currency trading, in addition to the more typical banking services. Regional banks have numerous branches and automated teller machine (ATM) locations throughout a multi- state area that provide banking services
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to individuals. Banks have become more oriented toward marketing and sales. As a result, employees need to know about all types of products and services offered by banks. Community banks are based locally and offer more personal attention, which many individuals and small businesses prefer. In recent years, online banks- which provide all services entirely over the internet- have entered the market, with some success. However, many traditional banks have also expanded to offer online banking and some formerly internet-only banks are opting to open branches. Savings banks and savings and loan associations, sometimes called thrift institutions, are the second largest group of depository institutions. They were first established as community- based institutions to finance mortgages for people to buy homes and still cater mostly to the savings and lending needs of individuals.

Credit unions are another kind of depository institution. Most credit

unions are formed by people with a common bond, such as those who work for the same company or belong to the same labor union or church. Members pool their savings and, when they need money, they may borrow from the credit union, often at a lower interest rate than that demanded by other financial institutions.

Federal Reserve banks are government agencies that perform many

financial services for the government. Their chief responsibility are to regulate the banking industry and to help implement our nations monetary
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policy so our economy can run more efficiently by controlling the nations money supply the total quantity of money in the country, including cash and bank deposits. For example, during slower periods of economic activity, the Federal Reserve may purchase government security from commercial banks, giving them more money to lend, thus expanding the economy. Federal Reserve banks also perform a variety of service for other banks. For example, they may make emergency loans to banks that are short of cash, and clear checks that are drawn and paid out by different banks.

An Overview of banking industry in India

Till the end of late 18th century, Banks in India, in the modern sense of the term, werent there. During the time of the American Civil War, the supply of cotton to Lancashire (The textile hub of UK) stopped from the Americas. At that time some banks were opened, which functioned as entities to finance industry, including speculative trades in cotton. Most of the banks opened in India during that period could not survive and failed because of the high risk which came with large exposure to speculative ventures. It was a disaster for depositors who lost money and therefore lost interest in keeping deposits with banks. In the year 1786, The General Bank of India was the first bank to come into existence in India. And then, almost a century later, in the year 1870, The Bank of Hindustan became the 2nd bank in India. Unfortunately, both these banks are now defunct.1 The Bank of Bengal which later became the State Bank of India

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The oldest bank to be still in existence, that too as the largest bank in India, is the State Bank of India. Albeit, the name was not the same as today rather was "The Bank of Bengal which started its operations in Calcutta in June, 1806. Interestingly, if people think that the entry of foreign banks in India is only a post-reform phenomenon, they are absolutely incorrect. In fact, in as early as 1850s, foreign banks like Credit Lyonnais started their Calcutta (now Kolkata) operations. At that point of time, Calcutta was the most active trading port, thanks to the trade of the British Empire, and due to which banking activity took roots there and prospered. The first fully Indian owned bank was the Allahabad Bank, which was established in 1865. By the 1900s, the market expanded with the establishment of banks such as Punjab National Bank, in 1895 in Lahore and Bank of India, in 1906, in Mumbai - both of which were founded under private ownership. The Reserve Bank of India formally took on the responsibility of regulating the Indian banking sector from 1935. At least 94 banks in India failed during the years 1913 to 1918. This was really a turbulent time for the world as a whole and the banking sector in India specially. This was the period which witnessed the First World War (1914-1918). Since then through the end In Second World War (1939-1945), and two years thereafter until India achieved independence, were very challenging period for Indian banking. The years of the First World War were turbulent, and it took toll on many banks which simply collapsed despite the Indian economy gaining indirect boost due to war-related economic activities. There were at least 106 numbers of banks which downed shutters during that period.
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Post-independence
The partition of India bought about a social unrest throughout India in 1947. Riot and chaos ruled. The most adversely impacted provinces were the Punjab and West Bengal. So did the economies of both these provinces. As a result, the banking activities had remained paralyzed for months. Till then the banking sector was wide open and there were almost no regulation. Most of the promoters were private players. With Independence, things started changing. Rather the independence marked the end of a regime of trellisesfaire for the Indian banking. The new government initiated a process of playing an active role in the economy of the nation. The Industrial Policy Resolution adopted by the government in 1948 was the first step towards it. The resolution opted for a mixed economy. This resulted into greater control and involvement of the state in different segments of the economy, more so, in the sensitive sectors including banking and finance. The important banking regulatory steps were as follows: In 1948, India's central banking authority the Reserve Bank of India got Nationalized, and it became an institution owned by the Government of India. With the enactment of the Banking Regulation Act in 1949, the Reserve Bank of India (RBI) got empowered "to regulate, control, and inspect the banks in India." The Banking Regulation Act also provided that no new bank or branch of an existing bank may be opened without a license from the RBI, and no two banks could have common directors.

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Interestingly, despite these provisions, control and regulations, almost all banks in India except the State Bank of India, continued to be owned and operated by private persons. However, the situation changed dramatically with the nationalization of major banks in India on 19th July, 1969.

Nationalization
From Independence, it took some years for the banking sector to mature. By 1960s, the Indian banking industry did occupy an important position to facilitate the development of the Indian economy. Moreover, it did employ a quantum volume which could affect national economy. It resulted in a debate about the possibility to nationalize the banking industry. At that point, during the annual conference of the All India Congress Meeting, in a paper entitled "Stray thoughts on Bank Nationalization", India Gandhi, the-then Prime Minister of India expressed the intention of the GOI favoring nationalization. The paper was received with positive enthusiasm. Thereafter, in a swift and sudden move, the GOI issued an ordinance and nationalized the 14 largest commercial banks with effect from the midnight of July 19, 1969. The decision was even termed as a "masterstroke of Political sagacity" by non other than a leader of the stature of Jaypraksh Narayan. Then, Within the next fortnight of issuing the ordinance, the Parliament passed the Banking Companies (Acquisition and Transfer of Undertaking) Bill. The bill finally received the presidential approval on 9th August, 1969.

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In 1980, there came the second phase of nationalization of 6 more commercial banks. The reason forwarded for this was to have more control of credit delivery by the government. By the time, GOI effectively got hold of 91% control of the total banking business of India. Till 1990s, all nationalized banks grew at a pace of around 4%, similar to the average growth rate of the Indian economy.

Post-liberalization
In the early 1990s, with the Narsimha Rao government embarking on a policy of liberalization the situation started changing. Licenses were issued to a small number of private banks, such as Global Trust Bank (the first of such new generation banks to be set up)which later amalgamated with Oriental Bank of Commerce, UTI Bank(now re-named as Axis Bank), ICICI Bank and HDFC Bank. These banks also came to be known as New Generation tech-savvy banks because of their improved service condition and their extensive use of IT in the operations.

Indian Banking Industry

The growth in the Indian Banking Industry has been more qualitative than quantitative and it is expected to remain the same in the coming years. Based on the projections made in the "India Vision 2020" prepared by the Planning Commission and the Draft 10th Plan, the report forecasts that the pace of expansion in the balance-sheets of banks is likely to decelerate. The total asset of all scheduled commercial banks by end-March 2010 is estimated at

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Rs. 40, 90,000 cores. That will comprise about 65 per cent of GDP at current market prices as compared to 67 per cent in 2002-03. Bank assets are expected to grow at an annual composite rate of 13.4 per cent during the rest of the decade as against the growth rate of 16.7 per cent that existed between 1994-95 and 2002-03. It is expected that there will be large additions to the capital base and reserves on the liability side. The Indian Banking Industry can be categorized into non-scheduled banks and scheduled banks. Scheduled banks constitute of commercial banks and co-operative banks. There are about 67,000 branches of Scheduled banks spread across India. As far as the present scenario is concerned the Banking Industry . The Public Sector Banks (PSBs), which are the base of the Banking sector in India account for more than 78 per cent of the total banking industry assets. Unfortunately they are burdened with excessive Non Performing assets (NPAs), massive manpower and lack of modern technology. On the other hand the Private Sector Banks are making tremendous progress. They are leaders in Internet banking, mobile banking, phone banking, ATMs. As far as foreign banks are concerned they are likely to succeed in the Indian Banking Industry in India is going through a transitional phase

In the Indian Banking Industry some of the Private Sector Banks operating are IDBI Bank, ING Vyasa Bank, SBI Commercial and International Bank Ltd, Bank of Rajasthan Ltd. and banks from the Public Sector include Punjab National bank, Vijaya Bank, UCO Bank, Oriental Bank, Allahabad

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Bank among others. ANZ Grind lays Bank, ABN-AMRO Bank, American Express Bank Ltd, Citibank are some of the foreign banks operating in the Indian Banking Industry.

Kerala banking industry

The most essential element in the process of development and growth of the country is finance. The economy of a country becomes crippled without the flow of finance and the economic growth is stunted. Monitory resources can be channelised only with the help of a proper financial infrastructure. An effective financial system in the form of banks and financial institutions offer economical lending and borrowing. Kerala boasts of a well-developed banking infrastructure. With progressing time Kerala banking system has attained a high benchmark. Commercial, Nationalized a large number of Grameen banks have sprung up within the state. In fact there was a surge of Banks in the state following the nationalization of the banks in 1969. The State Bank of India (S.B.I.), Canadra Bank and Syndicate Bank are the principal nationalized banks. The State Bank of India offers around 228 branches and the Syndicate Bank has 115 branches in the fourteen districts of Kerala.

Apart from these commercial banks like Vijaya Bank, Dhanlakshmi Bank and the Federal Bank also offer commendable finance and banking facilities. Dhanalakshmi Bank offers 112 branches in the state. The Grameen Banks like SMGB and NMGB provide loans at low interest rates, special,
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subsidized lands and relief facilities to the local farmers and plays a great role in enhancing the agrarian productivity of the state. According to a survey conducted in the year 2001, there were 2 Regional Rural banks (RRBs) 49 Commercial Banks 14 District Co-operative Banks 1 State Cooperative Bank 44 PCARDBs All these banks altogether had 3813 branches in the rural as well as the urban areas and among them 2956 branches belonged to the Commercial Banks. Besides, there are also 1593 Primary Agriculture Credits Co-operatives in Kerala. The commercial banks of Kerala have also witnessed an increased flow of non-resident deposits toward the end of 2005. Kerala is done experiencing better growth of economy in the banking sector besides the banks, the other financial institutions which give a boost to the economy of Kerala are, Government Institutions Kerala Financial Corporation (KFC) Kerala State Financial Enterprises (KSFE) Kerala Transport Development Finance Corporation (KTDFC) Reserve Bank of India Private Institutions HDFC(Housing Development Finance Corporation Limited)
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 Muthoot Pappachan Group

COMPANY PROFILE PALAKKAD DISTRICT CO-OPERATIVE BANK(PDC BANK)

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PDC bank came in to existence on 01-07-1963 as a central co operative in the Palakkad district in the Kerala state. Before 1963, it was one of the branch viz. palakkad branch of Malabar central co-operative bank. The Malabar co-operative central bank was one of the central co-operative bank of Malabar district of old madras state up the costititution of the Kerala state on 01-11-1956. After the constitution of Kerala state, Malabar area became part of the Kerala state, and Malabar co operative central bank continued its functions as central co-operative bank in the Kerala state with its head quarters at Kozhikode. In 1963 Malabar central Co operative bank was bifurcated as two separate central co operative bank viz. palakkad central co- op bank and kannur district co operative bank. So in 1963 the palakkad district co operative bank began its function as central cooperative bank of the palakkad district with its head quarters at palakkad. Then after, when malappuram co- operative central bank was constituted in 1970, the branches of palakkad central co- operative bank at perinthalmanna and ponnani taluk was became part of the malappuram cooperative central bank. Following are some salient features of the bank: 1. Share capital The paid up share capital of the bank at the beginning of the year was Rs.5, 46, 23,750.00. During the year an amount of Rs.17, 64,100.00. The amount refund was Rs.12, 06,750.00. 2. Deposit and Borrowings

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(a)Deposits: The total amount held under various deposits at the end of the year was Rs.7, 31, 52, 32, 982.59 as against Rs.6, 08, 58, 73, 691.36 at the beginning of the year. (b)Borrowings: The total borrowing of the Bank from the Kerala state co- operative Bank and Govt. stood at Rs.10, 55, 83, 829.00 at the end of the year as against Rs. 10, 86, 29, 668.00 at the beginning of the year. 3. Loans and Advances The amount outstanding under loans and advances at the beginning of the year was stood at Rs.3, 87, 37,259.86. During the year a sum of Rs. 6, 85, 52,691.00 were disbursed and a sum of Rs.5, 55, 40, 44,126.86 was recovered leaving a balance of Rs. 5,17,40,45,814.00 at the end of the year. 4. Net profit The bank earned a net profit of Rs.1, 16, 02,032.20 during the year. Out of this 25% shall be credited to the Reserve Fund, 15% to Agricultural credit stabilization Fund and Rs.40, 000.00 to co-operative education fund. The balance is available for distribution as per Byelaws. 5. Reserve Fund The statutory reserve fund of the bank as on 31-3-2008 stood at Rs.6, 51, 91,389.23 with the addition of Rs.29, 00,508.05. 6. Classification The bank is classified as B for the year 2007-2008
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7. Working capital Working capital at the end of the year is Rs.7, 57, 22, 50,188.00.

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THE PALAKKAD DISTRICT CO-OPERATIVE BANK LIMITED BRANCHES

BRANCH AGALI, AGALI MOBILE BANK, ALATHUR, ALANELLUR, CHITTUR CHERPALCHERY, EDAKKURISSI, KANJIKODE, KALPATHY, KERALASSERY, KOLLENGODE, KODUVAYUR, KOPPAM, KOOTTANAD, KUZHALMANNAM, MANGALAMDAM, MANNARKKAD, MANNARKAD M& E, MENONPARA, MELAMURI, NEMMARA, OTTAPALAM, OTTAPALAM EVENING, PALAKKAD MAIN, PALAKKAD EVENING, PALAKKAD TOWN, PATTAMBI, PERINGODE, PULAPATTA, PADINJARANGADI, SHORNUR, SREEKRISHNAPURAM,

THEKKEGRAMAM, VADAKKANCHERY, MURIKKAVU (WEST YAK KARA), TRITHALA, KAMBRATHCHALLA, THENKURISSI, PARLI,

MANAPPULLIKKAVU.

PRODUCT PROFILE
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DIFFERENT TYPES OF DEPOSITS

Current Deposits Saving bank deposit Fixed deposits

DIFFERENT TYPES OF ADVANCES

Short term loans Cash credit Over draft Medium term loan Long term loan

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SWOT ANALYSIS

SWOT analyses take into account the strengths, weaknesses, opportunities and threats facing a business, organization or operation, in terms of serving customers, stakeholders and their own employees. A SWOT analysis of the banking industry will list these four components and illustrate for executives and management the areas the industry is performing well in not so well in. The SWOT also highlights the areas where there is opportunity to develop further and areas where there is potential to be hurt in the future.

Strength
The "Strengths" portion of the banking industrys SWOT analysis is a list of the internal operational elements where the banking industry is succeeding or excelling. These elements need to refer to features the industry can control and has a direct power to change

Efficient Board of Directors Good reputation Customer satisfaction Financial stability Dedicated staffs
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Weakness
The "Weaknesses" element of the banking industrys SWOT analysis is a list of the internal operational elements the banking industry needs to improve upon. These elements need to refer to features the industry can control and has a direct power to change.

No separate R&D department Shortage of staff Dual control (i.e. from RBI &co-operative department) No proper thinking facilities to staff

Opportunity
The "Opportunities" part of the banking industrys SWOT analysis is a list of the external environmental elements the banking industry can potentially take advantage of in the near future or long-term. These external environmental elements should not reflect the internal components of the industry, but rather the factors or features outside the industrys control

Sufficient fund Different type of loan Demand of financial product

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Introduction of more innovative financial products. Cross selling. Threats

The "Threats" component of the banking industrys SWOT analysis is a list of the external environmental elements that can potentially harm the banking industry. These external environmental elements do not reflect the internal components of the industry, but the factors or features outside the industrys control.

New banking policies of central govt. Presence of competitors in the market

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CHAPTER 3 Review of Literature

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Review of Literature

CRM has been a part of marketing literature since more than a decade. Interestingly, there is still much debate over what exactly constitutes CRM (Nevin, 1995; Parvatiyar and Sheth, 2001; Sin et al., 2005). According to Parvatiyar and Sheth (2001), some of the themes represent a narrow functional marketing perspective while others offer a perspective that is broad and paradigmatic in approach and orientation. One example of a narrow perspective is to view CRM as database marketing (Peppers and Rogers, 1995) emphasizing promotional aspects of marketing by leveraging customer databases. Other examples of a narrow approach include electronic marketing (Blattberg and Deighton, 1991) and after marketing (Vavra, 1992). Electronic marketing encompasses all marketing efforts supported by information technology while after marketing efforts focus on customer bonding after the sale is made. 64 On a broader level, CRM may mean customer retention or partnering (Peppers and Rogers, 1993, Vavra, 1992). In order to develop a comprehensive list of CRM practices, it is essential to identify the key Constructs of CRM. In this direction, Sin et al. (2005) have proposed that CRM comprises the following four constructs: Key customer focus, CRM organization, Knowledge management and Technology-based CRM. Each of these is discussed as follows.

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Key customer focus This is all about developing a strong customer focus (Das, 2004; Sheth et al., 2000; Vandermerwe, 2004) and continuously delivering superior value to selected key customers (Parvatiyar and Sheth, 2001) through personalized/ customized offerings (Dyche, 2002). CRM organization It implies organizing the whole organization around CRM, which will lead to considerations like organizational structure, commitment of resources and human resources management (Sin et al., 2005). Knowledge management Key facets of this construct include learning about customer needs and wants, dissemination and sharing of this knowledge and action (Sin et al., 2005). Technology-based CRM Technology plays the role of enabler in CRM deployment (Das, 2004) and allows firms to achieve greater customization and better service at lower cost (Sin et al., 2005). A review of academic and practitioners literature was done to develop a comprehensive list of CRM practices. Please refer appendix I for the practices and their respective chief sources.
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Going over to customer loyalty, Oliver (1999) defined it as a deeply held commitment to re-buy or re-patronize a preferred product or service in the future despite situation influence and marketing efforts having the potential to cause switching behavior. Thus, loyalty has both an attitudinal and behavioral dimension (Day, 1969; Dick and Basu, 1994). Behavioral loyalty will include examples like repeat purchase, word of mouth, etc while attitudinal loyalty will comprise examples like trust or emotional attachment (Baumann et al., 2005). Further, behavioral loyalty does not necessarily reflect attitudinal loyalty, because there might exist other factors that prevent customers from defecting (Aldlaigan and Buttle, 2005; Liljander and Roos, 2002; Reinartz and Kumar, 2002). Customer loyalty has been additionally related to profit levels (Reichheld and Teal, 1996). Besides, customer loyalty is one of the key objectives of CRM (Das, 2004; Lindgreen, 2004; Parvatiyar and Sheth, 2001; Payne, 2002; Sin et al., 2005).

THEORETICAL REVIEW:

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Introduction
Today, many businesses such as banks, insurance companies, and other service providers realize the importance of Customer Relationship Management (CRM) and its potential to help them acquire new customers, retain existing ones and maximize their lifetime value. At this point, close relationship with customers will require a strong coordination between IT and marketing departments to provide a long-term retention of selected customers. This paper deals with the role of Customer Relationship Management in banking sector and the need for Customer Relationship Management to increase customer value by using some analytical methods in CRM applications. CRM is a sound business strategy to identify the banks most profitable customers and prospects, and devotes time and attention to expanding account relationships with those marketing, customers through individualized reprising, discretionary decision making, and customized

service-all delivered through the various sales channels that the bank uses. Under this case study, a campaign management in a bank is conducted using data mining tasks such as dependency analysis, cluster profile analysis, concept description, deviation detection, and data visualization. Crucial business decisions with this campaign are made by extracting valid, previously unknown and ultimately Comprehensible and actionable knowledge from large databases. The model developed here answers what the different customer segments are, who more likely to respond to a given offer is, which customers are the bank likely to lose, who most likely to default on credit cards is, what the risk associated with this loan applicant is. Finally, a cluster profile analysis is used for revealing the distinct
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characteristics of each cluster, and for modeling product propensity, which should be implemented in order to increase the sales.

Customer Relationship Management

In literature, many definitions were given to describe CRM. The main difference among these definitions is technological and relationship aspects of CRM. Some authors from marketing background emp hasize technological side of CRM while the others consider IT perspective of CRM. From marketing aspect, CRM is defined by [Couldwell 1998] as ... a combination of business process and technology that seeks to understand a companys customers from the perspective of who they are, what they do, and what they are like. Technological definition of CRM was given as .. the market place of the future is undergoing a technology-driven metamorphosis[Peppers and Rogers 1995]. Consequently, IT and marketing departments must work Closely to implement CRM efficiently. CRM in banking sector was considered by Meanwhile, implementation of [Mihelis et al. 2001]. They

focused on the evaluation of the critical satisfaction dimensions and the determination of customer groups with distinctive preferences and expectations in the private bank sector. The methodological approach is based on the principles of multi-criteria modeling and preference desegregation modeling used for data analysis and interpretation. [YliRenko et al. 2001] relationships and have focused on the management of the exchange the implications of such management for the

performance and development of

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Technology-based firms and their customers. Specifically the customer relationship of new technology-based firms has been studied. [Cook and Hababou, 2001] was interested in total sales activities, both volume-related and non-volume related. They also developed a modification of the standard data envelope analysis (DEA) structure using goal programming concepts that yields both a sales and service measures. [Beckett-Camarata et al. 1998] have noted that managing relationships with their customers (especially with employees, channel partners and strategic alliance partners) was critical to the firms longterm success. It was also emphasized that customer relationship management based on social exchange and equity significantly assists the firm in developing collaborative, cooperative and profitable long-term Relationships. [Yuan and Chang 2001] have presented a mixed-initiative synthesized learning approach for better understanding of customers and the provision of clues for improving customer relationships based on different sources of web customer data. They have also hierarchically segmented data sources into clusters, automatically labeled the features of the clusters, discovered the characteristics of normal, defected and possibly defected clusters of customers, and provided clues for gaining customer retention. [Peppers 2000] has also presented a framework, which is based on incorporating e-business activities, channel management, relationship management And back-office/front-office integration within a customer centric strategy. He has developed four concepts, namely Enterprise, Channel management, Relationships and Management of the total enterprise, in the context of a CRM initiative. [Ryals and Knox 2001] have identified the three main issues that can enable the development of Customer Relationship
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Management in the service sector; the organizational issues of culture and communication, management metrics and cross-functional integrationespecially between marketing and information technology.

Benefits of CRM
The use of a CRM system will confer several advantages to a company:

Quality and efficiency Decreased costs Decision support Enterprise agility

Phases
The three phases in which CRM support the relationship between a business and its customers are to:

Acquire: CRM can help a business acquire new customers through contact management, selling, and fulfillment. Enhance: web-enabled CRM combined with customer service tools offers customers service from a team of sales and service specialists, which offers customers the convenience of one-stop shopping.

Retain: CRM software and databases enable a business to identify and reward its loyal customers and further develop its targeted marketing and relationship marketing initiatives.

CRM Objectives in Banking Sector

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The idea of CRM is that it helps businesses use technology and human resources gain insight into the behavior of customers and the value of those customers. If it works as hoped, a business can: provide better customer service, make call centers more efficient, cross sell products more effectively, help sales staff close deals faster, simplify marketing and sales processes, discover new customers, and increase customer revenues. It doesn't happen by simply buying software and installing it. For CRM to be truly effective, an organization must first decide what kind of customer information it is looking for and it must decide what it intends to do with that information. For example, many financial institutions keep track of customers' life stages in order to market appropriate banking products like mortgages or IRAs to them at the right time to fit their needs. Next, the organization must look into all of the different ways information about customers comes into a business, where and how this data is stored and how it is currently used. One company, for instance, may interact with customers in a myriad of different ways including mail campaigns, Web sites, brick-and-mortar stores, call centers, mobile sales force staff and marketing and advertising efforts. Solid CRM systems link up each of these points. This collected data flows between operational systems (like sales and inventory systems) and analytical systems that can help sort through these records for patterns. Company analysts can then comb through the data to obtain a holistic view of each customer and pinpoint areas where better services are needed. In CRM projects, following data should be collected to run process engine: 1) Responses to campaigns, 2) Shipping and fulfillment dates, 3)Sales and purchase data, 4) Account information, 5) Web registration data, 6) Service and support records, 7) Demographic data, 8) Web sales data.
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CRM Development
To be prepared to the changing economic conditions and, in particular, to a rapidly decreasing inflation rate scenario Garanti Bank has started timely to focus on developing a customer relationship management (CRM) system. The total number of customers is presently around two millllions, but an increase to roughly three millions is foreseen as merging with Osmanli Bank and Koferzbank are achieved and the present growth targets are reached. The importance for the bank of managing the relationships with their customers has been the drive of the joint projects that have been developed with IBM in the last three years. During the projects a number of crucial technological and architecture choices have been made to implement the entire process. Realizing the importance of customer information availability the first of these projects has focussed on the Problem of routinely collecting and cleansing data. The project has been undertaken by the bank with the spirit that has characterized the whole CRM development. The project has promoted a massive branches, namely of involvment of the the portfolio managers and campaigns have been

launched for popularizing among branch staff the importance of gathering and maintaining reliable customer data. Another set of methods have been tested for customer not included in portfolios (pool customers), such as mailing or distributing questionnaires in the branches or using automatic teller machines (ATM) and the call center. Methods for data checking and testing have been developed to be routinely employed by the banks staff. Results obtained are very good: for portfolio customers data available are respectively 98% for the commercial ones and 85% for the retail ones. For
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pool customers availability goes down to 65%: this is a well-known phenomenon due to the loose relationship with the latter Customers. Indian Banking The structure of schedule banks in India in shown in figure 1. The total number of public sector banks (PSBs) stands at 28. In the category of private banks (PBs), there are 16 banks classified as old private banks (OPBs) which were existing prior to the liberalization of the banking sector. The new private banks (NPBs) were born after 1991-92 with the opening up of this sector to private players. The total number of NPBs, as of 1st May, 2007, is 8. Plus, there are 29 foreign banks (FBs), most of which are limited to the metropolitan cities (RBI, 2006). In all, the total number of scheduled commercial banks as of 1st May, 2007 is 81.

Geographic Scope Many of the 81 scheduled commercial banks in the country have a pan-India presence in terms of branch network. For matters of convenience, the study was restricted to Surat city, where the researcher was based. Another reason for accepting Surat as the place of study is the fact that except for one bank (State Bank of Patiala), the entire segment of PSBs is existing for many years. In the case of PBs, except for four banks, all others have a presence in this city. These four banks are Lord Krishna Bank, Neonatal Bank, Ratnakar Bank, and SBI Commercial and International Bank. The merger of Lord Krishna Bank with Centurion Bank of Punjab is on the cards (RBI, 2007).
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Nainital Bank is in the process of getting merged with Bank of Baroda (PR Domain, 2006) and the future of the other two PBs is uncertain. In the case of FBs, out of the 29 players operating in the country, only 4 players are active in the retail banking segment for more than one year (Chowdhury, 2007), out of which 3 banks are present in Surat (only HSBC Bank is not present). Further, the practices of the banks are consistent across cities/ regions as confirmed by their respective managers and further corroborated by the researchers personal observations, thus ensuring that external validity will not be affected.

Scheduled banks in India

Scheduled Commercial Banks

Scheduled Co-operative Banks

Public Sector Bank

Private Banks

Foreign Banks

Regional Rural Banks

New Private Banks

Old Private Banks

Scheduled Urban Co-operative Banks

Scheduled State Co-operative Banks

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Surat is the ninth largest city of India in terms of population as per 2001 census (Population, 2006). The city is ranked 70th amongst the most populous cities of the world for the year 2006 with an estimated population of 3.9 million (vom Hove, 2006). The city was ranked 131st amongst the wealthiest cities of the world for the year 2005 and is predicted to be the 4th fastest growing city of the World (second in the country) for the period 2006 to 2020 (vom Hove, 2006). All these facts make Surat a very lucrative market for the banks, particularly, in the retail banking segment. This also explains the high representation of scheduled commercial banks in the city.

CHAPTER-4

DATA ANALYSIS AND INTERPRETATION

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Table:1

Satisfaction Level with present facilities provided by the bank Mode of response Satisfied Neither satisfied nor dis satisfied Dissatisfied Total No of response 25 57 18 100 Percentage 25 57 18 100

50

D iagram-1: satisfaction w ith present facility provided by the bank

18%

25% Satisfied To some extent Dissatisfied

57%

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Interpretation
The above table shows that 25% of respondents are satisfied with present facilities provided by the bank and 57% of respondents are neither satisfied nor dissatisfied and 18% are dissatisfied with present facilities provided by the bank.

TABLE 2

The table showing whether the respondents are getting any additional service provided by the bank Attitude Yes No Total No. of respondent 50 50 100 Percentage 50 50 100

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D ia g ra m -2 : A d d itio n a l s e rv ic e p ro v id e d b y th e bank

50%

50%

Y es No

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Interpretation
The above table shows that 50% of respondents are getting additional service and 50% not get additional service provide by bank. Table: 3 The table showing whether the respondents use the facility in a

effective manner

Option Yes No Total

No. of respondent 75 25 100

percentage 75 25 100

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Effectiveness of the fcility used

25%

Yes No

75%

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Interpretation
This table show that 75% of respondents use the facility most effectively and 25% are not using the facilities in an effective manner..

Table: 4

Opinion towards customer relationship Opinion Good Neither good nor bad Bad Total No. of respondent 85 15 0 100 Percentage 85 15 0 100

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O ption towards custome r re lationship

15%

0%

Good S atisfied B ad

85%

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Interpretation
85% of customers says that the CRM of the bank is good.

Table: 5 Whether customer relationship help in reducing customer complaints Opinion Yes To some extent No Total No of respondent 55 25 20 100 Percentage 55 25 20 100

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Effectiveness of CR to reduce customer complaints

6%

18% Yes To some extent No

76%

Interpretation
55% of customer says that customer relationship helps to reduce complaint and 25% are said it helps to only some extent to reduce complaints. But 20% customer says that it does not help to reduce complaints. Table: 6

Attitude of the customer to make suggestion

Attitude Yes, I am ready No Total

No. of respondent 85 15 100

Percentage 85 15 100

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Attitude of customer to make suggestion

15%

Yes, I am ready No

85%

Interpretation

The above table shows that 85% customers like to give suggestion which make customer service more effective. But 15% are not ready. Table: 7

Change of attitude by adoption of CRM

Attitude Yes To some extent No Total No of respondents 50 30 20 100 Percentage 50 30 20 100

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Change of attitude by adoption of CRM

20%

Yes 50% To some extent No 30%

Interpretation
50% of customers attitude was changed by the adoption of CRM. But 20% of customers did not have any change in their attitude. Table: 8

Banking operation channel used by customers

Channels Internet Call centers Telephone Total No of respondents 21 29 50 100 Percentage 21 29 50 100

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Banking operation channel used by customers

21% Internet 50% Call centers Telephone 29%

Interpretation
50% of customers use telephonic service , 29% of customers uses call center service and 21% use internet as banking operation channel. Table: 9

Banking resourses used by customers

Resources Project finance Equipment finance Corporate loan

No. of respondents 22 18 20

Percentage 22 18 20

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Working capital loan Agricultural loan Total

15 25 100

15 25 100

DIAGRAM - 9

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Banking resourses used by customers

Project finance 25% 22% Equipment finance Corporate loan 15% 20% 18% Working capital loan Agricultural loan

Interpretation
The above table shows that 22% of customers use project finance. 18% use equipment finance, 20% use cooperate loan, 15% use working capital loan, and 25% of customers use agricultural loan facilities.

Table: 10 Rating Scale of Satisfaction level towards customer relationship provided by bank

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Level 21-30 31-40 41-50 51-60 61-70 71-80 Total

No. of respondents 4 12 35 32 11 6 100

Percentage 4 12 35 32 11 6 100

DIAGRAM - 10

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40 35 30 25 20 15 10 5 0 4 12

35 32

35 32 21-30 31-40 41-50 51-60 11 6 4 12 11 6 61-70 71-80

No. of res pondents

P erc entage

Interpretation
Satisfaction level of about 35% of customers flies within the range of 41-

50

Table: I1

Main reason for selecting PDC bank

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Reason Good relation with customers Nearness More facility Total

No. of Respondents 45 18 37 100

percentage 45 18 37 100

Main reason for selecting PDC bank

37% 45%

Good relation with customers Nearness More facility 18%

Interpretation
The above table show that most of the people select PDC bank because the bank is maintaining a good relation with customers and secondly because of the facilities provided by the bank Table: 12

Suggestion for making customer service more effective

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Suggestion Maintain good relation with customers Provide better service Provide more banking resources Total

No. of respondent 49 30 21 100

Percentage 49 30 21 100

Suggestion for making customer service more effective

21%

Maintain good relation with customers 49% Provide better service Provide more banking resources

30%

Interpretation
Most of the customers have the opinion to maintain a good relation with customers

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FINDINGS, SUGGESTION & CONCLUSION

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Findings

Most of the customers are satisfied to some extent with the present
Fecilities provided by the bank Most of the customer gets additional service provided by the bank. Majority of the customers effectively used the fecilities provided By the bank. Most customers have good opinion towards customer relationship. The customer relationship helps to reduce customer complaints most Effectively. Most of the customer effectively utilized the banking operation channel. The main purpose of providing customer service is for acquire new customers and retain existing one. The customers have change on the attitude by the adoption of customer Relationship The majority of the customer opinion is that the bank must maintain a Good relation with them. Majority of the customer choose PDC bank because of the good relation With employees. .

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SUGGESTION 1. The bank must keep a good relation with customers. 2. Provide more banking resources and better services. 3. Consider the suggestion made by the customers. 4. Collect more information about customers. 5. Solve customer complaints most effectively. 6. Provide better after sales services. 7. cross selling of products should be provided

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CONCLUSION

The project is an attempt to analyze the effectiveness of customer relationship management in banking sector especially for PDC bank Palakkad From this study it is concluded that most of the respondents are satisfied with present services provided by the bank. The customers expect more services from the bank. Customer relationship helps the bank to increase reputation among the public. .

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BIBLIOGRAPHY

73

BIBLIOGRAPHY

Books: Research Methodology Marketing Management Banking theory & practice Rural Banking in India - C .R .Kothari - Philip Kotler - B.S Raman - U.C. Patnayic

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ANNEXURE

Questionnaire
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To customers: Name:
1. What was the main reason for selecting PDC bank palakkad? Good relation with customers Nearness More facility 2. Are you satisfied with the present facilities provided by the bank Yes: No:

3. Do you get any additional service provided by the bank? Yes: No:

4. Whether you use the facilities most effectively Yes: No:

5. What is your opinion towards customer relationship? Good Satisfied Bad 6. Whether it help to reduce customer complaints Yes: No:

7. Is there any change on your attitude by the adoption of customer relation service Yes: No:

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8. Would you like to give any suggestion to make customer service more effective? Yes: No:

9. Whether you use any of the following banking operation channels Interest Call centre telephone 10. Do you use any of the following banking resources Project finance Equipment finance Corporate loan Agricultural loan Working capital loan

11. do you get following additional service After sales services Friendliness with customers Festival offers 12. Can you rate the satisfaction level towards customer relationship provided by bank? 20-30 31-40 41-50 51-60 61-70 71-80

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13. Give some suggestion which will make customer service more effective Provide better after sales service Maintain good relation with customers Provide more banking resources

To Manager

1. What are the main banking resources used by customer? Project fianc Equipment finance Corperate loan Working capital loan Agricultural loan

2. What are the additional services provided by the bank? After sales services Friendliness with customers Festival offers

3. What is the main reason for providing customer service? Acquire new customers Retain existing one Maximize their life time value Reducing customer defection

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4. If there is any change on the attitude of customers by adoption of customer relationship Yes: No: To some extent

5. Does the customer use the facility most effectively? Yes: No: To some extent

6. Does the customer relationship target all customers? Yes: No:

7. If it help to find most profitable customers Yes: No:

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