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Analysis of Retail Banking with

Marketing Strategies

RESEARCH PROJECT REPORT

Submitted to Punjab Technical University in partial fulfillment of the requirements

for the degree

Of

MASTER OF BUSINESS ADMINISTRATION(Specialization: Finance)

By

Anuj Kumar Srivastava

(81001317013)

Gian Jyoti Institute of Management &

Technology

Mohali

2010


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DECLARATION

Hereby declare that the project report entitled Retail Banking

with marketing strategies submitted for the degree of Master of

Business Administration, is my original work and the project

report has not formed the basis for the award of any diploma,

degree, associate ship, fellowship or similar other titles. It has

not been submitted to any other university or institution for

the award of any degree or diploma.

Anuj Kumar Srivastava

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CERTIFICATE

This is to certify that the this entitled Retail Banking with marketing strategies

submitted for the degree of MBA for the Punjab Technical University, Jalandhar, is a

bonafide research work carried out by Anuj Kumar Srivastava (81001317013) under my

supervision and that no part of that is has been submitted for any other degree.

This assistance and help received during the course of investigation has been fully

acknowledged.

PR

OJECT GUDIE

DR. Monika Aggarwal

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Table of Contents

Declaration ----------------------------------------------------------- 1

Certificate ------------------------------------------------------------ 2

Acknowledgement--------------------------------------------------- 4

Preface------------------------------------------------------------------5

Introduction------------------------------------------------------------8

Research methodology-----------------------------------------------20

History-----------------------------------------------------------------22

Marketing Strategies------------------------------------------------ 27

Accessing Growth------------------------------------------------------46

Recognition to Value-------------------------------------------------59

Customer Satisfaction------------------------------------------------61

Expanding Horizons-------------------------------------------------68

SWAT Analysis--------------------------------------------------------70

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EXECUTIVE SUMMARY

RETAIL BANKING

Retail Banking refers to all banking products and services which are aimed at the retail or

individual consumer market. It can also be said that retail banking is all about giving or

providing the best of banking products and services to enhance individual customer

satisfaction. Since retail banking is all about providing financial services to the customer.

So it becomes essential to describe the nature of services so that we are able to

understand how the services are different from usual products

MARKETING STRATEGIES

Marketing is an essence of every organization whether manufacturing sector or bankingsector. Without marketing every other function is futile. This function clearly need to

be scrutinized by every enterprise.

Marketing is three phased process:

1.Value creation: This process need strong reflexes. For that marketing manager need to

segment the market so that he can apparently arbitrate the need in various segment.

Segmentation can based on the following of characteristics:

1. Economic conditions of the people

2. Geographical conditions

3. Psycographic conditions of people

4. Political Conditions

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And can be based on other demographic conditions:

1. Age and stages in Life cycle

2. Gender

3. Generation

MAJOR PLAYERS IN THE REGION IN COMPARISON WITH LORD

KRISHNA BANK

1. ICICI

2. HDFC

3. KOTAK MAHINDRA

4. CENTURION BANK OF PUNJAB

5. STANDARD CHARTERED

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INTRODUCTION

Banking environment is changing day by day. Competition has forced banks to offer

large a large number of financial services. Not surprisingly, this competition puts a

premium on innovation and precision in delivering services. Unfortunately many banks

are at a competitive disadvantage because of state regulations. Still they are gaining

greater flexibility in diversifying their asset base across geographic boundaries and into

new product lines. Their battle is for a playing field in which they can compete equally

with other financial service providers.

The increasing competition has led to force banks to give the best of customer services to

their customers, which in turn have led to customer satisfaction. Todays era of modern

banking is all about a good banker and customer relationship. The more the customer will

be satisfied the more the bank will be successful. For seeking a good relationship with a

customer, the bank has to give the most efficient financial services to its customers.

The main force behind the evolution of financial services and restructuring of financial

market is the financial innovation.

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RETAIL BANKING

Many years ago, Peter Drucker entitled a chapter in his book Managing for Result

The Customer is the Business. The statement is as true as important today. Customers

provide revenue that provide profit potential which acts as incentive for investing in a

business. The customer is the business. Without customer, there is nothing.

Never before, the financial service providers have intended struggle and fight for

customer as they do today. Everyone is after everyone elses best customers. Today it is

harder to win new customers and keep old ones.

The necessity for banks and other institutions to know the customer and to translate this

knowledge to provide value to customer was never as essential as today. Genuine value,

and not story telling, is the perfect way to attract and keep customers. Delivering value to

customers is the marketing interpretive. Today, financial service customers can go

anywhere. And, they will, if their present bank offers sub-standard and inefficient

services.

So, due to increasing importance of efficient financial services, the banks are moving

towards extending their business to give optimum customer satisfaction. The banks

business prosperity depends on how it fulfills the needs of its customers.

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So, due to many other reasons similar to the above, there is emergence of the concept of

Retail Banking. Before going into details of retail banking, this concept needs to be

described in some detail.

What is Retail Banking?

Retail Banking refers to all banking products and services which are aimed at the retail or

individual consumer market.

The concept of retail banking could be understood in a better way by knowing about

wholesale banking which applies to all small business banking, corporate banking,

government banking, correspondent banking, international banking, corporate trusts and

any other activities directed towards organizations rather than individuals.

It can also be said that retail banking is all about giving or providing the best of banking

products and services to enhance individual customer satisfaction.

To have more clarity about Retail Banking, it is differentiated from commercial banking

under the heads of Retail Services and Commrcial Services respectively as below:

BASIS OF DIFFERENCE RETAIL SERVICES COMMERCIAL SERVICES

Customers Individual customers Business, Institutions

Nature of product Similarity between product

lines, for example,

consumer loans

Wide product differences, for

example, customized loans.

Customized product features

for large corporate customers

Pricing Published and applied to all

customers(fee occasionally

Published but negotiable paid

with fees or compensating

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waived but not modified) balances

Promotional mix emphasis Mass media advertising;

point of sale promotion, in

bank personal selling

Personal selling supplied by

advertising and sales

promotionPromotional appeal

emphasis

Combination appeal to

emotions, economic logic

Appeal to economic logic

Distribution channels Branches, ATMs,

Telephones, Computers

Account Manager, Account

support staff, Automated

clearing house system,

telephone and Computer

terminal, branches( for some

services)

Source: Marketing Financial Services by Mary Ann Pezzullo

As shown in the above table, retail banking services are based on similar terms of prices

i.e., they are standardized, such as consumer loans including car loans, home

improvement loans, personal loans, etc.

In Retail Banking, physical location is an important aspect of distribution of banking

services.

And for the promotion of retail banking services, mass media advertising and personal

selling within the bank are mainly used. For the promotion of such services, both the

emotional amd financial appeals are emphasized. Emotional appeals generally include

personal likes and dislikes of customers, their values and beliefs and nature or behaviour.

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The main distribution channel for retail banking services are branches, ATMs and

telephones, etc.

And last but not the least, the product mix in case of retail banking is less diversified than

in the wholesale banking concept because in latters case the products or services are

customized for different customers. But this is not so in the case of retail banking because

there is similarity within product lines such as consumer loans(Car Loans, Home Loans)

AUGMENTATION OF RETAIL BANKING SERVICES- SOME POSSIBILITIES

Before going further into the discussion of retail banking let us see an actual range of

possibilities that exist for the development of retail services provided by the banks.

1. MAJOR INNOVATIONS

These are fundamentally new services that typically involve new technology, a

sizeable investment, considerable risk and significant potential. These services are not

only new to the institution; they are also new to the market. This category is

important particularly to the banks seeking profits.

2. NEW SERVICE LINES

This category refers to a service line that is new to the bank but not to the market. In

fact, the bank enters a business in which other banks already compete. The potential

for obtaining revenue from non- traditional sources, enhancing the value of

relationship packages and enhancing client loyalties, among other possible goals,

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provides the rationale. The newness of the line to the bank and the presence of

existing competitors add to the risk.

3. ADDING TO EXISTING SERVICE LINES

This category applies when the institution adds a new service- usually a variation of

an existing service line already in place. This is the category that has traditionally

accounted for most new service development activity in banking institutions. The

rationale is to attract additional business by precisely meeting the requirements of

given market segments.

This is also known as line stretching or product proliferation. The required

investment is generally low and the technology and marketing approaches to be used

are familiar, because of which little new learning is required.

Sometimes it becomes a trend to add new services and not eliminate services. This

results in unwieldy service lines, confusing to both employees and customers.

However, a shift in emphasis is occurring. A number of banks are simplifying their

lines, eliminating redundancies, cleaning out services that have not been selling and

be more selective in adding new services to existing lines.

4. MODIFICATION OF EXISTING SERVICES

In this category, the bank alters an existing service. A new service is created from the

old ones. The intention is to increase the appeal of the service by improving its

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performance, adding enhancement, making it simpler or convenient to use, lowering

its delivery cost and passing these savings on to the customer.

Management can improve many services already in the market if it wants to do so.

The risks are confined to the devoting of extra resources to a service that may prove

unwarranted by the ensuing market response.

But there can be great rewards for it such as satisfied customers who remain

customers for a longer time; i.e. customers who buy services other than those which

they already enjoy and who spread word of mouth publicity.

NATURE OF SERVICES

Since retail banking is all about providing financial services to the customer. So it

becomes essential to describe the nature of services so that we are able to understand

how the services are different from usual products.

The fact that banks develop and market services, rather than goods, present some

distinct challenges. The goods firm produces are market objects, for example,

automobiles, industrial machines, etc. The services firm produces are market

performances for example dry cleaning, investment advice, transportation, etc.

Critical difference exists when task at hand is to make and market a performance

rather than an object.

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1. INTANGIBILITY

Services are, in essence, intangible. Unlike goods, they cannot be seen, touched,

smelled, tasted, tried on for size, stored on shelf. Services are used by customers

but they are not possessed. Money is spent but there is nothing to show physical

for the expenditure. The college students spend thousands on education that is

invisible to the naked eye. Most service performances, however are supported by

tangibles bus, train, airplane in case of transportation and books, buildings in

case of education, etc.

What the financial service customer really buys is not the cheque book but a

convenient relatively safe and easy to understand means for transferring funds.

The cheque books, the monthly statement, the office facilities are tangibles

associated with the service but they are not the service.

Because the service of the financial institution or bank is itself invisible,

customers tend to be specially attentive to that which is visible the service

facility, the appearance of service personnel, the equipment used in performing

the service, account statements, stationary, logos for clues about the service,

nature and quality.

A key challenge in developing new financial services is to design the tangibles

associated with the service in such a way that they reinforce the overall

positioning strategy.

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2. INSEPERABILITY OF PRODUCTION AND CONSUMPTION

Whereas a good is manufactured in a factory, then sold and then consumed, for

many services the sequence is reversed. First the service is sold and then it is

produced or partially produced in the presence of customer. Often, production and

consumption are inseparable, which means that the customer must be present for

the service to be performed. The customer must be present for a dental exam,

must be in the taxi to receive a taxi ride.

The key implication of inseparability is that, in effect, the customer is in the

factory. In the barbers chair, in the airline seat or in the banking office, the

customer witnesses the production of the service personnel conduct themselves

how they act. Even how they dress can greatly influence the customers level of

satisfaction with the service. Accordingly, a key issue in developing new financial

services is improving the behavior of contact personnel so that the service actually

rendered will be what its developers and its customers want t to be.

3. POTENTIAL FOR VARABILITY

Variability in case of financial services signals towards the services which are

available n various forms to satisfy the needs of the customer, whch can vary

from one customer to another. For example, a customer may want loan for a home

for a particular period of time whereas another customer may want for a shorter

period of time. So, the bank can satisfy this or other similar needs of a number of

other customers through various services being provided by the bank.

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Knowing when to offer high touch(people based) and when to offer high-

tech(equipment based) can pay off richly in the development of financial

services.

DELIVERING OF RETAIL BANKING SERVICES

There is no area of activity in retail banking services business that is quite as

important as the process of delivering need-satisfying product offerings to

customers on a convenient and cost efficient bass. Delivering system changes and

innovations have reached out on a widening geographic basis with a mix of high

tech and high touch techniques.

Reach out and touch someone is the strategy followed by many players in the

business of financial services. Reach out and sell. Reach out with the customers

ideas about time and place convenience. Reach out and deliver effectively through

people, places, plastic and machines.

1. PEOPLE

Financial services now- a- days are not delivered by traditional customer contact

employees but increasing through personal banker programs employing highly

trained and motivated man power. Todays trend is not only of completing

financial formalities but also of dealing with a customer in such a way that he has

not thought of going to any other bank. So it becomes essential for each bank

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particular with retail banking. Accordingly, an attempt in this study has been

made to examine the same.

DATA COLLECTION

The data were collected directly from the respondent customers and the bank

officials and organization brochures and the findings were based on the

information thus collected. Also the product profile literature and websites were

consulted for the study.

DATA SAMPLING

8 customers from different banks were interviewed personally, who were found

availing retail banking services. The survey for the purpose of research work was

carried out by personally visiting the banks on working days and whoever

customer entered first was interviewed. After this, the rest of the survey was

conducted by interviewing the customers who were found accessible. The sample

unit included the respondent customers of almost every age group above 20 years,

almost with every educational backgrounds , almost every profession or

occupation. For the purpose of collecting data on marketing strategies, bank

officials were also interviewed.

DATA ANALYSIS

For the purpose of analysis of the data, information collected was presented in the

form of tables and likert scale was used as a tool for data analysis.

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BANK PROFILE

HISTORY

Born to serve

The year was 1940. In a quaint little hamlet called Kodungallur in Trichur district of

Kerala, a humble initiative was taken, to serve the people of the region with honesty,

commitment and dynamism. And thus was born Lord Krishna Bank. While the seeds of

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expansion were sown in the 60s when 3 commercial banks merged with LKB, the turning

point came in 1992 when the reputed Puri group took substantial stake in the equity of the

bank.

Today, while the bank continues to retain its trademark values of personalised customer

care, it has grown rapidly in size and scope, from a local to a national player. From a

traditional bank to an ultra-modern, technology driven entity that is redefining

relationship banking with an ideal partnership of man and machine.

Net worth of the bank, which was Rs. 106.12 crores as of 31.03.2005 has gone upto Rs.

163.81 crores as of 31.03.2006

Lord Krishna Bank Ltd.- striding ahead in the business of banking.

It has spread its wings. Broadened its horizons. And scaled new heights in consumer

services and reaching out to more and more customers. Today its wide range of products

and services help people across the country, live their dreams.

Backed by state-of-the-art technology and experienced professionals adept in financial

management, they strive to make banking, simple, fast and customer friendly. Just the

way people like it.

MISSION

Keeping the customer as the central focus, Lord Krishna Bank is committed to provide

excellence in banking services through a well-matched mix of trained professionals and

state-of-the-art technology.To follow the strategy of speedy and aggressive branch

network expansion throughout India, to be a truly National Bank.To offer a technology

driven, well diversified range of services to cater to both the retail segment as well as

large and medium sized corporates.

MILESTONES IN REACHING OUT TO THE CUSTOMERS

LKB is a pan-Indian Bank with network of 112 branches spread across 11 States.

LKB is poised to have 114 branches across 13 States / Union Territories at the

earliest.

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LKB has reached out at the doorsteps of Schools, Colleges etc. through its 11

Extension Counters in major cities. This network is planned to be increased to

about four times shortly.

LKB's 100% business is computerised.

LKB believes in offering the latest in banking technology to its clients. As a part

of this strategy, the present thrust is on providing "ANYTIME, ANYWHERE

BANKING" with 44 ATM. In this direction, interconnectivity of branches and

ATMs is already established successfully.

LKB has, as a part of an on-going process, re-structured its various products to

cater to the retail segment. The newly structured products cover : Personal Loan,

Consumer Loan, Education Loan, Loan against Rent, Home Loan, Car Loan and

Trade Loan.

LKB apart from banking services, offers popular financial products like:

Life and non-life insurance,

Mutual Funds,

Infrastructure /Tax saving/Relief Bonds.

LKB has established its International Banking Division (IBD) fully capable to

handle varied forex transactions with centralized, full-fledged dealing room

driven by state of the art technology.

LKB has 21 full-fledged authorised branches offering forex business services.

Bank has expanded correspondent relationships across the globe with 230 banks

in 95 countries and are fully capable to handle bilateral transactions like advising

letters of credit, negotiating/discounting LCs, remittances etc. with various

overseas banks.

LKB has, in order to ensure seamless services to NRI customers, tied up with

Western Union for quick money transfer of NRIs. The Bank has entered into

Rupee drawing arrangement with well-known exchange houses in UAE viz Al

Razouki International Exchange Co., Dubai, Al- Ansari Exchange Est, Abudhabi,

UAE Exchange Centre LLC, Abudhabi Federal Exchange and Arabian Exchange.

Recently LKB has signed another Rupee Drawing arrangement with Wall Street

Exchange Centre LLC, Dubai. Similar arrangements are also in the offing with

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more Exchange Houses in Saudi Arabia, Qatar, Bahrain, Oman, Kuwait and

London.

LKB has undertaken a restructuring and re-engineering exercise to emerge as a

modern, market driven and high-tech bank.

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INTRODUCTION TO MARKETING

Transition is a mandatory part of business exercise. With the change in thinking of

consumers, with the change in strategies of competitors, with more impetus to LPG

(Liberalization, Privatization, and Globalization) business is likely to change with the

change in an ambience. As strategies in one of the favorite sport i.e. cricket is taking

shape of transition as considering it strategies 20 years ago even achieving a target of

about 150 was considered as cumbersome task but now even 400 is achieved then chased.

It only due to changing mindset of the players and transition encompassing

strategies of the players. Players are five times more flamboyant than the previous

players.As a hasty transition from perfect competition and monopoly to monopolistic

competition through a wave of LPG consumers behavior is undergoing an immense

change. Consumer was little bit sluggish before that wave due to lack of alternative

available to him but now consumer is imbued with maturity and much acquainted with

various alternatives rather than focusing on only one alternative. Consumer is much more

rational while making choices. Following are the reasons as to why consumer is

undergoing such a transition:

An emergence of various MNCs due to which consumer is

acquainted with new techonology and new class of products.

Other competitors also forced to introduce new technology in their

respective products due to which consumer is filled with choices.

Due to more matured consumer grievance redresser tribunal

consumer is vying for good quality and much diffident regarding

that.

Goods available from other foreign markets at cheap rate.

With the change in attitude of the consumer business is also enforced to be

changed as to how archaic such business is, how antiquated business techniques are these

are likely to be changed because ultimately consumer has to be served so recognition of

each need of consumer is mandatory task. Marketing strategy of every company has

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undergone an immense transition. Definition of marketing has changed as more emphasis

is being given on segmentation rather than mass marketing due diversification in the

needs of consumers and escalation in the standards of the people. So in modern days

marketing starts with segmentation and ends with segmentation. It cannot be dealt with

negligence by the marketers and needs meticulous actions by the marketers.

Banking Sector is also undergoing a change with the change in marketing structure the

banks and with the emergence of the banks like Citi Bank, ICICI bank, HDFC Bank,

HSBC Bank, Standard Chartered Bank. And those who will not change will suffer from

detrimental effect.

As in the recent news by RBI (Source Business World) various foreign banks like Citi

Bank, HSBC Bank etc will be granted liberation to enact its operatins in Tier1& Tier2

cities ( i.e. small cities) away from various metros. It will enhance the competition in the

banking sector and those banks who persisting their respective on the archaic modes will

have to change their operational activities or they will be under acquisition spree by big

giants.If you want to be in the picture and you yours products must be a source of

reverence for every customer then diversify your products otherwise else will eat away

your share so only way out is to diversify operations or demolish your whole wing.

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Marketing Strategies Of Banks

Marketing is an essence of every organization whether manufacturing sector or banking

sector. Without marketing every other function is futile. This function clearly need to

be scrutinized by every enterprise.

Marketing is three phased process:

1.Value creation: This process need strong reflexes. For that marketing manager need to

segment the market so that he can apparently arbitrate the need in various segment.

Segmentation can based on the following of characteristics:

1. Economic conditions of the people

2. Geographical conditions

3. Psycographic conditions of people

4. Political Conditions

And can be based on other demographic conditions:

4. Age and stages in Life cycle

2. Gender

3. Generation

In banking sector ICICI bank and HDFC bank are concisely following strategies of

segmentation Because of following reasons:

a) Encompassing the needs of every income group whether he is affluent or not so

economically sound which can be explained through products of these banks

later.

b) Products includes features which corresponds to the people comprises of every

age group.

c) These banks are present in almost every region of the country serving almost all

the country. ICICI bank is paving its way towards south as it is planning to

acquire LKB.

LKB has really to work on the value creation front which nascent need of marketing. As

it is focusing on unilateral policy for all the customers.

2. Value delivery: After it had been observed what are needs of the customers through

segmentation now actual practice of converting observance into practice. In the banking

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sector it is really proficient work of Financial Manager of converting all that is being

observed by marketing manager into actual practice.

3. Communicating the value: It is really apt work of marketing manager as to how to

persuade customers about the product. It is through advertisement only one can acquaint

customers about the product otherwise customer can take irrational deliberations

regarding the brand to which product corresponds. They might think that the

brand had vanished.

LKB is lacking behind in communicating the value of product to the consumer. Because

LKB is not involved in any of the promotional activities which is really detrimental for

the firm.Organization must not be negligent towards these three features of marketing if it

want results to be profolic.

Are the Private Sectors Banks really savvy in Holistic

Marketing Approach

Holistic Marketing means encompassing almost everything in the activities of marketing.

It not only comprises of producing and selling of goods and services. But in fact

it is more versatile concept. With a transition from antiquated marketing to novice

concept of marketing this concept really serves the purpose of new version of marketing.

With enhancing complexities of business this concept is really panacea to all these

complexities. Following are the features comprises in Holistic Marketing Concept:

1.Relationship Marketing: This concept had emerged due to increased

awareness among consumers and acceleration of competition in market. Relationship

can be prevailing with customers, suppliers, distributors and other marketing partners. In

Banks most of the relationship prevails with customers and other banks.

a.) Customer Relationship Marketing (C.R.M): Customer Relationship Management is

maintaining all mandatory information about customers, about their diversified needs,

targeting all customer segment markets and promoting touch points of customers. Touch

Points is the most pragmatic approach to C.R.M. It commences with consumer obtaining

knowledge about the product and finishing with the consumer actually experiencing the

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Functions Of C.R.M

Above diagram apparently authenticates that function of C.R.M is to create the customer

at an initial stages then converting these customers into routine customers and

Then converting these customers into clients so that they can seek advice from their

managers and then converting them into members by offering them membership

programme and such members can avail special discounts at various outlets. By such

offerings customer will have sense of belongingness for the company, emotional tie-up

with the company and they will advocate the products. Automatically become partners of

First Time customers

Repeat Customers

Members

Advocates

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the firms.As such kind of offerings are not being granted by any of the banks but according to

me such offerings are really attractive schemes for the firms for mesmerizing the customers.

b.) Partner Relationship Marketing- It is considered to be a core concept of relationship

management especially in manufacturing sectors where there are many intermediaries like

suppliers, distributors, etc. But in case of banking sector the emphasis of this particular

management is not so mandatory because there are no intermediaries between banks and

customers but banks have relationship with other banks as RBI had directed that various

banks can borrow from other banks up to an extent of Rs.5 crores. So, banks have to

maintain an efficient and cordial relationship with other banks as LKB is having

relationship with PNB as it can borrow within this limit from PNB.

2. Internal Marketing:- As whole activities of firm are encompassed around this concept

of marketing, so the firm cannot be apprehensive about this concept. As variousemployees working in an organization contributes towards internal management of

organization, so employees must be very much apparent as what are their respective

designation. As far as LKB is concerned this bank is lagging behind in this front because

there is no hierarchy in an organization. Nobody is clear about his or her designation. It

can be clearly corroborated through the survey which has been conducted. Now take the

cases of internal management of various banks.

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Above hierarchal level in various banks concisely authenticates that Standard Chartered

is pioneer as there is proper delegation of authority from top to bottom. As every

employee is headedby a superior. But in case of LKB there is no hierarchal level in an

organization because there is no delegation of authority. Nobody is clear about his or her

role in an organization because below DVP and manager, all employees are possessing an

identical status. Only criteria on which ICICI is lagging behind Standard Chartered

because there is different role assigned to relationship manager i.e. team leader. But in

case of ICICI assistant manager is performing a role of relationship manager. It

overburdens his work as position of relationship manager is really a sensitive position so

his role mustbe confined to relationship building only. Now performance of all these

banks on internal management can be made clear through following rank order scale.

NOMINAL SCALE ORDINAL SCALE

LKB 4

Standard Chartered 1

HDFC bank 3

ICICI Bank 2

HR Manager of LKB must really work out strategy for improving an internal

management of the company. Because its only an amalgamation of activities of an

employees that comprises of an organization. So each employees roles and responsibility

must be concise to him or her so that they can contribute towards ultimate mission and

objective of an organization. Structure of an organization is much refined according to

me as communication from top to bottom can be much more flexible and everybody is

ICICI BANK STANDARD CHARTERED BANK

Deputy General Manager Country head

Assistant General Manager Regional Head

Chief Manager 2&1 Manager

Manager 2&1 Assistant Manager Assistant Manager Team leader

Senior Officer Senior officers

Officers Officers

Officer trainees

LORD KRISHNA BANK HDFC BANK

Deputy Vice President Branch Manager

Manager Back up Branch Manager

Assistant Manager(These comprise of 6

AMs)

Executives(These comprise of 7

executives)

Banking Assistants(These comprise of 3Bas)

Trainee

Officer Trainee

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apparently acquainted with his or her role. In case of HDFC bank there are 7 executives

and one of the executives are performing the role of relationship manager.

HDFC Bank and LKB has really to work on the strategies of internal management. HR

Managers must come into an act.

3. Integrated Marketing:- This is a concept which surrounds every marketing activity

because finally we have to sell off the products of the firm. This is a stage where actual

marketing of products through means of promotional activities can be undertaken. It

involves amalgamation of 4 Ps.

a) Product.

b) Price.

c) Place.

d) Promotion.

PRODUCT-

Product is the main component around which every activity is centered. Product can be

tangible product or an intangible product in the form of services etc. In banking sector

most of the activities are centered on intangible products. Following are the intangible

products sold by banks:

i.) Deposits: For safeguarding a liquid cash of the people banks offers the facility

of deposits to the people and give an appropriate rate of interest upon that on the basis of

scheme offered by the bank. Following are the various deposits facilities offered by the

banks:

a.) Saving Account: It is an account which is a tool for promoting saving

among people. To avoid people to be an extravagant this tool abet people to pool their

savings and deposit in the bank and enjoy necessary rate of interest according to

standards of respective banks and within a framework of RBI. As far as saving products

of LKB is concerned there is no visibility of segmentation encompassed in LKBs

saving product after considering in comparison with HDFC bank as there is option of

only one saving account open for all customers. Now have a glance:

LKBs Saving Product: Average monthly balance of Rs 2000 is needed to be

maintained for opening a saving account with LKB. This is the only scheme provided by

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LKB and it is open for all the customers. It concisely shows that there is no customer

segmentation.

Now take a case of HDFC Bank as to how many saving products it is offering:

a) Normal saving account

Minimum AQB required Rs.5000 (urban)

Rs.2500

(semi-urban)

b) Sweep-in account - It is also really an interesting scheme as it provides an

advantage for opening two accounts at a single time i.e. fixed deposit and saving

account. If you wish to transfer some of an amount available in fixed deposit to

saving account you can opt to do so and vice-versa. For that purposes you have to

maintain Rs.50,000 in fixed deposit and initial amount of Rs.5,000 should bedeposited in saving account. No minimum AQB is required in this case.

c). Kids Advantage Account-

Minimum AQB Rs.5000 (Urban)

Rs.2500 (Semi-urban)

Minimum fixed deposit Rs.25,000

d). Trust and society account-

Minimum AQB Rs.5000

[Rate of interest by all banks is almost identical is 3.5% p.a.]

PRICE-

LKB:- Some price is charged from customers if condition of minimum balance is not

being fulfilled. In LKB if customer is not able to fulfill condition of Rs.2000

monthly avg. balance then Rs.28 is charged in that month. Though no charges are on

availing services of ATM. Moreover it is providing services for the customers of

Western Union Money Transfer through its ATM.

HDFC Bank:- Following are the charges which HDFC customers have to bear in case

minimum avg. quarterly balance is not being maintained:

Normal Saving Account: If AQB is less than

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Rs.5000 (Urban) Rs.750

Rs.2500 (Semi-Urban) per quarter.

Sweep-in Account: Same charges as in option 1,if customer is not able to maintain

Rs.50000 in fixed deposit and Rs.5000 as initial saving deposit.

No-frill saving account: In case of non-maintenance of Rs.500 ( Urban and semi-urban),

Rs.75 per month charged quarterly.

Current Account- This account is favorable for businessmen who are engaged in

variety of transactions and need mandatory withdrawals on regular basis. Though not

many schemes are provided by banks as far as current account is concerned . Now again

differentiating products relating to current account with the products of HDFC bank, it

clearly authenticates that features of segmentation is absent as far as this product is

concerned. Now have a glance at this:

LKB:- Rs.5000 minimum avg. balance monthly needed to be maintained in LKB for

opening current account. This is only product of LKB as far as current account is

concerned.

But I think feature of segmentation cannot be incepted in this particular category of

product because this product is only suitable for businessmen. But HDFC Bank had

endeavored to induce this feature in current account also. Two facilities are provided by

HDFC Bank as far as current bank is concerned.

a). Normal Current Account:

Minimum AQB: Rs.10000

b).Premium current account: This account is providing incentives to the customers.

Following are the features of this account:

Minimum AQB: Rs.25000

Some more features are provided utilizing this account. Cheque-book (free at par).

Fund transfer from one branch to other

Branch locally Free upto Rs.10 lakhs p.a.

Above this @ Rs.1.50/Rs.1000

PRICE-

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LKB: In case minimum avg. monthly balance of Rs.5000 is not maintained then Rs.56

per month and Re.1 per cheque leaf is also charged.

HDFC Bank: Service charges in case of non-maintenance Rs.750 per quarter

50 cheque leaves Free

Additional cheque leaf Rs.2/cheque

Current Account Premium:

Service charges in case of non-maintenance Rs.900 per quarter

Cheque books Free (at par)

Additional cheque leaf Rs.5/cheque leaf

Fixed Deposit:-This is a deposit in which constant amount is deposited and retained

for the longer period in the bank and interest is compounded annually or quarterly. In

fixed deposit amount cannot be withdrawn before the maturity but if it is withdrawn then

rate of interest will be less. As far as policy of fixed deposit is concerned in LKB interest

on this deposit is seeming to be quite attractive. Thats why huge chunk of people are

being attracted by the fixed deposit of the bank as it is apparent from the survey of 8

respondents. Now have a glance at it:

Less than 15 lakhs Above Rs 15 lakhs

5 years and upto Rs.10 lakhs 8% p.a. 8% p.a.

3 years and less than 5 years 7.75% p.a. 7.75% p.a.1 year and less than 2 years 7.75% p.a. 7 % p.a.

90 to 120 days 6% 6.25%

15 to 29 days 4.5% 4.75 %

In case of senior citizens, 0.5 % is more added in all these rates.

Now take the case of HDFC Bank:

BelowRs15Lakhs

5years to 8years 7% p.a.

7.19%

(compounded quarterly)

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7.25% p.a.

(senior citizens)

7.45%

(senior citizen)


3 years to 5 years 7 % p.a.

7.19%


7.25% p.a.

(senior citizen)

7.45%

(senior citizen)


In case amount of interest is more than Rs.5000 then TDS of 12% (appx.) is deducted.

But if a person is senior citizen then TDS is foregone by giving form 16F. It concisely

shows LKB is giving an attractive rate of interest.

Recurring Deposit:- As name suggests it is a kind of annuity or monthly installment

paid by depositor every year or every month for a fixed period of time and fixedamount is paid at the time of maturity. Rate of interest is same as provided by the

fixed deposits. People usually not maintain this account with the bank and avail the

facility of post-offices for these purposes as clearly shown by the survey of 20

people.

Flexible Recurring Deposit:- Sometimes income of people doesnt allow to deposit

an amount regularly. So it is quite attractive for this category of customers. As customers

are not bound to pay an installment monthly or annually. Whenever they want to invest

they can as this is just the subsidiary of recurring deposit. Whenever they think that they

are having surplus money they can invest. They can deposit any installment twice a

month or thrice a month according to their convenience. Rate of interest is identical as

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available on FDs. This account is also usually opened with post offices because

attractive gift coupons are attached to it.

Various banks can also utilize this kind of policy to capture customers of post-offices so

that they can also be mesmerized by the products corresponding to recurring deposits of

the banks.

Loan Products:- Now various banks earn profits by granting loan to the customers

and earn a rate of interest as amount deposited by the customers in the form of saving

accounts, fixed deposit and recurring deposits is utilized in much profolic way by bank

to grant loans to the customers. So in this way various banks earns a profit. As far as

LKB is concerned it has ceased its loan facilities to the customers for a while because its

non performing assets (NPA) were escalating. Following are the loan products of LKB:

a). Personal loan: It is a loan which is granted for contending the personal needs of

consumers. Now have a glance at this type of loan:

Loan tenure: 12 to 48 months

Minimum amount: Rs.30,000

Maximum amount: 10 times of take home or Rs.5 lakhs whichever is less.

Rate of interest:

i) Salaried person whose GMI of Rs.25,000 and confirmed employee of MNCs and

PSUs.In case of professionals like doctors, CAs, engineers whose gross receipt Rs.4 lakhs p.a.

Rate of interest: 13%

Processing fee: 0.5% of amount borrowed.

ii) Salaried persons whose GMI is RS.10,000 and confirmed employees of PSUs,

MNCs, etc.

Any professional person whose gross receipt of Rs.2,50,000 p.a.


Processing fee: 2% of amount borrowed.

iii) Salaried category GMI of Rs.8,000


Processing fee:2% of amount borrowed.

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b). Car loans: Car loans are enhancing day by day because of psychological attitude of

people in emulating other people in order to gain the status in the society. Thats why

various finance companies are gaining exposure persistently. Following are the facilities

related to car loans provided by LKB:

Minimum and Basic car model showroom price: Below Rs.3,50,000

maximum Mid- segment: Car model having showroom price Rs.3,50,000amount upto Rs.5 lakhs.

Sedan segment: Car model having showroom price above

Rs.5 lakhs and upto Rs.10 lakhs.

Luxury segment: Care model having showroom price above

Rs.10 lakhs and upto Rs.20 lakhs.

In case of old cars rate of interest is 12% for both segment people.

Particulars Salaried Persons Self employed

Eligibility Confirmed employee Minimum 2 years in

existing line of business orwith 2 years of total

experience

Age Minimum: 21 years

Maximum: 60 years at the

end of repayment period

Minimum: 21 years

Maximum: 60 years at the

end of repayment period

Rate of interest Basic cars: 10.75%

Mid segment cars: 9.75%Sedan segment cars: 9.50%

Luxury cars: 9.25%

Basic cars: 10.75%

Mid segment cars: 9.75%Sedan segment cars: 9.50%

Luxury cars: 9.25%

Income Loan upto Rs.8 lakhs

Minimum take home:Rs.8,000 per month or Rs.1lakh which ever is less.

Loan upto Rs.8 lakhs

Annual income of Rs.1,25,000Above Rs.8 lakhs

Minimum PAT Rs.5 lakhs

or Net worth of Rs.20 lakhs

Pre payment Charges 2% of outstanding amount 2% of outstanding amount

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Minimum amount: Rs.1 lakhs

Maximum amount: 70% of market price.

c). Two-wheeler loans:-

Particulars Salaried Persons Self employed

Loan Tenure 12 to 36 months 12 to 36 months

Rate of interest 13 % 13 %

Processing fee Rs.500 Rs.500

Minimum loan Rs.25,000 Rs.25,000

Maximum loan 80 % of market value 80 % of market value

d). Home Loans:-Purpose Purchase of land, constructions, repairs,

etc.

Age Minimum 21 yearsMaximum 60 years or age of retirement

whichever is earlier

Rate of interest Upto 5 years 8.5 %5 to 10 years 8.75 %

11 to 20 years 9.25 %

e). Loan against fixed deposits:- This is a special privilege granted to persons using fixed

deposit facility as everybody is acquainted with the fact that customer cannot withdraw

money from fixed deposit before maturity and if it is withdrawn then low rate of interest

will be received. So this is a feature of fixed deposit which assist customers to get loan

against fixed deposits and their amount which is deposited stands as it is. Following are

the features of this particular facility provided by the bank:

i) 90 % of the amount deposited in fixed deposit will be granted as loan.

ii) Demand promissory note showing the customers promise to repay loan at the

validate time must be issued by the customers.

iii) Overdraft agreement showing that this particular amount .

iv) Letter of continuity stating that if FD gets matured then loan should be

continued.

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As LKB has tied up with western union money transfer so customers are

accessible to receipts and payments globally.

Customer can make purchases without the direct payment of paying in cash.

LKB is giving a service of debit cards to the customers but attractive schemes like

discounts at various outlets and petrol pumps are not being provided by LKB. ICICI

Bank showing every feature of disbursing attractive schemes to the customers like

discounts at various petrol pumps. LKB can also opt for providing attractive schemes to

the customers by integrating with various outlets so that they can avail discount facilities

at these particular outlets. As there are many value added services which LKB can opt but

will be discussed later in the part of Customer Perceived Value. No price is charged for

utilizing the services of debit cards in LKB.

ii) Life Insurance:- As various banks like HDFC Bank and ICICI Bank are going

in for diversification of policies by not confining themselves to one category

of businesses. As this is a source of reverence for the banks as far as

marketing strategies of banks are concerned. Because focusing on one

category of business is an archaic concept but every player in the private

banking sector has to move nascent concept of the marketing i.e. holistic

marketing concept which authenticates the feature of diversification. As

players who are novice in this particular banking sector like Kotak MahindraBank are also opting for diversification. But LKB which is 60 years old bank

is just focusing on banking. Though LKB has entered into cross selling of life

policies of ICICI Prudential Life Insurance Company. LKB is a corporate

agent of these bank assurance products. LKB supports ICICI Prudential to sell

their policies with an assistance of staff appointed for this purpose. In return

LKB earns commission from ICICI Prudential.

iii) Non-life Insurance:- These are the policies corresponding to accidental

policies, policies related to vehicles and other policies which are not related to

life. For these also LKB is not having its own acquaintance as it is having an

alliance with M/s Bajaj Allianz General Insurance Company. LKB sells

policies on their behalf to the clients through which they earn commission.

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iv) Mutual Funds: - Mutual funds are gaining impetus with an escalation of stock

indices. As this particular scheme is quite attractive to retail investors who are

not so proficient in stock selection. So, fund manager on the behalf of retail

investors chose the stocks deliberately on the basis of their intuition and

proficiency.

Mutual fund is a kind of trust or fund in which various investors pool their

money respectively and it is a responsibility of fund manager to handle all the funds

and fund manager invests accordingly in various stocks from that pool. Fund

manager invests in diversified securities whether its only debentures or its an

amalgamation of debentures, equities or preference shares. Even if market is falling

then also customers risk is diversified because his money is divided into units and

from these units, fund manager invests in thousands of securities and these days fund

managers from such pools give loans to other banks and financial institutions. In this

way money of an investor is also secured. This is an amalgamation of risk cum

securities. Only drawback of this scheme is that a universal fee is charged from all

investors and if pool comprises of larger amount then an immense burden of higher

fee is to be borne by all investors irrespective of the fact that he is a retail investor or

whole-sale investor. Now a days SEBI opening up doors for various sectors to be a

part of mutual funds. ( In a recent announcement made by SEBI that real estate can

participate in mutual funds)

There are various types of mutual funds:

a) Tech funds- Out of these funds investment is made in the securities of IT

companies like Infosys, Wipro, TCS, Satyam, etc.

b) Equity Funds- Out of these funds investment is made in diversified equity

shares of various companies.

c) Debt Funds- These funds give an immense amount of securities to the

customers because out of these funds investment is made in the debentures

of various companies.

d) Equity and Debt funds- These funds are amalgamation of securities and

risks because out of these funds a proportionate amount is invested in

equity shares and balance in the debentures of various companies. Even if

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risk is borne by investor it is being set off by the profit from the

debentures and other equity shares. So in this way risk is minimized.

e) Reality Funds- These funds have been recently started by SEBI for

investment in real estates.

LKB is also carrying on business of selling mutual funds of various companies like :

a) Franklin Templeton

b) LIC Mutual funds

c) IL&FS Mutual Funds

d) Reliance Mutual Funds

e) SBI Mutual Funds

f) Escorts Mutual Funds

g) HDFC Mutual Funds

h) UTI Mutual Funds

i) DSP Merill Lynch Mutual Funds

j) TATA Mutual Funds

k) Chola Mutual Funds.

l) Sundaram Mutual Funds

m) Stanchart Mutual Funds

As almost all the banks are providing the facilities of mutual funds because this

particular investment instrument is hottening up day by day.

Rate of Commission to the agents on Third party products

Life Insurance- 6%

Non-life insurance- 12%

Mutual Funds- avg. rate of 0.70%

PLACE:-

As these days competition is surging persistently so every bank is vying hard to

maintain their attractive outlook. Especially in private sector banks where

competition is too hard that every aspect of banking matters. Though infrastructure of

bank is having negligible effect on the performance as corroborated through a survey

of 8 people and co-relation studies but outer looks matter somehow as far as

employee working in these respective banks experience a motivational power. Their

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efficiency is increased if outer look is quite decent and customer is some how

attracted towards an appearance of the bank. Almost all the private banks are situated

in that place which is convenient to the customers. They are situated in tertiary hubs

where customer is accessible. As far as infrastructure of LKB is concerned, its quie

attractive according to the customers views which can be corroborated in the next

part of study i.e. co-relation study. But LKB is having only one branch in Amritsar

i.e. at Lawrence Road which is clearly having a detrimental effect on the

segmentation. As far as ICICI Bank is concerned it is possessing two branches in the

main hubs of the cities i.e. at Lawrence Road and Hall Bazar. Through this

diversification this bank is capturing various customers from various sides as both the

hubs are in the middle of the city. This apparently shows that LKB is not following

segmentation strategy meticulously but ICICI Bank and HDFC Bank are really

passionate towards segmentation as it is well acquainted fact.

PROMOTION:-

Promotional strategies have a favorable bearing effect on every company.

Promotional strategies cannot be dealt with negligence because it is most mandatory

tool upon which structure of company stands. Though on the basis of survey 8 people

manipulated the fact that the performance of the bank is not co-related withpromotional strategies of the banks. But according to me promotional strategies have

enduring effect on the performance of the bank because this is the medium through

which product is acquainted with the customer. This is the reason why ICICI Bank

and HDFC Bank is capturing various customers through stringent promotional

strategies. Until or unless promotional standards are not followed by the company, it

cannot move towards the second step i.e. selling of the product and it cannot gain

customers loyalty without that. LKB is way beyond other banks as far as

promotional strategies are concerned. Now have a glance at this particular rank order

scaling on the basis of promotional strategies of the banks:


Centurion Bank of Punjab 4

Kotak Mahindra Bank 3

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HDFC Bank 2

Lord Krishna Bank 5

ICICI Bank 1

In the Nut shell :-

ICICI Bank is the versatile bank as far as holistic marketing strategies are concerned

because it grasps every opportunity that comes its way and try its hard to attract more

and more customers. HDFC Bank is also lagging behind from ICICI Bank as far as

holistic marketing approach is concerned. It is lagging behind in two or three aspects

like providing attractive schemes to the customers. ICICI Bank is more diversified in

its portfolio of the products. LKB is far away from holistic marketing approach

because first aspect of this is not being fulfilled by them i.e. promotion through a

medium of which product is acquainted with the customer. Then how can LKB afford

to build customer loyalty. So, this bank is having threat from emerging banks like

Kotak Mahindra Bank, Yes Bank, Indus Ind Bank, etc. and is also having threat of

acquisition spree as NPAs quite reflect that.

ACCESSING GROWTH

OPPORTUNITIES

Growth is necessary factor for every business because it involves diversification of

products and can lead to enhancing sales of an enterprise. Identifying opportunities is one

of the main factor which assist in enhancement of growth. So growth factor and

opportunities are co-related with each other. In LKB opportunities are not adjudged

deliberately. So, it is one of the main obstacle in the way of growth. As ICICI Bank and

HDFC Bank are involved in diversification of products. They are emerging in various

sectors like insurance, mutual funds, etc. They are not only serving the core banking

purpose to the customers. It clearly substantiate that these banks are versatile banks.

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There are various types of growths which can be discussed as follows:-

1. Intensive growth:- This is one of the main growth factor for every firm whether it

is manufacturing firm or services firm. Serving the one product in only one

market or only to one set of consumers is a unilateral policy. So multi-lateral

policies need to be pursued in order to contribute towards high growth i.e. one

product can be available for different set of consumers or different products can

be available for different set of consumers according to their respective needs. It

can be lucidly shown through following diagram:

Current Products New Products

CurrentMarkets

NewMarkets

An above diagram clearly corroborates that current products can be sold in new markets

i.e. shown by co-relation between current products and market development strategies.

As HDFC Bank is not focusing on this particular strategy but it is offering new productsfor new markets i.e. shown by co-relation between new products and diversification

strategies. For instance, different saving products like no-frills saving account, kids

advantage account, sweep in account, etc. apparently shows this particular strategy. Now

following are the co- relations shown through this particular diagram:

a) Current products in current market shown by market penetration strategy .

b) Current products in new markets which is shown by market development

strategies as it is very cumbersome to enact such kind of strategy because needs of

different customers are distinct so this strategy is pre-mature strategy.

c) New products in current market which is shown by product development

strategies. As new product is firstly introduced in current market to acquaint the

reactions of current customers.

49

1. Marketpenetration strategy.

3. Product-development strategy.

2. Market-

developmentstrategy.

( Diversification

strategy)


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d) New products offered in new markets as it is shown by diversification strategies.

If response corresponding to new products is favorable in current markets then by

taking this particular assumption, response of new market will be also favorable.

LKB is very sluggish as far as intensive growth is concerned

because neither current products are introduced in new markets unlike ICICI Bank and

HDFC Bank are having two branches in the major hubs of cities where different

customers can be accessible but LKB is having only one branch in the city. Only that

branch is satisfying diverse needs of customers. As far as innovations are concerned LKB

is still in the backlash in providing new products to the customers. As I had been

constantly focusing on from the start of the project that segmentation is new tool to

marketing strategy without it firm cannot survive and it is considered as dead firm. So

LKB need to be hasty on segmentation strategy.

2. Integrative Growth:- This type of growth can be enacted through horizontal or

forward integration within its industry. This can be enacted through various

acquisitions and mergers as ICICI Bank is doing an attractive job by acquiring

meager and sick units to enhance its operational activities. The top management

of ICICI Bank is thinking on acquiring LKB as mentioned by The Economic

Times. Well, I think this is a good move by ICICI Bank to acquire LKB. LKBs

performance will be enhanced through this particular activity of ICICI Bank.

These acquisitions are much favorable for big firms as well as small firms which

are being acquired. This is the way through which private sector banks can

compete with public sector banks as this is the way through which operational

activities of big private sector firms can be enhanced through probing miniscule

firms. This gives an impetus to sick private units which are suffering from

immense NPAs.

3. Diversification Growths:- It is a kind of growth in which good opportunities can

be found outside the present business and it allures the present business by

enhancing the customer base and overall affecting whole business structure. As

various banks are engaged in distinct type of services like:

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i) Providing comprehensive insurance business to the customers like

ICICI Banks, HDFC Bank, Kotak Bank and Standard Chartered

Bank are providing insurance business to the customers.

ii) Payment of electricity bills on the behalf of the customers. This is an

important service which a customer can avail from the bank. Usually

such scheme is prevailing in the metros.

iii) As investors are really paving their respective investments in the stock

markets due to hottening up of stock markets. So for the customers

who are not adept in choosing right kind of stocks at right time. Banks

are providing schemes for these customers. Detailed explanations have

been made earlier.

iv) Various banks are making shopping easy for customers by providing

them service of credit cards and they can avail sufficient discounts at

various outlets. As one of the logo Citi Bank is SMS i.e. Shopping

Made Simpler is trying to allure various customers.

v) Various other services like internet banking, mobile banking is for the

convenience of the customers is also one of the strategy of

diversification.

4. Downsizing and Divesting Older Business:- As this is a golden rule that if one

particular unit is sick, endeavour to convert into profitable business by efficient

measures and if you cant do it just divest that sick unit and focus on any other

business. Trying to salvage hemorrhaging business is a futile activity. So it is

mandatory to divest such business and try to focus on any other business or

expand your wings.

LKBs performance shows that it need to be restructured properly to carry out its

operations efficiently and in effective way. If LKB cant focus on restructuring, then its

top management must deliberate to pave its foot towards an integrative growth. Now

strategies of various banks regarding growth opportunities can be accessed through

following graphical representation:

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SC Bank- StandardICICI Bank Chartered Bank

KM Bank- Kotak HDFC Bank Mahindra Bank

G CBOP-CenturionR SC Bank Bank of PunjabO KM Bank

W LKB- Lord KrishnaT CBOP BankH LKB

FLAWS

Above Graph plotted between two parameters growth and flaws shows ICICI Bank atthe peak followed by HDFC, SC bank, KM Bank, CBOP and LKB respectively.

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GROWTH MOMENTUM

AN IMPETUS TO BRAND EQUITY

Brand equity is added value endowed to products and services which encompasses of

the perception of consumer as to what consumer thinks, feel regarding the brand and

respond accordingly. It also comprises of prices of the product, market share,

profitability that brand commands for the firm. In other words some distinct feature

that brand possesses which provide added value to the products and services.

CUSTOMER BASED BRAND EQUITY: It is defined as to how consumer reacts

to nature of particular brand. Positive customer based brand equity arises when

consumer thinks favorably about the product. It depends on how well consumers are

acquainted with the nature of products and their functions. This is the stage where

promotion skills matter a lot. Secondly what is the profitability of the firm to which

brand corresponds. Thirdly, what is the market share of the firm to which brand

corresponds.

Negative customer based brand equity arises when consumers are adversely

acquainted with the brand.

Is LKB able to maintain the standards of brand equity? Consider the following

parameters.

i) Customers are well acquainted with the product:- I completely disagree with

the fact because there is no below the line advertisement ( BTL advertisement

through medium of newspapers, magazines, glow boards, sign boards) and

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above the line advertisement (ATL which is through the medium of

televisions, radio, etc)

As there is another form of promotional activities which is known as grass

root marketing. For instance, Infosys is pursuing this kind of strategy to make its

acquintance globally. It has tied up with Wharton School of Management Studies,

London to disperse awards under their brand name to the students. Banking sector

must also come up in pursuing this kind of strategy.

ii) Profitability of the bank:- As it is sheer nonsense to compare profitability of

LKB with big giants like ICICI Bank and HDFC Bank. But considering its

profitability with novice players like Kotak Mahindra Bank it is only

satisfactory. For instance, Indus Ind Bank provides various schemes in saving

account. It is also segmenting the market through various schemes offered to

rural as well as urban customers. NPAs of LKB is appx. Rs.5 lacs in Amritsar

branch. It concisely shows as to what is the profitability position of this bank.

It is just embellishing an internal structure of its company while not retaining

its corporate ambience.

iii) Market share of the bank:- Market share of the bank is very low. As Puris are

the major stake holders of this bank. This bank is not going for any IPOs

which is really detrimental for the firm and hinderance in the way of

expansion spree. As every well structured firm like ICICI Bank and HDFC

Bank is going for an IPO and LKB is lagging behind.

After considering all these features it is lucidly shown that ICICI Bank and HDFC

Bank is imbued with all the above features. NPAs of these banks is almost negligible

and market share of these banks are quite high in comparison to other private sector

banks and customers are well acquainted with the nature of the products as

promotional activities of these banks are quite high

ADVANTAGES OF BRAND EQUITY:

a) Greater customers loyalty.

b) Less vulnerability to competitors action.

c) Less vulnerability to marketing crises.

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d) Larger margins.

e) More inelastic response to increase in price.

f) More elastic response to decrease in price.

g) Brand extension opportunity.

MEASUREMENT OF PERFORMANCE ON THE BASIS ON BRAND

EQUITY MODELS:

These were the models which were developed by various authors of marketing after

keen observation and deliberations which resulted in good outcomes. Following are

the various models which are discussed below:

a) Brand Asset Evaluator:- Advertising agency Young and Republicam developed the

model of brand equity called brand asset evaluator. There are four parameters

according to which brand equity is adjudged by this particular model which are

discussed below:

Differentiation: It measures degree to which brand and its products andservices are different from others.

Relevance: It measures the breadth of brand appeal.

Esteem: It means how well brand is respected and revered.

Knowledge: It means how familiar are the customers acquainted with

the brand and how strongly firms are intimating the value to the

customer.

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Differentiation and relevance are brands strengths where as esteem and knowledge are

based on past actions and past performance of the company.

Following are the measurements of the various banks upon this particular model:

ICICI BANK HDFC BANK

LORD KRISHNA BANK CENTURION BANK

OF PUNJAB

56

0

2

4

6

8

10

D R E K0

2

4

6

8

10

D R E K

0

1

2

3

4

D R E K

0

1

2

3

4

5

6

D R E K


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Above graphical representation concisely shows that LKB is lagging behind in brand

strength i.e. differentiation and relevance. As its promotional activities are really poor to

make a way towards acquainting products to the consumers so customers are not aware

about the products. ICICI Bank shows versatility as its products are highly different from

other banks as shown by histogram and the customers of this bank are really revering the

products of this particular bank so it is doing excellent job as far as relevance is

concerned.

As it can be shown on rank order scaling that which bank is at the top of the position and

which at the low position on the basis of this particular model:


Lord Krishna Bank 4

ICICI Bank 1Centurion Bank of Punjab 3

HDFC Bank 2

b) Aaker Model :- This is a model which was developed by David Aaker. According

to this model, following values must be attached to brand:

Brand awareness

Brand loyalty

Customer perceived quality

Other proprietary assets such as patents, trademarks, copyrights, etc.

Now taking each parameter one by one for comparing the performance of bank

according to Aaker model:

i). Brand awreness: Promotion is a mandatory tool for creating brand awareness

among the people but there is no organized way in which LKB promotes its products

and services, as it had been discussed earlier that there is no ATL or BTL

advertisements. Even some banks like Kotak Mahindra Bank, Indus Ind Bank ,etc, are

involved in promotional activities in encompassing both ATL and BTL activities.

So, brand must be acquainted with the consumer, though, brand possesses all inherent

features which must be adored by the customers but all such activities are rendered

futile until or unless there are no promotional activities. ICICI Bank is giving much

impetus to promotional activities as it had been discussed earlier.

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ii). Brand loyalty: After the consumers are acquainted with the brand now it is a duty

of CRM (Customer Relationship Manager) to escalate loyalty of customers. To the

routine customers membership facilities can be offered and after gaining membership

facilities they can avail discounts at various outlets by utilizing their products like

debit cards, credit cards, etc. This is to allure various customers so that they can after

gaining membership can advocate the products to other people. It had also been

discussed in previous chapter of Holistic Marketing Approach. But as far as brand

loyalty is concerned as far as I had observed from the survey of twenty people that no

customer is loyal to any bank. As one customer is possessing multiple accounts in

different banks. LKB is alluring customers by giving high rate of interest on fixed

deposits compounded annually or quarterly. The interest rate is even more than big

giants i.e. HDFC Bank and ICICI Bank but as far as saving account is concerned

customers are mesmerized towards ICICI Banks and HDFC Banks because ancillary

services are being provided along with the main products of the banks.

Some of the samples are here being attached to corroborate the view that

customers are less loyal to one particular bank.

iii). Customer perceived value: As customer is vying for the quality but it is a matter to

note that what the consumer is paying to grasp such quality. ICICI Bank is performing upto a level of perceived value. Though consumer is paying some money for availing the

facility of debit card and credit cards but attractive schemes are offered by them in return

of that like discounts at various outlets and petrol pumps. These schemes really

mesmerize the customers an a small amount which is paid by the customers to avail such

facilities doesnt matter at all.

iv). Proprietary assets: These are an independent entities of various firms which includes

patents, trademarks and punch lines. These are assets which differentiate products of one

firm with other firm. These are not directly related to the performance of the banks but

activities undertaken by the bank energizes these assets and create strong customer base.

c). Brand resonance: It is also one of the critical model to determine brand equity. It

determines what kind of relationship a consumer is having with brand. It includes four

steps:

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i) Firmly establishing following associations with the brand:

Intangible Relationship: These are the types of relationship that can be

established through energetic promotional activities. For instance, ICICI

Bank and HDFC Bank are vying to create intangible association with the

customer. And thats the reason these banks are able to enhance their

customers base.

Tangible Relationship: As soon as promotional activities are undertaken

then customers are acquainted with the brand physically. At this particular

stage customer really experiences the product and gives its relevant

opinions regarding products and services to other people. It can be

adjudged through strong customer base of ICICI Bank and HDFC Bank

that a particular view which had been expressed by various banks

intangibly is experienced by the customers in an excellent way.

ii) Take a consumer responses after a consumer had actually experience the product.

It can be adjudged through following:

Brand Salience: It relates to that how often a brand creates an endurance

memories among the customers. Attractive schemes which are granted by

ICICI Bank is really a set instance for that purpose

Brand Performance: It relates to how the products or services is meeting

a functional needs of people. In case of banking, deposit facilities, loan

facilities of the banks meet the functional needs of consumers. All the

banks are performing their part as far as functional needs are concerned.

Brand Imagery: It deals with as to what are extrinsic properties

encompassed in the brand. These are the only properties which can allure

various customers. Extrinsic facilities are dealt by the ICICI Bank in an

efficient way as it had been discussed earlier.

iii). After that this is a stage where customer responses are adjudged.

iv). At this particular stage mandatory improvements in the brands are enacted if the

customers response is adverse towards a brand.

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In the nut shell, LKB is not accessing its marketing activities which is an immense

purpose to create a brand equity which had been shown through various models

previously. As promotion is first stage of creating brand equity so at very first stage

LKB has lost the purpose of creating brand equity.

The performance of these banks on the basis of these models can be shown through

following paired order scaling and rank order scaling:

PAIRED COMPARISON SCALING

Above paired order scaling clearly authenticates that ICICI Bank and HDFC Bank are

preferred three times more than other banks. CBOP gains two points on this front. LKB

does not open its account on this front but Std.Chtd. Bank gains one point.

It can be lucidly shown through rank order scaling that which bank performs on which

rank as far as brand equity is concerned.

RANK ORDER SCALING

Nominal Scale Ordinal Scale

Centurion Bank of Punjab 3

Lord Krishna Bank 5

HDFC Bank 2

ICICI Bank 1Standard Chartered Bank 4

CBOP LKB HDFC ICICI Std.Chtd

CBOP - 0 1 1 0

LKB 1 - 0 0 1

HDFC 0 0 - 1 0ICICI 0 0 1 - 0

Std.Chtd 1 0 1 1 -

2 0 3 3 1

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A RECOGNITION TO VALUE

Value is most important factor which is to be considered in mind while developing any

product or services. From the start of the project, it had been discussed that value is co-

related with segmentation. So, segmentation must be kept in mind in order to ensue the

value at a good pace. So, every bank must ensue the activities of segmentation properly

in order to deliver value which is favorable for the customers and delivery of the values is

one of the key factors which must be kept in mind. Because until or unless value is not

delivered in an efficient way, segmentation and an inception of value corresponding to

segmentation is futile activity.

Customers perceived value: It is a difference between what consumer gets and what he

or she pays for obtaining such products or services. If customer is obtaining a cluster ofbenefits but amount which he is paying for obtaining such benefits is higher than the

benefit he is getting, then such benefits are just futile. But in ICICI bank though

customers are being charged some amount for obtaining a facility of debit cards and

credit cards but attractive schemes offered by this bank i.e. discounts at various petrol

pumps and outlets are of much use to the customers. So, the fees which is being charged

by ICICI Bank is just a nominal fees. So, ICICI Bank is performing up to the customers

perceived value. Now following are the values which LKB can opt for competing with

other private sector banks in providing attractive schemes to the customers:

V1

LKB can select three persons randomly who are availing a facility of credit card and

debit card every year and can grant free trip to any of the tourist destination and rest of

the customers can receive consolation prizes. Though nominal fees can be charged from

the customers for availing credit card and debit card facility. Such a nominal fees cant

pinch consumers though it will allure various customers. LKB can work on this particular

strategy.

V2

Free internet connections can be granted to the customers availing debit card, credit card

or ATM facility and nominal fees can be charged from the customers.

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V3

Customers can avail discounts at eminent outlets in the city.

These are the values which create an opportunity for the banks to create more customers

from various wings.

This case shows that how a particular dependent variable depends on independent factors:

Dependent variable: Is LKB really serving the very purpose of retail banking?

Independent variables:

1. Services provided to the customers.

2. Rate of interest given to customers on various deposits.

3. Internal management of company.

4. Ancillary services i.e. attractive schemes corresponding to ATM

cards and debit cards along with the main products of the

company.

5. Remittances provided to the routine customers.

6. Customers provided with alternative plans.

7. Promotion of the company.

These are the independent variables upon which the very purpose of retail banking

stands. It will be discussed later on with the help of Likert scale and co-relation study.

Value Proposition: Cluster of benefits given to customers by a company is known asvalue proposition. It involves not only dispersing core benefits to the customers but also

involves distributing ancillary services along with that.

LKB is just focusing on granting core benefits to the customers i.e. banking and it is not

providing ancillary services to the customers as other banks like ICICI Bank and HDFC

Bank are dispersing. ICICI bank beats all the banks on value proposition front because of

following reasons:

a) Promotional activities.

b) Ancillary services provided by the bank.

c) Targeting various segments and not only focusing on one segment or universal

segment

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d) Well-qualified and experienced staff and proper hierarchical level in an

organization as it had been discussed in the earlier stages of the project and

enhancing value delivery process to the customer.

e) Internet and mobile banking facility provided by this bank.

Total customer satisfaction: Buyers satisfaction and dissatisfaction depends upon the

pleasure an

Documents

Anuj-RETAIL_BANKING