Chapter 1 – Marketing In Retail Banking

Marketing and Delivery Channels in Retail Banking

Retail Banking is primarily driven by number of customers each bank possesses. To build up the customer base, marketing promises and delivery of products and services are the top priorities of banks in the retail banking.

Definition of Marketing

Sir Frederick Seebohmn: Bank Marketing is ‘the creation and delivery of customer – satisfying services at a profit to the bank’.

Kenneth Andrew: Bank Marketing is ‘the matching of bank’s resources with the customer’s needs in the most profitable manner’.

Dervk Vander Weyer: Bank Marketing is a proactive business strategy aimed at organisational excellence. in the context of Retail Banking marketing means –

• Identifying the most profitable markets now and in the future.
• Assessing the present and future needs of customers.
• Setting business development goals and making plans to meet them.
• Adapting to a changing environment in the market place.

Marketing in Retail Banking

Customer is the centre of attraction in retail banking and marketing and all the activities have to be focused towards

1. Identifying the customers’ needs,
2. Developing appropriate products to satisfy their needs,
3. Providing them with efficient delivery channels for availing the products.
4. Making them avail the products continuously. The ultimate objectives of these initiatives are to achieve the business objectives of growth and profit.

Marketing Mix in Retail Banking

Marketing mix in retail banking refers to the different ingredients to make customer happy and satisfied. The fundamental ingredients of an effective marketing mix in retail banking are as follows:

• Product
• Price
• Promotion
• Place
• People
• Process
• Physical evidence.

The above seven Ps play a vital role for the banks in their retail banking strategies.

Product: A bank product can be defined as “Anything that has the capacity to provide the satisfaction, use, and return desired by the customer”. The different retail banking products like Deposit, Asset and Other Service products.

Price: ‘Price’ in the marketing mix refers to transaction cost to be borne by the banker or the customer depending upon the product offered or availed. In the case of deposit products, ‘Price’ refers to the interest rate offered by the banker to the customer. In asset products, ‘price’ refers to the interest the bank is quoting to the borrower customer for offering the loan product to the customer. In case of other services, price refers to the fee/charges the bank is charging for offering the different services.

Promotion: ‘Promotion’ refers to the efforts of the banks to reach the customers. This includes personal promotional measures and other promotional measures. The ultimate objective of these promotional measures is only to win the customer and make him to avail the bank’s products & services. The various ways in which the marketer develops promotion strategies are through Personal Selling, Advertisement, Sales Promotions, Publicity etc.

Place: ‘Place’ in retail banking generally refers to the place where the Bank is offering its product. Earlier ‘Place’ was limited to the location of Branch but technology has shifted the place from the brick and mortar format to e format and has reached the customer in his place through internet banking and mobile banking.

People: Since Retail Banking is basically services marketing addressed to a large customer base, people play a very essential role in the success of the retail banking strategy. ‘People’ concept in marketing refers to the people who are doing the marketing strategies and also ‘people’ who are the beneficiaries of the marketing strategies. Moreover, banking products and people are inseparable. Therefore, the effectiveness of the product depends on the effectiveness of the people delivering the product.

Process: ‘Process’ is an all pervasive concept in the product development, product structuring and delivery stage. Process will be successful when the output derived from the process is delivered in the expected way. The process relates to all organisational activities which go into the marketing of the final product to the customer including delivery channels.

Physical Evidence: Physical evidence means adding tangible aspects to even otherwise intangible nature of banking services. Debit Card, ATM Card, Personalised Cheque Book are some of the attempts by banks for creating physical evidence.

Relationship between 7 Ps

The seven Ps are both independent as well as interdependent in the marketing effectiveness. The 7 Ps individually contribute-their part in the effectiveness. But these P’s are interlinked in such a way that one P will be a deciding P for the effectiveness of the other R For example, though product is an important element of the marketing mix, the effectiveness of the product and the strategy depends on the price. Similarly, price is an important element in the marketing mix, but the product and price will not matter much if the promotion or the place aspects are not given due consideration. If the ‘process’ element is not taken care of, the other Ps will not be effective.

The effectiveness can be measured by the response of the customer to the marketing strategies. If the customer is responsive, availed the products/services from the marketer and satisfied about it, then that would result in repeated purchases/availment of the products/services. If the customer is not satisfied, there is no reason for him to come again because his needs were not satisfied with our products/ services. The success of the seven Ps and the marketing strategies are measured only by the responses from the customers from the point of view of need satisfaction.