MARKETING CONCEPT
Market
A situation where buyers and sellers of a
commodity interact.
Coming together of buyers and sellers of
the same or similar commodities
TYPES OF MARKET
Geographical Area
Product
Nature of Transaction
Volume of Transaction
MARKETING
Marketing is the process of determining
consumer demand for a product or service,
motivating its sale and distributing it into
ultimate consumption at a profit
A management function
A Business Philosophy
EVOLUTION OF MODERN MARKETING
Industrial revolution
Digital revolution
Barter System
Customer and market driven
Wants of customers
CRM
Customer Satisfaction
Nothing is worthwhile unless it
touches the customer
Selling
Marketing
Selling is an operational
activity
Marketing is a total
management
Selling is product focused
Marketing is customer
focused
Selling is oriented to the
needs of the firms
Marketing is oriented to the
needs of the buyer
Selling encashes profitable
opportunity
marketing coverts customer
needs into such
opportunities
Marketing aims at
maximizing customer
satisfaction
Selling aims at maximizing
sales volume
Selling=
Factory > Products > Selling and
promotion > Profits
Marketing=
Target market > Needs > integrated
marketing > Profit by customer satisfaction
MARKETING MANAGEMENT
A process of planning and executing the
conception, pricing , promotion and distribution of
goods and services and ideas to create
exchanges with target groups that satisfy
customer and organizational objectives.
FUNCTIONS OF MARKETING MANAGEMENT
Analysis
Planning
Implementation
Control
IMPORTANCE OF MARKETING FOR
INDIAN BANKS
"The relevance of aggressive marketing in
banks has come to the fore as never before"
- M N Goiporia.
What is a Product?
Product is defined as “ anything that can be
offered to a market for attention, acquisition,
use or consumption.
CHARACTERISTICS OF SERVICES
Intangibility
Inseparability
Heterogeneity
Perishability
SERVICE
A service is any act or performance that
one party can offer to another that is
essentially intangible and does not result
in the ownership of anything. It’s
production may or may not be tied to
physical product.
S.No.
1.
2.
3.
4.
5.
6.
7.
8.
Physical Goods
Tangible
Homogeneous
Product and distribution
separated from
consumption
A thing
Core value produced in
factory
Customers do not
participate in the
production process
Can be kept in stock
Transfer of ownership
Services
Intangible
Heterogeneous
Production, distribution
and consumption re
simultaneous process
An activity
Core value produced in
buyer-seller interaction
Customers participate in
production
Cannot be kept in stock
No transfer of ownership
MAREKTING OF FINANCIAL SERVICES
Intangibility, inseparability and heterogeneity are
manifested at both strategic and tactible levels in
services marketing.
Marketing strategy provides the organisation with
a sustainable competitive advantage in the
markets it operates.
Organization should understand consumer needs
and identifies how those consumers should be
grouped into different market segments.
Product attributes, pricing decisions, methods of
distribution and communication should all seek to
reflect the chosen position.
Types of Financial Markets in India
The credit market
The money market
Equity and term lending market
Debt market
Insurance market
Foreign exchange ,market
Stock markets
Consumer finance market
BANK MARKETING
Provides services
Aimed to satisfy customer’s needs and
wants
Needs and wants may be non financial in
nature
Competitive element, efficiency and
effectiveness
Organizational objectives are still the
driving force
Commercial objective to make profit
Social Objectives
Essentials for a Banks Success
Cannot exist without customer
Create, win and keep customers
Organizational design should be
oriented to the customer
Deliver total satisfaction to the
customer
Customer satisfaction is affected by
the performance of all the personnel of
the bank.
MARKETING MIX
Key concept in the modern marketing
Considered to be core of marketing
It is the set of tools that the firm uses to
pursue its marketing objectives in the
target market
Decisions must be made for both the
distribution channels and the final
consumers
Marketing Lessons
OLD
New
Product
Consumer
Price
Cost
Place
Convenience
Promotion
Communication
Wining companies are those that can
meet customer needs economically and
conveniently and with effective
communication
Services Marketing Mix – 7P’s
Product, Price, Place, Promotion, People, Physical
evidence, Process
Consumer Behavior
Planning of a marketing mix commences with
formulating an offering to meet the target
customer’s needs or wants.
Maslow’s Hierarchy of Needs:
1) Physiological needs - food, drink, oxygen, sleep
2) Safety needs – avoidance/ protection from
threatening situation and economic security
3) Social needs – friendship, affection and sense of
belonging
4) Esteem needs – self-respect, recognition, status
and success
5) Self- actualization – self- fulfillment
Stage
Financial situation
Banking needs
Young bachelor
Per capita income
high, as no
dependants. Few
family burdens
Credit cards, auto
loan, low cost
banking services
Half nest (married
with young
children)
Home buying priority, Mortgage loan,
low liquidity
credit card,
overdraft, durable
loans
Full nest (older
couple, grown up
children)
Income stabilized,
good financial
position
Empty nest (older
couple)
Significantly reduced Social security
income
services, some loans
Home improvement,
equity investment
Learning and habit development:
The marketers break habit by giving free
samples, introductory trial offer and special
discount on opening and generate new
clientele.
Once consumer makes the purchase, the
habit reinforcement is done to get them to
remain habitual users.
Influence on Decision making:
Face- to-face group many a time gives an
individual the support for decision-making.
Customer relationship Management:
Objectives:
Long term customer retention
Relationship with external market who influence
or provide referrals
Integrating marketing activities, customer
service and quality standards
Gap Analysis:
The CRM tries to close the gap in the customer perception
and the firm’s perception by finding and analyzing the “GAP”
1) The first gap is between the service expected by the
customer and company perception of consumer
expectations.
2) The next is between the customer driven service designs
and standards vs. company perception of consumer
expectations about the service designs and standards.
3) The third is about delivery of service perceived by the
customer and the firm’s perception about customer
expectations.
4) The gap between the service delivery to the customer and
external communication to the customer by the firm.
5) The ultimate gap between expected service and perceived
service.
PRODUCT
A product is anything that can be offered
to a market for attention, acquisition, use
or consumption that might satisfy a want
or need
PRODUCT PERSONALITY
THE CORE
THE ASSOCIATED FEATURES
THE BRAND NAME & LOGO
THE PACKAGE AND LABEL
PRODUCT LEVELS
Core benefit, basic product, expected
product, Augmented product and Potential
product.
PRODUCT CATEGORY
Durability, tangibility and use
Product item, Product Line, Product mix
Banking product
PRODUCT PLANNING
The process of product planning consists
of determining the strategies in respect of
various elements. Product Line, Product
Mix, Branding, Packaging and New
product development.
PRODUCT LIFE CYCLE
Introduction, Growth, Maturity, Decline
The product Life cycle operates at three
levels product level, product sub category,
brand level.
NEW PRODUCT DEVELOPMENT
Idea screening
Concept testing
Product development
Test marketing
Commercial launch
PRODUCT STRATEGIES
Strategies based on Product Mix
Strategies based on Product Life Cycle
PRODUCT MODIFICATION
Quality Improvement
Feature Improvement
Style Improvement
PRODUCT ELIMINATION
GROWTH STRATEGIES
Intensive
Integrated
Diversification
Identifying growth opportunities
Products
Existing
New
Existing
Market
Penetration
Product
development
New
Market
development
diversification
Market
DIVERSIFICATION
Concentric Diversification – technologically
related but the target customers are entirely
different
Horizontal Diversification – technologically
unrelated but the target customers are same
Conglomerate Diversification – no
relationship with the existing product
BRANDING
Line Extension
Brand Extension
Multi brands
New Brands
PACKAGING
Primary Package
Secondary Package
Shipping Package
LABELLING
Identify the product or brand
Describing information
Promoting the product through 'attractive
graphics'
PRICING
Price is the sum value of all the values
that consumers exchange for the benefits
or having or using the product or service
Different forms - Goods bought, hire
charges, tuition fees
Dynamic Pricing - Varying prices
Flexibility
OBJECTIVE OF PRICING
Profit
Survival
Market Share
Cash Flow
Status Quo
Product Quality
Communicating Image
Short term/Long term
FACTORS INFLUENCING PRICING
Internal factors
External factors
PRICING METHODS
Mark up Pricing
Variable costs and contribution for fixed costs
Absorption cost Pricing
margin for profit
Target Return Pricing
Return on the investment
Marginal cost Pricing
Direct variable costs are fully realized
Only a portion of fixed costs may realized
Perceived Value Pricing
Buyer’s perception of value
Value Pricing
Product with high value at a fairly low price
Going Rate Pricing
Based on competitor’s prices
PRICING METHODS (Contd..)
Auction Type Pricing
English Auctions
One seller many buyer
Dutch Auctions
Sealed Bid Auctions
Group Pricing.
Pricing Strategies
Geographical pricing
Price discount and allowances
Psychological pricing
Promotional pricing
Loss-leader pricing
Loss is covered by sale of other items
Special event pricing
Cash rebates
Low-interest financing
Longer payment terms
Warranties and service contracts
Psychological discounting
Pricing Strategies (Contd.)
Discriminating pricing
First degree
different prices to each customer depending
upon their intensity of demand
Second degree
Lower prices for buyers of a larger volume
Third degree
Customer groups – student, senior
citizen
Product form
Image pricing
Channel
Location
Time
Pricing Strategies (Contd.)
Product-mix pricing
Product line pricing –developing product line
Captive-product pricing – main product at
lower price, ancillary product at higher price
Two-part pricing –
split into fixed and variable
component
By-product pricing –
by-products obtained in
production of other products
Product-bundling pricing
Market skimming pricing
Market-penetration pricing
Bank Pricing:
There are two major costs, which have to be
considered while pricing bank products:
1) Interest cost
2) Servicing cost
Interest cost constitutes 67 % of the price and
service cost is around 33 % in any bank product.
Table 36.4 – explains charges bank charge for
some of the services
Other factors: Risk and return
Monetary policy
Capital adequacy
Cost-benefit analysis
Distribution
Distribution channel
Marketing channels are sets of
independent organizations
involved in the process of
making a product or service
available for use of
consumption.
Functions of distribution channels
Market information
Promotion
Contact
Matching
Negotiation
Product information
Physical distribution
Financing
Risk Taking
Channels types
Channel 1, Channel 2, Channel 3, Channel 4,
Factor influencing channel section
Product characteristics
Perishable products
Consumer durables
Industrial products
Market characteristics
Customer characteristics
Company resources
Competition
Product lines
Channels for banking products
Branches
Other channels
Tele-banking
ATMs
Computerization
Plastic Cards
Virtual branches and automated video banking
Intermediaries in banking services
DSA
Automobile Dealers
Merchant establishments
Channel Management:
Channel management is also called as IT channel
management, distribution channel management,
channel sales management and sales channel
management.
Channel levels:
Zero level
One level
Two level
Three level
Channel Dynamics:
Vertical marketing system ( VMS):
It implies that the producer, wholesaler and retailer acting as
a unified system.
Horizontal marketing system:
It is one in which two or more unrelated companies put
together resources of programmes to exploit an emerging
marketing opportunity.
e.g.: in-store banking, education loans, housing loans, etc
Multi-channel marketing systems:
With the proliferation of customer segments and channel
possibilities, more companies have adopted multi-channel
marketing.
e.g.: a bank may try to sell its products through internet,
marketing officials, outsourcing, etc
Advantages:
The Interwoven channel Management (ICM)
connects businesses with their direct and
indirect channels through information,
business processes and sales applications to
streamline the sales process and realize more
profitable channels.
Promotion
Role of promotion
Persuasion
Inform
Reminding
Reinforcing
Promotion mix
Blended Mix of Promotion Tools
Advertising
Personal
selling
Sales
Promotion
Public
Relations
Direct
Marketing
Promotion mix strategies
• Push strategy -Retailer
• Pull strategy - Customer
Factors influencing promotion mix
• Types of product/market
• Buyer’s readiness stage
• PLC stage
Promotion mix integration
Direct Selling (DS):
It is also called as multi-level selling or network
marketing.
The company sells door to door or at home sales
parties.
e.g.: Amway, Tupperware, etc
Direct Marketing (DM):
It is an interactive marketing system that users
one or more media to affect a measurable
response or transaction at any location.
e.g.: telemarketing, television direct-response
marketing (home shopping network) and
electronic shopping (Amazon.com).
Relevance of DS/DM to banks:
Banks have transformed from a totally
computed environment to core banking system
linking all the bank branches as a single branch,
data being maintained at a nodal point termed
as “ Centralized Data Centre” (CDC).
Channels of delivery in a Bank:
ATM counters, Net Banking, Phone banking,
mobile banking, online trading accounts, etc.
Benefits of Direct marketing:
1) It saves time and introduces customer to
the various selection of products.
2) It is convenient, easy and hassles free
for the customer.
3) Various products are available at
customer’s disposition.
4) It reduces the operational cost.
5) It enables deployment of available
manpower for other jobs.
Marketing Information System (MKIS)
Features of MKIS
Master Plan
Coordination
Future Orientation
Computerized Environment
Analyze Quantitative Information
Regular flow of Information
Functions of MKIS
Collecting and assembling data
Processing of data
Analysis of data
Storage of data
Discrimination of information
Need of MKIS
Complex marketing activity
Knowledge /information explosion
Communication gap
Prompt decision
Non-price competition
USAGE OF COMPUTERS IN MKIS
Hardware usage
Software usage
Frequency of computer usage
Communications of information
Sources of information
Support for marketing management
Support for marketing mix decision
Kinds of information needed
• Information about market forces
• Information about the bank’s market
behavior
• Internal information
Components of MKIS
• Internal marketing information
• Marketing intelligence system
professional market research agencies like
ORG, MARG, IMRB, etc.
• Marketing research system
information pertaining to specific marketing
problems.
Advantages of MKIS