shekhar malik

INDIAN INSTITUTE OF PLANNING AND MANAGEMENT

NEW DELHI

Thesis Report

on

“““Effect of Branding on Marketing of Banking

Services - A Case of Bank of HSBC Bank”””

Submitted to:

Thesis Department IIPM

Under the Guidance of:

Mr. Debanjan Pandit

Submitted by:

SHEKHAR MALIK

PGP/SS/2012-14

Thesis ID No.: SS/12-14/M/96/Delhi/ISBE

PGP/SS/2012-14 SS/12-14/M/96/Delhi/ISBE

ii

ABSTRACT

In India, with competition heating up in the banking industry and the increase in the

number of private and foreign banks in the post liberalization era, all players in this

market are gearing up their supply chain management processes for better customer

acquisition and retention. Most of these new private sector banks and the foreign banks

are handicapped by the lack of a strong branch network as compared to their public

sector counterparts to distribute their products or services.

Many international banks have Indian operations, including Citibank, Bank of America,

Bank of Nova Scotia, RBS Bank, Deutsche Bank and JPMorgan Chase Bank and

Standard Chartered.

Most foreign banks follow a strategy of first setting up base in metros – Mumbai, New

Delhi, Kolkata and Chennai. Then, in the next stage, they move to the mini-metros such

as Bangalore, Hyderabad, Pune and Ahmedabad. Over the last few years, some banks

have talked about expanding their reach beyond the conventional circuits of these eight

places.

Foreign Banks in India always brought an explanation about the prompt services to

customers. After the set up foreign banks in India, the banking sector in India also

become competitive and accurative. Although foreign banks have brought new

technology, capital and competition in price and customer service into the Indian

financial system, their outreach to the mass of the people has not been as wide as that of

PSBs. Foreign participation also leads to modernization of the domestic banking sector,

sound corporate governance and a competitive environment. Foreign banks have and will

play a large role in developing local financial markets and will increase equity

participation in domestic banks in need of restructuring, enter into alliances and joint

ventures to market global services to domestic customers and bring expertise to the local

markets.

Technology is enabling banks to provide the convenience of "anytime-anywhere"

banking to increasingly demanding customers. Banks are now reengineering the way in

which their services can be "distributed" to their customers. The earlier brick-and-mortar

branch is no longer sufficient, technology is now taking banks to the homes and offices,


iii

24 hours a day, 365 days a year through ATMs, phone banking and Internet banking.

Therefore, the financial supply chain is undergoing a fundamental strategic change.

HSBC is known as the ``world’s local bank.’’ Originally called the Hong Kong and

Shanghai Banking Corporation Limited, HSBC was established in 1865 to finance the

growing trade between China and the United Kingdom. HSBC is now the second-largest

bank in the world. The company is organized by business line (personal financial

services; consumer finance; commercial banking; corporate investment banking and

markets; private banking), as well as by geographic segment (Asia-Pacific,

U.K./Eurozone, North America/NAFTA, South America, Middle East). Despite

operating in 79 different countries, the bank works hard to maintain a local feel and local

knowledge in each area. HSBC’s fundamental operating strategy is to remain close to its

customers. Today, the bank offers an integrated and comprehensive set of products and

services across all businesses, serving the needs of individual, corporate, institutional and

government clients, by combining the best of local knowledge and international

expertise.


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DECLARATION

I, Shekhar Malik, certify that the thesis report entitled “““Effect of Branding on

Marketing of Banking Services - A Case of Bank of HSBC Bank””” , is an original one

and has not been submitted earlier either to Indian Institute of Planning and Management

or to any other Institution for the fulfillment of the requirement of a course of

Management Programme (MBA).

Place:

Date: (Shekhar Malik)


v

CERTIFICATE FROM THESIS GUIDE

This is to certify that the thesis titled “““Effect of Branding on Marketing of Banking

Services - A Case of Bank of HSBC Bank””” , submitted by Shekhar Malik for the

award of degree in Master of Business Administration has been completed under my

supervision & guidance. It is an original piece of work based on primary as well as

secondary data.

This work is satisfactory and complete in every respect.

Mr. Debanjan Pandit

Thesis Guide


vi

THESIS TOPIC APPROVAL MAIL

From: Thesis mkt <[email protected]>

Date: Sat, Oct 11, 2014 at 7:14 PM

Subject: synopsis b approval

To: "[email protected]"

Dear Student, The topic of your thesis will be “Effect of Branding on Marketing of Banking

Services - A Case of Bank of HSBC Bank” Pls start working on the same & ensure that you collect relevant & updated information on the same.

Student Name Shekhar Malik

Thesis ID Generated: SS/12-14/M/96/Delhi/ISBE

IIPM Center Delhi

Specialization Area M

Topic Effect of Branding on Marketing of Banking Services - A Case of Bank of HSBC Bank

Name of the Guide Mr. Debanjan Pandit

Phone No. 9818446632

Email [email protected]

For all correspondence with me and your external guide, you should always mark a cc mail to [email protected], mentioning your ‘thesis id’ in the subject of the mailer. Best Regards,

Neena Rawat

Department of Academics(Thesis), IIPM Delhi

**********************************************************************

The Indian Institute of Planning and Management

IIPM, Satbari-Chandan Haula, Bhatti Mines Road, New Delhi- 110074

mailto:[email protected]


vii

APPROVED THESIS SYNOPSIS

DETAILS OF THE STUDENT:

Name : Shekhar Malik

Thesis ID Generated : SS/12-14/M-96/Delhi/ISBE

Course to which admitted : ISBE

Batch : SS-2012-14

Month & year of admission: May 2012

Place of study (IIPM CENTER): New Delhi

Specialization : Marketing

Section : SSUM

Phone No : +91-7503446100

Email Id : [email protected]

DESIRED AREA OF RESEARCH: Banking Industry

TITLE OF THE THESIS:

Effect of Branding on Marketing of Banking Services: A Case of Bank of HSBC Bank.

INTRODUCTION:

HSBC Bank is a leader in financial services, offering a full range of products and

advisory to individuals, corporations, institutions and governments worldwide. Today,

the bank offers an integrated and comprehensive set of products and services across all

businesses, serving the needs of individual, corporate, institutional and government

clients, by combining the best of local knowledge and international expertise.

Thus I am taking HSBC Bank for my study.

RESEARCH OBJECTIVE:

To study the key aspects of the Indian Operations of HSBC Bank in India.

To enlist the key products and services offered by HSBC Bank to various

individuals, corporations& institutions in India and evaluate in branding strategies.


viii

To conduct a survey in respect to gauging the satisfaction level of individuals,

corporations and institutions with respect to the services of HSBC Bank.

RESEARCH METHODOLOGY:

Information Source:

Primary data will be collected through survey of individuals, corporations,

institutions using two sets of questionnaire.

Sampling: Random Sampling for collection of data

Sample Size: 50 Individuals & 20 Corporations & institutions – Clients of bank.

Target Audience: Employees of the Finance Departments of selected Corporations

& Institutions and survey of Individuals who hold Banking Relation with the Bank.

Tool used: All the information will be analyzed using Excel an depicted using Bar

diagram/Pie charts

Secondary data will be collected from the Internet, Magazines and Newspaper

All the results will be used to draw conclusions and to make recommendations.

SCOPE OF THE STUDY:

The scope of my study will be limited to Survey to be conducted in Delhi.

LIMITATIONS OF THE STUDY:

Survey will be limited to Delhi and NCR

Biased response of respondents

BOOKS REFERRED:

Philip Kotler, ‘Marketing Management’, 12th edition, Prentice-Hall India, New Delhi,

2006

C. R. Kothari, ‘Research Methodology’, 2nd edition, Wishwa Prakashan, New Delhi,

2001

JUSTIFICATION:

Retail banking is when a bank executes transactions directly with consumers, rather

than corporations or other banks. Services offered include savings and transactional


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accounts, mortgages, personal loans, debit cards, and credit cards. The term is generally

used to distinguish these banking services from investment banking, commercial banking

or wholesale banking. It may also be used to refer to a division of a bank dealing with

retail customers and can also be termed as Personal Banking services. But recently banks

have started focusing on branding and marketing to specific segments. Thus I have taken

the organization for my study.

DETAILS OF EXTERNAL GUIDE:

Name Of the Guide: Mr. Debanjan Pandit

Qualification : MBA( Marketing & Finance),CA(Inter)

Designation : Assistant Manager(Operations)

Phone Number : +91-9818446632

E-mail ID : [email protected]


x

ACKNOWLEDGEMENT

I appreciate the co-ordination extended by my friends and also express my sincere

thankfulness to the entire faculty members of Indian Institute of Planning &

Management, Delhi, giving me the opportunity to do this project/study and also assisting

me for the same.

(SHEKHAR MALIK)


xi

TABLE OF CONTENTS

INTRODUCTION 1

PROFILE OF HSBC 12

RESEARCH OBJECTIVES & METHODOLOGY 25

LITERATURE REVIEW 27

SURVEY FINDING AND ANALYSIS 66

CONCLUSION & RECOMMENDATION 79

BIBLIOGRAPHY 84

ANNEXURE 85


1

CHAPTER-1

INTRODUCTION

The banking sector has under gone turbulent changes in the past few years. The financial

sector reforms have brought in the entry of new private sector and foreign banks in the

country. The conventional banking as outlined above has given way for professional and

high-tech banking. There has been a paradigm shift from the monopolies of public sector

banks to competitive banking. Public sector banks can no longer remain complacent with

their conventional products and services. With walk in business virtually being ruled out,

banks are now scouting for quality consumers both for building their resources and assets

There were times when the corporate clientele occupied the centre stage and the retail

ones were pushed to the back seat. The slow down of the economy, sluggish industrial

growth and slump in agricultural activities have pushed the commercial banks to look to

the retail customers.

Retail banking has both pros and cons. In a situation like today, the bankers have very

little option, but to chant the “Retail Mantra”

What is retail banking?

Retail banking can be crudely defined as the antonym of wholesale or bulk banking. It

is nothing, but shared business. A deposit of Rs.1 crore from single customer vs. small

deposits of Rs. 10,000 each from 100 different customers. The corporate and retail divide

is nothing but internal segmentations and the customer remains always a customer.

Retail banking generally refers to offering financial services, products related to deposits

and assets to individual customers for personal consumption.

Banks concentrate on various segments like professionals, housewives, pensioners,

children, salaried class etc. Different types of products like recurring deposits, savings

bank deposits, fixed deposits, credit cards, housing and consumer loans and educational

loans are offered by banks to the above mentioned marked segments.

The domain of retail banking market has tremendous growth potential for banks and

finance companies, as at present it is largely untapped. The penetration level is 2.5 to 3

% and is in a scenario when the requirements of the consumers are growing. In the past,


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people never believed in buying consumer goods on credit. But today the attitude is

changing. The demand for consumer products has increased. Today, about 70% of

consumer goods purchased are through finance schemes/loans as against 40% about 1 to

6 years ago. The home loans alone account for nearly two-third of the total retail

portfolio of the bank

Advantanges Of Retail Banking

Retail banking has inherent advantages outweighing certain disadvantages. Advantages

are analyzed both from the resource angle and asset angle.

RESOURCE ASSET SIDE

Stable and constitute core deposits. Better yield and improved bottom line.

Less bargaining for additional interest. Good Avenue for funds deployment.

Low cost funds. Lower risk and NPA perception.

Builds customer base. Helps economic revival of the nation

through increased production activity.

Increases subsidiary business Improves lifestyle and fulfills aspirations

of the people through affordable credit.

A safe and convenient saving avenue. Innovative product development.

Minimum marketing efforts in a demand-

driven economy.

Risk weight in certain segments like

housing loan.

Retail Banking Functions Available In India

A banks retail offering can be broadly categorized into Core service, facilitating service,

and supporting service. Core service is the reason for being in the market, facilitating


3

services are needed so that the core service can be used, and supporting services exactly

discriminates the service package from the services of competitors.

Categorization of retail bank services:

Core services Facilitating services Supporting services

Payment services Cash

Foreign Currency Requirement

Traveler Charges

DD/ Bankers Cheque

IT

EFT

Making payments at door step

Internet banking

Telephone banking

Current account and savings

account

ATM card

Standing instructions from

customers for making payments

Inter branch/interbank transfer

of funds

Safety vault

Credit cards

Debit cards

Services to senior citizens

Telephone banking

Internet banking

Conversion of excess balance to

Time deposits

Loan products: Consumer loans,

personal loans, housing loans,

educational loans

Loan Accounts

Linked Customer Accounts

Delivery of loan at promised

time period

Interest rate option:

Fixed/floating

Flexibility in pre-payment of

loan

Counseling on Real-estate

markets

Legal services for

documentation

ECS for payment of loan

installments


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Insurance products: Life

insurance, pension schemes

Current account

Savings account

Time deposits

Safety vaults

Additional insurance facility for

family members

Counseling on post retirement

savings

Indian banking, a conservative club with exclusive membership, was forced to open its

doors to some new members in the mid-’90s. These new members—the private banks,

helped by the winds of liberalisation—changed the face of banking as we knew it,

forever.

Earlier, the banking sector had just two types of players. On the one hand, there were the

foreign banks, which were choosy and decided who to accept as a customer. At the other

extreme were the public sector banks which catered to the masses but which were

seriously found wanting in terms of products and services. Then there were the old

private sector banks and co-operative banks, but they were mainly community-oriented.

A large number of middle-class customers, though a tolerant lot, were looking for a

change. This was the scenario when the new private banks stepped into the picture in

1995.

Foreign banks with complex structures and those who do not provide adequate

disclosures in their home jurisdiction as well as large foreign banks will have to locally

incorporate themselves as wholly owned subsidiaries of the overseas parents. There is no

compulsion to convert into wholly owned subsidiaries for those banks that have been

operating in India before August 2010 but they will be incentivized to do so by offering

them so-called near-national treatment when it comes to opening branches in the world’s

10th largest economy.

There are 43 foreign banks in India with a network of 334 branches, mostly in cities.

Twelve of these banks are “systematically important” with assets accounting for at least

0.25% of the total assets of all commercial banks. Collectively, the foreign banks

account for roughly 7% of the assets and little over 15% of capital, reserves and surplus

of the industry as of 2014.


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Foreign banks in pre-independence India

Foreign banks in India today, such as Standard Chartered Bank and HSBC, found their

roots in financing the growing trade between Asia and the rest of the world. Traditional

trade items at the time were cotton from Mumbai, indigo and tea from Kolkata, rice from

Burma, sugar from Java, tobacco from Sumatra, hemp from Manila and silk from

Yokohama, all flowing to the west through Indian ports, making India an important

destination for these banks.

Standard Chartered Bank’s antecedent, the Chartered Bank of India opened an office in

Calcutta in 1858, after receiving a Royal Charter from Queen Victoria. The Hongkong

and Shanghai Banking Corporation (HSBC), present in pre-independence India through

branches, took a major inorganic step in 1959 when it acquired the erstwhile Mercantile

Bank in India. The Comptoir d’Escompte de Paris, which would later become one of the

entities to form BNP Paribas, started operations in Calcutta in 1860, and represented the

French as the second nationality to have a major banking presence in the country after

the British.

Major American banking companies were at the time restricted by law from operating

outside the US. The relaxation of these laws paved the way for the global expansion of

American banks in the early 20th century. Citibank, or as it was known then, The

National City Bank of New York, entered India in 1902, and JP Morgan, which had

ambitions of entering India as early as 1902, did so in 1922 via an ownership stake in the

Calcutta merchant banking firm Andrew Yule and Co. Ltd.

Foreign banks in India today: A snapshot

As of date, there are 43 foreign banks from 26 countries operating as branches and 46

banks from 22 countries operating as representative offices. In addition, a number of

foreign banks have also entered India via the NBFC route, while a considerable number

have set up captive centres in the country.

Foreign banks present in India as representative offices often have correspondent

banking relationships with domestic banks and provide a useful platform for foreign

banks to access opportunities for foreign currency lending to Indian corporate and

financial institutions.


6

Foreign banks have less than 1% of the total branch network but about 7% of the total

banking sector assets and a sizeable 11% of profits. With 334 branches in all, the share

of foreign bank branches is less than 1%.

For most foreign banks, their relationship with Indian corporate clients is pivoted around

their ability to provide access to global capital and debt markets. Although data relating

to individual bank’s exposure to India through onshore credit and offshore ECB and

trade finance is not available, taking the total ECB data as a proxy for offshore exposure,

it is interesting to see the consistent upward trendline for external debt. Understandably,

the onshore exposure and its growth are related to the performance of the economy and

market share of foreign banks.

Although foreign banks largely operate at higher levels of efficiency and maintain low

net NPA ratios, due to exposure to the same group of clients, the risks are co-related.

Interestingly, one of the biggest challenges facing foreign banks is client selection.

Although the Indian economy has grown at a healthy rate, there are only a handful of

Indian corporates with credible governance processes and global reputation required to

pass muster with the credit divisions of these banks. Increasingly, such clients are also

being pursued by domestic banks with larger single obligor limits and greater autonomy

to take decisions locally. This automatically segments foreign banks as ‘niche’ service

providers which often collides with the ‘universal banking’ policy regime.

Foreign banks: Evolution and approaches to banking in India

Due to the local branch regime and the operating model of choice, foreign banks have,

for the large part, remained niche players, focussing on trade finance, external

commercial borrowing, wholesale lending, investment banking and treasury activities.

Some large foreign banks have focussed on capturing the retail market but have

remained confined to the high end of private banking and wealth management, while a

few others have created valuable niche offerings in the areas of transaction banking, cash

management and remittance products.

With India emerging as a major Information Technology (IT) service provider in the 21st

century, many global banks set up business processing offices (BPO) in India; primarily

to take advantage of the low-cost technology and availability of English-speaking

employees. Some foreign banks also created centres of excellence that provided services


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at the higher end of the value chain. Although not in scope for the present survey, these

operations of foreign banks have created attractive and large-scale employment

opportunities for educated Indians and have been an interesting part of India’s economic,

social and cultural landscape.

With the growing importance of IT to banks, foreign bank BPO centres in India have

expanded the scope of their services, providing data analytics, and data-backed solutions,

that contribute to the efficiency and profitability of these banks globally.

Liberalisation of Foreign Direct Investment (FDI) norms for financial services provided

further strategic entry routes for foreign banks in the form of NBFCs that could provide

specialised non-banking financial services such as stock broking, merchant banking,

leasing and finance and others to specific segments of the economy.

Foreign banking groups present in India as branches also took this opportunity to set up

separate entities to provide specialised services. This led to the formation of financial

conglomerates or large franchises with multiple entities. In the absence of flexibility on

expanding the branch network, the lending NBFCs also created an opportunity for

foreign banks targeting retail clients to create the level of outreach required for their

operations.

However, the 2006 guidelines on Financial Regulation of Systemically Important NBFCs

and Banks’ Relationship With Them and subsequent regulations have significantly

limited this opportunity by stipulating consolidated capital market limits and otherwise

frowning upon what regulators consider to be ‘regulatory arbitrage’ between a bank and

an NBFC engaged in an activity permitted in the bank.

Foreign banks: Bringing global innovation standards to banking practice in India

In addition to setting up the first formal banking institutions in India, foreign banks have

made considerable contribution to the banking sector over the years by bringing capital

and global best practices as well as grooming talent.

Foreign banks have been innovative in identifying specific needs of the market, creating

products, and developing organisational constructs. A good example is the cash

management offering in the early 1990s, that targeted inefficiencies in cash collection

and check processing, identified as a specific issue for the Indian market. Built around


8

this were products such as Citicash and Citicheck. More importantly, the bank had a

dedicated division in the organisation to address the needs of this market and after a

successful stint in India, the product was successfully introduced in other emerging

markets. There are many such examples, including securitisation, foreign exchange

derivatives, travellers’ cheques, channel financing and credit scorecards. Similarly, these

banks often introduced risk management practices from their countries and were took

steps to become part of the local cultural and community landscape through their

initiatives relating to corporate social responsibility, sustainability, and contribution to

protection of heritage buildings, local arts and crafts.

Prior to 1990s, foreign banks easily distinguished themselves vis-a-vis public sector

banks. They used technology to their advantage to create and often maintain lead in

premium services such as integrated cash management, private banking, 24-hour phone

banking, internet banking, securitisation, forex and interest rate derivatives trading, risk

management and Know Your Customer (KYC) software solutions. The first Automated

Teller Machine (ATM) in the country, for instance, was set up by HSBC in 1987. This

focus on innovation helped foreign banks build profitable businesses with a relatively

high share of investment and fee income.

In the early stages through expatriate employees, and later integrating local talent in a big

way, foreign banks trained and nurtured talent in India. In the process, foreign bank

executives in India have also become a rich source of talent for their global banking

networks. An established global network, ability to specialise, gain access to latest

developments in banking technology and services, and the opportunity to gain

international experiences were key factors contributing to their talent retention.

The banking landscape changed dramatically post the entry of new private sector banks.

Not only did foreign banks face competition from the new private sector banks that were

often run by their own ex-employees with the opportunity to take quick decisions and

upscale in a fostering environment using local technology, but also from some of the

public sector banks that did well on the back of what was then called ‘computerisation’

and a better way of engaging with the customer.


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Retail and inclusive banking vs differentiated banking

The discussion paper articulated the preference for retail banks over ‘niche’ banks. While

in reality, only few foreign banks offer full suite retail services, due to the regulatory

expectations, all foreign banks operating in India need to offer retail liability and basic

banking products.

In most countries, regulation for retail deposit accepting banks is more stringent than

regulation for banks that offer limited facilities to non retail clients. In India, on the other

hand, incentive (in the form of branch licences that are discretionary) is tagged to retail

banking.

In August 2013, the RBI released a discussion paper on banking structure in India,

wherein, among other things, the discussion on differentiated licensing has been

initiated.

This will be an important step in the right direction to create the right structure for

aspiring retail banks that are likely to grow as subsidiaries with large branch networks as

against banks whose business models are suited to niche activities with limited growth

ambitions and limited capacity to create systemic risk..

Banking and technology

In the midst of rising costs and increasing regulatory and political pressure to expand

banking access to rural areas, foreign banks are also experimenting with partnerships and

the use of different forms of technology for providing banking services. Globally, banks

have started to move beyond the branch, and in some cases, the ATM formats, and have

begun to deploy banking services via channels that promote flexibility and mobility.

Technology as value driver

On the distant horizon, disruptive technology seems to emerge as a challenger to the

long-term sustainability of banking as the world has known it so far. Yet, in India,

concerns around operational and systemic risk from non-bank operators will continue to

make banks important partners to innovative technology companies for mutual benefit.

The regulatory preference for banks as better regulated and therefore safer vehicles for

financial services will continue to work for banks for the foreseeable future.


10

The current wave of technology integration in banking services has also been spurred by

growing consumer expectations and fast adoption by a younger, more tech-savvy

generation. A survey by PwC titled ‘The New Digital Tipping Point’, presents interesting

trends about growing consumer appetites for banking through alternative channels across

developed and emerging economies. For instance, on an average, a little over 50% of the

consumers in India reported having used mobiles to purchase financial products, while

70% used the internet to do the same.

While non-touch consumer acquisition continues to be constrained, many other

technological capabilities, often developed for the uniquely Indian situation, are likely to

help banks deal with the issue of growth. For example, banks and other non-bank players

have started deploying white label ATMs and mobile Point of Sale (PoS) systems such

as micro-ATMs that can be operated by business correspondents, and provide basic

banking services to the rural customers. Similarly, e KYC and the gradual convergence

of KYC requirements across financial services intermediaries may lead to more

sustainable customer acquisition models.


11


12

CHAPTER-2

PROFILE OF HSBC

The Hong Kong and Shanghai Banking Corporation , based in Hong Kong, is a

wholly owned subsidiary and the founding member of the HSBC Group, which is traded

on several stock exchanges as HSBC Holdings plc. The business ranges from the

traditional High Street roles of personal finance and commercial banking, to corporate

and investment banking, and private banking.

Known locally by the affectionate term Honkers and Shankers or equally its old

trademark Hong Kong Bank, the bank was founded by the Scot Thomas Sutherland to

finance trade in the Far East in 1865. It is the largest bank in Hong Kong and has offices

in Asia Pacific region.

The HSBC Group is named after its founding member, The Hong Kong and Shanghai

Banking Corporation Limited, which was established in 1865 to finance the growing

trade between Europe, India and China. The inspiration behind the founding of the bank

was Thomas Sutherland, a Scot who was then working for the Peninsular and Oriental

Steam Navigation Company. He realized that there was considerable demand for local

banking facilities in Hong Kong and on the China coast and helped establish the bank

which opened in Hong Kong in March 1865 and in Shanghai a month later. Soon after its

formation the bank opened agencies and branches around the world. Although that

network reached as far as Europe and North America, the emphasis was on building up

representation in China and the rest of the Asia-Pacific region. HSBC was a pioneer of

modern banking practices in a number of countries.

History

The bank first leased Wardley House in Hong Kong at HKD $500 a month in 1864.

After raising a capital of HKD $5 million, the bank opened its doors in 1865. The

original location of the bank was considered crucial since the construction was based on

some of the best fung shui in Colonial Hong Kong. In March 1865, the "Hongkong and

Shanghai Banking Company Limited" was established to finance the growing trade

between China and Europe (with traded products including opium), with an office

opened in Shanghai during April of that year. The bank was incorporated in Hong Kong


13

by special dispensation from the British Treasury in 1866, and under the Hongkong and

Shanghai Bank Ordinance 1866, a new branch in Japan was also established. The bank

handled the first public loan in China in 1874, thereafter issuing most public loans.

Business Development

Sir Thomas Jackson Bart became chief manager in 1876. During his twenty-six year

tenure, the Bank became a leader in Asia. Notable events included being the first bank

established in Thailand, in 1888, where it printed the country's first banknotes; acting as

banker for the Hong Kong government from the 1880s; and participating in the

management of British colonial government accounts in China, Japan, Penang and

Singapore. A period of expansion followed, with new branch offices opening in Bangkok

(1921), Manila (1922) and Shanghai (1923), and a new head office building in Hong

Kong in 1935. Jackson is also credited with a statue in Statue Square.

Core Business

HSBC’s core businesses are divided into four categories – Personal Financial Services

(including consumer finance), Commercial Banking, Global Banking and Markets

(formerly Corporate, Investment Banking and Markets), and Private Banking. Personal

Financial Services provides more than 100 million customers world-wide with a full

range of personal financial services, including current and savings accounts, mortgage

loans, car financing, insurance, credit cards, loans, pensions and investments.

Commercial Banking provides financial services to small, medium sized and middle-

market enterprises. The group has almost 2.7 million of such customers including sole

proprietorships, partnerships, clubs, and associations incorporated businesses and

publicly quoted companies. Global Banking and Markets provides customized financial

services to corporate and institutional clients. Business lines comprise Global Banking,

Global Markets, Global Asset Management, Global Research and Principal Investments.

This division was formerly known as Corporate, Investment Banking and Markets.

Private Banking is the marketing name for the private banking business conducted by the

principal private banking subsidiaries of the HSBC Group worldwide. HSBC Private

Bank, together with HSBC Guyerzeller and the private banking activities of HSBC

Trikaus & Burkhardt, known collectively as Group Private Banking, provides services to

high net worth individuals and their families through 93 locations in some 42 countries


14

and territories in Europe, the Asia Pacific region, the Americas, the Middle East and

Africa. HSBC Premier is the groups' premium financial services product. The product

requires deposits of at least $100,000 or a mortgage of at least $500,000. Customers have

a dedicated relationship manager, global 24 hour access to call centers and preferential

rates. HSBC Bank International is the offshore banking arm of HSBC Group; it focuses

on providing offshore solutions to expatriates and migrants. It provides a full range of

multi-currency personal banking services. HSBC net is a global service that caters to

local business needs by offering specialized functionality ranging from payments to Cash

Management to trade services features as well as foreign exchange and money markets

trading for different regions of the world. HSBC Direct is an online direct banking

operation that offers high interest savings accounts and no service charges or minimum

account balance requirements. It was first launched in USA in 2005 and now is available

in Canada, Taiwan and South Korea.

HSBCs strategic initiatives involve maintaining a strong capital base and liquid balance

sheet. Capital ratio as measured as the absolute amount of capital over the absolute level

of risk. Tier 1 Capital is defined as common stock surplus, retained earnings and some

perpetual preferred stock. It has the most conservative approach among banking circles.

Remarkably, it has emerged least damaged from the recent American financial turmoil of

all the big banks, and maintained involvement in Investment Banking. Investment banks

help companies and governments raise money by issuing and selling securities in the

capital markets as well as providing advice on trading such as mergers and acquisitions.

HSBCs competitors are other big banks such as Bank of America, Citigroup, and

investment banks such as JP Morgan. HSBC invested an estimated $1 billion into

starting an investment banking business from scratch. Today it is ranked 16th among

investment banking firms. JP Morgan is ranked number one. The bank has moved up but

not become a leader in the business as it is in other businesses. HSBC has 2.7 million

commercial banking customers, putting it on roughly equal footing as HSBC Bank. But

HSBC Bank’s customers are mostly domestic.

HSBCs top three managers have all been with the bank for over 25 years. Although this

has been criticized by some as insularity in the organizational structure of the bank it has

worked for the bank and so cannot be held against it. HSBC has never hired an executive

from outside to run the bank. It also operates in accordance with British corporate


15

governance rules. The rules require strict division between Chief Operating Officer and

Chairman. In 2005, Stephen Green was promoted from Chief Operating Officer to

Chairman. Mr. Green took over the position from Sir. John Bond and his predecessor

was Sir William Purves who had both worked at HSBC for over 30 years.

The bank is regulators vary based on the country in which it operates. It is based in

London, England but its current expansion is into emerging markets. HSBC has around

10,000 offices in 83 countries and territories. It has a staff of 330,000 employees

worldwide (HSBC.com). It is 50% more profitable in emerging markets than in mature

markets. Currently it is expanding internationally at a rapid pace. It has plans for Russia,

Sub-Saharan Africa and South Korea. It is the first foreign bank to open a branch in rural

China; it has 62 retail outlets there, up from 39 a year ago. In 2001 it made a buy into the

Bank of Shanghai.

In conclusion, HSBCs conservative approach to banking, staying focused on keeping its

capital base strong and liquid balance sheet have prevented its failure. Today HSBC is

the world’s most valuable Banking brand, the world’s largest company, and the world’s

largest banking group.


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Customer groups No. of customers Key products and Services

Personal Financial

Services(including consumer

finance)

120 million Current, Cheque and savings

Accounts, Loans and Home

Finance, card payments,

insurance, investment services

and HSBC Premier.

Commercial Banking 25 million Payments and cash

management, trade services and

loans, wealth management

services, insurance and e-

banking

Corporate Investment and

Banking, Corporate Market

3800 Global Markets, Global

Investment Banking and

Institutional Banking, Global

Transaction Banking, Private

Equity and Group Investment

Business

Private Banking 90,000 General banking services,

Investment Services, Solutions

to preserve and protect existing

wealth, specialist advisory

services regarding tax charities

and foundations.

Global Resourcing

Group Service Centers (GSCs) play a key role in helping HSBC to remain competitive in

the global financial services market. Almost 20,000 employees in its 11 GSCs in five

countries — China, India, Malaysia, the Philippines and Sri Lanka — support customers

in Europe, North America and Asia-Pacific with account administration, credit card

payments, mortgages and telephone enquiries. Its GSCs enable HSBC to harness a

diverse range of skills, knowledge and languages and to avoid being overly dependent on


17

any one region or economy. By creating jobs in emerging markets, HSBC is making a

positive contribution to social and economic development.

Competitive Environment

HSBC faces a strong competition in all the markets it serves worldwide from a wide

range of financial institutions: commercial banks, consumer finance companies, savings

and loan associations, credit unions, retailers, brokerage firms and investment

companies.

Principles and Values

The HSBC Group is committed to five core business principles:

outstanding customer service;

effective and efficient operations;

strong capital and liquidity;

prudent lending policy;

strict expense discipline;

Its business principles are supported by loyal and committed employees who make

lasting customer relationships and international teamwork easier to achieve.

HSBC also operates according to certain key business values:

The highest personal standards of integrity at all levels.

Commitment to truth and fair dealing;

Hands-on management at all levels;

Commitment to quality and competence;

A minimum of bureaucracy;

Fast decisions and implementation;

Putting the team’s interests ahead of the individual's;

The appropriate delegation of authority with accountability;

Fair and objective employment;


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A diverse team underpinned by a meritocratic approach to

recruitment/selection/promotion;

A commitment to complying with the spirit and letter of all laws and regulations

wherever it conducts business ;

The exercise of corporate social responsibility through detailed assessments of

lending proposals and investments, the promotion of good environmental practice

and sustainable development, and commitment to the welfare and development of

each local community.

HSBC’s reputation is founded on adherence to these principles and values. All actions

taken by a member of the hsbc group or staff member on behalf of a group company

should conform to these principles and values. Additionally, they have codes of conduct

for staff in all operations.

People

HSBC recognizes the need to attract and motivate talented people who have the drive

and enthusiasm to find innovative ideas to fulfill customers’ needs.

HSBC places great importance on respecting each other and embracing ideas, cultures

and abilities.

Furthermore, in building the brand as “the world’s local bank”, HSBC strives to ensure

that the values are expressed to customers by everyone who works for HSBC around the

globe.

The sort of people HSBC requires-

Perceptive: Who try to look harder, in order to understand things more deeply, and this

informs everything they do.

Progressive: Who are driven by the belief that they can shape a better future?

Responsive: Who always try to anticipate and act quickly to ensure they meet and

exceed customers’ expectations.

Respectful: Who are not stereo types? Who have values inculcated in them?


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Its employee policies are therefore geared towards attracting, developing and motivating

these sorts of people. HSBC wants to be a company people feel good about and really

want to work for.

HSBC In India

The antecedents of the HSBC Group in India can be traced back to October 1853 when

the Mercantile Bank of India, London and China was founded in Bombay (now

Mumbai). Starting with an authorized capital of Rs 5 million, the Mercantile Bank soon

opened offices in London, Madras(Chennai), Colombo and Kandy, followed by

Calcutta(Kolkata), Singapore, Hong Kong, Canton(Guangchow) and Shanghai by 1855.

The following hundred years were in many ways propitious for the Mercantile Bank. In

1950 it moved into its new head office building in Mumbai at Flora Fountain.

The acquisition in 1959 by The Hongkong and Shanghai Banking Corporation Limited

of the Mercantile Bank was a decisive factor in laying the foundation for today's HSBC

Group. Founded in 1865 to serve the needs of the merchants of the China coast and

finance the growing trade between China, Europe and the United States, HSBC has been

an international bank from its earliest days.

After the Mercantile Bank was acquired by The Hongkong and Shanghai Banking

Corporation, the Flora Fountain building became and remains to this day, the Head

Office of the HSBC Group in India.

Through the 1990s, HSBC has vigorously developed its role as one of the leading

banking and financial services organisations in the world. Its strategy of 'managing for

value' emphasizes the Group's unique balance of business and earnings between older,

mature economies and faster-growing emerging markets.

HSBC in India is proud to have retained the Group's pioneering streak by being an active

partner in the development of the Indian banking industry - even giving India its first

ATM way back in 1987. The organisation's adaptability, resilience and commitment to

its customers have further enabled it to survive through turbulent times and prosper

through good times over the past 150 years.


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HSBC GROUP MEMBERS IN INDIA-

The Hongkong and Shanghai Banking Corporation Limited

HSBC Asset Management (India) Private Limited

HSBC Electronic Data Processing India Private Limited

HSBC Insurance Brokers (India) Private Limited

HSBC Operations and Processing Enterprise (India) Private Limited

HSBC Private Equity Management (Mauritius) Limited

HSBC Professional Services (India) Private Limited

HSBC Securities and Capital Markets (India) Private Limited

HSBC Software Development (India) Private Limited

HSBC’s origins in India dates back to 1853, when the Mercantile Bank of India was

established in Mumbai. The parent company, HSBC Holdings plc is a British

multinational banking and financial services company headquartered in London. In

India, it offers a comprehensive suite of world-class products and services to its

corporate and commercial banking clients as also to a fast growing personal banking

customer base.

The bank also has over 50,000 active commercial banking customers in India, including

proprietors, partnerships, clubs and associations, incorporated businesses and publicly

quoted companies.

The Hongkong and Shanghai Banking Corporation Limited (HSBC)

Personal Banking

HSBC offers a wide range of retail banking and wealth management services, including

personal lending and deposit products, through its branch network in Ahmedabad,

Bangalore, Chennai, Chandigarh, Coimbatore, Gurgaon, Hyderabad, Jaipur, Kochi,

Kolkata, Ludhiana, Mumbai, New Delhi, Noida, Pune, Thane, Trivandrum and

Visakhapatnam. Also offered branch-wide are international Gold and Classic credit cards

from VISA and MasterCard and debit cards from Visa. Customers have access to 24-


21

hour banking services through an extensive network of automated teller machines

(ATMs), an integrated Call Centre, and internet banking - online@hsbc .

Non Resident Indian Banking

HSBC's Non Resident Indian Banking (NRI) centres located in Asia-Pacific, the Middle

East, Europe and North America, together with HSBC's offices worldwide, provide the

international Indian Diaspora access to a range of products and services. These include

NRI related investment (both international and domestic), transactional and deposit

products, together with a full range of personal and private banking products in India and

overseas. Internet banking also provides easy access to HSBC's services.

Financial Planning Services

Services include investment and custodian management and access to stock broking and

insurance services, which are offered to resident as well as non-resident Indians.

Corporate Banking

HSBC has well-established, long-term corporate banking relationships with large

domestic Indian corporations and foreign multinationals operating in India. Services

include term and working capital finance, trade facilities, corporate deposits,

syndications, payments and cash management services and factoring.

Business Banking

HSBC's Extra Mile Business Banking offers two types of account to small and medium-

sized businesses - The Business Account and the BusinessVantage Account. Services

include Business Phone Banking, Business Doorstep Banking and Multi Branch

Business Banking.

Payments and Cash Management

HSBC provides integrated domestic and regional transaction support to corporate clients

through a sophisticated range of cash management solutions, including collection and

payment services and integration with customer back-end systems. Operations and client

services are ISO 9001 certified. Hexagon, the HSBC Group's dedicated electronic

banking service allows users to perform financial transactions, obtain international

financial markets information, and review details of their domestic and international

accounts, from anywhere in the world, 24 hours a day.


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Trade (international and domestic) and Factoring Services

A wide range of solutions tailored to meet customer's requirements for both domestic and

international businesses is offered. HSBC is also one of the leading banks involved in the

bullion business through its offices in Ahmedabad, Bangalore, Chennai, Hyderabad,

Kolkata, New Delhi and is supported by the Group's global expertise in the precious

metal business. HSBC is the leading provider of trade services in India and its trade

centres are ISO 9002 certified.

Institutional Banking

Working closely with Group offices in India and overseas, trade services, payments and

cash management, treasury and capital markets, custody and clearing, and correspondent

and electronic banking activities are offered to banks, financial institutions, securities

houses, insurance companies, asset management companies and other non-banking

companies, non-government and development organisations operating in India.

Treasury and Capital Markets

Clients consistently rate HSBC's Treasury business as one of the best in India. Its dealing

room in Mumbai is one of the largest in the country, serving clients in Mumbai and in

the major metropolitan centres across the country. It provides a comprehensive range of

products which include - foreign exchange, money market and fixed income products

and derivatives in both rupees and major currencies.

Custody and Clearing

The leading custodian in Asia, HSBC's custody and clearing services are available in 28

markets in Asia-Pacific and the Middle East. With experienced staff and the latest

technology, HSBC is the premier provider of sub-custodian and clearing services to

foreign institutional investors (FIIs) in India. HSBC clients include the domestic fund

management sector in both the retail and institutional segments. Institutional Fund

Services launched by the bank offers a comprehensive suite of products to domestic

mutual funds and insurance companies ranging from custody, fund administration

services, unit distribution and Cash Management Services.


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Technology

The HSBC Group develops and applies advanced technology to the efficient and

convenient delivery of banking and related financial services. In India, the Group

provides:

Self-Service Banking with over 150 in-branch and off-branch ATMs and 24-hour

Phone Banking.

Trade and Corporate Banking services with real-time access to a centralised

information database

Instantaneous inter-city transactions through online connections between all branches

A state-of-the-art treasury dealing system

A sophisticated card system supporting debit and credit cards, domestic and

international VISA, MasterCard, and co-branded cards

A dedicated acquiring system for both MasterCard and Visa transactions

online@hsbc, HSBC's internet banking service, provides customers with an

integrated and secure platform to access their accounts.

Internet Payment Gateway handles credit card transactions on the internet


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EMERGING MARKETS AND OPPORTUNITIES

Emerging markets are at the heart of HSBC's corporate identity. Throughout history, the

HSBC Group has maintained a strong presence in global trade, particularly in India and

China, the world's most dynamic emerging markets.

HSBC has been a participant and a witness to the development of emerging markets for

over a century. HSBC have established branches even in countries that were considered

closed, restricted or highly centralised. Over the years, HSBC rose to the status of a

respected institution as it worked actively in these markets.

Sensitive to the unique cultures in emerging markets, HSBC has often been the first

foreign bank to work in partnership with local businesses. HSBC Amanah was among

the first to offer Islamic banking products and has the largest Islamic banking team of

any international bank.


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CHAPTER-3

RESEARCH OBJECTIVES & METHODOLOGY

Objective Of The Study

To study the key aspects of the Indian Operations of HSBC Bank in India.

To enlist the key products and services offered by HSBC Bank to various

individuals, corporations& institutions in India and evaluate in branding strategies.

To conduct a survey in respect to gauging the satisfaction level of individuals,

corporations and institutions with respect to the services of HSBC Bank.

Scope of the Study

The study was limited to the study of the branding strategies of HSBC in Mumbai. The

sample size of the survey was limited to 100 HSBC bank customers only.

Methodology

Research Method:

Research work was done from two sources: -

Primary data

Questionnaire survey of 100 customers of HSBC bank

Interview of Managers/Officials of HSBC bank in Delhi.

Secondary data

I got secondary data from:

Books on Branding & banking industry

Articles in Newspapers, Magazines and Internet

Journals and Study Reports on HSBC Bank

Website of the Bank

Primary Data

For obtaining the primary data for my project, I used two research instruments i.e.

Questionnaire and Structured Interview.


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Questionnaire

Sample Size 100

Sample composition:

Customers 100

Structured Interview

Sample Size 10

Sample composition:

Managers/Officials of HSBC Bank 10

The information collected through above methods have been tabulated, analysed and

interpreted.


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CHAPTER-4

LITERATURE REVIEW

Phillip Kotler states -

“Marketing isn’t working today. New products are failing at a disastrous rate. Most

advertising campaigns do not register anything distinctive in the customer’s mind. Direct

mail barely achieves a 1% percent response rate. Most products come across as

interchangeable commodities rather than powerful brands.

Yes, there are still powerful brands :Coca-cola, Harley-Davidson, Apple, Singapore

Airlines, BMW. These customers have learned to make their brands live in the customers

minds. A brand, of course must at least deliver a disntinctive benefit. No amount of

dressing up will make up for this lack. All of the aforementioned brands deliver a

distinctive benefit.

But distinctive brands require something more. They have to be powered up to deliver a

full sensory and emotional experience. It is not enough to present a full sensory and

emotional experience. It may not be enough to only present a product or service visually

in an ad. It pays to attach a sound, such as music or powerful words and symbols. The

combination of visual and audio stimuli delivers a 2+2 = 5 impact. It pays even more to

trigger other sensory channels – taste, touch, smell – to enhance the total impact.”

Net what Kotler states here is the customer experience and response to a brand. And it is

in this light that the study is furthered than rather restricting itself to a uni-dimensional

measuring of ad impacts. Apart from the HSBC ads it is the customer experience of what

the brand stands for is important.

When we apply marketing to the banking industry, the bank marketing strategy can be

said to include the following:

i. A very clear definition of target customers.

ii. The Development of marketing mix to satisfy customers at a profit for the bank.

iii. Planning for each of the ‘source’ markets and each of the ‘user’ markets (A bank

needs to be doubly market – oriented – its has to attract funds as well as users of

funds and services).

iv. Organization and Administration.


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Consumer Behavior and Segmentation

Philip Kotler has described the dilemma of the seller (especially, a seller dealing with

masses, e.g. banks) as follows:

“How the seller determines which buyer’s characteristics produce the best partitioning of

a particular market? The seller does not want to treat all customers alike nor does he

want to treat them all differently”.

Banks deal with individuals, group of persons and corporates, all of whom have their

likes and dislikes. No bank can afford to assess the needs of each and every individual

buyer (actual or potential).

Segmentation of the market into more or less homogenous groups, in terms of their needs

and expectations from the banking industry, provides a solution to this problem.

This involves dividing the market into major market segments, targeting one or more of

this segments, and developing products and marketing programs tailor-made for these

segments.

In the first segmentation, the market is divided from a unitary whole, to groups of buyers

who might require separate products and marketing mix. The marketer typically tries to

identify different segments in the market and develop profiles of resulting market

segments.

The second step is market targeting in which each segment’s attractiveness is measured

and a target segment is chosen based on its attractiveness.

The third step is product positioning which is the act of establishing a viable competitive

position of the firm and its offer in the target segment chosen.

In the process of segmentation, the market can be divided into major segments which are

gross slices of the market, or into smaller specially formed segments, otherwise known

as niches. Niche customers have a specific set of needs which the markerter tries to

address. While a market segment attracts several competitors, a niche attracts fewer

competitors and therefore, a company should clearly define its target segment and devise

strategies to target the customer, so that it has a competitive advantage in the segment.

These concepts can be applied in personal banking by an Indian Bank. Traditionally,

Indian Banks have not had any conscious strategy for selecting customers from the


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personal banking area, apart from some banks which have a geographic concentration

strategy such as concentrating on a particular region or state. These banks will have to

segment the market on certain basis, and identify market segments or niches which they

want to cater to. For example, a bank like SBI may not be able to cater high income

groups (say, managers, professional, NRIs, etc. who earn above Rs. 40,00,000 p.a. and

who want a higher quality of products / services and who are willing to pay for them), as

the services required by such a profile of customers are entirely different from the kind

of products / services SBI can offer.

Initiation of Segmentation in India

State Bank of India was the first Indian Bank to adopt the concept of market

segmentation. In 1972, it reorganized itself on the basis of major market segments

dividing customers on the basis of activity and carved out 4 major market segments, viz.

Commercial and Institutional, Small Industries and Small Business Segment,

Agriculture, Personal and Services Banking. The objectives of this scheme were:

Deeper penetration and coverage of market by looking outwards.

Adequate flexibility of organization to accommodate growth and rapid change,

Delegation of work for releasing senior management for more futuristic tasks.

Criteria for Segmentation

Segmentation in a right fashion makes the ways for profitable marketing. This helps

policy planner in formulating and innovating the policies and at the same time also

simplifies the task of bank professionals while formulating an innovating the strategic

decisions. The following criteria make possible rig segmentation.

An important criterion for market segmentation the economic system in which we find

agricultural sector, industrial sector, services sector, household sector, institutional sector

and rural sector requiring of weightage while segmenting.

Agricultural Sector: In the agricultural sector, there are four category rise since the needs

of all the categories cant’s be identical.


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The mechanization of agriculture, the improved or scientific system of activation, the

help of nature, the magnitude of risk, the availability infrastructural facilities influence

the level of expectations vis-à-vis the needs and requirements. The banking organization

are supposed to know and under stand the changing requirements of different categories

of farmers.

Industrial Sector: The banking organizations subserve the interests of the industrial

sector. The large-sized, small-sized co-operative and tiny industries use the services of

banks. The expectations of all the categories cant’s be uniform.

The banking organizations are supposed to have an indepth knowledge of the changing

needs and requirements of the industrial segment.

Services sector: It is an important sector of the economy where the banking organizations

get profitable business. The two categories of organizations such as profit-making and

not-for-profit making are found important in the very context.


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The banking organizations need to identify the changing needs and requirements of the

services sector. With the frequent use of information technologist and with the mounting

pressure of inflation and competition, we find a change in the hierarchy of needs.

Household Sector: This is also constitutes an important sector where different income

group have different needs and requirements. in below figure we find the different

segments of the household sector.

Household Segment: The high income group, middle income group, low income group,

substance level group and marginal income group have different hierarchy of need which

influence the level of their expectations.

Gender Segment: In the gender segments, we find male and female having different

needs and requirements. The banking organizations are supposed to identify the level

expectations of both sexes.


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Some of the women are housewives and therefore they have different need and

requirements whereas some of them are working ladies having different needs and

requirements.

In the profession segments, we find different categories of professions an therefore we

find a change in their needs and requirements.

The technocrats, bureaucrats, corporate executives, intellects, white and blue – collar

employees have different needs and requirements and therefore the banking

organizations should know their expectations.

Some of the organizations are known as cultural organizations, some of them are not for

–profit making, some of them are philanthropic and some of them are related to trade and

commerce. The emerging trends in the social transformation process determine the

hierarchy of needs.


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Markets segmentation thus simplifies the task of understanding the customers/prospects.

The bank professional find it convenient to formulate and innovate the marketing mix of

world class which simplify the process of excelling competition.

In the Indian perspective where we find agrarian economy contributing substantially to

the transformation of national economy, it is pertinent that the banking organizations

assign due weightage to the rural sector of the economy where we find tremendous

opportunities.

The urbanization is likely to gain the momentum and villages, outskirts of big towns and

cities are to be developed on a priority basis. Almost all the organizations are to get

tremendous opportunities there. The marketing resources if of innovative nature would

make the ways for capitalizing on the same profitably.

International marketing is simply the application of marketing principles to more than

one country. However, there is a crossover between what is commonly expressed as

international marketing and global marketing, which is a similar term. For the purposes

of this lesson on international marketing and those that follow it, international marketing

and global marketing are interchangeable. At its simplest level, international marketing

involves the firm in making one or more marketing mix decisions across national

boundaries.


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International Marketing is the performance of business activities that direct the flow of a

company's goods and services to consumers or users in more than one nation for a profit.

Cateora and Ghauri consider international marketing in the absence of global marketing.

International marketing is the application of marketing orientation and marketing

capabilities to international business. Muhlbacher et al consider international marketing

in relation to marketing orientation and competences. The international market goes

beyond the export marketer and becomes more involved in the marketing environment in

the countries in which it is doing business.

At its most complex level, it involves the firm in establishing manufacturing facilities

overseas and coordinating marketing strategies across the globe.

When it comes to marketing strategies, most people spontaneously think about the 4P

(Product, Price, Place, Promotion) – maybe extended by three more Ps for marketing

services (People, Processes, Physical Evidence). Market segmentation and the

identification of target markets, however, are an important element of each marketing

strategy.


35

They are the basis for determining any particular marketing mix. Basic steps in

marketing strategy are as follows:-

The classic STP model calls for:

I. Segmentation - Identify potential customers - for instance, foreign direct

investors, or expatriates and the diaspora.

II. Targeting - Concentrate on those "clients" you can serve most effectively, to

whom you are most valuable and thus can "charge" the most for your

offerings

III. Positioning - Communicate effectively the main benefits you offer to the

targeted group.


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Segmentation, targeting, and positioning together comprise a three stage process. We

first (1) determine which kinds of customers exist, then (2) select which ones we are best

off trying to serve and, finally, (3) implement our segmentation by optimizing our

products/services for that segment and communicating that we have made the choice to

distinguish ourselves that way.


37

Segmentation involves finding out what kinds of consumers with different needs exist.

In the auto market, for example, some consumers demand speed and performance, while

others are much more concerned about roominess and safety. In general, it holds true

that “You can’t be all things to all people,” and experience has demonstrated that firms

that specialize in meeting the needs of one group of consumers over another tend to be

more profitable.

Generically, there are three approaches to marketing. In the undifferentiated strategy, all

consumers are treated as the same, with firms not making any specific efforts to satisfy

particular groups. This may work when the product is a standard one where one

competitor really can’t offer much that another one can’t. Usually, this is the case only

for commodities. In the concentrated strategy, one firm chooses to focus on one of

several segments that exist while leaving other segments to competitors. For example,

Southwest Airlines focuses on price sensitive consumers who will forego meals and

assigned seating for low prices. In contrast, most airlines follow the differentiated

strategy: They offer high priced tickets to those who are inflexible in that they cannot

tell in advance when they need to fly and find it impractical to stay over a Saturday.

These travelers—usually business travelers—pay high fares but can only fill the planes

up partially. The same airlines then sell some of the remaining seats to more price

sensitive customers who can buy two weeks in advance and stay over.

Note that segmentation calls for some tough choices. There may be a large number of

variables that can be used to differentiate consumers of a given product category; yet, in

practice, it becomes impossibly cumbersome to work with more than a few at a time.


38

Thus, we need to determine which variables will be most useful in distinguishing

different groups of consumers. We might thus decide, for example, that the variables

that are most relevant in separating different kinds of soft drink consumers are (1)

preference for taste vs. low calories, (2) preference for Cola vs. non-cola taste, (3) price

sensitivity—willingness to pay for brand names; and (4) heavy vs. light consumers. We

now put these variables together to arrive at various combinations.

Several different kinds of variables can be used for segmentation.

Demographic variables essentially refer to personal statistics such as income,

gender, education, location (rural vs. urban, East vs. West), ethnicity, and family

size. Campbell’s soup, for instance, has found that Western U.S. consumers on

the average prefer spicier soups—thus, you get a different product in the same

cans at the East and West coasts. Facing flat sales of guns in the traditional male

dominated market, a manufacturer came out with the Lady Remmington, a more

compact, handier gun more attractive to women. Taking this a step farther, it is

also possible to segment on lifestyle and values.”

Some consumers want to be seen as similar to others, while a different segment

wants to stand apart from the crowd.

Another basis for segmentation is behavior. Some consumers are “brand

loyal”—i.e., they tend to stick with their preferred brands even when a competing

one is on sale. Some consumers are “heavy” users while others are “light” users.

For example, research conducted by the wine industry shows that some 80% of

the product is consumed by 20% of the consumers—presumably a rather

intoxicated group.

One can also segment on benefits sought, essentially bypassing demographic

explanatory variables. Some consumers, for example, like scented soap (a

segment likely to be attracted to brands such as Irish Spring), while others prefer

the “clean” feeling of unscented soap (the “Ivory” segment). Some consumers

use toothpaste primarily to promote oral health, while another segment is more

interested in breath freshening.


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POSITIONING PLANNING

Positions are described by variables and within parameters that are important to the

customers. Common examples are price, supporting services, quality, reliability, and

value for money. Often, customers position a product in relation to a brand or product

that is especially visible to them. This could be the market leader or any other offer with

a high media exposure and an above average marketing budget. Therefore, it is advisable

to use in-depth market research to determine relevant parameters in order to understand

how customers rate different products and marketing variables.

The number of relevant parameters is normally low. Most often, they can be described

with a two- or three-dimensional matrix. This tool to visually depict customers’

perceptions of a product and its position is called perceptual mapping.

Normally, most suppliers in a market or in a market segment will be positioned along the

diagonal. This diagonal is called the Value-Equivalence-Line (VEL), since value and

price are balanced there.

In our example, product A is positioned unfavourably. It is too expensive for the mass

market and its quality is not good enough for the premium segment. In general, there are

the following strategies for repositioning; however, their feasibility will depend on the

particular situation.


40

Change the relation of price and quality for the existing brand; e.g. product relaunch

with improved characteristics

Change the relation of price and quality by introducing a new brand; e.g. introduction

of clone under a ‘cheap’ brand or a retailers own brand

Alter believes about the brand; e.g. image campaign, creation of a ‘hype’

Alter believes about competitive brands; e.g. comparing advertisements

Alter customers’ rankings of important factors; e.g. focus on additional features and

characteristics (example: car manufacturers focus on very different product

characteristics in their commercials, for instance security, fuel consumption, image,

luxury interior, fun)

Introduction of new or neglected attributes; e.g. product relaunch with new features

that are new for the whole market segment.

When planning such activities it is critical to think about possible reactions of

competitors. A shift of a product into a more favourable position in the price-quality-map

above the diagonal (e.g. into position B) will normally lead to in shift of market shares in

favour of this product. Competitors could react with a reduction of general price level,

thus moving the VEL to the left. Product B would lose its superior position.

Moreover, it is advisable to keep in mind that customer and their individual preferences

of a price-quality-combination are not distributed equally along the VEL. Neglecting the

distribution of customers could lead to the following problems:

Positioning in a segment with very few potential customers (e.g. positioning in a

middle-segment in a market where customers prefer either the budget-product or the

premium product)

Positioning in a too low or too high price-value-combination (segments a and b in

our example). This product does not appeal to a large proportion of the market, since

customers either expect a higher quality (a) or are not willing to pay that high price.


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Defining a target market requires market segmentation, the process of pulling apart the

entire market as a whole and separating it into manageable, disparate units based on

demographics. Target market is a business term meaning the market segment to which

a particular good or service is marketed. It is mainly defined by age, gender, geography,

socio-economic grouping, or any other combination of demographics. It is generally

studied and mapped by an organization through lists and reports containing demographic

information that may have an effect on the marketing of key products or services.

Target Marketing involves breaking a market into segments and then concentrating

your marketing efforts on one or a few key segments. Target marketing can be the key to

a small business’s success.

The beauty of target marketing is that it makes the promotion, pricing and distribution of

your products and/or services easier and more cost-effective. Target marketing provides

a focus to all of your marketing activities.

Market targeting simply means choosing one’s target market. It needs to be clarified at

the onset that marketing targeting is not synonymous with market segmentation.

Segmentation is actually the prelude to target market selection. One has to carry out

several tasks beside segmentation before choosing the target market.

Through segmentation, a firm divides the market into many segments. But all these

segments need not form its target market. Target market signifies only those segments

that it wants to adopt as its market. A selection is thus involved in it.

In choosing target market, a firm basically carries out an evaluation of the various

segments and selects those segments that are most appropriate to it. As we know that the

segments must be relevant, accessible, sizable and profitable. The evaluation of the

different segments has to be actually based on these criteria and only on the basis of such

an evaluation should the target segments be selected.


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PROCESS OF CHOOSING THE TARGET MARKET

The process of choosing the target Market are:-

Choosing the target market is related to, but not synonymous with, market segmentation.

Segmentation is the means or the tool; choosing the target market is the purpose.

Segmentation can also be viewed as the prelude to target market selection.

Choosing the target market usually follows multi-level segmentation using different

bases.

Choosing the target market involves several other tasks in addition to segmentation.

Looking at each segment as a distinct marketing opportunity.

Evaluating the worth of each segment (sales/profit potential).

Evaluating whether the segment is:

Distinguishable.

Measurable.

Sizable.

Accessible.

Growing.

Profitable.

Compatible with the firm’s resources.

Examining whether it is better to choose the whole market, or the only a few segment,

and deciding which ones should be chosen.

Looking for segments, which are relatively less satisfied by the current offers in the

market from competing brands.

Checking out if the firm has the differential advantage / distinctive capability for

serving the selected segments.

Evaluating the firm’s resources and checking whether it is possible to put in the

marketing programmes required for capturing the spotted segments with those

resources.


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Finally selecting those segments that are most appropriate for the firm.

In the next step, we decide to target one or more segments. Our choice should generally

depend on several factors. First, how well are existing segments served by other

manufacturers? It will be more difficult to appeal to a segment that is already well

served than to one whose needs are not currently being served well. Secondly, how large

is the segment, and how can we expect it to grow?. Thirdly, do we have strengths as a

company that will help us appeal particularly to one group of consumers? Firms may

already have an established reputation. While McDonald’s has a great reputation for

fast, consistent quality, family friendly food, it would be difficult to convince consumers

that McDonald’s now offers gourmet food. Thus, McD’s would probably be better off

targeting families in search of consistent quality food in nice, clean restaurants.

Positioning involves implementing our targeting. For example, Apple Computer has

chosen to position itself as a maker of user-friendly computers. Thus, Apple has done a

lot through its advertising to promote itself, through its unintimidating icons, as a

computer for “non-geeks.” The Visual C software programming language, in contrast, is

aimed a “techies.”

STP can be done in the following ways:

Brand Name – Coke, Philip Morris, DaimlerChrysler

Product Design –McDonald’s, Toyota, Ford

Product Positioning-Unilever, Harley-Davidson


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Packaging -Gillette

Distribution - Benetton

Customer Service -Caterpillar

Sourcing –Toyota, Honda

The STV Model

Marketing Strategy – How to Win the Mind Share of consumers by

Segmentation, Positioning, Targeting

Marketing Tactic – How to win the market share by Differentiation, Selling &

Marketing Mix

Marketing Value - How to Win the Heart Share of target markets by Brand,

Process and Service

Segmentation divides a market into distinct subsets with similar needs or behaviour. As

each segment is fairly homogenous in attitude and need, they tend to respond similarly to

a given marketing strategy. This will produce similar ideas and feelings about the

marketing mix of a product or service at a specific price, and distributed and promoted in

a certain manner.

The process of segmentation is distinct from targeting, which aims at choosing market

segments to address. After the most attractive segments are set, a firm should not directly

start targeting them all at once. The attractiveness of segments usually depends on other

important factors, including defining the abilities and resources a company will need to

enter a market and analysing the competition. Such activities are crucial to deciding

which segments will actually be targeted.

Positioning aims to design an appropriate marketing mix for each segment. This process,

which comes after defining the target markets, develops the marketing mix based on the

ways of creating an identity or image of the product in the consumer's mind.

Coke is arguably the quintessential global product and global brand. Coke's positioning

and strategy are the same in all countries; it projects a global image of fun, good times,

and enjoyment. Coke is "the real thing." There is only one Coke. It is unique. It is a


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brilliant example of marketing differentiation. The essence of discrimination is to show

the difference between your products and other competing products and services)

This positioning is a considerable accomplishment when you consider the fact that Coke-

is a low/no-tech product. It is flavored, carbonated, sweetened water in a plastic, glass, or

metal container. The company's strategy is to make sure that the product is within arm's

reach of desire. However, the marketing mix for Coke varies. The product itself is

adapted to suit local tastes; for example, Coke increases the sweetness of its beverages in

the Middle East, where customers prefer a sweeter drink. Also, prices may vary to suit

local competitive conditions, and the channels of distribution may differ. However, the

basic, underlying, strategic principles that guide the management of the brand are the

same worldwide. Only an ideologue would insist that a global product couldn’t be

adapted to meet local preferences; certainly, no company building a global brand needs

to limit itself to absolute marketing mix uniformity. The issue is not exact uniformity but

rather offering essentially the same value.

Segmentation is the first critical step in the marketing process once a need has been

identified. The process of segmentation, targeting and positioning provides the bases on

which one decides the 4 Ps of marketing mix, product, price place and promotion.

In segmentation we divide a market into distinct groups which have distinct needs,

characteristics or behavior, so that the company can focus its resources on satisfying the

customers in this distinct segment rather than spreading itself thin trying to serve the

whole market.

Thus we can say that the total process of market segmentation, targeting and positioning

is a very important attribute of marketing mix. All these three process is very closely

interrelated with each other.


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Once the organization has decided which customer groups within which market

segments to target, it has to determine how to present the product to this target audience.

This allows to exactly addressing the needs and expectations of the target groups with a

tangible marketing mix that consists of product characteristics, price, promotional

activities and places to present the product.

Effective strategies of segmentation, targeting and positioning gives an extra advantage

in changing and highly competitive environment. To make this three marketing process

effective a thorough SWOT analysis of the firm is very important. Keeping in mind the

strength, weakness, opportunity and threat the firm can formulate and implement its total

marketing mix.


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MARKETING MIX FOR BANKING SERVICES

The formulation of marketing mix for the banking services is the prime responsibility of

the bank professional who based on their expertise and excellence attempt to market the

services and schemes profitably.

The bank professionals having world class excellence make possible frequency in the

innovation process which simplify their task of selling more but spending less. The four

submixes of the marketing mix, such as the product mix, the promotion mix, the price

mix and the place mix, no doubt, are found significant even to the banking organizations

but in addition to the traditional combination of receipts, the marketing experts have also

been talking about some more mixes for getting the best result. The “People” as a

submix is now found getting a new place in the management of marketing mix. It is right

to mention that the quality of people/employees serving an organization assumes a place

of outstanding significance. This requires a strong emphasis on the development of

personally-committed, value-based, efficient employees who contribute substantially to

the process of making the efforts cost effective. In addition, we also find some of the

marketing experts talking about a new mix, i.e. physical appearance. In the corporate

world, the personal care dimension thus becomes important. The employees re supposed

to be well dressed, smart and active. Besides, we also find emphasis on “Process” which

gravitates our attention on the way of offering the services. It is only not sufficient that

you promise quality services. It is much more impact generating that your promises

reach to the ultimate users without any distortion. The banking organizations, of late,

face a number of challenges and the organizations assigning an overriding priority to the

formulation processes get a success. The formulation of marketing mix is just like the

combination of ingredients, spices in the cooking process.

THE PRODUCT MIX: The banks primarily deal in services and therefore, the

formulation of product mix is required to be in the face of changing business

environmental conditions. Of course the public sector commercial banks have launched a

number of polices and programmers for the development of backward regions and

welfare of the weaker sections of the society but at the same it is also right to mention

that their development-oriented welfare programmes are not optimal to the national

socio-economic requirements. The changing psychology, the increasing expectations, the

rising income, the changing lifestyles, the increasing domination of foreign banks and


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the changing needs and requirements of customers at large make it essential that they

innovate their service mix and make them of world class. Against this background, we

find it significant that the banking organizations minify, magnify combine and modify

their service mix.

It is essential that ever product is measured up to the accepted technical standards. This

is due to the fact that no consumer would buy a product which contains technical faults.

Technical perfection in service is meant prompt delivery, quick disposal, presentation of

right facts and figures, right filing proper documentation or so. If computers starts

disobeying the command and the customers get wrong facts, the use of technology would

be a minus point, and you don’t have any excuse for your faults.

PRODUCT PORTFOLIO: The bank professional while formulating the product mix

need to assign due weightage to the product portfolio. By the concept product portfolio,

emphasis is on including the different types of services/ schemes found at the different

stages of the product life cycle. The portfolio denotes a combination or an assortment of

different types of products generating more or less in proportion to their demand. The

quality of product portfolio determines the magnitude of success. It is excellence of bank

professionals that help them in having a sound product portfolio.

We find the composition of a family sound, if members of all the age groups are given

due place. Like this, the composition or blending of a service mix is considered to be


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sound, if well established and likely to be profitable schemes are included in the mix. It

is against this background that a study and analysis of product portfolio is found

significant. The bank professionals are supposed to perform the responsibility of

composing the same. A sound product portfolio is essential but its process of constitution

is difficult. An organization with a sound product portfolio gets a conducive environment

and successes in increasing the sensitivity of marketing decisions. The banking

organizations need a sound product portfolio and the bank professionals bear the

responsibility of getting it done suitably and effectively.

If the banks rely solely on their established services and schemes, the multidimensional

problems would crop up in the long run because when the well established

services/schemes would start saturating or generating losses, the commercial viability of

banks would of course, be questioned. The banking organizations relying substantially

on a profitable scheme and ding nothing for new scheme likely to get a profitable market

in the future is to face is to face a crisis like situation. It is in this context, that we find

designing of a sound product portfolio essential to an organsition. We can’t deny that the

product portfolio of the foreign banks is found sound since they keep their eyes moving.

The innovation, diffusion, adoption and elimination processes are taken due care. The

public sector commercial banks need to innovate their service and this makes a strong

advocacy in favour of analyzing the product portfolio.

DESIGNING AN ATTRACTIVE PACKAGE

In the formulation of product mix for the banking organization, the designing of package

is found important. In this context, we find packaging decision related to the formulation

of a mix of different schemes and services. Developing an attractive package required

professional excellence and therefore, the bank professionals are required to be aware of

the different key issues influencing the formulation process. What the package should

basically be or do for the particular target. We re aware of the fact that a number of

schemes and services are included in the service mix of bank product and all the services

or schemes can’t be preferred by all. Of course we find some of the public sector

commercial banks now evincing stage. This makes it essential that a bank manager

thinks in favour of developing a package. The importance of packaging can’t be

underestimated considering the functions it performs and the effects which we witness in

the process of attracting and satisfying the customers. In addition to other aspects, it is


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also pertinent that a bank manager is familiar with the package developed by the leading

competitive banks since this would help them in innovating the package. It is an

important component of the product mix and a bank manager while formulating or

designing a package needs to assign due weightage to the formulation process. While

developing a package, it is essential that the packages offered are efficacious in

establishing an edge over the packages of competitors. Thus needs and preferences of the

target market in addition to the packages offered by the competitors need due weightage

while designing a package.

In the designing process the bank professionals can make a package, an ideal

combination of both, the core and peripheral services. The main thing in the process is to

make it profitable, convenient and productive to the customers so that they prefer to

transact with the bank. For the bank professional, it is an important persuasive efforts

that helps in increasing the business even without developing or innovating the services

or schemes.

PRODUCT DEVELOPMENT: In almost all the services, the development of a product

is an ongoing process. The banking organizations also need to develop new services and

schemes. We can’t deny that the development of product specially in the banking

services is found difficult since they don’t have any discretion, however they can do it, of

course in a limited way. By minifying, combining, modifying and magnifying, the

banking organizations can give to the services or scheme a new look. The regulations of

the Reserve Bank of India, no doubt stand as a barrier but professionally sound marketers

make it possible even without violating the rules and regulations. The banking

organizations in general have been found developing product by including some new

properties or features. Generally we find two process for the development of product.

The first process is found proactive since the needs of the target market are anticipated

and highlighted. The second process is reactive and in this context the banks respond to

the expressed needs of the target.

PROACTIVE PROCESS: In the pro-active process, we find product to market needs.

This makes it essential that the branch managers are aware of the changing needs of the

target market. There are six stages for the development of the product, such as idea

generation, screening of the concept, assessing of market potential, analyzing the cost,

test marketing and final commercial launching. The bank professionals have to be careful


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at all the stages so that whatever the services or schemes are developed are found

instrumental in getting a positive response. The customers and competitors help bank

professional substantially in generating a new idea. The screening of the product concept

focuses on the process of narrowing down the list of the ideas generated to a small

number of concepts.

The assessment of market potential is the third stage in which we find scanning of the

market potentials at the apex level. The branch managers can assess the potential sin

their command areas.

The fourth stage draws our attention on analyzing the cost on the basis of a cost-benefit

analysis and the fifth stage before launching is test marketing which is found

instrumental in minimizing the risk element. And finally, we find commercial launching.

The Reserve Bank of India is also required to make the regulations liberal so that the

pubic sector commercial banks get an opportunity to make their services or schemes

internationally competitive. The unfair practices, illegitimate steps should be checked but

fair practice should essentially be promoted to make the business environment

conductive.

PROMOTION MIX

In the formulation of marketing mix the bank professionals are also supposed to blend

the promotion mix in which different components of promotion such as advertising,

publicity, sales promotion, word-of-mouth promotion, personal selling and telemarketing

are given due weightage. The different components of promotion help bank professionals

in promotion the banking business.

Advertising: Like other organizations, the banking organizations also us this component

of the promotion mix with the motto of informing, sensing and persuading the customers.

While advertising, it is essential that we know about the key decision making areas so

that its instrumentality helps bank organization both at micro and macro levels.

Finalising the Budget: This is related to the formulation of a budget for advertisement.

The bank professionals, senior executives and even the police planners are found

involved in the process. The formulation of a sound budget is essential to remove the

financial constraint in the process. The business of a bank determines the scale of

advertisement budget.


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Selecting a Suitable vehicle: There are a number of devices to advertise, such as

broadcast media, telecast media and the print media. In the face of budgetary provisions,

we need to select a suitable vehicle. The latest developments in the print technology have

made print media effective. The messages, appeals can be presented in a very effective

way.

Making Possible creativity: The advertising professionals bear the responsibility of

making the appeals, slogans, messages more creative. The banking organizations should

seek the cooperation of leading advertising professionals for that very purpose.

Instrumentality of branch managers: At micro level, a branch manager bears the

responsibility of advertising locally in his / her command area so that the messages,

appeals reach to the target customers of the command area. Of course we find a budget

for advertisement at the apex level but the business of a particular branch is considerably

influenced by the local advertisements. If we talk about the cause-related marketing, it is

the instrumentality of a branch manager that makes possible the identification of local

events, moments and make advertisements condition-oriented.

Public Relations: Almost all the organization need to develop and strengthen the public

relations activities to promote their business. We find this component of the promotion

mix effective even in the banking organizations. We can’t deny that in the banking

services, the effectiveness of public relations is found of high magnitude. It is in this

context that we find a bit difference in the designing of the mix of promoting the banking

services. Of course in the consumer goods manufacturing industries, we find

advertisements occupying a place of outstanding significance but when we talk about the

service generating organizations in general and the banking organizations in particular,

we find public relations and personal selling bearing high degree of importance. It is not

meant that the banking organizations are not required to advertise but it is meant that the

bank executives unlike the executives of other consumer goods manufacturing

organizations focus on public relations and personal.

Personal Selling: The personal selling is found instrumental in promoting the banking

business. It is just a process of communication in which an individual exercise his/her

personal potentials, tact, skill and ability to influence the impulse buying of the


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customers. Since we get in immediate feed back, the personal selling activities energies

the process of communication very effectively.

The personal selling in an art of persuasion. It is a highly distinctive form of promoting

sale. In personal selling, we find inter-personal or two-way communication that makes

the ways for a feed back. There is no doubt in it that the goods or services are found half

sold when the outstanding properties are well told. This are of telling and selling is

known as personal selling in which an individual based on his/her expertise attempts to

transform the prospects into customers.

Dynamics of Personals Selling

The dynamics of personal selling are found instrumental in activating the selling

activities. Sales preparations are considered most crucial for the actual sales. Pre-sale

activities and post-sale services can’t be left neglected to improve the marketing

activities. The customers may be interested in knowing the main features of the services,

how a particular service would help them, rationale behind the technical services and

proof in regard to its uses. The pre-sale activities would bring the positive results, if

preparations are adequate.

Some of the customers are found highly aware of the developments, they are found well

informed. On the other hand, we also find other category of customers who are in dark.

Here, the branch managers are expected to match the level of awareness of customers. As

for instance, Mr. A goes up the matrix but Mr. B has not enough time for the branch

managers. The branch managers are supposed to prepare a synopsis of their sales talk.

Not surprisingly the highly aware customers are found in a position to make independent

decisions and know all about. While selling to the less aware customers, the managers

should stress on the main features of the services and the expected benefits of these

services.


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Sales Promotion: It is natural that like other organisations, the banking organizations also

think in favour of promotional incentives both to the bankers as well as the customers.

The banking organizations make provisions for incentives


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ADVERTISEMENTS


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KEY BRANDING ASPECTS

Executing a Global Strategy, Locally: The World’s Local Bank

HSBC’s advertising can be noticed in jet bridges, baggage claim areas, and everywhere

else in over 45 airports around the world. What makes this global campaign truly

distinctive is the brilliant implementation of a “glocalized” strategy–keeping a consistent

execution across multiple countries, while maintaining a local flavor in its message at

each airport. Images of Macchu Picchu in Peru, soccer in Spain, renaissance sculptures

in Italy, beauty queens in Venezuela, French delicacies in Paris, chili peppers in Mexico,

and Mehndi art in India welcome travelers from around the world, with an colorful take

on local culture and values.

HSBC’s campaign exemplifies how marketing in the financial services sector has come a

long way: from assuming that banks are beyond branding to a phase where banks are

using branding strategically (think Bank of America, TD Bank, Chase, and most recently

the Bank of New Zealand). The economic climate in recent years has taught financial

institutions that strong brand equity is becoming more important than ever before.

Although the company is headquartered in the UK, it has a strong Asian heritage, and in

the past several years it has taken up a strategy of global retail and wealth management.

Branding plays an important role here: HSBC continues to unify how it presents its

brand across markets, while maintaining a message of local specialization and specific

cultural understanding. This is likely to continue as part of the bank’s strategy to

reinforce its business in emerging markets.

HSBC showed immense strength when other brands in the banking arena, across the

globe, faced a real hard time to keep up their image during the global meltdown in 2008.


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And they believe our slogan, ‘The world’s local bank,’ played a very critical role in the

same. HSBC’s global expertise coupled with local relevance finds expression in that

tagline.

The driving focus of HSBC’s communications is backed by the strong consumer insight

that a large, global bank is intimidating for most consumers, who associate the footprint

and size of the bank with a negative experience and condescending treatment.

The bank’s conceptual response to this insight is a classic example of “glocalizing” — a

concept that even many consumer goods companies struggle to grasp. Through its “The

World’s Local Bank” advertising campaign, HSBC strives to set itself apart as a bank

that, while having many global connections, is still flexible enough to care for the needs

of local customers in the ways they prefer.

HSBC’s executes its strategy not only through marketing and advertising, but also by

offering a customer experience that lives up to the brand expectation. An example of the

brand in action is a recently launched product, HSBC Premier, that allows customers to

open accounts in 37 countries and get assistance regardless of location.

Global brands that find value in appealing to local customers can learn a lesson from this

glocalized execution. HSBC starts with a strong brand positioning that cascades into

local markets through tweaks in communication. It then backs up the promise of the

“World’s Local Bank” with products and features that leverage its international footprint

matched with a familiar and approachable customer experience. Sounds like a winning

formula.

Their marketing and branding strategy played a key role not only in India but across all

countries they are present in. The HSBC brand was rated as the most valuable financial

brand in the world with a valuation of $28.47 billion by Brand Finance’s Top 500 Global

Financial Brands, 2010 survey.

Brand HSBC showed immense strength when other brands in the banking arena, across

the globe, faced a real hard time to keep up their image during the global meltdown in

2008.

Backed by strong consumer insights and validations, the products and services from

HSBC address the concerns, wants and requirements of all its customers. Also, by


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communication of the bank’s products and services like Global Premier, Cards,

Alliances, Commercial Banking et al., they offered the consumer a ‘reason to believe’ in

what they said at a larger brand level.

In India, one of the key drivers of the HSBC brand imagery is the fact that it ‘advises on

basis of its international network of expertise’. This attribute among many others has

gone a long way in giving HSBC the standing it has in India today, that of one of the

leading financial services brands.

The past couple of years have been action-packed for HSBC. To start off, since HSBC

prides itself in continuously innovating, it took its earlier position to a logical conclusion

in 2008: ‘People value things differently. That’s why they offer different banking

solutions.’ It is this insight that helps HSBC understand and appreciate the values that

shape financial needs. With extensive advertising across airports and other media like

outdoor, TV et al., the brand reinforces its commitment to offering customised banking

solutions to its customers.

Their leadership position in financial services today gives HSBC the opportunity to take

our brand from an “observational role,” i.e. understanding the world like none other, to a

more “active role” that can help their customers navigate today’s interconnected world

and leverage their local and cultural knowledge and understanding to inspire and enable

our customers to reach their potential. It is for this reason that they launched their new

brand idea, ‘HSBC helps you unlock the world’s potential’. Two factors – HSBC’s

strong performance in the recent times and the increasing globalisation of the consumer

mind-set – offer them an opportunity to move the HSBC brand forward in a

differentiated, relevant and true way.

HSBC’s association with YouTube for IPL3 was indeed a reflection of their belief in

new-age media. HSBC as a brand has always been progressive and innovative and their

investment in new media/technology only strengthens how they wish to portray

themselves to their consumers.

HSBC as an organisation has always been technologically advanced. HSBC’s thrust on

technology has not only helped the bank grow, but it has also actively contributed to the

modernisation of the Indian banking industry. See for yourself: HSBC gave India its first

ATM way back in 1987. In 1985, it became the first bank to fully computerise its


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operations. In 1989, it became the first bank to have inter-branch and inter-city

connectivity. In 1994, it became the first bank to provide online access to accounts and in

1995 it became the first bank to introduce off-branch ATMs. HSBC launched, for the

first time, an Internet banking security device. It took online security to the next level.

They believe technology is one of those key aspects that helps them to stay in touch with

their customers. HSBC is one of the most recalled and respected brands in the markets of

its presence in India today. It is a clear reflection of the efficacy of its brand positioning

and stature.


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CHAPTER-5

SURVEY FINDING AND ANALYSIS

INTERNAL CUSTOMERS SURVEY RESULT

Q1: What are the key business segments in India?

Global Consumer and Small Business Banking

Global Business and Financial Services

Global Capital markets and Investment Banking

Global Wealth and Investment Management

Q2: What are the key business values of HSBC Bank?

Doing the right thing

Trusting and teamwork

Inclusive meritocracy

Winning

Leadership

Q3: Has the bank implemented Six Sigma?

HSBC Bank applied six sigma in three ways:

Core Process Performance Metrics

Business Approach

Leadership Philosophy

Q4: How has the bank benefited from Six Sigma Implementation?

Six Sigma has enabled HSBC Bank to make the breakthrough improvements in customer

satisfaction and shareholder value that achieved to reach their goal of becoming one of

the world’s most admired companies.


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Q5: What are the key Core Process Performance metrics at HSBC Bank?

Setting of standards and targets for each branch and each banker

Developing metrics for sale of product

Gathering Voice of Customer and CTQ

Benchmarking of 90% in providing customer delight

High quality service:

Individual customer

Small Business Entity

Large Business Entity

Q6: What is the business approach of HSBC Bank

Increasing Investment Retirement Accounts

Improving Certificate of Deposits

Reducing Response Cycle Time

Relationship banking

Enhancing customer experience via computerized and electronic channels

Applying six sigma to all operations in HSBC and to entire value chain

Q7: What are the Objectives and strategies of CRM programs?

To increase the customer satisfaction ratings and scores

Responsible to ensure that the target performance levels set by the client are met

and exceeded

To ensure that the customer query is resolved in the first attempt.

To provide customer service in the most effective and efficient manner.


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Q8: What are the basis to measure customer satisfaction at HSBC Bank?

HSBC Bank measures customer satisfaction through various methods:

It has a comprehensive quality framework which encompasses several key

parameters of operational excellence, performance management and people’s

management.

The quality parameters are jointly agreed between HSBC Bank and the client which

help in monitoring and ensuring that the highest levels of customer satisfaction ate

achieved.

Q9: What are the Measures undertaken to deliver the expected level of quality?

HSBC Bank has a state of the art training centre of excellence where a defined

methodology of training is imparted to the employees. There are various levels of

training modules that help in achieving the expected level of quality required.

The quality analyst also coaches and provides feedback to the employees on the level

of service provided and providing an action plan for deviations if any.

Q10: Do you Incorporate suggestions or feedback given by customers?

Yes, HSBC Bank incorporates the suggestions or feedback given by customers. For e.g.

if a customer points out something on an airline website to HSBC Bank’s Process Agent

such as not finding a place where he can check special in-flight services , then HSBC

Bank gives that feedback to its client.

Q11: What are the Training given to your employees for interacting with

customers?

HSBC Bank’s trainers impart highly customized training to its employees. This training

methodology is jointly agreed with the client. The kind of training given to the

employees is manifold:

a) Knowledge about the client

b) Training on the industry in which the client is present.

c) Soft skills and voice and accent training.

d) Product or process training.


69

CUSTOMER SURVEY FINDING

To know customer view about the products and services provided by Banks, I have done

survey of few people and asked them certain set of Question.

Do you have a bank account at HSBC, if yes please specify for how long?

Less than 1 yr 1-3 yrs 3-5 yrs more than 5 yrs

31 26 22 21

31%

26%

22%

21%


How will you rate the friendliness and competence of the staff?

Good Average Bad

51 37 12

51%37%

12%

Good Average Bad


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How will you rate the convenience to approach the desired Bank officer?

Good Average Bad

57 36 7

57%36%

7%

Good Average Bad

Please rate your overall satisfaction with your contact to a HSBC sales

representative?

Satisfied Neutral Dissatisfied

87 11 2

87%

11% 2%



71

Do you think that banking methods and techniques adopted by HSBC are in

accordance with the needs of international market and modern banking?

Yes Not Sure No

86 6 8

86%

6%8%

Yes Not Sure No

How will you rate HSBC in comparison with other banks?

Better Average Worst

96 4 0

96%

4% 0%



72

Are you satisfied with the categories of loans available, options are student loan ,

personal loan, home finance and car finance ?

Yes Not Sure No

97 3 0

97%

3% 0%

Yes Not Sure No

Are you satisfied with the interest rates on loans applied by HSBC?

Yes Not Sure No

100 0 0

100%

0%0%

Yes Not Sure No


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What do you think about the investment opportunities provided by HSBC?

Good Average Bad

67 33 0

67%

33%

0%

Good Average Bad

How will you rate the performance and versatility of Credit cards?

Good Average Bad

100 0 0

100%

0%0%

Good Average Bad


74

Do you think marketing techniques adopted by HSBC to advertise their services

and offers are sufficient?

Yes Not Sure No

86 14 0

86%

14% 0%

Yes Not Sure No

Will you recommend the services provided by HSBC to a friend or family?

Yes Not Sure No

75 23 2

75%

23%2%

Yes Not Sure No


75

Do they know all the products and services offered by banks?

0

10

20

30

40

50

60

70

80

90

YES NO

Pe

rce

nta

ge

This bar diagram shows how many people are aware of ‘Products and Services’ provided

by HSBC Bank. The bar which is in red colour indicates that 80% of the people are

aware of the ‘Products and Services’ and out of that 60% of the people knows all the

services provided by HSBC banks where as bar which is in green colour indicates that

20% of the people don’t know the products and services which bank provides.


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When survey respondent were asked, which product they use mostly?

(General Classification)

- 40 percentage people said Deposit

- 30 percentage people said Loan

- 20 percentage people said Credit card

- 10 percentage people said Others (i.e. Demat services, Debit cards etc.)

40%

30%

20%

10%

Deposit Loan Credit Card Others


77

When survey respondent were asked, Which is the easiest mode of getting services

from HSBC Bank?

(General Classification)

- 20 percentage people said Personal Banking

- 30 percentage people said Phone Banking

- 45 percentage people said Internet Banking

- 5 percentage people said Others

20%

30%

45%

5%

Internet Banking Phone Banking Personal Banking Others


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When survey respondents were asked, are they satisfied with the products and

services provided by HSBC Bank?

72%

28%

Yes No

From the above graph we can see that 72 % of the people are satisfied with the customer

services provided by the bank & the rest 28% says that they are not because they feel that

they should extend more services to attract customers.


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KEY FINDINGS

There is a need of constant diversification in products. In bracing for tomorrow, a

paradigm shift in bank financing through innovative products is necessary. Banks now

need to use products as a growth trigger. This requires product development and

differentiation, innovation and business process reengineering, micro-planning,

marketing, prudent pricing, customization, technological up gradation, home / electronic

/ mobile banking, cost reduction and cross selling.

Banking industry hitherto has been concentrating on its core business that is accepting

deposits and lending money and acting as custodian for its customers. Now banks have

diversified from its core banking business to other business like retail bank, selling

third party product like insurance, mutual fund etc. The banking sector has to

overcome many challenges in product diversification like:

Cope up with stiff competition from private delivery channels.

With its vast clientele, the banking industry has its challenge to provide

backup service considering the volume of business which the banks could

login.

Deploying and training of its personnel for selling these products.

Devising marketing strategies.

Challenges for the bankers in convincing its customers to take third

party products from them as those are not their own. They will have to overcome

their customer reluctance.

The findings imply that HSBC banks striving to differentiate themselves on factors such

as customer service and further these banks have developed a focused and coordinated

approach to managing customers’ experience through an efficient feedback system.

HSBC banks has efficient customer surveys in place wherein customers’ opinions are

taken into consideration and the bank tries to ensure that any gaps that have occurred in

what the customers expected and received are filled up. Further, the feed back forms are

kept at ATM centers for customers to give their opinion.


80

HSBC banks uses the feedback to understand the customer needs better and assess the

level of services they desire. Feedback through Internet and phone are also encouraged.

“All the feedback is sent to service control team who initiates processes to ensure

customer satisfaction and loyalty”.

Hence, it can be established that better banking option and wide service and facilities

range in India and with due to ensure that all customer expectations have been met and

they are satisfied with the services.

From a resource allocation perspective, organizations need to ensure that the delivery of

parity value, differential value, and customized value is tightly aligned with customer

motivation to remain as strangers, acquaintances, friends or true partners. Carte blanche

approaches that seek to establish relationships with all your customers are unlikely to be

profitable. In our study, the firms that were most comfortable with customer relationship

programs were firms that knew what they wanted to get from their data systems and had

a realistic appreciation for the organizational constraints that exist. In other words, these

firms had a clear, unconstrained strategy aimed at identifying customer segments and

extracting the most value from their economic interactions with different types of

customers. It is in this area, as many organizations would agree, that considerable room

for improvement exists.

The HSBC Group operates in a global market place. Increasingly, the financial services

industry and modern communications are borderless. More and more people travel

internationally. They must develop a growing range of products and services which are

marketed around the world. In addition to their well established strengths in areas such as

trade finance and the wholesale markets, they must place increased emphasis in many

countries on the development of banking and other financial services for personal

customers. The future strategy calls for the development of a strong consumer brand. The

HSBC brand must continue to be known in every country and in every sector in which

they operate as synonymous with integrity, trust and excellent customer service.


81

CHAPTER-6

CONCLUSION & RECOMMENDATION

We define bank marketing as follows: “Bank marketing is the aggregate of functions,

directed at providing services to satisfy customers’ financial (and other related) needs

and wants, more effectively and efficiently that the competitors keeping in view the

organizational objectives of the bank”. Bank marketing activity. This aggregate of

functions is the sum total of all individual activities consisting of an integrated effort to

discover, create, arouse and satisfy customer needs. This means, without exception, that

each individual working in the bank is a marketing person who contributes to the total

satisfaction to customers and the bank should ultimately develop customer orientation

among all the personnel of the bank. Different banks offer different benefits by offering

various schemes which can take care of the wants of the customers.

Marketing helps in achieving the organizational objectives of the bank. Indian banks

have duel organizational objective – commercial objective to make profit and social

objective which is a developmental role, particularly in the rural area.

Marketing concept is essentially about the following few thing which contribute towards

banks’ success:

1) The bank cannot exist without the customers.

2) The purpose of the bank is to create, win, and keep a customer.

3) The customer is and should be the central focus of everything the banks does.

4) It is also a way of organizing the bank. The starting point for organizational

design should be the customer and the bank should ensure that the services are

performed and delivered in the most effective way. Service facilities also should

be designed for customers’ convenience.

5) Ultimate aim of a bank is to deliver total satisfaction to the customer.

6) Customer satisfaction is affected by the performance of all the personal of the

bank.


82

All the techniques and strategies of marketing are used so that ultimately they induce the

people to do business with a particular bank. Marketing is an organizational philosophy.

This philosophy demands the satisfaction of customers needs as the pre-requisite for the

existence and survival of the bank. The first and most important step in applying the

marketing concept is to have a whole hearted commitment to customer orientation by all

the employees. Marketing is an attitude of mind. This means that the central focus of all

the activities of a bank is customer. Marketing is not a separate function for banks. The

marketing function in Indian Bank is required to be integrated with operation.

Marketing is much more than just advertising and promotion; it is a basic part of total

business operation. What is required for the bank is the market orientation and customer

consciousness among all the personal of the bank.

The competition is intense in retail banking as almost all the public, private and foreign

banks are eyeing a share a on retail market pie . To meet the competition retail banking

product and services have to become more competitive, and they are being perceived as

commodities. To leverage the competitive environment , they are reducing the interest

rate to increase the customer base. For expanding the market, banks are developing both

market and product they are venturing into new locations and adding depth to the

existing geography. They are increasing there penetration in existing location as well.

They are also increasing there presence in Tier-2 and Tier-3 because these have immense

potential.

To be on safe side banks are targeting the upwardly urban salaried class despite knowing

that it is “Big city Indian youth” who are most profitable segment. However banks are

also spreading there operations to include the self employed and semi-urban rich

Retail Banking covers both asset-side and liabilities-side products. The liabilities side

includes ATM, E-banking, and Tele-banking where the bank has to make significant

investment in infrastructure and technology. The asset side of bank has various type of

loans provided by banks

Bank can devise suitable strategies of segmentation, delivery channels and pricing by

understanding the frame work of retail banking. Banking service can be understood in

three categories from the point of view of retail banking. Core services, facilitating

services are needed and supporting services are needed.


83

The individual customer is the presiding deity of banks in the field of retail banking. All

the products and services are designed and formed to satisfy the financial needs of the

customers. The customers belong to different economic, cultural and social background.

Hence the products and services offered are also varied. Through out the world it has

been felt that main focus of the banks in the retail sector should be customer service. It is

the acceptance by the customers of the banking products and his satisfaction with the

services that brings out profit for the banks in this sector. Unlike corporate banking

where corporate customers have a well defined financial policy and projects, in retail

banking the onus lies on the banks to approach the customers, find out there financial

needs and problems, design the products and services, market them and finally sell them

to the satisfaction of the customer.

There is a need of constant innovation in retail banking. In bracing for tomorrow, a

paradigm shift in bank financing through innovative products and mechanisms involving

constant up gradation and revalidation of the banks’ internal systems and processes is

called for. Banks now need to use retail as a growth trigger. This requires product

development and differentiation, innovation and business process reengineering, micro-

planning, marketing, prudent pricing, customization, technological up gradation, home /

electronic / mobile banking, cost reduction and cross selling.

While retail banking offers phenomenal opportunities for growth, the challenges are

equally daunting. How far the retail banking is able to lead growth of the banking

industry in future would depend upon the capacity building of the banks to meet the

challenges and make use of the opportunities profitably. However, the kind of

technology used and the efficiency of operations would provide the much-needed

competitive edge for success in retail banking business. Furthermore, in all these

customers’ interest is of paramount importance. The banking sector in India is

demonstrating this and I do hope they would continue to chart in this traded path.


84

BIBLIOGRAPHY

Doole, I. and Lowe, R. (2001), International Marketing Strategy - Analysis,

Development and Implementation, Thomson Learning, 3rd Ed.

Johansson, J.K. (2000), Global Marketing - Foreign Entry, Local Marketing, and

Global Management, Johansson, International Edition.

Cateora, P.R., and Ghauri, P.N. (1999), International Marketing, McGraw-Hill

Publishing Company, European Edition.

Muhlbacher, H., Helmuth, L. and Dahringer, L. (2006), International Marketing - A

Global Perspective, Thomson, 3rd Ed.

Keegan, W.J., (2002), Global Marketing Management, Prentice Hall, 7th Ed.

Saumitra and Shanmugam, "Indian Banking Sector: Is it on the Right

Track,"Businessline, www.thehindubusinessline.com, December 10, 2005.

Rupa Rege Nitsure, "Issues and Concerns: Banking Regulation (Amendment) Bill,

2005,"www.medcindia.org, December 2006.

"Foreign Banks a Threat to PSBs, Say Govt Bankers,"www.ficci.com, The Financial

Express, September 15, 2007.

"Banking in India,"www.wikipedia.org, (Retreived on June 17, 2008).

"Unique Risk Cover for Lost Credit Card,"www.telegraphindia.com, June 17, 2008.

“Foreign Banks Target Newer Business Segments," www.financialexpress.com, June

17, 2008.

Montek S. Ahluwalia, "Financial Sector Reforms in India: An Assessment,"

www.planningcommission.nic.in

Sayuri Shirai, "Assessment of India's Banking Sector Reforms From the Perspective

of the Governance of the Banking System,"www.unescap.org,

Chandrasekhar, C.P, "What is happening to Indian Banking?," Frontline,

www.hinduonnet.com, February 12-25, 2005.

www.icra.co.in.

www.ibef.org

http://www.hsbc.co.in/1/2/homepage


85

ANNEXURE

SURVEY QUESTIONNAIRE

Internal Survey Questionnaire

Q1: What are the key business segments in India?

______________________________________________________________

Q2: What are the key business values of HSBC Bank?

______________________________________________________________

Q3: Has the bank implemented Six Sigma?

______________________________________________________________

Q4: How has the bank benefited from Six Sigma Implementation?

______________________________________________________________

Q5: What are the key Core Process Performance metrics at HSBC Bank?

______________________________________________________________

Q6: What is the business approach of HSBC Bank

______________________________________________________________

Q7: What are the Objectives and strategies of CRM programs?

______________________________________________________________

Q8: What are the basis to measure customer satisfaction at HSBC Bank?

______________________________________________________________

Q9: What are the Measures undertaken to deliver the expected level of quality?

______________________________________________________________

Q10: Do you Incorporate suggestions or feedback given by customers?

______________________________________________________________

Q11: What are the Training given to your employees for interacting with customers?

______________________________________________________________


86

CUSTOMER SURVEY FINDING

Name:_____________________________________Age:________Gender:__________

Mobile No:__________________ Home Address:_______________________________

1) Do you have a bank account at HSBC, if yes please specify for how long?


2) How will you rate the friendliness and competence of the staff?

Good Average Bad

3) How will you rate the convenience to approach the desired Bank officer?

Good Average Bad

4) Please rate your overall satisfaction with your contact to a HSBC sales

representative?


5) Do you think that banking methods and techniques adopted by HSBC are in

accordance with the needs of international market and modern banking?

Yes Not Sure No

6) How will you rate HSBC in comparison with other banks Barclays, Lloyds, Natwest?


7) Are you satisfied with the categories of loans available, options are student loan ,

personal loan, home finance and car finance ?

Yes Not sure No

8) Are you satisfied with the interest rates on loans applied by HSBC?

Yes Not sure No

9) What do you think about the investment opportunities provided by HSBC?

Good Average Bad

10) How will you rate the performance and versatility of Credit cards?

Good Average Bad

11) Do you think marketing techniques adopted by HSBC to advertise their services and

offers are sufficient?

Yes Not sure No

12) Will you recommend the services provided by HSBC to a friend or family?

Yes Not sure No

shekhar malik

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