THE MINISTRY OF EDUCATION OF AZERBAIJAN REPUBLIC

THE FEATURES OF APPLYING BANK MARKETING IN

AZERBAIJAN: A CASE OF BANK OF BAKU

STUDENT : NASIB SADIGOV

SUPERVISOR : LEYLA HAJIYEVA

UNEC SABAH

AZERBAIJAN STATE ECONOMIC UNIVERSITY

June 2019

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Acknowledgements

I am thankful to my dear instructor Leyla Hajiyeva for her immense

encouragement and great guidance during working for my dissertation.

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ABSTRACT

Banking and marketing are two of the most important sectors of the

economy. Banks can go through difficulties and threats to stronger opportunities

due to banking marketing that provides a variety of framework analysis and

marketing strategies.

The purpose of the thesis is to give general information about banking

marketing in Azerbaijan and to analyze its characteristics through Bank of

Baku. If the theoretical framework of the research provides information about

the general banking sector, the practical part includes the process of marketing

activities, as well as the positive and negative effects of those banks.

264 people participated in the survey. According to the information

gathered and the conclusions reached, customer satisfaction and service power

of the bank in general are at the normal level.

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TABLE OF CONTENTS

Introduction…………………………………………………………….5

1. Literature Review…………………………………………………….9

1.1 The main aspects of the development of the banking sector………....9

1.2 The specific characteristics of the bank marketing…………………..14

1.3 The main functions of the bank marketing…………………………..17

2. Research methodology………………………………………………35

2.1 Data collection with survey and SWOT analysis methods…………36

3. Analysis………………………………………………………………38

3.1 Analysis of Azerbaijan banking system ……………………………38

3.2 Analysis of the marketing activities in Bank of Baku ……………...46

3.3 The results of survey………………………………………………..49

4. Conclusion……………………………………………………………59

5. Bibliography………………………………………………………….62

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INTRODUCTION

Marketing is the planning and implementation process for the

development, pricing, promotion and dissemination of ideas, goods and services

in order to realize exchanges that will achieve personal and organizational

goals. Marketing is a process in which we encounter, use and are influenced in

every aspect of our lives. Making of products consumed by the buyer as part of

its marketing strategy to phase the use of those products is increasing day by

day. Of course, marketing is applied not only in products but also in service

areas. Also bank marketing is a type of service marketing. If we think that there

is a strong competition regime in the banking sector in our country and also one

of the difficult periods for banks due to some financial problems, we can see

how important the bank marketing is in terms of banks and customers.

Banks, financial institutions with the basic function of collecting the

savings of enterprises or individuals and transferring them as loans to the

economy. Apart from these two activities, the functions of banks are shaped and

diversified according to the economic and social order of the countries. The

products and services applied by banks are bridges between investors and savers

in the economy.

In the last 30 years, the developments in technology, the emergence of

various financial institutions, the increasing competition in the financial sector

are the most important developments affecting the banking sector. These

developments have led to the globalization of many foreign banks.

Banks against institutions that are born as a result of loss of confidence in

the state, that the state guarantee behind the banks' deposits they collect are

considered the performance of a public duty. In line with this, banks are the

institutions that have taken an active role in the realization of the structural

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changes that are considered in the economic field in a country. As a result, the

market conditions, banks and functions are shaped. As a matter of fact, the

banks, which are regarded as institutions where the monetary accumulations are

stored and lending transactions, have started to offer a large number of financial

services.

In this competitive market, banks have entered into hard work to create

new customers and create existing customer loyalty. This situation has turned

the place of traditional banking into a modern banking approach. Banks are not

afraid to use the latest technology to make it into customer needs has created an

action plan priorities. In addition, it decreases the cost of the customer base and

creates projects related to it. From this point of view, the main objective of the

banks is to ensure the continuity of customer satisfaction by delivering cost-

effective banking products and services to customers.

Due to the changing conditions and competition in the economy, it has

become more difficult for banks to increase their profit margins and to maintain

their share in the market. In such a challenging market, banks need to be able to

accurately identify customers' needs and provide the right product or service. In

this case, banks should not only increase the cost but also need to be able to

provide the best product and service in the best way by prioritizing customer

needs. This shows that the importance of marketing in the banking sector has

increased considerably.

Banks are now offering various services market is obliged to share with a

large number of financial institution and any use tool to gain some competitive

advantage. To be successful in such a competition is only possible by following

the wishes and requirements of the market and the masses of the market,

creating products for this need and presenting these products to the market in a

suitable way. Therefore, banks now need to take into consideration both

economic competition and customer requirements and in parallel to this, they

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must succeed in providing the required product with good service. This is an

indicator of the increasing importance of marketing in the banking sector.

Banking service is the basis of the marketing activities of a banking

institution. It should be noted that banking services are fairly standardized, and

therefore there are limitations in the context of the marketing of product

policies. In this situation, the role of branding, which allows market positioning

in the banking sector, is growing. The main purpose of this marketing tool is to

increase the awareness of banking institution services. In addition, each bank

must choose the target audience, which will be targeted branding. Another

effective instrument of marketing product policy in the sphere of banking

services is the accompanying (additional) service. In order to increase the value

of banking services in conditions of limited opportunities to create new or

modify existing banking products, banks can develop and offer additional

services to regular and potential customers. This may be preferential rates for

additional deposits, favorable credit conditions, concierge service and the like.

When introducing additional services, it is important to conduct a thorough

economic analysis to ensure a positive economic effect of the marketing policy.

It is equally important to adapt the banking service to current realities and in

time to abandon the service that does not meet the requirements of the market.

When creating the marketing planning of banks, the market needs to be

analyzed correctly and the target customer population should be determined

correctly. It groups the market according to certain criteria and works on the

needs of the group. It then transfers it to its customers through various

distribution channels.

Today, the creation of image banks to establish good relationships with

customers and in line with the market share to be obtained by the use of items to

be created as a means of competing claims on customers and long-term and

more stable profit would be obvious. In this direction, banks were structured as

physical spaces, which were separated from the old images and separated by

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glass screens, and the bank staff became the representative of the bank who

made warmer relations with the customers, found the customer if necessary, and

went to the customer visit. It is also a necessity for the banking sector to make

innovative changes in line with customer requests. Marketing is a key task in

meeting the new requirements for the purposes of the bank.

The object of the research is:

- to find out most significant factors about bank sector;

- to analyse advantage and disadvantage of bank marketing;

-to investigate main features of bank marketing, that is more necessary

for clients;

- to research the marketing activity of “Bank of Baku”

The purpose and object of dissertation is to learn and detecting which

marketing strategies and ideas are able to gain success for companies in bank

sector.

Information base and research methodology: Statistical materials from

the statistical committee, bank reports of banks, also written literatures are

regarding bank sector and some reliable online sources and dissertations that

used as theoretical basis for the study.

Innovative features of the paper: This study reveals how the marketing

concept in the banking sector is becoming more important and used for banking

functions of "Bank of Baku" because of changing market conditions and

increasing competition.

The actuation of the thesis:

Many authors in Azerbaijan have examined marketing issues in depth

(Aşurov A.S.,2008; Mammadov A.T.,2014, Hajıyeva L.A.,2013, Xayirxabarov

İ.M.,2015). However, the topic of bank marketing has not been sufficiently

studied, which predetermines the relevance of the research being conducted.

The practical essence of the thesis:

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The information provided in this thesis may help to understand the most

important factors affecting bank customers and adjust the marketing strategy of

the bank.

1.LITERATURE REVIEW

1.1 The main aspects of the development of the banking sector

Although banks vary according to their level of development, they are

institutions that operate in the fulfillment of monetary and credit functions in all

economies. The activities of these two activities are shaped by the economic

and social structures of the countries in which they are located.

Bank is defined as “Engaged in all types of operations on money and

credit, and the regulator Of the private and legal persons, an economic

organization that works to meet the needs of the state and businesses in this

area” (Buch,C., C. Koch and M. Koetter,2011).

This definition indicates the relationship between bank functions and

various types of banking activities. However, the diversification of economic

requirements, the change in the requirements of bank services over time and the

fact that banks consider these changes as competitive opportunities increased

the existing dimensions of bank functions and the types of activities.

Considered in terms of bank functions; banks, collecting deposits from

real and legal entities, which collected deposits as loans and placement of

various banking services outside of them is referred to as organizations offering

to customers.

One of the most important functions of banks is create money. This is the

most important feature that distinguishes banks from other financial institutions.

In the economy, most of the monetary payments are carried out by banks that

collect deposit subject to check.

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Banks are profit-making institutions, that allow the risk allocation by

multiplying the service items. It is responsible for customers, employees, public

authorities and many others.

On the other hand, the laws on financial intermediation activities also

concern banks and intervene in their fields of activity. Banks play an important

role in the implementation of economic decisions in countries.

Today, the services offered by the banks are diversified.So instead of

making the bank definition, understanding the function of banks is more

accurate. (Cetorelli, N., and L. Goldberg,2011).

Make to collect money

Ability to deposit with the help of various tools.

Providing savings to funds deposited and deposited with specific

maturities for the purpose of saving.

To support companies by giving credit.

Supporting individuals with consumer loans.

Discounting notes.

By collecting checks and bills; track and save time

Remove money handling with money transfer transactions.

Intermediation of foreign trade transactions.

To perform foreign exchange transactions.

Assisting the firms in their tenders with letters of guarantee and

external guarantees.

Provide safe deposit box service.

Intermediation in the purchase and sale of securities.

Provide credit card services.

To provide consultancy services.

With the general lines, the functions of banks are known in this way.

However, within the structural size and economic line of each bank, it can be

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seen that it offers different services than the above services or gives less

attention to some of the above services.

Banks are effective tools in the implementation of economic decisions.“In

the sector, political and economic decisions have been accepted for years and

banking activities have continued” (R. Marquez 2010).

Since the banks continue to achieve their risks in their existing schemes,

their marketing activities are ignored; they focus on the protection of deposits

and credit activities. Creating customer loyalty for the future or customer

requirements are not taken into account; what has been done in this direction is

limited to the personal perspective of the employees.

Banks offered only the product they wanted to present, and they

measured their success with the increase in their credit volume. Generally they

see customers as a means of reaching goals, not as a point of departure for

marketing and sales.

“However, non-price factors such as globalization, information

technology, change in consumer preferences and quality have been the

dynamics that have revealed the necessities of the new marketing concept”

(Nazmiye Demir, Dilek Birbil, Nevda Atalay, Şevket Yıldırım, 1998).

The new competitive conditions, the settlement of the quality

consciousness, the expectation of more comprehensive services by consumers,

the tendency to move from concrete to abstract, and the rapid change in

technology have become the new dimensions of marketing. ( Adillawa,2011)

wrote about this in his book on marketing. The reasons for the change in banks

are known due to internal and external factors.

External factors affecting changes (İsmail Canseven,1991):

- Political, economic developments

- Social changes

- Legal regulations

- Technological changes

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-International trends

- External environmental factors.

“After the Second World War, the growth of the business volumes of the

financial sector markets increased the banks' functions. Developing monetary

transactions and increasing the importance of corporation; as it allows the

integration of industry trade and banking sector, the balance of such loans-

deposits also caused a re-establishment” (Levintal,2013)

Economic changes have led to structural and functional changes in the

banking, bank services according to the need of general economic structure is

shaped.

“Since the beginning of the 1970s, the rise of living standards, the

increase in the income level of the people; the bank has spread its habits to the

wider masses of the society and the banks have started to compete in favor of

being preferred” (Robinson, Karina,2001).

These years are also due to the unstable balance of the world economy,

the transition to the flexible exchange rate system, the interest rate changes

caused by the oil crisis and the increasing number of companies operating in

international markets; In the banking sector, responding to customer

expectations and turning to rational policies. The increase in labor costs has

lowered profit margins, and banks have had to expand their work areas to

increase profit.

Another factor in the changes in the banking sector; increasing

competition in the financial sector. Due to the expanding fields of activity of

banks, all competition elements in the financial sector also affected banks. The

formation of various financial institutions and unions, some institutions began

to make bank transactions (eg P.T.T.) competition has riveted. In order to

compete in the financial markets, banks had to follow the technological

developments closely, and the rapid change of technology increased the speed

and quality of the service and accelerated the change processes.

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In the banking sector, which is moving towards liberalization, regulations

related to the legislation have also caused banks to review their functions. In the

1930s, the strict measures introduced for the depression and the new legislative

arrangements were made according to demographic, economic and social

factors. The banking sector, which has been affected by the changes in the

legislation in time, has affected the public authority with its proposals.

External factors affecting changes:

External factors also affect the internal structures of banks; competition

and operating expenses increased; as in the case of lowering bank profit

margins. In this respect, cost accounting has gained importance.

“ The most important element in terms of the internal factors affecting the

change in banks is the spread of the idea that the customer is the basis of the

bank's functions. In this direction; concepts such as new service development

and service differentiation have become increasingly prominent ”(Katz,Eugene

M, 2003).

It is impossible to meet the needs of all customers, given the wide range

of customers. This has pushed banks to segment the market, to increase the

number of branches and to implement new forms of distribution.

“Increasing competition has ensured the importance of banks'

organizational structures” (A.Van Rixtel,2013). The ever-changing customer

demands and expectations required more information about the market, which

increased the importance of market research. Briefly, competition from regional

banking to multinational banking increased, for compliance, new structures and

therefore marketing activities have become mandatory to survive.

Distribution of services, price-cost balance, promotion and public

relations have gained importance as well as the follow-up of competitors. As a

result of the service differentiation of customer demand; Being the uştur

customer's bank bank and applying the banking functions of the free market

economy after 1980s became the cornerstones of banking. Developing

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international markets have made the existence of banks compulsory in foreign

trade transactions as well as domestic trade.

The increasing importance of customer satisfaction and loyalty has forced

the banks to work in line with the implementation of customer-oriented

marketing strategies.

Marketing is an indispensable business function that is vital for the

success of the enterprise. “Marketing is a business-oriented business activity

that organizes planning, pricing, distribution, and sales efforts to present

satellites and services to their current and potential customers” (William J.

Stanton,1998). Marketing another definition is “all about creating customer

value and building profitable customer relationships” (Ph. Kotler, G.Armstrong,

2011).

Within the framework of historical development, “business managers'

business understanding started with ve production approach (product

management) mamul and continued with sales approach (sales management)

concept and today marketing concept (modern marketing concept) has reached”

(Coffey , John J. and Gene Palm, 2003).

1.2 The specific characteristics of the bank marketing

The concept of marketing and the basic principles of marketing are also

valid for the activities of banks. Banks have recently grasped the importance of

marketing and have made significant changes in their services and attitudes

towards customers.

“In this sense, marketing in banks; to provide geographic, sociological,

economic and behavioral analysis of the market served, to create services that

will meet the needs of the market according to this analysis, to present these

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services in an appropriate manner, to provide an effective communication and

ultimately to achieve profitability” (Dixit, V.C.,2004).

The subject of banking is the solution of customers and their financial

problems. Thus, detection of customer expectations, the creation of appropriate

services to these expectations, presenting the most suitable facilities to

customers, ensuring the bank environmental compliance and improving existing

customers' loyalty, marketing is an important role in realizing the customer of

potential customers.

“Bank marketing; It includes examining the needs of existing and

potential customers and determining the ideas and functions in order to

determine the future requirements. In an environment that is constantly

changing, marketing is a guide for the development of banks.At the same time,

increasing competition wars, marketing is an important competitive tool for

banks. As people change, banks have to change with them” (ABA Bank

Marketing,2003).

“The future of banking is based on the determination of new requirements

of customers and the development of new opportunities to meet these

requirements. Marketing also plays a key role in meeting the new requirements

for the purposes of the bank” (Patnaik, U. and Chhatoi, B., 2006). In an

environment full of uncertainties, marketing is the most effective tool for banks

to address these uncertainties.With a marketing approach, the starting point for

the banks operating in the market, existing and potential customers in this

direction, to meet the current and prospective requirements, in doing so is to

maximize profit. Accordingly, the activities of a bank with a marketing

understanding are based on some basic principles.

The basic principles of bank marketing is:

1. To be market oriented,

2. Integrated Management Approach,

3. Contribution to Market Development,

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4. To be directed towards objectives,

5. High Planning

1. Be Oriented Market:

Banks apply their many years of "What do we sell" style of thinking,

"what the customer asks us" mindset and returned to the starting point of the

customer, the focus has now turned to an understanding of the marketing

decisions. All program activities and strategic practices of banks in this

direction is planned according to customer and market needs and requests.

2. Integrated Management Approach:

Marketing should be evaluated not only by the senior management or the

marketing department but also by the whole institution and must be the duty of

every employee working in the bank. In order to establish strong exchange

relationships with customers, integrated marketing means the inclusion of

marketing, price, location and sales improvement measures in the most optimal

way and adapting them to the organizational structure. Thus, all marketing

decision variables can adapt to each other.

3. Contribution to Market Development:

The market is constantly changing, as is the case in all sectors, and in

banking, it is necessary to spread the existing products (through branches,

alternative distribution channels) as well as to introduce new products.Which is

important for a bank with a marketing approach, doing research to market is yet

to serve customers even if they do not know and get products to customers that

the bank shares as.

4. To be directed towards objectives:

Profitability, liquidity and trust are the most important goals of banks.

“Rantability, growth, improvement of asset quality, and some of the objectives

given by law can be expressed as extensions of these three objectives”.(Adrian,

T., and H. Shin,2010) Objectives should be clearly defined by the bank

management. For example, the growth goal can be considered as the spread of

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the branch network, or as an increase in credit volume or profitability. If the

objectives are clearly defined, all marketing activities and especially marketing

decision variables can be arranged according to the determined objectives

within the framework of the customer axis.

5. High Planning:

Without planning, it is impossible to talk about marketing. “Planning is

the process of deciding what to do before, when, how and by whom. This

process is continuous due to the continuous changes in environmental

conditions” (Sasanee, M.K.,2004).The concept of marketing, which includes the

planned marketing actions, refers to the determination of the goals and

objectives.

1.3 The main functions of the bank marketing

The benefits of planning for marketing in banks include identifying

business opportunities, identifying the activity programs to be implemented in

order to achieve the objectives, and controlling these programs later.

With the increasing importance of customer demands and expectations in

banking, changing marketing concept is not limited to presenting the service

expected by the customer, creating customer loyalty, and marketing elements

have been used to connect the customer to the bank in a long-term relationship.

New customer-oriented marketing strategies are very important competition

tools for banks.

The fact that the services have different characteristics than the goods

required the banks to take into account different marketing elements when

fulfilling the customer requests.

Details such as the illumination of branches, the location of the items in

the branch, the emblems and logos of the banks, the presentation of the other

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customers and services within the bank to the customers at the right place and at

the right time have become important elements in the bank marketing.

With the development of technology, banks started to gather data about

their customers in a pool. With the development of data-based banking

nowadays, these data are very important tools to reach existing customers in the

implementation of marketing decisions. The increasing importance of data-

based marketing has increased the importance of customer relationship

management and relational marketing concepts. The acquisition of existing

customers or customers who leave the bank as well as acquiring new customers

is also an important marketing tool.

Marketing is very important in satisfying customer demands and needs

and ensuring customer loyalty.

“The current job of banks is to fight the changes” (Koray Tulgar,2013).

Marketing management decisions are taken under the control of macro

environmental factors that are not under control.It is possible to consider the

external environmental factors as national and international environmental

factors. Although national environmental factors directly affect marketing

decisions, international environmental factors first affect the national

environment of the bank and thus the bank.

The second type of factors affecting the marketing decisions of the Bank

are; It consists of the variables under the control of the company - within the

bank - factors. These variables can be analyzed as non-marketing sources and

marketing decision variables.

All these factors constitute the marketing system of banks. The customer

is at the middle of the system. The success of marketing management is to

analyze the factors that will affect the relations of the customers with the bank

and the changes in these elements and to provide the services suitable for the

customer. Such a building banks; aims to take all business and marketing

functions from the determination of the objectives to the delivery of the service

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to the customers. “This situation brings to the banks the need to set up the

marketing system which is one of the basic tasks of business management, to

make it work and to control it” (Goldberg, L.,2009).

The bank's external factors are also affecting the marketing decisions of

banks. Factors that have the most impact on the Bank's marketing system are

environmental factors beyond the control of management. They are also the

main determinants of the bank's service policies.

International environmental factors constitute the outermost ring of

uncontrollable factors. “These, they are very broad-based factors such as the

economic structures of foreign countries, technological developments and

cultural changes” (Goldberg,L., and A.Guptal,2013). Innovations in other

nationalities, technological developments and customer expectations will

inevitably change the wishes and expectations of customers within the country.

In addition, each customer bank will expect to serve in accordance with

international trade standards.

National Environmental Factors:

a) Demographic Environment:

The family structure and characteristics of the country, education level,

age, quantity and distribution of the population; it affects customers' demands

for bank services. These variables play an important role in market

segmentation. In our country, where the young population is dominated, it is

seen that the banks treat young people as target groups; Such products are

market segmentations created within the framework of these variables.

b) Economic Environment:

While banks are affected by their economy, they also affect the same

economic system. Activities of banks in economy: “As a result of the use of

loans, increasing the consumption, creating opportunities for increasing

investment, creating money by increasing the liquidity of the economy and

providing consultancy services to the society” (M., Dong, G. and Palia, D.2012)

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c) Social and Cultural Environment:

Banks have responsibilities to the people and organizations that form the

society in which they are located. The marketing policies they implement

cannot be contrary to this society and the changes in the social and cultural

environment and their life styles affect the marketing decisions.

There are also marketing activities that are created by the influence of

other factors such as interest-free (Islamic banking) that address the beliefs and

value judgments of some segments of the society.

d) Political and Legal Environment:

No institution within the country can be considered independent of its

governments, and decisions taken affect all institutions. Likewise, the banking

sector affects the government to make new regulations and the decisions taken

and the regulations made affect this sector.

The effects of the laws on banks are seen not only in the financial field,

but also in the legal regulations on economic and fiscal policies.

e) Competition:

Banks addition to having increased competition among themselves,

financial institutions fulfilling the bank's activities or similar institutions (such

as the payment can be made P.T.T. jobs) it is also in competition. In this market

that displays oligopolistic features, the price is not an effective means of being

preferred and it is important that the factors other than the price are competitive.

Differences in deposit assessments, technological superiorities, or the

provision of services that the client needs outside the bank's activities will help

to provide superiority to competitors.

f) Technology:

Following the rapidly advancing technology is no longer a marketing

activity for banks and has become an essential element of marketing. In today's

banking sector where knowledge and development gain importance; It is

planned to provide an advantage over competitors by using technological

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products. Internet, television banking, smart cards, banks have become the

institutions that customers can access everywhere.

Basic marketing variables are available in marketing.The efforts of a bank

which has adopted a marketing approach to achieve its targets are also affected

by internally controllable variables. Banks can change their customer

preferences by affecting the market with the variables under their control. These

variables, which are under the control of banks, are marketing decision

variables or marketing components (Möller,2006):

-Product (service)

-Price }4p mixed

-Place

-Promotion

As we know, the basis of the marketing activity in terms of banks

constitutes the service variable. For a service that does not create saturation in

the customer, the low price, intense advertising campaign or the availability of

the service will not mean anything. In line with this understanding, it is to

develop the existing service or offer new services to the marketing director. For

this, service planning and development programs should be prepared. While

preparing these programs and placing the products on the market, the point to be

considered is the customers and their wishes.

Services are requirements and saturation when marketed to end users or

businesses, regardless of the sale of a good or service. Therefore, the service

should be able to satisfy the needs of the customer by providing saturation at the

customer.

In this direction, the most important objectives in determining the service

policies of the banks; customer satisfaction and financial needs, to increase

profitability, to increase alternatives in products, to provide competitive

advantage, to strengthen the image of the bank, to distribute the risk and to

provide the image of the leader bank.

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“Bank services it can be classified according to customer base and

purchase form” (Möller,2006). In customer classification, customers are divided

into individual and corporate forms. Services also vary as individual and

corporate services. This classification, which can be divided into lower sections,

is widely used. Services according to customers' purchase format; it is divided

into easy, likable and featured services.

- Easy services; time deposit and fund accounts such as banks and each

customer can do.

- Like-up services;The services that are taken care of to create a

preference for the customer, are differentiated and differentiated services.

Foreign trade transactions, different investment opportunities, such as loans.

  - The Specialty services, bank customers who cater to specific needs and

requirements are services they are looking for and they made a special effort to

achieve their insistently. Like personal banking services.

In subsequent studies, the marketing mix in the banking sector increased

to 7Ps (Möller,2006), talked about the shortcomings of the 4Ps marketing mix

as a basis for traditional marketing management in his book and required the

introduction of the 7Ps marketing mix. Service marketing is a combination of

different components of services that companies engage in, and is used to

deliver their services, organizational and branding messages to their customers.

Combined consists of seven Ps, such as product, price, location, incentive,

human, process, and physical evidence. A long-term marketing blend, called

service marketing, also looks at the service it offers as a business product. The

arrangements for their service are unnatural.

Services offered by banks; basic and auxiliary services; In this

distinction, the rate of fulfillment of customer requests and requirements is

taken into consideration. Basic services; providing deposit and custody services,

intermediation in payments and financial support service (lending). The

auxiliary services; services such as gathering information about the market and

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benefiting from this information, consultancy, insurance agency, customer

intelligence, safe deposit box, tourism agency, foreign trade transactions and so

on.

Banking transactions had to be developed with the transition to customer

orientation and differentiation of demands. Services such as goods;

presentation, growth, maturity, and decline. Banks have to evaluate the current

services offered, such as the entire service sector, according to this course. The

Bank's policy in service development; it depends on its physical and financial

resources, the characteristics it wants to protect in the market and its

organizational structure. The situation of competitors and the market, the

delivery possibilities of the service, the timing, the number of potential users

affect the success of the selected policy.

“Increasing competition in the banking sector, changes in the economy,

developments in technology, changes in policies, determination of market

shares and risk factors lead banks to develop new services” (Neili, J. 2007.). In

addition, the social activities of the banks also require the development of new

services.

In addition to all these, crises in the world or in countries, exchange rate

systems, changing the conditions of international market forces banks to

provide different services. In the development of existing services or in the

provision of new services, care should be taken to ensure that these services are

complementary services, in need of service in the market, in line with customer

requirements. It should also cover the costs of the service return.

The fact that services have some basic characteristics different from bank

products forced the banks to follow different marketing plans and strategies in

the services. “Service in this sense: It can be defined as abstractable efforts that

can be identified as the main objective or element of an activity” (Calton, John

T.,2002). General characteristics of services in this direction; they are abstract,

23

heterogeneous, their production and consumption are synchronous and they

cannot be stocked.

Customer-focused marketing strategy because of the importance of

winning and banking services in the characteristics of the product / service

rather than nature, involving the presentation and presented the ambient

conditions of service "Services Marketing" concept came to the fore. In line

with this new marketing mix elements; these is physical environment,

participants and process management.

Due to the fact that the production and consumption of the service are not

realized at the same time and the banking services are labor intensive, the

quality and service provision varies from one bank to the other.

Customers are seeking clues about the services and quality of the bank

they choose. The physical environment is a very rich resource for giving clues

about services. Physical environment conditions; service before and after the

use of the customers are effective in the re-purchase. Physical environment; it

affects bank staff as well as customers. The working environment has an

important role in the satisfaction, efficiency and motivation of the personnel.

Therefore, the physical environment should be tailored to the needs of both

customers and employees.

Services can be grouped as interpersonal, self-service and remote

services. Interpersonal services presentation of classical banking activities

between the customer and the customer representative, self-service ATM, such

as customer services in his own their own processing and remote services are

services that are offered through alternative delivery channels such as the

telephone banking.

Banks have to adjust their physical environment according to these types

of services. For example, as there will be no customer representatives in self-

service services, all conditions should be prepared in accordance with customer

requirements and comfort (changing the design and use of ATMs in line with

24

customer needs). In remote services, only the personnel will be found, so the

physical environment in which employees can apply their marketing policies is

necessary (the reconstruction of telephone banking departments in many banks

in recent years, the creation of physical conditions that the employees will be

comfortable with). Interpersonal services take into account the comfort of both

customers and employees (as branch arrangements in banks are organized

considering the comfort of everyone within the bank).

The physical environment of the service business is a variety of

dimensions with different characteristics; environmental conditions, associated

order, being functional, signs, symbols and substances. Ambient conditions;

environmental temperature, lighting, colors, such as elements. Today, banks

take all these elements into account in their branch configurations. The related

order is the size and shape of the equipment in the physical environment, the

design of the furniture and so on. are the elements. Functionality is that the

same elements provide the necessary tasks and achieve the goals. The use of

small seats in the crowded and busy branches of the banks and the presence of

teller operations on the ground floors. Signs, symbols and items; quality of

construction, advertising boards on the wall, photographs, signs showing bank

departments. As the new products are offered to the customer by hanging the

advertising boards and boards of the products they offer to the market on the

branch walls. The physical environment can have an impact on the potential

uses and quality of the service, as well as the creation of the bank image.

Another marketing mix element for service businesses is the participants.

Participants cover the whole human element, including business employees and

other consumers.(Jim Turner,2003) Similar to the physical environment, other

customer and bank personnel within the bank have also decided that potential

customers are affected by the use of the service. If the service is satisfied after

use, it is shaped according to the skills of the personnel. Banks should shape the

expectations of the customer from the service through the customer

25

representatives so that the customers can not be dissatisfied after the service

usage and they should provide the service according to these expectations.

However, if there is dissatisfaction, then explaining the reasons for this is an

important factor in customer acquisition.

As the factor of the participants has a high impact on the customer, banks

provide training support to their employees, support their customer

representatives with technological investments, employ successful managers in

customer relations and closely monitor the profitability and productivity of their

employees. Training, performance and compensation of employees are

important for customer satisfaction and better service production.

Another important factor in service marketing is process management.

Process management is to ensure that the service is available at the time the

customer needs it and is presented in consistent quality.

In the banking sector, where demand fluctuations are frequent, the

customer density causes the customer to be uncomfortable as the branches are

crowded and the channels such as internet run slowly due to the load.During

high demand periods, banks take precautions such as increasing existing

working hours, training additional personnel, using it to use in cases where

customer service decreases demand, giving priority to continuous customers,

shifting personnel from other departments and putting new branches into

service. During the low demand periods, the personnel go out of the bank to

visit new customers, increase their promotion efforts, visit the existing

customers, visit the customers and communicate with the customers who are not

as frequent as the old ones.

The price variable includes the determination of the price levels for

marketing services, bank services, determination of payment methods, loan

terms and costs, and determination of the strategies to be applied in these

pricing.

26

The prices for banks constitute interest, commission and other various

fees. Price differentiations can be made as a result of market or customer

characteristics. However, in order to implement the measures imposed on the

economic structure in the countries, the price is largely under the influence of

government intervention, which limits the pricing decisions.

As a result of increasing competition, banks that failed to apply a high

price to a single product attempted to increase their business volume. Non-price

competitive tools and customer characteristics have become important concepts

in increasing the volume of business. Before the marketing approach, pricing

decisions were not taken into consideration, the cost was not applied and all

banks followed each other's prices. Giving gifts to customers such a structure,

the width of the branch network and various promotion activities have been

competing elements that the importance of banks. “However, over time, the

release of interest rates, the penetration of other financial institutions into the

market and the increase of competition, the decrease of profit margins, and the

developments in the technological field in the banking sector have also

increased the importance of the price” ( Kotler P. & Keller K,2014).

The pricing decisions of banks are handled in two basic aspects. These

are price determination and price management.

The determination of the price is related to the determination of the price

of the service offered or to be offered to the market. This is the activity to

measure the price that the customer will pay for the service to be used. From a

marketing standpoint is an important procedure.

Price management includes price adjustments based on various

conditions, price changes around a basic price. Price changes are made due to

market conditions, customer specifications, product continuity and costs.

In the pricing decisions of banks; factors such as profitability of the bank,

costs, competition conditions, structure and requirements of the market are

influenced. Changes in public policies are also important in pricing decisions.

27

The fact that the Central Bank decreases the time deposit quotations and that the

banks are obliged to decrease the time deposit interest rates. In addition,

customer values and the customer size of the event are also taken into account

in the pricing decisions. For example, private customers are sensitive to non-

price variables; Small deposit holders give more importance to the closeness,

interest, personal relations. As the customer relations intensify, price factors are

becoming more important in all customer types and the price is put into the

background. A small price flexibility in the newly entered market can lead to

success in the bank, but customers with long-term relationships do not disrupt

the existing relationship for a small price difference.

Pricing forms in the banks:

-Cost-based pricing

-Demand-based pricing

-Competition-based pricing

Distribution variable, where the services of the bank, is seeking a

solution to the question of whether, how and by what means marketing. The

distribution system is extremely important for the image of the bank, because if

customers liked and encounter problems in delivering the product itself that

decided to take is decide not to use the product.

Banks' superiority in the distribution system gives them a competitive

advantage. The most classical form of distribution is through branches. With a

wide and widespread branch network, banks have long been providing bank

dependency for customers.

As a result of the changes in the understanding of marketing and

technology, besides branches in recent years; alternative distribution channels

have been introduced. Computer (internet banking) is being developed more

and more every day as a result of developments in telephone technology.

28

In addition, the sales staff who go to the customers to visit, the banks that

serve in other countries through the correspondent bank also constitute the

example of the different distribution system.

The distribution variable is used less because the service is not a

competitor in the presentation process, as the costs increase during the

regression period, the use of distribution channels such as promotional activities

is reduced. The Bank's selection of distribution channels is an important

investment for them. The decisions taken for the selection of these channels are

high cost and important decisions in terms of bank organization structures.

The distribution decisions of banks are the decisions that should be taken

according to the market policies of the bank, the form of the service to be

presented, the investment and personnel opportunities of the bank, legal

regulations in the country, the organizational structure of the bank and the status

of the competitors.

Distribution form of Bank services:

-Branches,are the best examples of using direct distribution channels.

Through trusting branches, which are the closest channels to the community,

trust is gained and face to face sales are achieved. Close dialogue with the

customer can be established and service delivery can be adjusted according to

customer behavior. Besides these advantages, branches are cost elements for

bank administrations. Building selection, rental, fixture purchase,

advertisement, promotion, system establishment, etc.

The choice of branch location is important in terms of meeting costs and

increasing efficiency. Establishment location should be determined for the

purpose of the branch to be presented / reached. (If there will be a Commercial

Branch, proximity to organized industrial zones and sites, proximity to central

places if there will be an individual branch. Etc.)The physical structures of the

branches have also changed in line with the changing marketing approach. In

29

the areas separated by the glass partitions, the working elements enable the

customer to get closer to the bank.

- Sales staff,takes the service to the customer's feet. "Customer

Representative" these elements carrying the title, the bank, the company is

people who represent the company at the bank. This knowledgeable, educated

staff plays an active role in introducing and presenting bank services to

customers.

- Alternative distribution channels such as Electronic Banking (Internet

Banking, Telephone Banking, Television Banking) and cash machines are the

distribution channels that enable customers to access the bank from anywhere

and make fast transactions. Within the framework of modern marketing

concept, banks are striving to develop these channels with the help of advanced

technology and thus to provide superiority in the market. These channels, which

have lower costs than branches, increase the bank's dependence on customers.

The promotion variable is to provide customers with information about

the services of the bank, to provide information to the market, to convince the

customers and to choose the bank services. Promotion; personal sales, sales

development, advertising, public relations and promotion activities are

composed of. Promotion provides convincing communication that promotes the

sale of the service and strengthens the bank's dependence on customers.

Personal sales is a two-way communication activity that is established to

provide bank services and includes face-to-face meetings. “The best way to

offer financial services is yolu face-to-face sun sales” (Kalyanam K., &

McIntyre S,2002).

The biggest feature of personal sales is that the customer representative

represents the bank. Personal sales play an important role in learning about

customer demands and expectations and differentiating services. Behavior is

easier to adjust for the customer, and personal sales are even more important

30

because of the need for detailed information on the bank service, pricing

features and continuity of the relationship.

"Customers waiting for bank" profile changed with the times, in the face

of personal sales of the changing marketing approach instead

genişlemiştir.kapal rooms, separated bank branches with glass pane with today's

customer service representatives has been designed to provide a more active

communications.

Today, customer visits, creative, active hizmeti marketers, customer

representatives kiş are performing personal sales and their education,

information, service quality and fast presentation is important.

In order for the personal sales to be successful, the customer representative

needs to know the target customers, the status of the competitors and the market

conditions. The person who performs the personal sale is the implementer of the

marketing program.

Sales development, “customers' buying decisions and intermediaries

effectiveness of the stimulus, shows, exhibitions and shows, such as the use of

advertising, promotion, sales and face to face outside is not continuously carried

out various sales efforts” (Jim Turner, 2003).

The main difference of sales development is the completion of personal

sales by advertising in banks. Sales development, involving a large number of

heterogeneous activities, are intended for bank employees or for customers.

Sales development tools for Bank employees; education, seminar, sales

promotion competitions, incentive premiums and outstanding tools. Sales

development tools for customers are letter, book, brochures, banners, banners,

emblems, distributing bonuses, cultural publications, providing some services

cheap or free. Generally, sales promotion efforts, which are considered as

auxiliary promotions, can be applied alone or are often used when combined

with other components.

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Public Relations and Promotion: Banks need to increase their number

of customers, sustain their profitability in the long term, establish good relations

with the environment, gain respect and trust. The concept of public relations is

considered as convincing communication efforts, which are planned to make the

bank popular and respect the environment and to develop confidence in the

bank. Public relations are long-term activities that cover the whole bank and

concern the whole society. In addition to providing respect to the bank, the

function of public relations is to provide information to customers, to obtain

information from them, to gain efficiency in marketing activities, to create a

positive effect on the public in the public and to develop good relations with the

environment.

Public relations and promotion are activities aimed at raising public

interest and increasing bank dependence by means of various media without

paying a fee. While public relations require mutual communication, the

promotion includes information about the bank. Both activities are aimed at

facilitating sales. Most effective tools; radio, television, computer, press,

magazine, book, seminar etc. cultural and social economic activities.

Banks create “an appropriate promotional mix” by using these variables in

different ways in accordance with the possibilities and customer requirements.

“As important as the marketing decision variables for banks, 4O of

marketing and marketing environment, which are parallel to these decision

variables, have started to find more applications in institutions”.(Marketing

encyclopedia,2008)

• Objects / Goods / Services: What does the market buy?

• Objectives / Motives: Why buy?

• Organization / Purchasing Organization: Who buys?

• Operations / Purchasing Organization Activities: How to buy?

4O of marketing should also be taken into consideration by banks as well as

other marketing-oriented corporate employees. The characteristics of the

32

market, what it is, how and why it is bought, knowing who the customer is are

important information for banks. Correct identification of the 4O mix gives

banks an idea of the market they are in, and helps their current or potential

customers learn their purchasing habits. In this direction, service and product

development will bring competitive advantage. In order for 4P to be successful,

a good understanding of 4O, the marketing environment is required.

Figure 1: Marketing Environment and Marketing Basic Decision Variables

“Today, market forces, the cost factor, technology, public

regulations and competitive factors creating international strategies”.( Philip

Kotler,1984) “Marketing has become more important in the international

marketing platform with its human-oriented, process-driven and information-

based (ATM) services, which are oriented to the most common usage ATMs in

the banking sector” (Christopher H. Lovelock, 1999).

33

“Standardization and global strategies are important in sectors such as food

and beverage, health, and tourism, where international marketing strategies have

gained importance” (Shodhganga,2009) wrote about this in his book on

marketing. However, banking as well as global principles require local and

customer related strategies.

In the banking sector, product-oriented strategies are now replaced by

customers focused strategies. In customer-oriented strategies, it is important

how the service, how to reach the customer and how to reach the customer, how

to establish lasting relationships with the customer in the long term or how to

ensure customer loyalty and loyalty.

In this regard, the basic marketing mix elements; customer

communication, customer satisfaction and service elements are also included.

Customer communication includes activities such as telephone lines and

troubleshooting of complaints (Paul Greenberg,2001). Customer satisfaction

includes monitoring and satisfying customer needs through service and service

delivery system, pre-sale and after-service service provided to the customer.

As a result of the customer-oriented approach to the marketing policies of

the banks, the Customer (MBC-Management by Customer) strategies are:

- Database Marketing,

- Customer Relationship Management and CRM

- Relational marketing strategies, have gained importance.

As a result of increasing competition conditions, information about

marketing environment and customers has become the most important key to

strategic competition for many companies. These developments in the banks

and marketing environment make companies more sensitive to information due

to the increasing role of information technologies in the preparation and

implementation of marketing strategies.

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2.RESEARCH METODOLOGY

The research was based on quantitative method using quantitative

questionnaire. This kind of research, estimates will be available for other people

to find an explanation or aims to get answers to standardized items that will help

to improve. The main idea is to develop generalizations that can answer the

main question or to contribute to the theory (Christopher H. Lovelock, 1996).

Quantitative research begins with a theory or problem expression and includes

quantitative data analysis. To clear variables, causes and consequences of

thinking, the use of measurement, analysis, and requires a reduction in testing

theory.

Problem. As we know, the role of marketing in the Azerbaijani banking

sector is increasing day by day and many banks who understand that these

marketing events are important try to maintain their service activities with

various marketing strategies. Since the Bank is a service area, the main purpose

is to keep the customer satisfaction high, and for this, the bank needs to reach its

customers through suitable channels and provide banking products that meet

their needs and needs. Given the high competition conditions in the Azerbaijani

banking sector, each bank should use marketing.

The purpose of this thesis is to investigate the customers and banks that

follow the bank and to reveal the banking products of the said group and all the

activity of the bank in question.

The importance: The thesis is important in terms of the ability of banks

to reach a more effective publicity and number of participants and to identify

the strengths and weaknesses of banks.

Scope: In this context, the demographic structure of bank customers has

been resolved and a customer profile has been issued. Traditional and new bank

usage habits of people were determined and their preferences regarding bank

products and services were examined. Within the scope of the research, the

35

banks of Azerbaijan and the most important “Bank of Baku” are considered as

examples.

The universe and sample: The universe of the research is the bank

customers. The sample group consisted of 264 people who were customers of

the banks and accepted to answer the survey questions and whose

questionnaires were considered valid. After eliminating the unacceptable forms,

the remaining 264 questionnaires were conducted. The study group was

determined by using appropriate sampling method. This sampling method gives

speed and practicality to research because in this method the researcher chooses

a situation that is easy to access.

2.1 Data collection with survey and SWOT analysis methods

Methods: In this study, a survey method was applied and swot analysis

was used.Face to face questionnaire and online survey technique which is one

of the quantitative research methods were used for the data to be used for

statistical analysis and calculations. For the purpose of this study, a

questionnaire prepared by the researchers consists of closed and open-ended

questions to determine the effects of bank activities on customers. The

questionnaire consists of three parts: the first section covers questions about the

demographic characteristics of the respondents. In the second part, the questions

about the frequency and preferences of the respondents in Azerbaijan banks and

the third part are the questions about the Bank of Baku activity. The ”Google

Form“ scale was used to prepare the questionnaire.

The word SWOT consists of the initials of the English equivalents of 4

main characteristics for both individuals and businesses. These; Strengths

(strengths), Weaknesses (weaknesses), Oppurtunities (opportunities) and

36

Threats (threats) are the words. Even this formation gives us the necessary

information.

SWOT Analysis is a very simple but useful technique that you can use in

your business life as an institutional purpose, as well as personalized in your

own life. The history of the analysis dates back to the 1960s. The tool developed

by Albert Humphrey has since been up-to-date and popular. To understand your

strengths and weaknesses, you also frequently apply to the SWOT Analysis to

understand the opportunities around you and the possible threats you may

encounter.

It is important for institutions to be sustainable in business life. In this

context, SWOT Analysis serves to sustainability by ensuring that you

understand the market niches (undesired areas). When used as a Personal

SWOT Analysis, it enables you to develop your career in the best possible way

through your features, capabilities, and opportunities.

Results: Findings revealed that the educational status of the participants

was mainly at the undergraduate and graduate levels, although the traditional

bank habits were evident, the participants were aware of the new marketing

strategies.

Conclusion: When the data of the participants showing the sources of

news about the bank are analyzed, it is seen that the users first receive

information from the oral communication sources, followed by social media and

web sites with a small difference.

37

3.ANALYSIS

This chapter is written to follow the thesis’s objective: what to analyze in

a marketing plan. Therefore, an “alike theoretical framework” practical

framework has been created so that besides bringing the theory into real

situation for analyzing certains factors, the Authors also suggest some ideas

which are approached at practical level. They are all gathered to enhance a

marketing plan for "Bank of Baku".

3.1Analysis of Azerbaijan banking system

The orientation of the modern marketing world has also affected the

banking sector in Azerbaijan banking system. Azerbaijan banks, which could

not go beyond the deposit collection activities, had to increase the types of

activities by the introduction of foreign banks in the market, the decrease of

public authority and the establishment of private banks. It has been tried to

create a difference with modern-looking branches, trained customer

representatives and alternative distribution channels equipped with

technological innovations.

In the last decade, Azerbaijan's banking system has undergone a lot of

changes due to both internal and external environmental variables. The sector,

which expanded with the release of interest rates in the economic area and

partially alleviated the public authority, later the liquidity shortage and the

deterioration of the payment balances experienced a contraction in the political

developments, strikes and autonomous expenditures. In the field of competition,

the penetration of foreign banks and financial institutions into the market, the

increase in the number of banks and then the decreasing of this number with the

regulations made in the sector have made competition difficult. Developments

38

in the technological field, regulations in the legal field and changes in the socio-

cultural area necessitated changes in the marketing policies of the banks.

Depending on these external factors, the internal factors such as the

difficulties in the loan repayments of bank customers, the difficulties in

determining the pricing decisions, and the increase in the costs have affected the

banks in making marketing researches, in the development of new products, in

changing the organizational structures. Making a difference in the sector with

investment advisory, foreign trade transactions and special products has been

the most important competitive instrument.

Modern Azerbaijani banking has undergone significant developments in

recent years. In the 21st century, with the growth of the economy and the free

circulation of money, the bank marketing was brought to the attention of

Azerbaijani banks, which did not even have a marketing department and

accounting conceptions were accounted for, and cash machines, credit cards,

telephone banking and on-line systems were offered to the customers. The right

to free movement has allowed many international banks to enter the market, and

foreign banks have compelled their banks to provide such services with their

high service quality. In parallel with this understanding, “the key word service

quality in bank services has been achieved”. (Johnson, B., & Christensen.L,

2008)

The initial development of the Azerbaijani banking system has begun in

the second half of the 19th century. However, the institutional and legal

construction of the banking system of the Republic of Azerbaijan began after

the state independence of Azerbaijan on October 18, 1991. In 1992, with the

adoption of the laws "On National Bank of the Republic of Azerbaijan" and "On

Banks and Banking Activity in the Republic of Azerbaijan", the legal and

regulatory basis of the banking system was laid.(The law of Azerbaijan

Republic on the banks,2018)

39

The first stage of creation and development of the banking system of the

independent Azerbaijan Republic was accompanied by the free conditions of

access to the banking sector.

The development of the banking system in Azerbaijan can be divided into

3 parts:

1. The first stage was the establishment of the Central Bank (National

Bank) system between 1990-1992;

2. The development of the banking system in hyperinflation and unstable

conditions in 1992-1994;

3. The stage in which the banking system began to develop under

conditions of macroeconomic stability after 1994.

Currently, the country has a two-tiered banking system based on market

principles (National Bank of the Republic of Azerbaijan, commercial banks and

other non-bank credit organizations). At the initial stage of reforms,

restructuring and restructuring of state banks were implemented, institutional

formation of the private banking system was ensured. At this stage, low capital

requirements, extremely liberal conditions for accessing the system were

identified, and soft adjusting tools were used to regulate banking activity. As a

result of these processes, the banking system was institutionalized and the

number of private banks began to increase rapidly.

At the moment, the work has been started to develop a new concept for

the development and further modernization of the banking business. At present,

there are 45 banks and 530 branches in Azerbaijan. At present, 1 out of the

banks is established with state capital and 23 with foreign capital. As of January

1, 2008, there are 96 non-bank credit organizations in the country, of which 77

are credit unions.

“Bank of Baku” profile

"Bank of Baku" since its establishment in 1994 until today, several

fundamental direction remains committed to its activities. The Bank supports

40

retail business, small and medium-sized business, large corporate business and

strives to improve customer service quality. The retail sector is a key part of the

Bank of Baku. Dynamics of growth of consumer loans in the country is a

stimulus for the development of the bank. The "Bank of Baku" slogan, "Close to

you," is the philosophy of Bank's closeness to customers and their everyday

concerns. Throughout its entire activity the Bank contributes to the formation

and development of retail business in Azerbaijan. Bank of Baku has played the

role of "pioneer" in applying many banking products and services in Azerbaijan

and spreading the world's leading banking experience. Bank of Baku, for the

first time in the country, has released a partial paid credit card in the country,

significantly simplify the terms of consumer loans and set up a privilege club

for permanent clients. Thus, Bank of Baku played a major role in the spread of

banking products and services among a large group of people. Today, Bank of

Baku has its headquarters and 22 branches in our country.

Vision: To become Azerbaijan’s leading bank providing individuals, as

well as small, medium, and large enterprises with large range of modern and

high quality financial products and services.

Mission:

-To be dynamic, innovative and transparent in their relations dedicated to

their clients.

-To serve their needs and demands to the maximum, and for that purpose

to engage personalized approach.

-To ensure client satisfaction and to protect interest of their shareholders,

clients and customers, and of their personnel.

The share capital: 52 870 000,00 AZN

Shareholders:

35,00% – Nab Holding (Turkey)

31,11% – Hikmət İsmayilov

28,89% – “Azpetrol” Oil Company

41

5,00% – Elçin İsayev

Core values and the organizational structure of “Bank of Baku”:

The highest position in the organizational structure of the Bank belongs to

the supervisory board. The second stage is composed of seven committees.

Although the duties of the board are lower than committees, they are subject to

direct supervision councils, not the committees.The next place is occupied by

the chairman of the governing board and his deputies. All departments are on

the lower ranks. The core values of Bank of Baku demonstrated on table 1. The

organizational structure has been clearly defined on scheme 1.

Pioneering "bank of baku" want be the leader and set up the new

growth areas in solving difficulties

Dynamic and Innovative "Bank of Baku" believes that changing is a perceptual and

also the force of development.

High Commitment "Bank of Baku" commits that all staff will continuously to

improve by means of training and development to ensure

that they consistently exercise professionalism in

providing the highest service quality to its customers.

Making a Difference "Bank of Baku" believes in making a difference in all

aspects of its operations thereby creating competitive

advantage

Table 1. Core values of “Bank of Baku”

42

43

The principles they have given importance to the marketing policies of

the banks with modern marketing approach have also been valid for "Bank of

Baku":

• Be Oriented Market: "Bank of Baku customer focus, to heed the wishes

and expectations of existing and potential customers, it is seen as an important

marketing function to know and follow.

• Integrated Management Approach: Marketing departments in branches

and branches in the Head Office units, branches and all other departments have

adopted the marketing approach and customer satisfaction in this direction is

considered.

• Contribution to the Emergence of the Market: "Bank of Baku" is a bank

that attaches importance to the introduction of new products to the market. New

products that are not in the market are being developed in services developed in

line with products and customer needs that require technology follow-up.

• To be oriented towards the objectives : The Bank, which is determined in

line with the marketing approach and works for the revised purposes from time

to time, adopts its weighted targets as organic growth, local management and

profitability after 2013.

• High Planning: The Bank carries out all its activities within the

framework of plans and programs determined at different time intervals. The

realization rates of these short-medium-long-term studies, which are considered

in both marketing and finance activities, are also monitored by the management

and shared with the employees. The course of the products in the market is

followed in the life curve, and the service, price, distribution and promotion

decisions are taken in this direction. Program changes and adjustments are made

according to the results of all these activities; planning-application-audit-

application changes are made.

In Bank of Baku, the target market distinction according to customer

behaviors is made as real persons and corporate customers. While only

44

corporate and retail banking departments were in operation, the name of retail

banking was changed as retail banking, retail and retail commercial began to be

served in two branches.

Private banking units have been established and services provided to real

person customers have started to provide services to the customer with a certain

amount of money. There is no doubt that the trust of real person customers in

choosing Bank of Baku cannot be neglected. Within the framework of its

marketing approach, Bank of Baku started to be preferred as the leading bank in

the market. Especially the banking transactions that give the opportunity to use

technology are the reasons why real person customers prefer Bank of Baku.

"Bank of Baku" while demographic market segmentation, attitudes and

behaviors, and lifestyle factors such as personal values rather than geographical

factors and the use of services is more care. The branch takes into account the

geographical elements when expanding its network or creating branch

structures. The branches of the branches opened in organized industrial zones

constitute the commercial section. The Center and they go where the people are

very often put into service retail branches.

According to the Service use market segmentation in the real customers

of the bank with ordinary customers, all activities (insurance, auto payments, ..

etc.) "Bank of Baku" in which the customer is made different applications in the

details of the services offered both in price. In the Bank of Baku, market

segmentation within the bank is taken into account for service differentiation.

Differences in the eyes of the customer and the difference between the services

offered and those in the market are important. The changing market conditions

are constantly monitored in "Bank of Baku" and the marketing activities and

targets are shaped according to the service and product, how and why the

current and potential customers demand. The target group and the customer

group that the Bank of Baku can reach are constantly being expanded with

existing and new services.

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3.2. Analysis of the marketing activities in Bank of Baku

The creation in our country of a two-tier banking system and a large

number of commercial banks has led to a more rapid formation of a competitive

environment in the banking sector compared with other sectors of the national

economy. In addition, in recent years, non-banking organizations, financial,

investment and insurance organizations, pension funds, etc. began to be rapidly

created and developed. Foreign banks enter the country's financial market.

Thus, buyers form the market for banking services, and competitive the struggle

for customers is even more acute. Of course, in this competitive struggle, those

banks that will form a new demand for banking services, gain a competitive

advantage, and a sufficient number of clients will win the success. This, in turn,

insistently requires the use of marketing in the banking sector of marketing and

the creation of marketing services that will carry it out.

"Bank of Baku" cash loans are divided into 3 parts:

1.Loans for repeat customers. This type of credit is provided at a maximum

of 20,000 AZN starting at 23%, within 3-48 months.

2. Credit for public and private enterprise employees. Credit for public and

private enterprise employees is provided at a maximum 20.000 AZN starting at

23% until to 29%, within 3-48 months.

3.Possible loan. This credit is provided at minimum of 3000 AZN, maximum

of 70.000 AZN starting at 23% until to 25 %, within 3-36 months.

Credit Cards of “Bank of Baku”:

1. Debet Card

Visa infinite

Visa Gold

Visa Classic

Visa Electron

MC Gold

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MC Standard

Maestro

MC Virtual Card

Bolkart Genc Debet

Bolkart Aile Debet

Bolkart Gold Debet

Bolkart Diamond Debet

2. Local Cards.

Ideal Card

MyBrands Card

Dostlar klubu Brilliant

Dostlar klubu Gold

Dostlar klubu Silver

Bonus Card

3. Credit Cards.

Credit Card for commonly used

Bolkart Genc krediti

Bolkart Aile krediti

Bolkart Gold kredit

Bolkart Diamond kredit

Bolkart Business

4. Cards for Business.

Visa Infinite

Business Card

Maestro

İşkart – Biznes kart

For the first time, Bank of Baku has applied card payment in our country.

That's why it is not surprising that Bank of Baku's card products are so

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extensive. These cards, presented to their customers at low interest rates, create

loyalty to the bank.

Online banking services are available in Bank of Baku:

İnternet Banking

DostBank – Mobile banking

SMS Banking

Cash by Code

Online credit payment

Online credit application

Plastic Card Order

3D secure

PİN change

Buy the Virtual card in the 3 minute

Payment of the Utility and other services

Mobile additions – İphone, İpad, Android

Call Center 145

Moneysend/VisaDirect service

What is Internet Banking?

Internet Banking is current account, cards, savings, credit account holders

through the Internet, their accounts of the flows follow, as well as online

payments, make payments history, so, from card to card money transfer, to

deposit the amount of the increase, the bank's internal and external money

transfers that allow software. “Through this program, you at any time of the day

without going to the bank accounts directly through the Internet on their own

and be able to get information about the turnovers can perform various

operations”. (www.bankofbaku.com)

Competitors:

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The biggest competitors of Bank of Baku are “Kapital Bank” and “Access

Bank”.Because "Bank of Baku" lose to "Access Bank" in business credits

competition. In the competition of consumer loans bank lose to "Kapital Bank".

SWOT Analysis:

Analyzing the strengths and weaknesses of the bank, and also taking into

account external factors affecting the bank, we consider SWOT analysis of

Bank of Baku:

Strengths

Capital adequacy ratio is high and has a strong capital structure that supports sustainability.

A bank that steers the sector and the market with its innovation oriented approach.

Loyal customers.

Weaknesses

Loss of some branches of the bank in the competition with other branches of the bank.

Opportunities

Low interest rate opportunity. Availability of different bank

product varieties. Despite the negative

atmosphere in the economic sense, to show growth momentum in the economy of Azerbaijan.

Threats

Negative effects of monetary and fiscal policies.

When the conditions are appropriate, the loans that are relaxed are not returned at this time.

Table 3. SWOT analysis of “Bank of Baku”

We can easily see the strengths, weaknesses, and opportunities and

threats of the Bank of Baku through the above SWOT analysis. However, it is

possible to see these features of the bank in the information we provide about

the bank.

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3.3 The results of survey

An online survey was used to make sure that the dissertation was

accurate. The topic of the dissertation is that the person who is over 18 years of

age has responded to the questionnaire because of the Bank's marketing. The

survey was answered by respondents for 2 weeks.

In general, our survey consists of 13 questions. The first 5 questions are

demographic parameters. The other 8 questions are about the Bank.

Figure 1.Gender of respondents

As can be seen from the graphic above, 53.8% of the 264 people surveyed

were men and 46.7% were women.

Figure 2.Age group of the respondents

The age group of respondents has been classified from 18 to 56.

According to the survey, the main age group of participants is 26-40 years,

50

which is 40.5% of all those surveyed. The age group between 18 and 25 was

37.9%. As it is seen from the chart, the difference between these two age groups

is not very high. Following the age group of 14.4%, 41-55 years age group and

7.2% 56 and older.

Figure 3.Level of education

Figure 3 shows the level of respondents' education. 55.3% of the

respondents are trained on bachelor's degree, 27.3% in secondary education,

14.4% in magistracy, and 3% in doctoral studies. Of course, the responses to the

questionnaire reflected these levels of education.

Figure 4. Occupation

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The business activities of the respondents in the survey were diverse.

41.7% of the respondents are private sector employees, 20.8% of them are

students, 11% are state employees, 9.8% are unemployed, 9.1% are engaged in

entrepreneurship, 5% are retired, and others who gave the answer.

Figure 5.Wage of respondents

As a 5th questionnaire, the monthly income of the respondents was asked.

Of the 264 respondents, 33.7% had 501-1000 AZN, 31.1% of them were 201-

500 AZN, 26.9 5 points 0-200 AZN, 8.3% said they received a salary of 1000

AZN. The place of monthly income question is very important. This first part of

the questionnaire where demographic questions are usually placed is a section

that has a strong impact on the entry and also on other sections. In particular,

the importance of paying a person's money on his banking services is great.

The next part of this questionnaire was just about banks and specially

selected questions were used to measure the impact of banks on their clients.

These questions show us how both Bank of Baku and other banks use marketing

and how they all affect their customers.

52

Figure 6.Frequency of use of banking services for respondents

In the 6th question, we mentioned the frequency of use of banking

services by respondents. 41.7% of the respondents said that they were using less

and 25% did not use it. In addition, 24.2% of the respondents noted that they

often used the remainder, ie 9.1% of the total number of permanent clients. We

can say that our economy is in difficult times and as a result of the high interest

rates , it is normal for such a small number of regular customers.

Figure 7.Factors affecting bank selection

In Question 7, respondents were asked to record the factors that could

have an impact on the bank's choice. Almost half of the respondents (43.2%)

chose interest rates as their factor in the bank option. Taking into account that

customers always want the bank to be low, we can say that this is not a surprise.

The other part, ie 26.1% of the respondents, stated that the companies affected

them. So, the marketing measures and the generated strategies The next 16.3%

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of the respondents have a friendly staff, 13.3% share ads and the remaining

1.1% of respondents. In the comment section at the end of this question, the

respondents stated that they preferred more interest rates.

Figure 8. The most frequent use of banking services by respondents

In the above question, the diagrams of services provided by respondents to each

bank are noted. As can be seen from the diagrams, the Bank of Baku has been

using more credit services. In addition to the loan, a small number of customers

use card ordering as well as savings and fast remittances. In comparison with

other banks in Baku, we can see that the first bank selected by the respondents

in the credit service is Bank of Baku. However, the card order seems to be just

behind Kapital Bank. The reason behind the deposit service is the fact that the

deposit service is not active at the Bank of Baku. Kapital Bank is also ahead of

other banks in the fast money transfer service. The main reason for the fact that

Bank of Baku is so much in credit service is, of course, a lower interest rate than

other banks, which is a peculiarity of competitive advantage over its

competitors.

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Figure 9.Cashless payment systems in “Bank of Baku”

In the ninth graph, the non-cash payment systems used by respondents

were expressed in percentage. 44.7% of the respondents use bank cards, 30.3%

use mobile banking and 23.1% use internet banking. Last 0.9% The share of

bank cards in Azerbaijan has also fallen in this graph. People will gradually

become accustomed to cashless payments, which will lead to faster performance

of their work.

Figure 10.Source of information about "Bank of Baku"

The 10th questionnaire was about where respondents received

information about "Bank of Baku". 39.4% of the respondents reported that they

received information from social networks. The Bank's website and social

network accounts were provided to its customers and to those regularly provide

55

information about the bank and its services. This, as you can see, has not

diminished by the respondents.

About 22% of respondents noted that they received information from

relatives. As we know, oral banking has been widely spread recently. Therefore,

the bank must satisfy its customers at maximum levels so that they can give

positive feedback to everyone about the bank by informing their relatives.

In addition, 16.3% of the respondents reported receiving TV

advertisements, 11.7% respondents said they were informed by Billboard

advertising, and 9.1% said they were distributing booklets. In recent times,

Bank of Baku has not used TV ads much, but billboards and booklets are widely

used.

Figure 11. “Dost Bank” application

As you know, Bank of Baku provides online services to its customers

through the "Dost Bank" application. In question 11 of the questionnaire, the

respondents are asked what this application is like. 70% of the respondents said

they liked it and 30% did not like it.

56

Figure 12.The features of “Bank of Baku”

Chart 12 shows the respondents' specificity of what the bank likes and, as

you can imagine, the answers are very close to each other. Thus, 21.6% of the

respondents stated that the bank has a choice of a wide range of services

provided by the Bank. and the location of offices in a convenient location

affects 14% of the respondents, 12.1% of respondents indicated that they chose

Bank of Baku for 10.2% of their advertising, 13.3% said the bank was valid and

that said they were customers.

Figure 13. Evaluation of banks

57

As it is seen from the graph above, the respondents noted that they liked

Kapital Bank the second, while Bank of Baku took the 2nd place. Pasha Bank,

International Bank and Express Bank share the next places. This assessment is

partly reflected in the cost of banks by the respondents.

At the end of the questionnaire, the respondents were provided with the

opportunity to comment on their comments. The respondents were fully

informed about their views.

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4.CONCLUSION

For many years, customers have had to accept the classic banking

services offered by banks, as in many other sectors. Customers' requests and

requirements have not been put forward, the banks have continued to offer the

services they want to offer.

After the Globalization, the transformation of national markets into

international markets, the opening of trade to foreign markets and the change in

income-expenditure level forced the banks to change their marketing

understanding and to provide customer-oriented service. Increasing competition

in the financial market, providing some flexibility by public authorities, and

technological progress have played a major role in changing the marketing

concept.

 As a result of the increase in income level and the rising standard of

living, people have become more likely to save money and have started to need

consultancy services in which areas they can invest. Apart from consulting and

investment opportunities, the changing economy and technological conditions

have increased the expectations of the customers from the banks and the

anticipation of future customer demands brought a competitive advantage to the

banks. As a result, the importance of market research to identify new and

existing requests as well as service differentiation has increased.

Customer-oriented marketing approach has been developed within the

framework of these changes and customer-specific package services have been

offered. The development of international markets led to the expansion of

foreign trade, it has forced banks to specialize in these types of transactions and

provide a competitive advantage internationally recognized as a bank.

With the public authorities releasing the banking sector to the market

conditions, pricing decisions have begun to be taken in line with pricing

decisions, costs, bank objectives, competition, market targets and public

59

decisions. The concepts of efficiency and profitability are further highlighted.

For these purposes, banks have started to implement different market programs

for each segment by segmenting the target market.

As the marketing approach was established, banks had to reorganize their

organization structures and tried to be a pioneer in the market with new

departments and special products. In addition to quality service, new service

delivery has gained importance. The main mission of the banks was to ensure

customer satisfaction and loyalty through strategies added to the service

marketing and marketing mix.

In parallel with the technology advancing rapidly, banks have started to

make large investments in these channels in order to provide competitive

advantage based on distribution channels. These efforts, supported by

promotional activities, enabled the client to reach the bank from anywhere.

Changes in parallel with all these developments in the world are also

experienced in the banking sector in our country. Taking into account the

changing internal and external factors in the sector where the marketing concept

is increasingly settled; banks are trying to become the market leader with

marketing decision variables, new marketing strategies and advanced

technology.

The thesis was written to provide the Bank's marketing strategy for Bank

of Baku. It was introduced a theoretical structure with the analysis of various

marketing services to accomplish the main objective: SWOT and marketing

strategy. In recent years, “Bank of Baku” is one of the banks that has achieved

great success in the market. However, due to the unbalanced financial market in

Azerbaijan, customers can easily change their services and change their

trustworthy brands.

Analyzing and finding a strategic market plan for a bank's situation is

extremely important for all marketers, especially at the strategic level (the

objectives of this thesis) before considering the operational plan.

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In this dissertation research was carried out on the marketing activities

carried out by banks, and in particular, the Bank's activities were thoroughly

analyzed. In response to respondents' answers, it was clear that more than 26-

year-olds use banks. The majority of those who choose Bank of Baku from the

average age between 26 and 40 have stated that the bank interest rates are the

reason for the selection. The low interest rate strategy implemented by Bank of

Baku is justified. In particular, proves how important the application bank in

Azerbaijan is. Of course, as a result of the investigation, we have witnessed the

weaknesses of Bank of Baku. Particularly, the absence of deposit investment

can keep the bank one step behind competition with other banks. The difference

between "Bank of Baku" and other banks is that it is more customer-oriented

and frequently used by companies. We can see this again in the answers to the

questionnaire. But,as a result of the research, the issues that the bank should do.

In our opinion, expansion of the branch network is one of the things that the

bank should do. Also, the bank must solve deposit issues and try to re-activate

deposit operations.

Generally, the bank's profile and its marketing strategies are designed to

suit the needs of its customers. This will always keep them in the eyes of our

customers. If we look at the fact that the slogan of the bank is "Close to you

banking", we can see that customer satisfaction for "Bank of Baku" is

important. In addition, the bank's ability to train its employees highly qualified

personnel increases their business skills and as a result, activities are carried out

correctly.In general, Bank of Baku is a strong bank that can be included in the

list of the most reliable banks in Azerbaijan.

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