A

PROJECT REPORT
ON

SERVICE SECTOR MARKETING

Submitted in Partial fulfillment for the award of the degree of

Masters of Business Administration

SUBMITTED BY :

Ravi Kant Sharma

Roll No.: 581110987
Centre Code – 01585

SIKKIM MANIPAL UNIVERSITY, FBMIT

PURULIA ROAD, RANCHI – 834001

SUMITTED TO :

FIROZ AHMED

SIKKIM MANIPAL UNIVERSITY

Distance Education Wing
Syndicate House
Manipal – 576104

1
 BONAFIDE CERTIFICATE

This is to certify that the Project Report titled “Service Sector

Marketing” is the bonafide work of “Ravi Kant Sharma”

submitted in partial fulfilment of the requirements for the degree of

“Masters of Business Administration” (Banking), of Sikkim

Manipal University, who carried out the project work under my

supervision and guidance

Signature Signature
Head of the Department Faculty In Charge

2
 DECLARATION

I hereby declare that the project report entitled “Service Sector

Marketing” with special reference to banks, submitted in partial

fulfillment of the requirements for the “Masters of Business

Administration” (Banking), to Sikkim Manipal University, India is

my original work and not submitted anywhere for the award of any

degree, diploma, fellowship or any other similar titles or prizes.

Place : RANCHI Name : Ravi Kant Sharma

Date : Roll No : 581110987

3
 EXAMINER’S CERTIFICATE

The Project report of “Ravi Kant Sharma”, titled “Service Sector

Marketing”, in partial fulfillment for the award of Masters of

Business Administration (Banking) is approved and is acceptable

in quality and form.

Internal Examiner External Examiner

Md. Firoz Ahmad

MBA
M.Phil

4
 CONTENTS
1. AN INTRODUCTION TO BANKING SECTOR IN INDIA 5-9

2. PEST ANALYSIS 9

3. 7P’s OF BANKING SECTOR 16

4. 4I’s OF BANKING 47

5. RATER ANALYSIS FOR INDIAN OVERSEAS BANK 51

6. MARKET SEGMENTATION 57

7. COMPLAINT HANDLING–HDFC BANK 67

8. CASE STUDY-I 70

9. RATER 72

10. SERVICE RECOVERY 74

11. FISH BONE 75

12. CASE STUDY-II (ICICI BANK) 81

13. BIBLIOGRAPHY 87

5
6
 AN INTRODUCTION TO THE BANKING
SECTOR IN INDIA

Banks are the most significant players in the Indian

financial market. They are the biggest purveyors of credit,
and they also attract most of the savings from the
population. Dominated by public sector, the banking industry
has so far acted as an efficient partner in the growth and the
development of the country. Driven by the socialist
ideologies and the welfare state concept, public sector banks
have long been the supporters of agriculture and other
priority sectors. They act as crucial channels of the
government in its efforts to ensure equitable economic
development.

The Indian banking can be broadly categorized into

nationalized (government owned), private banks and
specialized banking institutions. The Reserve Bank of India
acts a centralized body monitoring any discrepancies and
shortcoming in the system. Since the nationalization of
banks in 1969, the public sector banks or the nationalized
banks have acquired a place of prominence and has since
then seen tremendous progress. The need to become highly
customer focused has forced the slow-moving public sector
banks to adopt a fast track approach. The unleashing of
products and services through the net has galvanized
7
players at all levels of the banking and financial institutions
market grid to look anew at their existing portfolio offering.
Conservative banking practices allowed Indian banks to be
insulated partially from the Asian currency crisis. Indian
banks are now quoting al higher valuation when compared
to banks in other Asian countries (viz. Hong Kong,
Singapore, Philippines etc.) that have major problems linked
to huge Non Performing Assets (NPAs) and payment
defaults. Co-operative banks are nimble footed in approach
and armed with efficient branch networks focus primarily on
the ‘high revenue’ niche retail segments.

The Indian banking has finally worked up to the

competitive dynamics of the ‘new’ Indian market and is
addressing the relevant issues to take on the multifarious
challenges of globalization. Banks that employ IT solution
are perceived to be ‘futuristic’ and proactive players
capable of meeting the multifarious requirements of the
large customer’s base. Private Banks have been fast on the
uptake and are reorienting their strategies using the
internet as a medium The Internet has emerged as the new
and challenging frontier of marketing with the conventional
physical world tenets being just as applicable like in any
other marketing medium.

8
 The Indian banking has come from a long way from
being a sleepy business institutions to a highly proactive
and dynamic entity. This transformation has been largely
brought about by the large dose of liberalization and
economic reforms that allowed banks to explore new
business opportunities rather than generating revenues
from conventional streams (i.e. borrowing and lending).
The banking in India is highly fragmented with 30 banking
units contributions to almost 50% of deposits and 60% of
advances. Indian nationalized banks (banks owned by the
government) continue to be the major lenders in the
economy due to their sheer size and penetrative networks
which assures them high deposit mobilization. The Indian
banking can be broadly categorized into nationalized,
private banks and specialized banking institutions.

The Reserve Bank of India acts as a centralized body

monitoring any discrepancies and shortcoming in the
system. It is the foremost monitoring body in the Indian
financial sector. The nationalized banks (i.e. government-
owned banks) continue to dominate the Indian banking
arena. Industry estimates indicate that out of 274
commercial banks operating in India, 223 banks are in the
public sector and 51 are in the private sector. The private

9
sector bank grid also includes 24 foreign banks that have
started their operations here.

The liberalize policy of Government of India permitted

entry to private sector in the banking, the industry has
witnessed the entry of nine new generation private banks.
The major differentiating parameter that
distinguishes these banks from all the other banks in
the Indian banking is the level of service that is
offered to the customer. Their focus has always
centered around the customer – understanding his
needs, preempting him and consequently delighting
him with various configurations of benefits and a
wide portfolio of products and services. These banks
have generally been established by promoters of repute or
by ‘high value’ domestic financial institAXISons.

The popularity of these banks can be gauged by the

fact that in a short span of time, these banks have gained
considerable customer confidence and consequently have
shown impressive growth rates. Today, the private banks
corner almost four per cent share of the total share of
deposits. Most of the banks in this category are
concentrated in the high-growth urban areas in metros
(that account for approximately 70% of the total banking

10
business). With efficiency being the major focus, these
banks have leveraged on their strengths and competencies
viz. Management, operational efficiency and flexibility,
superior product positioning and higher employee
productivity skills.

The private banks with their focused business and

service portfolio have a reputation of being niche players in
the industry. A strategy that has allowed these banks to
concentrate on few reliable high net worth companies and
individuals rather than cater to the mass market. These
well-chalked out integrates strategy plans have allowed
most of these banks to deliver superlative levels of
personalized services. With the Reserve Bank of India
allowing these banks to operate 70% of their businesses in
urban areas, this statutory requirement has translated into
lower deposit mobilization costs and higher margins relative
to public sector banks.

PEST ANALYSIS
TECHNOLOGICAL ENVIROMENT
Technology plays a very important role in bank’s
internal control mechanisms as well as services offered by
them. It has in fact given new dimensions to the banks as
11
well as services that they cater to and the banks are
enthusiastically adopting new technological innovations for
devising new products and services.

The latest developments in terms of technology in

computer and telecommunication have encouraged the
bankers to change the concept of branch banking to
anywhere banking. The use of ATM and Internet banking has
allowed ‘anytime, anywhere banking’ facilities. Automatic
voice recorders now answer simple queries, currency
accounting machines makes the job easier and self-service
counters are now encouraged. Credit card facility has
encouraged an era of cashless society. Today MasterCard
and Visa card are the two most popular cards used world
over. The banks have now started issuing smartcards or
debit cards to be used for making payments. These are also
called as electronic purse. Some of the banks have also
started home banking through telecommunication facilities
and computer technology by using terminals installed at
customers home and they can make the balance inquiry, get
the statement of accounts, give instructions for fund
transfers, etc. Through ECS we can receive the dividends
and interest directly to our account avoiding the delay or
chance of loosing the post.

Today banks are also using SMS and Internet as major

tool of promotions and giving great AXISlity to its customers.
12
For example SMS functions through simple text messages
sent from your mobile. The messages are then recognized
by the bank to provide you with the required information.

All these technological changes have forced the

bankers to adopt customer-based approach instead of
product-based approach.

13
 ECONOMICAL ENVIROMENT
Banking is as old as authentic history and the modern
commercial banking are traceable to ancient times. In India,
banking has existed in one form or the other from time to
time. The present era in banking may be taken to have
commenced with establishment of bank of Bengal in 1809
under the government charter and with government
participation in share capital. Allahabad bank was started in
the year 1865 and Punjab national bank in 1895, and thus,
others followed

Every year RBI declares its 6 monthly policy and

accordingly the various measures and rates are
implemented which has an impact on the banking sector.
Also the Union budget affects the banking sector to boost
the economy by giving certain concessions or facilities. If in
the Budget savings are encouraged, then more deposits will
be attracted towards the banks and in turn they can lend
more money to the agricultural sector and industrial sector,
therefore, booming the economy. If the FDI limits are
relaxed, then more FDI are brought in India through banking
channels.

14
 POLITICAL/ LEGAL ENVIROMENT
Government and RBI policies affect the banking sector.
Sometimes looking into the political advantage of a
particular party, the Government declares some measures to
their benefits like waiver of short-term agricultural loans, to
attract the farmer’s votes. By doing so the profits of the
bank get affected. Various banks in the cooperative sector
are open and run by the politicians. They exploit these banks
for their benefits. Sometimes the government appoints
various chairmen of the banks.

Various policies are framed by the RBI looking at the

present situation of the country for better control over the
banks.

15
 SOCIAL ENVIROMENT
Before nationalization of the banks, their control was in

the hands of the private parties and only big business

houses and the effluent sections of the society were getting

benefits of banking in India. In 1969 government

nationalized 14 banks. To adopt the social development in

the banking sector it was necessary for speedy economic

progress, consistent with social justice, in democratic

political system, which is free from domination of law, and in

which opportunities are open to all. Accordingly, keeping in

mind both the national and social objectives, bankers were

given direction to help economically weaker section of the

society and also provide need-based finance to all the

sectors of the economy with flexible and liberal attitude.

Now the banks provide various types of loans to farmers,

working women, professionals, and traders. They also

provide education loan to the students and housing loans,

consumer loans, etc.

16
 Banks having big clients or big companies have to

provide services like personalized banking to their clients

because these customers do not believe in running about

and waiting in queues for getting their work done. The

bankers also have to provide these customers with special

provisions and at times with benefits like food and parties.

But the banks do not mind incurring these costs because of

the kind of business these clients bring for the bank.

Banks have changed the culture of human life in India

and have made life much easier for the people.

17
 7 P’S of BANKING SECTOR
It is very important for any bank to identify the 7 P’s of
services so was understands their customers better and
provide them with best of service. The 7 P’s are:

1. PRODUCT MIX
2. PRICE MIX
3. PLACE
4. PROMOTION
5. PEOPLE
6. PROCESS
7. PHYSICAL EVIDENCE

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 PRODUCT MIX

The product mix of a company includes all different

product lines a company offers to its customers. The product
line of a bank might easily include more than 100 different
services. In today’s competitive scenario it has become very
necessary for a bank to provide it’s customers with a wide
variety of services and the best technology in order to
attract them. Here is an example of some of the products
offered by AXIS Bank to its customers.

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Offering

AXIS Bank's Savings Account is just the right product for

everyone, salaried, employees or businessmen, high net
worth individuals and NRI's. The unmatched package of AXIS
Bank Savings Bank account given below brings the benefits
of better, efficient and hassle free banking.

 ATM Network

A Savings Bank Account with AXIS Bank entitles you to a free

ATM card, which enables you to access your account
anytime and at any ATM centre across the country. You can
withdraw and deposit money and cheques with your ATM
card. Unlike most other ATMs, a AXIS Bank ATM allows you to
withdraw up to Rs. 20,000 a day. In addition, cash can be
withdrawn from any of the ATMs against your MasterCard
(domestic/international).

 7-Day Banking

At select branches spread over the country, you can bank on

all the 7 days of the week (except for public holidays), over
extended working hours.

 Telebanking

Telebanking service provides you instant access to your

account. It offers you a wide range of services over the
phone such as account information, Balance Enquiry,
20
Transaction Details, Statement of Account, Status of your
Cheque , etc.

 iConnect-Internet Banking

This is the concept of "the Bank on your desk-top". You can

look-up the status of your account, query and undertake a
range of financial transactions, simply by clicking the mouse.
Now don't you think you have a great opportunity to see
yourself laughing your way to the bank?

Offering

AXIS Bank has joined hands with Citibank, to give rise to a

new kind of card power - unique and unmatched benefits
and international AXISlity at the most competitive rates. The
AXIS Bank Citibank International Silver Card, the MasterCard
and 'Unique' Card offers quite a few benefits.

Rewards

AXIS Bank Citibank Card combines dual conveniences of high

purchase power and flexible payment facility. Purchase of
high-value items is now convenient and when it comes to
payback time, your bill can be paid in installments,
depending on your financial liquidity at a given moment. The
21
Revolving Credit Facility lets you pay as little as 5% of your
total outstanding every month. Giving you the power to buy
now and pay later in parts!

Dial-A-Draft

One can use your AXIS Bank Citibank Card to pay for your
personal expenses at places where credit cards are not
accepted yet. Like paying for investments, telephone and
electricity bills, school fees and much more. Just call
CitiPhone and the draft you need will be delivered to you!

Credit Limit Increase

You can call CitiPhone and ask for a Credit Limit Increase in
the event that you have to make a large purchase on your
card urgently. It's especially handy for paying off vehicle
repairs, telephone bills and electricity bills. And for
anniversaries, weddings, birthdays, or business trips or when
a holiday goes beyond budget

24-Hour ATMs

One can withdraw emergency cash up to 60% of your credit

limit from 24-Hour ATMs in Ahmedabad, Bangalore, Calcutta,
Chennai, Delhi, Hyderabad, Mumbai and Pune. While
traveling overseas you can draw cash from MasterCard ATMs
spread across the globe. The same is applicable for any
Citibank branch. Also the cash you withdraw is insured
22
against theft for a period of 12 hours after withdrawal. A
never before facility is brought to you with the AXIS Bank
Citibank Card at a transaction fee of 2.5% or Rs.50
whichever is higher. All cash advances also carry a service
charge from the date of the transaction. The cash withdrawal
limit for the first year is Rs. 5,000.

Photo card

One may choose to have your photograph and signature

digitally imprinted on the front of your Card in color. So that
you get the extra recognition and security you expect as a
AXIS Bank Citibank card member

Concession on Personal Remittances

Do you often need to remit funds to other cities using

facilities such as Drafts/Telegraphic Transfers, etc.? Here's a
benefit you would most appreciate. A 25% rebate on
standard commission is offered on personal remittances at
AXIS Bank branches.

Overdraft facility

AXIS Bank Citibank credit card provides you with an

overdraft facility to the extent of 75% of the value of your
holdings of Demat Shares and Units! Moreover, you get a
waiver of 0.5% on interest rate chargeable under the

23
scheme. All you need to avail yourself of these benefits is a
Demat A/c with AXIS Bank.

Free ATM Card

The AXIS Bank Citibank Credit Card offers you a free ATM
Card, which can be used at over 250 AXIS Bank ATM centers
all over India. All you have to do is open a saving
bank/current Account with AXIS Bank.

Other features

AXIS Bank Citibank Card has the widest possible reach -

welcomed by 1,10,000 Merchant Partners across India and
Nepal and yet another 160 lakh Merchant Establishments
worldwide. The card can be used both for major occasions,
and also for everyday purchases like groceries, cosmetics,
and petrol and auto accessories. It can also be used to buy
high-value items like consumer durables (refrigerators,
washing machines, microwave ovens, etc.). And even paying
customs duty and hospital bills becomes convenient with the
Card.

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25
 PRODUCT WIDTH AND DEPTH
Width

Width of the product mix is the number of product lines

a company is offering. The product width could be a narrow
one or a wide one depending from bank to bank. A wide mix
encourages more sales since the banks are able to diversify
and provide more to their customers and they also appeal to
a larger target market.

Depth

Depth of the product mix is the number of product

items in each product line. Banks with more schemes and
services have more depths than those offering only a few.

Here is table giving an example of Width and Depth in the Product Mix:

Similarly, different banks plan out their product

portfolios and based on that, the depth and width of their
product mix can be determined.
26
 In today’s scenario, where there is cutthroat
competition and new foreign banks entering the Indian
markets, it has became more or less like a law to have very
wide product lines with more and more number of products
in each line.

PRODUCT LEVELS
Core Benefit:

It is the main or core reason why the customer will buy

the service of the bank. More like the basic purpose or
necessity.

Basic Product:

The core benefit is converted into a basic product. That

is the service can used by the customer in order to fulfill
his/her needs.

Expected Product:

It refers to the set of attributes and conditions expected

by the customers when they purchase the service.

Augmented Product:

It is the additional feature that the banks provide which

exceeds the customer’s expectations.

27
Potential Product:

Innovations and product differential is the bases of a

Potential Product. If the banks alter its services according to
the requirements of the individual customers it reaches this
level.

Core Basic Expected Augmented Potential

Product Product Product Product Product
The basic Safety of Timely Goods Mobile and
necessity to deposits service waiting internet
use banking Loanable Long rooms Banking
services in funds etc. banking Extensive New
order to hours ATM Schemes
handle Low interest network tailored for
finance more rates Promotional specific
efficiently Discounts customers

Thus it can be seen how a particular product passes

through different levels. In today’s competitive scenario
most banks try offering services at the Augmented and
Potential level.

PRICE MIX
The price mix in the banking sector is nothing but the
interest rates charged by the different banks. In today’s
competitive scenario where customer is the king, the banks
have to charge them interest at a rate in accordance with
the RBI directives. Banks also compete in terms of annual
28
fees for services like credit cards, DMAT etc. Another
important aspect of the bank’s pricing policy today is the
interest charged on the Home Loans and Car Loans. With
India’s economy progressing, there are more and more
buyers seeking these loans but at a very competitive
interest rate.

Let’s understand this with an example. A particular

buyer approaches a bank for a car loan for a period of 3
years. He is charged Rs. 20,000 as interest. However, if a
sale representative of another bank comes to know of this
deal, he will try to attract the customer by giving him a
better deal i.e. a loan at a lower rate on interest. In this way,
it is the customer that ultimately benefits.
Here is an example of some of the prices charged by
ICICI bank for their services

ATM Card Issue Free – 2 ATM cards issued free if

it joint account
Add – on Card RS. 100 – Beyond 2 cards
Duplicate Card Rs. 100

Other General Charges

Current Account Savings Account

29
 Transaction Charges NIL NIL
Charges for issue of NIL NIL
Cheques book
Issue of duplicate Rs. 25 per page Rs. 25 per page
statement
Account closure Rs.100 Rs.100

This example evinces some of the charges that the

customer has to pay for the services provided by the bank.

The pricing factor is very important because of the

kind of competition that is prevailing today in the Indian
market. However it is very important to understand that in
the banking sector, the main pricing policy is concerned with
the interest rate charged. This interest rate is however
regulated by the RESERVE BANK OF INDIA and THE INDIAN
BANKING ASSOCAITION. Any one particular bank or a group
of banks does not regulate it. The interest rate charged
cannot be higher than that decide by the RBI and the INDIAN
BANKING ASSOCIATION.

Thus, inspite of the constraints in the pricing policy due

to the RBI directives there are mainly three types of pricing
methods adopted by banks. They are:

Value pricing:

Banks having unique or different products or schemes

mainly do this type of pricing. They usually charge a

30
combination of high and low prices depending on the
customer loyalty as well as the products. This type of pricing
strategy is usually coupled with promotion programmes.
Going Rate pricing:

The most commonly used pricing technique is the going

rate pricing. In going rate pricing, the bank bases its price
largely depending on the competitor’s prices. The banks
however have to stay within the RBI directives and compete.
The banks may charge higher or lower than their
competitors. After 1991 when the foreign banks entered the
Indian market this method of pricing has gained increasing
importance.

Mark up pricing:

This is a pricing technique wherein the cost of the

service is determined and a small margin is added to it and
then the final price is offered to the customers. This type of
pricing is the not very popular since in the banking sector it
is not very easy to arrive at the cost of the service. Thus
most banks use a combination of mark – up pricing and
going rate pricing.

31
 THE MOST FAVORABLE PRICING

STRATEGY

This model shows a pricing strategy, which should be

adopted in order to ensure maximum satisfaction to both the
bank as well as the customers.

The price should be set in such a manner that the

customer is assured that he is not being cheated or
overcharged by the bank and at the same time the bank is
able to reap maximum profits. Such a pricing stand helps the
bank get maximum sales as well as profits since the

32
customer feels that by entering such a transaction he is
winning.

PLACE MIX

Place mix is the location analysis for banks branches.

There are number a factors affecting the determination of
the location of the branch of bank. It is very necessary a
bank to situated at a location where most of its target
population is located.

Some of the important factors affecting the location

analysis of a bank are:

1. The trade area

2. Population characteristics
3. Commercial structure
4. Industrial structure
5. Banking structure
6. Proximity to other convenient outlets
7. Real estate rates
8. Proximity to public transportation
9. Drawing time
10.Location of competition
11.Visibility
12.Access

33
It is not necessary that all the above conditions have to be
satisfied while selecting the location but it should be tried to
satisfy as many of them as possible.

1. The Trade Area:

The trade area is a very important factor determining

the place where a bank branch should be set up. For e.g. a
particular location maybe a huge trading place for textiles,
diamonds or for that case even the stock market. Such
locations are ideal for setting up of bank branches.

2. Population Characteristics:

The demography of a place is a very important factor.

This includes:
 The income level of the population
 The average age
 The average male female population
 The caste, religion, culture and customs
 The average spending and saving habit of the
people.
These factors are very important for a bank as the help
them decide the kind of business the branch will get.

34
 3. Commercial Structure:

The commercial structure refers to the level of

commerce i.e. business activities taking place at a particular
location. The higher the level of business activities taking
place in a particular location the more preferable it is for
setting up a bank branch.

4. Industrial Structure:

This is nothing but a combination of the trade area

analysis and the commercial structure. However the
industrial structure focuses more on the kind of industries
operating in a particular location. For example, an area like
SEEPZ is marked with a lot of electronic manufacturing units.
Thus the industrial stricture determines the kind of financial
transactions that could take place in a particular location.

5. Banking Structure:

The Banking structure refers to the existence of other

banks in the area. Whether there is already an efficient
network of other bank branches operating at that particular
area. Thus the overall infrastructure needed for the working
of a bank.

6. Proximity of other convenient outlets:

35
 This refers to the other branches of the same bank as
well other commercial, entertainment and industrial outlets.

36
 7. Real Estate Rates:

This is mainly dealing with the cost factor involved in

opening up a bank branch at a particular location. The real
estate rate is a very strong factor influencing the location
decision for a bank branch.

8. Proximity to public transportation:

The location should be proximate to public

transportation facilities. This means it should have bus stops
close by as well as it should be proximate to railway stations
so as to make it convenient for the common man.

9. Drawing Time:

Drawing time refers to the time period during which a

customer can draw money from the banks. It should be
convenient to the customer and somewhat flexible to
accommodate the customer’s needs. No bank has more than
a certain amount with them and in case a customer wants to
withdraw an amount more than that available with the bank,
the bank needs to draw that amount from other banks.
Hence, a location must be such that it facilitates minimum
drawing time.

10. Location of Competition:

37
 The existence of other banks also means competition. If
the level of competition is very high in a particular location,
it is necessary that a bank does a lot of market research
before opening a branch so as to estimate the kind of
business it would get.

10. Visibility:

The location of a branch should be such that it is visible

and easily noticed by the customers as well other people.

10. Access:

The bank branch should be very easily accessible to the

customers. If this is not the case, the customer might switch
to some other bank, which is more convenient to him and
very easily accessible. The location should be such that it is
very convenient for the customer to reach.

38
 Promotion Mix

Promotion is nothing but making the customer more

and more aware of the services and benefits provided by the
bank. The banks today can use a lot of new technology to
communicate to their customers. Two of the fastest growing
modern tools of communicating with the customers are:

1. Internet Banking
2. Mobile Banking

This can be better explained with the example of ICICI

bank.

SMS services

SMS functions through simple text messages sent from

your cellular phone. These messages are recognized by ICICI
bank to provide you with the required information.

For example, when you enter ‘IBAL’ your cellular phone

screen will display the current balance in your primary
account. Thus with the help of SMS a wide range of query

39
based transactions can be performed without even making a
call.

ICICI was the first organization in India to provide

Wireless Application Protocol (WAP) based services. Mobile
commerce using WAP technology, allows secure online
access of the web using mobile devices. With WAP one can
directly access the ICICI WAP server, check one’s account
details and use other value added services.

Thus different methods are used by different banks to

promoter its services.

A bank may have very attractive schemes and services

to offer to their customers but they are of no use if they are
not communicated properly to the customers. Promotion is o
inform and remind the individuals and persuade them to
accept, recommend or use of product, service or idea.
However there some very important points that is to be
considered before the promotion strategy is made. These
points are:

Finalizing the Budget

Before the bank decides the kind of promotion that
should be done, it very important to finalize the budget for it.
The formulation of a sound budget is essential to remove the
financial constraints in the process. The budget is
40
determined on the basis of volume of business of the bank.
In addition to this the intensity of competition also plays a
decisive role.

Selecting a suitable vehicle

Another very important task is to select a suitable
vehicle for driving the message. There are a number of
devices to advertise such as broadcast media, telecast
media and the print media. The selecting of the mode of
advertising is strongly influenced by the kind of budget
decided. Usually for promoting banks the most effective and
economical form of advertising has been the print media.

Making possible creativity

Making possible creativity is nothing but the kind of
slogans, punch lines etc. that are supporting the message.
They should be very creative but yet simple to be
understood by the common man. It should appeal to the
customers. It should be distinct from that of the competitors
and should be successful in informing and sensing the
customers.

Testing the Effectiveness

It should be borne in mind that the advertisement is
first tested for its effectiveness. This should be done with the
help of various techniques like testing effectiveness on a
41
sample group. This helps determine the success of the
advertisement and in case of any problem the advertisement
can be altered and remedied.

Instrumentality of Branch Managers

At a micro level, it is the responsibility of the branch
managers to promote and drive the message to the people
in the local area. They should organize small programs in
order to attract people and crate awareness in the local area
about the new schemes of the bank.

42
 Different Ways of Promotion
Public Relations:
In today’s competitive scenario developing strong
public relations is very important for any bank to be
successful. Most banks today have a separate Public
Relations department. However primarily it is considered as
a responsibility of the various bank managers to develop a
steady and strong relationship with their present customers
as well as potential customers. This can be done by a
constant follow up, small programmes etc.

Personal Selling:

Personal selling is found to be one of the most effective

and popular forms of promoting bank business. The main
reason for this is that banking is a service in which trust
plays a very important role. In personal selling, a bank
representative goes to the customers and explains the
scheme to the customers. Also he gives the customers any
kind consultation he might need. He provides the customers
all the information sought by him. The representative tries to
persuade the customers to go for the scheme provided by
the bank by telling him all the benefits. Here are some of the
important features of personal selling
 It is a direct relation between the buyers and the seller
 It is oral presentation in conversation
43
 It is personal and social behavior
 It is found to be more effective in service oriented
organizations
 It is based on the professional excellence or expertise of
an individual

Sales Promotion:

Sales promotions are basically giving the customers

some additional benefits, maybe at times just some small
gifts, in order to promote the schemes. The more innovative
the sales promotions the more positive are the results. Some
of the most popular sales promotions techniques are gifts,
contests, fairs and shows, discounts and commission,
entertainment and traveling plans for bankers, additional
allowance, low interest financing etc. It is very important
that the sales promotions benefits are designed in such a
manner that they are better than those of the competitors.

44
Word – of – mouth Promotion:

This form of promotions is not only very effective in

banking services but in any kind of service. However it is
more important in banking for the only reason that this is a
service where trust plays a very important role. If a
particular bank’s services are recommended by friends,
relatives, or other well wishers the person is more influenced
and inclined towards that bank. It is very important to note
that the internal employees of the bank play a very
important role in word – of – mouth promotion technique.
This is because they can start the process by recommending
the bank to their friends and relatives and after that it is like
a chain, which spreads like a wild fire.

Telemarketing:

In recent times telemarketing has gained increasing

importance as an effective tool for promotion. The
telemarketing is a process of making use of sophisticated
communication network for promoting the banks. This
includes promoting through television, telephone, and radio.
Nowadays, cell phones are used extensively for the same.
This is the most popular form of promotion. Banks today
have started using ‘SMS’ and many other services supported
by cell phones to provide benefits to their customers and
thus have tried to increase their sales. In today’s competitive

45
and modern scenario it very important that banks makes use
of telemarketing techniques very efficiently to have
desirable results.

Internet:

The use of Internet as a promotional tool is increasing.

More and more banks are using Internet to promote their
services. The online banking has made it even easier for the
customers to avail the bank’s services. No longer do people
have to go to their bank branches for small petty matters
like checking their balance etc. All this can be done with the
help of a few clicks.

Thus, these were the numerous ways in which a bank

can promote its services and create more awareness
amongst the people.

People
People are the employees that are the service
providers. In a banking sector, the service provider plays a
very important and determinant role in rendering the
customers a satisfactory and a good service. It is extremely
essential that the service provider understand what his
customers expect from him. In the banking sector, the

46
customer needs to be guided in a lot of matters, which is
possible only with the help of the service provider.

The position in the eyes of the customer will be

perceived by appearance, attitude and behavior of the
customer contact employees. Not only does the customer
contact employee influence the customer’s perception but
also the customer base of the organization does so.

Process Mix
The process mix constitutes the overall procedure
involved in using the services offered by the bank. It is very
necessary that the process is very customer friendly. In
other words a process should be such that the customer is
easily able to understand and easy to follow. Today if
particular banks formalities are long and the procedure very
complicated the overall process fails and the customer may
not be inclined towards using that banks services.

Let’s take for example the process for application for a

car loan.
Now this mainly involves 3 things.

1. Producing of proper documents

2. Filling up of application form
47
 3. Paying for the initial down payment.

Here the process may fail in the following cases:

1. If the customer is asked to produce a number of forms

out of which some may not be necessary at all. Thus it
is very necessary that the customer be asked for the
minimum but most necessary document and not the
other unnecessary documents.

2. In case of application form, the application form must

be in a language best understood by the customers and
it should not be very lengthy one or demanding a lot of
unnecessary information.

3. Finally the payment of initial amount. The customer

should be given options as to how he would like to pay
by cheques or by credit card. Once again the amount
should be very competitive not very high above the
regular rates prevailing in the markets.

The smaller and simpler the procedure, the better the

process, and the customer will be more satisfied.

48
 PHYSICAL EVIDENCE
Physical evidence is the overall layout of the place i.e.
how the entire bank has been designed. Physical evidence
refers to all those factors that help make the process much
easier and smoother. For example, in case of a bank, the
physical evidence would be the placement of the customer
service execAXISve’s desk, or the location of the place for
depositing cheques. It is very necessary that the place be
designed in such a manner so as to ensure maximum
convenience to the customer and cause no confusion to him.

Let us see an example as to how banks try to make

little changes so as to make the service better for their
customers.

The Hong Kong Shanghai Banking Corporation (HSBC)

has decided in introducing a common uniform for all the
employees in all its branches all over India. The plan is
possibly in line with the aggressive retail banking adopted by
HSBC. A common uniform its nothing like a revolAXISonary
change but however this little change makes it very easy for
the customer to identify with his service provider and makes
the entire process very easy for him. The more the bank

49
does to make the service easier and better the more
satisfied will be the customer.

Thus, these are the 7 P’s of services. Each of them

plays a very important and a pivotal role in determining the
quality of the service provided to the customer.

THE 4 I’s OF BANK MARKETING

There are four distinctive characteristics of service, which
create challenges and opportunities. They are commonly
known as the four I’s namely:

1. Intangibility
2. Inconsistency
3. Inseparability
4. Inventory.

1.) Intangibility

It is that characteristics of a service indicating that it has

no physical attributes that a person may feel, hear, taste
before they buy it.

50
 For example, a person who is new to a bank and wants to
open up an account in the bank cannot feel or taste it and
ascertain whether the bank is good or bad before opening an
account. He has to experience it, feel how the service is, how
humbly do people or the staff members behave with him, is
his money invested or put in a safe account or not. It is only
then he would come to know about the services. This could
be done only from the ‘trust’ that he would have built up, as
these things cannot be inspected before the use. Therefore,
most banks now a days, indulge in “tangibilizing the
intangibles” i.e. they provide tangible clues to the
prospective customers like the different awards that they
have received for their superior services, their annual
records, etc. this helps the customers in selecting the banks
more easily.

2.) Inconsistency

It refers to variability or heterogeneity. In case of a bank,

a new customer or a rarely going customer may not get the
same type of service as a regular customer may get. This
may be the case because the staff members know the
person well as he comes often but they don’t know that
person who does not come in again and again.
51
 Also another point for inconsistency is that there is
variability in the service delivered by different people, that is
services delivered differs from people to people. Like in case
of a bank, different staff members would provide different
services. In the bank, a person may have lot of work and
may not attend to a customer .On the other hand, some
other person with the same work may attend him with great
enthusiasm. In order to tackle this inconsistency aspect,
adequate training and motivation must be provided to the
employees. This will result in higher number of customers for
the bank, higher profits and subsequently lower retention
rate.

Eg. “PUNJAB NATIONAL BANK” prides itself for providing

“crown of quality for customer who is the king” and is an ISO
9002 certified bank. Thus, they will have to ensure that their
service quality level is always consistent and up to the mark
to meet the tall expectations of their customers.

3.) Inseparability

Inseparability is that characteristics of a service indicating

that it cannot be separated from creator-seller of the
product. Many services are created, delivered and consumed
simultaneously through interaction between customers and

52
service producers. This is a source of major limitation for the
bank. But technology has in a big way helped the banks to
cope with this problem.

Production of services, when it comes to banks can be

performed in the following 3 ways:

(i) Co- production: In this case both the service provider and the
customer work together to produce services. When a
customer wants to withdraw cash from the banking
premises, then both the customer and the service provider
needs to be present.

(ii) Isolated production: It is that part of service that is done

outside to an organization. Eg. Tele-Banking.

(iii) Self Service production: In this case, the customer uses the
equipments of the service providers and self serves it. Eg.
ATM.

4.) Inventory

Inventory relates to the perishable characteristics of the

service marketing. If a customer starts his day at eight in the
morning and ends it at four, but if bank is open only from

53
9:00 a.m. to 1:00 p.m. in the afternoon, then one might not
be able to attend it. The demand for banking services also
fluctuates by day and hour. The day before the holiday,
weekend, most Mondays and Saturdays, pension and salary
days are heavier than normal banking hours. So service
faces a lot of problem from inventory as it cannot be stored,
saved and then used later.

RATER Analysis For Indian Overseas Bank

There are many reasons why a customer should be given
QUALITY SERVICES. The most of them are:

1. Industry being so competitive that a customer should

be given the best services as they have many
competitors (the company) and if even a single
customer is lost in today’s JLT world then it very difficult
to win back the customer.
2. Most of the customers do not complain as they just opt
out and do get satisfied with better services elsewhere.

When it comes to services, there are 10 quality dimensions.

Each of the dimensions is of utmost importance since human
element is involved and it relates to services.

54
 But Zeithaml, Bitner and Parsuraman have developed a
new and concise model by clubbing some points. This model
consists of the following dimensions:

 Reliability
 Assurance
 Tangibility
 Empathy
 Responsiveness

RELIABILITY

RESPONSIVENESS
ASSURANCE

EMPATHY TANGIBILITY
55
56
 RELIABILITY

It is defined as the ability to perform the promised

service dependably and accurately. In its broadest sense,
reliability means that the company delivers on its promises–
promises about delivery, service provision, problem
resolAXISon, and pricing. It is also known as the “No
Excuses” service delivery.

Indian Overseas Bank faces stiff competition from many

other banks within its vicinity and some of these banks are
foreign banks. But the existing customers have faith, loyalty
and trust in this bank. The customers are well aware that the
bank will provide them back the best and reliable services.
For e.g., no person likes to wait to withdraw his/her money.
In order to correct this problem, Indian Overseas Bank has
ensured that whoever comes in for cash withdrawal will
receive his/her cash within five to ten minutes.

ASSURANCE

Assurance is defined as employee’s knowledge and

courtesy and the ability of the firm and its employees to
inspire trust and confidence. It includes the ability,
knowledge, genuineness, and honesty to provide the best
services to the customer from the frontline staff. In this

57
dimension the front line staff is more important rather than
the owner.

At Indian Overseas Bank, every customer who comes is

treated with utmost care and any problem that takes place is
solved with great enthusiasm. It assures the customers
coming up to the bank that the money they invest is secure;
the interest rate that is being provided to them is at par or
sometimes even higher as compared to other banks. Also, it
assures the customers that the money they have invested
will be returned to them as and when required with proper
interest. It tries to empower their customer contact people
and regularly train them in skills to build trust and loyalty
between employess and the customers. They have assigned
some of their staff members to build relationships with the
customers by getting to know them personally.

TANGIBLITY

Tangibles are defined as the appearances of physical

facilities, equipments, personnel and communication
materials. All of these provide physical representations or
images of the service that customers, particularly new
customers, will use to evaluate quality.

58
 At Indian Overseas Bank, the entire premise is air-
conditioned. They have computerized systems in place and
therefore quick, accurate and efficient service can be
provided to the customers. The tables and chairs are
conveniently located for the customers. The personnel
always have a cheerful and helping veneer and are always
ready to help out the customers. The entire place is done up
in bright colours and thus the customer can immediately feel
the warmth and the radiance of the place.

EMPATHY

Empathy is defined as the caring, individualized attention

the firm provides its customers. The essence of empathy is
conveying, through personalized or customized service, the
customers are unique and unique special.

The empathy shown by the employees of the Indian

Overseas Bank is good as they are always polite humble and
helpful. There was a case where once a customer misplaced
Rs. 1,00,000 within the premises of the bank. He panicked
but the bank personnel put him at rest and assured him that
they would locate the same for him. Since he was a regular
customer, they knew him very well and took the situation
under control. They quickly located the cash and thus, the
customer was placated. The bank personnel went out of their
way to help this customer and thus understood his
59
predicament. This bank regularly holds seminars and
training workshops so that they can understand the
consumer better and thus serve him better.

RESPONSIVENESS

Responsiveness is the willingness to help the customer

and provide him with immediate and fast service.

The Indian Overseas Bank is prompt at providing its

customers with the information and services that they seek.
It is extremely prompt when it comes to resolving the
complaints of the customers. The customers, in their
feedback form, mentioned this as one of the most important
factor that has prompted them to continue with this bank.

All the five dimensions basically aim at serving the

customers to the best of their ability, giving them quality
services and if things are followed as they are demanded,
(i.e., according to the customers demand) then there would
be no problems in facing any type of people. The successful
service organizations set up speeds for service standards.

60
 MARKET SEGMENTATION
An organization is supposed to cater to the changing
needs of customers; it is only natural that all customers have
their own likes and dislikes. They have some uniqueness,
which throws a big imprint on their lifestyles. This makes the
task of understanding a bit difficult. It has the context that
we go through the problem of market segmentation in the
banking service.

The study of the needs of customers invites a plethora

of problems since in addition to other aspects; the regional
considerations also influence the hierarchy of needs. To be
more specific in the banking services, the banking
organizations are supposed to satisfy different types of
customers living in different segments. The segmentation of
market makes the task of bank professionals easier. If the
market segmentation is done in a right fashion, the task of
satisfying the customers is simplified considerably. The
modern marketing theories advocate the formulation of
marketing policies and strategies for each segment, which
an organization plans to solicit.

61
 The marketing segmentation is based in the principle
of divide and rule. If we divide the market into different
segments, the size of market is made small and the process
of study is found convenient. We find market segmentation
division and subdivision of a market based on
considerations. The bank professionals have to segment the
market in such a way that the expectations of all potential
customers are studied in a right perspective and the
marketing resources are developed to fulfill the same. The
marketing efforts can be made more proactive if the process
and bases of segmentation are right.

It is essential that the bank professionals assign due

weightage to the difference that we find in the market
behavior due to geographical, age, sex, nationality,
educational background, income classes, occupation, social
and other considerations. If they overlook or underestimate
key bases while segmenting, the study results can’t be
proactive to the formulation of creative marketing decisions.
This makes it essential that the bank professionals are well
aware of the criteria for market segmentation. The
agriculture sector, industrial sector, services sector,
household sector are found important in the very context.
The gender segment is found important no doubt but we
can’t underestimate institAXISonal and professional
segments. Since the banking organizations serve different
62
sectors and segments, the segmentation should be done
carefully.

IMPORTANCE OF SEGMENTATION
 Instrumental in exploring opportunities: We find market
segmentation very much effective in exploring the profitable
opportunities. It is well known to us that while segmenting,
the market is divided into different groups and sub-groups
and this simplifies the process of studying and
understanding the customers in a right perspective. If we
know about the rural segment, the opportunities are
explored to the rural areas. If we know about the women
segment, the opportunities are identified in that area. If we
know about the low- income group, the opportunities are
identified in that group. Thus the segmentation helps the
bank professionals in exploring the profitable opportunities.

 Instrumental in designing a sound marketing strategy : We

can’t deny that market segmentation makes it easier to
formulate a sound strategy. Since the banking professionals
are aware of the changing needs and requirements of a
segment, the marketing resources can be developed in tune
with the needs and requirements of a segment. The
formulation of a package is found significant and the bank
professionals can do it successfully on the basis of market

63
segmentation. The promotional measures can be satisfied in
the face of receiving capacity of a particular segment. The
pricing strategy can be made operational and the sales
promotion measures can be made productive.

 Helpful to the policy planners: In addition, the policy

makers also find segmentation since they are well aware of
the emerging trends in the business environment. They get
detailed information about the changing needs and
requirements of a segment. The planning is an on going
process. The banking professionals transmit necessary
information to the policy planners, which simplifies the
process of making a sound policy.

 Enriching the market resources: In addition to other

aspects, we find segmentation instrumental in enriching the
marketing potentials. If we know about the preference,
needs, requirements, attitudes, lifestyles it is found easier
for us to develop the marketing resources accordingly. This
in a natural way makes it convenient to develop marketing
resources. The process of innovation can be activated. The
services, the promotional measures, the pricing tool and the
process of offering can be made more competitive. The
development of world-class marketing resources thus makes
it convenient to influence the impulse of prospects. The bank

64
professionals find it easier to get the positive results for their
productive marketing efforts.

CRITERIA FOR SEGMENTATION

Segmentation in a right fashion makes the way for

profitable marketing. This helps policy planners in
formulating and innovating the policies and at the same time
also simplifies the task of banking professionals while
formulating and innovating the strategic decision. The
following criterion makes the segmentation right.

ECONOMIC SYSTEM

An important criterion for market segmentation is the

economic system in which we find agricultural sector,
industrial sector, services sector, household sector, and rural
sector requiring the weight age while segmenting.

A). AGRICULTURAL SECTOR: In the agricultural sector, there

are four categories since the needs of all categories can’t be
identical.

65
 The mechanization of agriculture, the improved or
scientific system of cultivation, the help of nature, the
magnitude of risk, the availability of infrastructural facilities
influence the level of expectations vis-à-vis the needs and
requirements. The banking organizations are supposed to
know and understand the changing requirements of different
categories of farmers.

B). INDUSTRIAL SECTOR: The banking organizations are

supposed to have an in-depth knowledge of the changing
needs and requirements of the industrial sector. The large –
sized, small- sized co-operative and tiny industries use the
services of the banks. The expectation of all the categories
can’t be uniform.

The banking organizations are supposed to have an in-

depth knowledge of the changing needs and requirements of
the industrial segment. The emerging tends in competition,
the pressure of inflation, the use of sophisticated
technologies, and the business regulations are some of the
important aspects influencing the hierarchy of needs.

66
C). SERVICES SECTOR: It is an important sector to the
economy where the banking organizations get profitable
business. The two categories of organizations such as profit-
making and non- profit making are found important in the
very context.

PROFIT MAKING ORG.

BANK INSURANCE,
TRANSPORT HOTEL,
TOURISM, PERSONAL
CARE, CONSULTANCY
ELECTRICITY
PERSONAL
SERVICE SEGMENT MULTIPLE SEGMENTS

NON PROFIT MAKING ORG.

EDUCATION, HHHOSPITAL,
RELIGIOUS
POLITICAL AND SOCIAL
WELFARE.

The banking organizations need to identify the

changing needs and requirements of the services sector with
the frequent use of IT and with the mounting pressure of
inflation and competition, we find a change in the hierarchy
of needs.

67
 HOUSEHOLD SEGMENT

This also constitutes an important sector where

different income groups have different needs and
requirements. In the below figure we can see the different
segments of household sector.

A). HOUSEHOLD SEGMENT: The high income group, middle

income group, subsistence level group and marginal income
group have different hierarchy of needs which influence the
level of their expectations.

B). GENDER SEGMENT: In the gender segment we find males

and females having different needs and requirements. The
banking organizations are supposed to identify the level of
expectations of both sexes as shown in the below figure.

Housewives

Sub-
Gender
Segment
Segment

Working
Ladies

68
 Some of the women are housewives and therefore they
have different needs and requirements whereas some of
them are working ladies having different needs and
requirements.

69
 PROFESSION SEGMENT

In the profession segment, we find different categories of

professions and therefore we find a change in their needs
and requirements. As shown in the figure below:

Technocrats
Bureaucrats
Corporate
ExecAXISves
Profession Intellects Segment
Public/ Private White - Formal/Informal
Collar
Employees
Blue – Collar
Employees

The technocrats, bureaucrats, corporate execAXISves,

intellects, white-collar and blue collar employees have
different needs and requirements and therefore the banking
organizations should know their expectations.

INSTITUTIONSAL SECTOR
In this sector we find different categories of
organizations. Some of the organizations are known as
charitable organizations, some of them are cultural/ social
organizations, some of them are industrial and many of them

70
are profit making and many are philanthropic and many of
them are related to trade and commerce. It is natural that
the needs and requirements vis-à-vis the level of
expectations cant be identical in all cases. To satisfy and to
increase the market share it is imperative that the banking
organizations are familiar with changing needs and
requirements. The emerging trends in the social
transformation process determine the hierarchy of needs.

Charitable Trusts
Individual
Originations
Chamber of
InstitAXISonal Commerce Segment
Sub- Segment Trade and
Commerce
Health/Education
Sports Org
Philanthropic
Organizations

71
 Complaint Handling-HDFC Bank

Whatever a service firm may do for customer, even the

best firms are going to find themselves facing complaints
from customers who feel that they are not being treated
fairly. In dealing with these situations, it is important to know
how to diffuse them and then turn them into positive
experiences for all involved.

However, when it came to complaint handling, HDFC

Bank turned to the airline industry for inspiration. Impressed
by the way an airline takes care of its customers from the
time they enter the airport till they collect their luggage after
landing, the bank maps the customer flow at its branch. The
first change it brought to its branches was the 'May I help
you' desk at the reception to guide the customer to the right
counter. Next, it laid down efficiency parameters for each
sub-process carried out at the branch. "We are constantly
fine-tuning our processes to reduce time taken, especially on
roAXISne tasks. We monitor how long it takes for customer
transactions as well as complaints to get processed".

The bank's 'moments of truth' surveys too are modeled

after the airline industry's satisfaction surveys. These are

72
given to customers just before they exit a branch after a
transaction.

HDFC Bank introduced changes for consumer

convenience, starting with the reception area and with good
reason. A traditional branch has always been an infrequent
user's nightmare: cryptic boards are placed on counters
leaving one as confused as ever, bank officials sit behind
wire-meshes making it impossible to seek any guidance, and
the long queues are frustrating, all the more so when you
realize you stood in the wrong long line. But HDFC branch
models are trying to address this confusion, as well as the
jail-like counters.

HDFC believes that unless they change to create

convenience for that customer, and add to his brand
experience, they will fail to capture the loyalty they're trying
so hard to earn. And unless they achieve this loyalty and
increase their share of the customer's wallet substantially,
the majority of their retail customers will continue to be
unprofitable for them.

73
 COMPLAINT RESOLAXISON MODEL (CRM)
HDFC bank takes complaint not as a mere complaint
but as an issue. They have got this unique CRM technique
where in if there is any complaint either by an employee or a
customer in any branch; it will be looked into and resolved in
24 hours. Within 24 hrs, if the branch manager does not
handle the complaint it goes to the higher authority. And
then again if the same complaint is not handled in 12 hours
by the higher authority it goes to the Managing Director.
Once if it reaches the MD, either the branch manager is
sacked or necessary action is taken against him.

74
 CASE STUDY-I

Phase I

The reason why the customer decided to open an

account with ABC Bank was their constant boasting of being
the best online trading bank in India. So one day the
customer called their customer center to open an account.
The lady was very polite and after talking with her for some
5 minutes, she told the customer that one of their
representatives will visit her soon. She gave the lady her
office address and asked her to send the person to her
office. The next day the customer gathered all the necessary
documents to open an account. It took exactly a week for
their representative to turn up and on her inquiring about
the delay, he gave her a silly reason, like he was busy with
many more clients and so could not come on the promised
date. She felt that the employees attitude towards the
customers depend upon their mood on that particular day.

Phase II

Within a month the customer got a letter from the bank

saying that her account has been activated. So the next day
she went to her nearest branch to deposit a cheque. As she
entered inside, it was over crowded with people in each and
75
every corner; most of them were the employees themselves.
In most of the branches that she had visited in last 5
months, she had got the feeling that the branches were over
employed.

Phase III

After going through all this she decided to use their

Phone banking facilities, and it’s did not turn out any better
than Central Railway Inquiry. Every hour you find some
different people to answer your query, and most of the time
you are put on HOLD.

Phase IV

They used to claim that their trump card was the ATM.
To some extent it was ok but what the customer noticed is
that most of the ATMs are located in a very isolated place
and its down during evening time.

The Finale

Here is something that made the customer to finally

say GOODBYE to ABC. Initially they told her that their share
trading service is free, so she did most of her trading
through ABC direct. The service was not of much help. Just a
week from then, she got a mail asking her to pay for using
share-trading service. Again she got in touch with the
76
concerned person and informed them about the mail and
also that she was no more interested in continuing her
account in ABC. Then they informed her that this mail is not
for current year it’s the advance payment for the coming
year. In the end she had to pay them for the service, which
she never AXISlized. She stopped using ABC Bank and asked
all her colleagues never to have an account with the bank
after her experience.

ANALYSIS OF THE CASE

As can be seen in this case, there is a definite failure in

the service delivery. Now apply the different dimensions of
service quality to this particular case and find out reasons for
the failure.

RATER

Reliability: The lady assured the customer that the

representative would visit her the next day. Instead he took
a week to turn up. Also instead of apologizing to the
customer, he gave the excuse that he was busy with other
clients and so he could not attend to him. In a service
industry the customer is the king and you should make each
customer feel special. As can be seen, the attitude of the
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employees in the bank is indifferent. In fact, the customer
concludes his review by saying that the employee’s attitude
towards the customer depends on their mood. This shows
tremendous inconsistency in service delivery.

Assurance: Here the staff has failed to live up to its promise.

Instead of coming in a day as promised, the representative
came after a week. He didn’t even apologize for his mistake.
As a result the customer was inconvenienced. The customer
was angry that the bank made false promise just to woo
customers. Also she was told that the share trading service
was free. Afterwards she was made to pay for the service,
which she had hardly used.

Tangible: The tangible cues here will be the facilities that they
provide, like the phone banking and the ATM. The customer
here describes the ATM service as okay. She says that it
works only sometimes. She compares their phone banking
facility to the central railway enquiry, where every hour
different people come to answer his query and most of the
time he was put on hold.

Empathy: From the case, it seems that they are not

understanding towards the customer grievances. All the
branches this customer has gone to have been very
crowded. There was no effort on the part of the employee’s
to help this customer. Also in the case of their phone
78
banking, they make the customer wait for long periods of
time without answering their query.

Responsiveness: In the case of this customer, the bank and its

staff were not able to respond quickly. When the particular
representative was not able to reach the next day, the bank
should have sent another representative in his place. Also
they should not have charged this customer for using the
share trading service, especially since it was a mistake on
their part.

Service Recovery

Service recovery pertains to the actions taken by an

organization In response to a service failure. When a
customer complains he expects 3 types of fairness.

Outcome fairness: In this case the customer decided to use the

share trading service as she was told it was free. She did not
find the service of much help. In the end she had to pay for a
service, which she hardly used. The bank should not have
charged the customer for this service especially since it was
a mistake on their part.

Procedural fairness: When the customer entered the bank to

deposit a cheque, she found it overcrowded. There was no

79
effort made by any of the employees to help this customer.
Using the phone banking facility was also not of much help.

Interaction fairness: After promising the customer that the

representative would come the next day, he came after a
week. After committing this mistake, he made no effort to
apologize for it. Instead he gave the excuse that he was too
busy with other clients to attend to him.

Fish-Bone

CUSTOMER EQUIPMENT FRONT PROCEDURE

DELAY IN

SERVICE

OTHERS MATERIAL SUPPORTING INFORMATION

Equipment: - Phone banking system of ABC Bank was really

bad. Every hour there was a new person on the phone and
most of the time the customer had to wait as the phone was

80
kept on hold. The customer had some difficulty using the
ATM machines, as they were located on isolated places,
which was very inconvenient for the customer to access.
Secondly, during the evening time they were not working.
The customer had been told about that the share trading
facility was free but later on they charged for the next year’s
trading in advance. So, there was certainly a failure in
equipments.

Material: The material aspect of HDFC bank would be its ATM

and Phone Banking services that are described by the
customer as a “total flop” and a waste of time. This shows a
complete material failure, as the services are not up to the
extent of the customer’s perception and expectations.

Front line staff: The customer has rated employee’s attitude

towards him as ‘depends upon the mood’. In a service
industry this is not acceptable, whatever might be the mood
his attitude towards the customers should be good. The front
line staff’s job is to make the work easier for the customer
and not to complicate further which is not the case in this
particular case study.

Supporting Activities: The supporting staff in this case would

include the front desk receptionist who fails to act in haste
and inform the same to the concerned representative. Also,
the customer is not informed about the different service
81
charges, which the back office should have notified by
sending some mails or notifications

Procedure: In the second phase the customer went to the

bank to deposit cheque, she found out that the place was
very crowded and there were no proper signboards for the
counters to guide her.

Information: In phase 1, the customer was told that the bank

representative would be coming to his place in a day’s time.
But these representatives came after a week. So there was
wrong information given on the part of the customer. Again
in the final phase, the customer was not given any
information about the next year’s share trading charges and
charged her in advance.

82
 Company Profile
ICICI Bank is India's second-largest bank with total
assets of over Rs. 1 trillion and a network of about 540
branches and offices and over 1,000 ATMs. ICICI Bank offers
a wide range of banking products and financial services to
corporate and retail customers through a variety of delivery
channels and through its specialized subsidiaries and
affiliates in the areas of investment banking, life and non-life
insurance, venture capital, asset management and
information technology. ICICI Bank's equity shares are listed
in India on stock exchanges at Chennai, Delhi, Kolkata and
Vadodara, the Stock Exchange, Mumbai and the National
Stock Exchange of India Limited and its American Depositary
Receipts (ADRs) are listed on the New York Stock Exchange
(NYSE).

ICICI Bank was originally promoted in 1994 by ICICI

Limited, an Indian financial institAXISon, and was its wholly
owned subsidiary. ICICI's shareholding in ICICI Bank was
reduced to 46% through a public offering of shares in India in

83
fiscal 1998, an equity offering in the form of ADRs listed on
the NYSE in fiscal 2000, ICICI Bank's acquisition of Bank of
Madura Limited in an all-stock amalgamation in fiscal 2001,
and secondary market sales by ICICI to institAXISonal
investors in fiscal 2001 and fiscal 2002. ICICI was formed in
1955 at the initiative of the World Bank, the Government of
India and representatives of Indian industry. The principal
objective was to create a development financial institAXISon
for providing medium-term and long-term project financing
to Indian businesses. In the 1990s, ICICI transformed its
business from a development financial institAXISon offering
only project finance to a diversified financial services group
offering a wide variety of products and services, both
directly and through a number of subsidiaries and affiliates
like ICICI Bank. In 1999, ICICI become the first Indian
company and the first bank or financial institAXISon from
non-Japan Asia to be listed on the NYSE.

After consideration of various corporate structuring

alternatives in the context of the emerging competitive
scenario in the Indian banking industry, and the move
towards universal banking, the managements of ICICI and
ICICI Bank formed the view that the merger of ICICI with ICICI
Bank would be the optimal strategic alternative for both
entities, and would create the optimal legal structure for the
ICICI group's universal banking strategy. The merger would

84
enhance value for ICICI shareholders through the merged
entity's access to low-cost deposits, greater opportunities for
earning fee-based income and the ability to participate in
the payments system and provide transaction-banking
services. The merger would enhance value for ICICI Bank
shareholders through a large capital base and scale of
operations, seamless access to ICICI's strong corporate
relationships built up over five decades, entry into new
business segments, higher market share in various business
segments, particularly fee-based services, and access to the
vast talent pool of ICICI and its subsidiaries. In October 2001,
the Boards of Directors of ICICI and ICICI Bank approved the
merger of ICICI and two of its wholly owned retail finance
subsidiaries, ICICI Personal Financial Services Limited and
ICICI Capital Services Limited, with ICICI Bank. Shareholders
of ICICI and ICICI BANK approved the merger in January
2002, by the High Court of at Ahmedabad in March 2002,
and by the High Court of Judicature at Bombay and the
Reserve Bank of India in April 2002. Consequent to the
merger, the ICICI group's financing and banking operations,
both wholesale and retail, have been integrated in a
singularly.

85
 CASE STUDY-II

The Customer’s Association with the Bank

The customer became an ICICI bank customer in 1998

when he became an NRI customer. Things were rather
mundane and normal. Compared to the other big
nationalized banks and Citibank, the customer felt ICICI Bank
was the best and got some great feedback from friends and
relatives alike. His initial relationship was excellent. This
continued till 2001. All the facilities were of the highest
grade. Their email follow-ups, request resolAXISon, customer
service and everything they served were of the highest
grade. They also baffled him by calling him overseas with
regard to certain transactions and request. So, he would
have given a 5 star rating in 1998. But it did not continue for
long.

What has changed since then?

This bank grew leaps and bounds ever since the IPO in
1998 as well as the NYSE listing in 2000. The numbers of
customers were huge and the merger with Bank of Madura
added to the woes of the service. As there is a saying
“Quality is inversely proportional to Quantity”, ICICI bank
yielded to this very true philosophy. The customer sent a
letter to their NRI center regarding a change of address for
86
his NRI account. This took considerable amount of time since
ICICI misplaced the letter twice and he head o mail the letter
again. This frustrated and infuriated the customer. Then,
they sent a courier to the customer but at the wrong
address. They sent one to the wrong address, and other one
to the right address but with the wrong password for the
bank account.

Snippets from mail correspondence that took place between

the customer and the banking personnel are provided as
follows providing us with an insight:

If doing an address change should take such a long time and if your
processes are so sterner and baseless with a mediocre customer-care follow-
up, I definitely need to reconsider my options. I had opened an account in
ICICI though I had quite a few options for an NRI account, in hope of
having an excellent customer service.
I’ll have to rethink if my decision was correct. I have received similar
complaints from my friends as well stating that the ’’Quality of ICICI has
gone down with Quantity’’, I would definitely like to talk to some manager
for NRI Services, for the same matter. Revert to me, if you still have any
queries.
Mr. XYZ

The Reply

87
NRI Cell <[email protected]> wrote:
Dear Mr. XYZ,
We apologize for the delay in our response.
With reference to your mail we would like to inform
you that we have not received your letter for address change.
Blah Blah Blah………

In this letter instead of requesting the customer for

sending the letter again and apologizing to him, the bank
authority says that the customer hasn’t send any letter at all
thus making it a CRITICAL INCIDENCE for the customer.

Customer’s Final Conclusion of the Bank

All things considered, the ICICI bank is far ahead of

many of the nationalized banks. As an NRI customer and a
person used to excellent banking for quite sometime, I feel
that this bank has some mediocre facilities and service. I will
be reevaluating the opinion at a later point. I am just having
an account after many unpleasant services and incidents.

Will the customer recommend ICICI Bank to anyone? A big

NO at least for the time being until the bank makes efforts
to upgrade their services.

88
 Case Study Analysis: RATER

R: Reliability

The Case Study shows that the bank was extremely

reliable and trustworthy initially. But after the surge and
swelling of customers, inefficiency has crept in r to the bank.
The bank is unreliable only on the basis of the service that it
provides, but when the question of financial reliability arises
the bank seems to be in very sound and secure.

A: Assurance

The customer Mr. XYZ was rest assured about the fact
that the bank was very professional in its approach. But after
the bank conducted the mistakes of sending the password at
the wrong address and then sending the wrong password at
the right address made sure that the bank lost the dignity of
being a financial institAXISon that provides assurance. This
had a deep impact on the customer.

T: Tangibility

As we can see when the customer Mr. XYZ wanted to

change the address for his NRI account he had to send 3
mails to the bank out of which 2 of them were lost by the
89
company, later on the first confirmation was sent at the
wrong address and the second confirmation was sent at the
right address with the wrong password. The whole process
took around 2 months, which is a very long time to take by
any standards.

90
E: Empathy

The bank was very co-operative and sympathetic

towards customers before the phase of their IPO, the best
example of this would be that the company also called its
NRI customers overseas for certain transactions this showed
that the bank was indeed very good towards its customers,
but after the IPO, the bank just lost all loyalty it earned, it
took the bank almost 2 months to change the address and
when the customer Mr. XYZ wrote a mail to the bank for its
mediocre service provided the bank in reply blamed the
customer for its mistake. Thus, ICICI Bank performs
miserably on this count too and thus loses the customer.

R: Responsiveness

The company lost this quality after the IPO. The

company took almost 2 months to change the address and
only after sending 3 mails was the job done, the bank
management was also very unresponsive in apologizing to
its customers.

91
 BIBLIOGRAPHY
 SERVICES MARKETING– M.K.RAMPAL & S.L.GUPTA
 SERVICES MARKETING–VALARIE.A.ZEITHAML & MARY JO
BITNER
 SERVICES MARKETING–CHRISTOPHER LOVELOCK
 MARKETING MANAGEMENT–PHILIP KOTLER
 BUSINESS TODAY
 ANALYST
 www.icici.com
 www.hdfc.com
 www.indianoverseasbank.com
 THE TIMES OF INDIA
 BUSINESSWORLD

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MARKETING

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A PROJECT ON
BANKING
SECTOR

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