Marketing of Services

Marketing of Services

Evolution of banking
First evolved in Egypt & Greece centuries

ago. In India, the establishment of General bank of India in 1786 marked the origin of the banking system in India. Banking emerged in the organized sector in the 19th century & developed significantly in the 20th century.

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Definition
A bank is a financial institution that accepts deposits & channels the money into lending activities.

Marketing of Services

Market Segmentation in Banking Industry

The basis of any segmentation is market

needs or the customer base. Earlier Banking segmentation was done on geographic & demographic basis. But later it was found that it is not suitable due to change in the customer profiles & their needs.

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Market segmentation based on customer Profile

Retail Banking
Commercial Banking Corporate Banking NRI Banking Investment Banking

Marketing of Services

Based on Customer Need, the loan market can be divided into

Consumer Finance
Trade Finance Corporate Finance Project Finance Venture Capital

Marketing of Services

Marketing Mix
Product may be in the form of Core Product (Basic

Service offered & Augmented product (Supplement services) Core Products Saving Accounts Salary Saving Account Current Account Fixed deposit Loans (Two wheeler, home, personal, home-equity)

Marketing of Services

Core Products (Contd..)

Overdrafts, credits, smart card Payment services of utility bills Advisory & Consultancy services

Augmented Product: Net, Phone, mobile, ATM, Mobile ATM banking, home banking 24-hours customer Care service Anytime & anywhere banking (customer is allowed to conduct transactions in any of the banks branches)

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Pricing: Traditionally, the main source of revenue for

any bank was the interest on investments & loans. Modern sources of income for banks: The annual charges for credit & debit cards Penalties Charges for payment of Utility bills

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Pricing (Contd.)
Pricing should take care of the cost of funds, the administrative expenses, the credit losses incurred & the expected profits. Pricing policy should be dynamic that changes with the changes in other elements of the product mix.

Marketing of Services

Place
Electronic channels of distribution have become quite

strong with technological innovations which gives great flexibility & convenience to customers. Conventional & modern distribution channels are : Bank branches Call Centers ATMs Internet banking & home banking Plastic cards Mobile offices & mobile ATMS

Marketing of Services

Place (contd)
Some banks have their ATMs & extension Counters in

the premises of External organizations. E.g. banks ATM in the premises of Corporate or Universities. To reduce Operational costs, banks have come together to run ATMs that can be used by customers of any bank.

Marketing of Services

Promotion
Personal selling, advertising, discounts &

melas. Banks advertise their services through different media like Print & electronic media. They put large hoardings especially in commercial areas. Banks also tie-up with companies from other industries for the benefit of both. E.g. ICICI with HPCL

Marketing of Services

People
Very important marketing mix as banker can sell the

loans & saving schemes as per customer requirements & can also inform them of the various benefits involved with the scheme which are not clear directly.

Process
It plays a significant role in winning customers &

increasing market share. It is the processes in a bank that determine the efficiency of its operations & quality of service delivery to customers. E.g. reduced time for transactions, Processing of high value cheques, Demand drafts preparation etc.

Marketing of Services

Physical Evidence
Ambience, building & lawns
Air-Conditioned branch offices & ATMs Furnished lounge for customers in queue

Amenities like Newspapers, drinking water etc. for

customers Displayed Awards & certifications like ISO 9001 Displayed achievements, financial results, business milestones Cheque books, customers letters & brochures etc.

Marketing of Services

Recent Trends in banking

Branding banking services have become very important in view of increased the competition & little differentiation between services.
More competition from NBFCs Banking Industry is trying to make the best use of technology, while trying to avoid the pitfalls involved. Banks have become more customer oriented & offer customized services to meet individual needs

Marketing of Services

Recent Trends in banking

There is an increased focus on the high net worth customs

as they contribute more to the business. Banks have been offering 24 hrs. service to customers all 365 days of the year through their customer care center & anywhere, anytime banking service. As more corporate turns to the equity market to raise funds, banks see more prospects in the retail, agriculture & infrastructure segments apart from personal banking. There has been a complete shift in the promotional strategies of companies as well, as banks tie up with companies from other sectors to leverage the synergies involved.

Marketing of Services

Insurance Industry
Insurance Industry in India has transformed because of wide range of structural changes. These changes are driven by main 3 reasons: Changes customer profile & increased expectations Increased competition because of foreign players & private players. Value added products from insurers & advancement in technology have also aided this transformation.

Marketing of Services

Market Segmentation for Insurance

Individuals
Institutions Industry

Trade

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Product
Life Insurance Accident Insurance Health Insurance House Insurance Liability Insurance Travel Insurance Commercial Insurance Property Insurance Automobile Insurance

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Product (Contd)
Baggage Insurance
Marine-Cargo Insurance

Insurance is a means of security, Investment or tax saving. Companies are striving for brand building as there is less of product differentiation.

Marketing of Services

Price
Pricing of life insurance is generally done

based on the competition, prevailing rate of interest etc. However it is the quantum of risk involved that ultimately decided the pricing of Insurance products. Higher the risk involved , higher is the price. Pricing can also be done taking advantage of the demand fluctuations in the market.

Marketing of Services

Place
The Volume of business generated depends on the

companys reach is the why place is important. A insurance company needs to offer a personalized service to customers to lower their perceived risk & for that it needs the services of a large number of able agents. LIC is the market Leader with a network of 2048 branches, 1 lakh employees & app. 7-8 lakh agents. The core product is best sold through personal selling, with customized offerings. The Other distribution channels like Internet, Advertising, telemarketing etc. can be used to provide supplementary services to customers.

Marketing of Services

Place
Some Innovative Changes like Bancassurance .

It is the distribution of Insurance products through a

banks distribution channel e.g. 1. Tata AIG tie up with HSBC 2. Bajaj Allianze tie up with syndicate bank.

Marketing of Services

Promotion
Personal Selling
Advertising Sales Promotion (Discounts, reduced premiums, gift

coupons, future price discount & special service enhancement) Tie-Ups (Banks , credit card companies or automobile companies) Public Relations

Marketing of Services

Process
The process of buying an insurance product & paying

the regular premium has become a simple process in the recent times. Technological changes have helped simplifying the process in the insurance sector. The customer can now gather more information on the internet, which helps him choose his service provider & the service that will cater best to his needs. Customer can even purchase a policy on Line Processes have to customer friendly & time saving.

Marketing of Services

People
Insurance needs to be sold; very few customers would

buy it in the absence of selling. Therefore the importance of people increases in Insurance industry which is dominated by agents & Insurance advisors. The agents ability to convince & persuade is the determining factor in an insurance deal. Therefore agents need to be empowered to offer customized services to suit the specific needs of customers. They need to be motivated through commissions & awards to achieve higher targets.

Marketing of Services

People
Insurance companies have realized that it is important to

hire agents who can win the trust & confidence of customers. Therefore they have started recruiting retired employees from banks who already have a customer base & can win customers confidence . Now a days they are appointing house wives as agents

Marketing of Services

Physical Evidence
In Insurance marketing , providing physical evidence to

the customers is quite difficult. As in most cases the customer buys the policy from agent & does not visit the office of Insurance company. Therefore the office building, infrastructure, equipment etc. contribute very little to physical evidence However a good ambience, well dressed & well behaved employees, displayed certificates & achievements of the company etc. are some of the techniques to provide physical evidence. The policy certificate & the receipt of the payment contribute to minimizing the perceived risk of customers.

Marketing of Services

Recent Trends in Insurance Marketing

Govt. of India set up a committee on reforms (the

Malhotra Committee) in April 1993. The committee recommended the entry of private & foreign players into the industry. The passage of the IRDA bill in 1999 initiated the reforms process. By 2004, 12 Life Insurance companies & 9 general Insurance companies were registered.

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Recent trends
Some of changes in Indian Insurance Industry over the past half decade are : There is an increased awareness of Insurance among consumers & so their expectations have gone up. The service portfolio of many Insurance companies have expanded with the addition of Innovative services. Market size has increased because of requirement of specialized custom made services. Tech. developments & International standards have improved the service Quality.

Marketing of Services

Portfolio Management
The growth of the Equity & debt markets in

India has opened more avenues for investment to the average Indian investor. Definition of Portfolio Management:- This refers to managing the funds of Individuals or Institutional customers taking into consideration their short-term & long term needs. This involves maximizing the returns for the customers while mitigating the risk.

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Portfolio Management
Portfolio management needs the professional

expertise of the portfolio managers, who technically analyze each investment option & choose the ones that best suit the customer needs. It also involves distributing the available funds among the investment options for the best results.

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Market Segmentation
PMS are used by high net-worth individuals

(HNIs) & corporate. However because of evolution the service is being extended to Individual investors with an investments sum of even Rs. 5 Lakhs. So market can be segmented into 3 categories:1. Average Individual investor 2. High net worth individual 3. Corporate investors.

Marketing of Services

Market Segmentation
The need of each segment is different. So the service

provider should target a specific segment. Based on the services offered & the requirements of the customer, the market can be divided into 1.Discretionary services (Portfolio manager can take independent investment decisions within the broad framework of asset allocation) 2.Non-discretionary services (Every decision requires Investors endorsement)

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Marketing Mix
1. Product :- Product need to be designed based on

the unique requirements of each investor. Each product should take into consideration the following aspects:Fitment with investment needs. Adherence to pre-determined goals Conformity to market guidelines & constraints Ensuring of investment returns

Marketing of Services

Price
Pricing is very important in the PMS sector as high fees can

turn away the potential customers towards mutual fund schemes. Therefore pricing services competitively is almost a necessity for the survival of the PMS companies. Pricing methods & the prices of these services vary from service provider to service provider. However, some of the most common used methods are percentage of value of portfolio assets or a percentage of returns.

Marketing of Services

People
As important investment decisions are taken

by portfolio managers so they are the very important. Portfolio managers are the most important assets of a PMS company. PMS dealing companies draw attention to their expert managers in their advertisements & promotional campaigns.

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Place
One of the major factor for the growth of PMS in India has been the time or expertise of the individual & institutional investors. Internet as a Distribution channel offers greater convenience & time saving to the investors. However the role of people who convince customers for various investment options can not be ignored.

Marketing of Services

Promotion
Personal Selling & Price discounting Some companies offer price discount scheme

wherein only the performance fee is charged, that is, the customers need to pay only if their portfolio performs well. PMS companies can have tie-up with reputed banks to add credibility to their services.

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Process
The

process of portfolio management starts with understanding the requirements of the customer & his profile. This includes understanding his investment objectives, liquidity constraints, time horizon, tax status & risk profile. The next step is the asset allocation to diff. segments of the portfolio like mutual funds, insurance, bonds, bank deposits, real estate etc. Finally the performance of the portfolio is tracked & necessary action is taken time to time to improve the returns

Marketing of Services

Physical Evidence
High value involved so high chances that

customer would visit the premises so infrastructure & the ambience should convey the message of trustworthiness of the service provider & the quality of services. Should display achievements, clearance from regulatory bodies, Quality compliance certification , past performance track etc.

Marketing of Services

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