MBM- 411

MARKETING OF SERVICES

ASSIGNMENT (PART II)

GAP ANALYSIS AND SERVQUAL MODEL ON BANKING INDUSTRY WITH SPECIAL

REFERNCE TO HDFC BANK

SUBMITTED BY:

VINEET HARITMBA-IV SEM (REGULAR)

ROLL NO: 127647

MARKETING SERVICES STRATEGIESIn the fierce competitive market, needs of customer keep changing. Hence, our marketing strategy must be dynamic and flexible to meet the changing scenario. Here are steps that form successful and effective marketing strategy for HDFC bank products.

Emphasis on Deposits

Emphasis, though in a discrete manner, should be given to mobilize more of term deposits as they are more profitable for the bank in comparison to demand. Introduction of products comparable to “Kisan Vikas Patra” of post office and product with the facility of tax rebate under section 88 of Income Tax Act will of much help in this regard.

Form a Saleable Product Scheme

Bank should form a scheme that meets the needs of customers. A bunch of such schemes can also form a product. A bank product may include deposit scheme, an account offering more flexibilities, technically sound banking, tele/mobile/net banking, an innovative scheme targeted to special group of customers like children, females, old aged persons, businessman etc. In short, a bank product may consist of anything that you offer to customers.

Effective Branding

Man is a bundle of sentiments and emotions. This can effectively be helpful in branding our products. Considering the features of products and target group of customers, the product can be effectively branded so as to sound it catchy and appealing. Some proven examples are Apna Ghar, Dhan Laxmi, Kuber, Flexi Deposit, Smart Kid, Sapney, Vidya etc.

The branding should be done in such a way that the brand name must attract the attention of customers. It should be easy to remember. The target group and the silent feature of the product should resemble brand name. This will help a lot in making the brand successful. All employees and all our campaigns should refer the product by its brand name only so that to strike the same in the customer’s mind.

Products for Women

The national perspective plan for women states that 94 pc of women workers are engaged in the unorganized sector and 83 pc of these in agriculture and allied activities like dairy, animal husbandry, sericulture, handloom, handcrafts and forestry. Banks should do something to improve their access to credit which they require.

Customer Awareness

There is a need to educate the customers on bank products. Efforts should be made to widen and deepen the process of information flow for the benefit and education of Indian customers. Today, the customers do not have any idea as to how much time is required for any type of banking service. The rural customers are not aware for what purpose the loans are available and how they can be availed. Customers do not know the complete rules, regulations and procedures of the bank and bankers preserve them for themselves and do not take interest in educating the customers. It is a need to educate the customers from the grassroots of banking.

It is time that each bank branch takes steps to educate the customers on all banking function, which will facilitate growth of banking on healthy lines both qualitatively and quantitatively.

Advertisement

Advertisement is an eminent part of marketing of bank products. Advertisement should be such that appeals to people. It should not follow the orthodox pattern of narrating a product. For effective advertisement, bank should understand people’s tastes and choices.

Selling Products in Rural Areas

For enhancing the marketing of their product, bank should sell their products in rural areas. For it, there is a need to open branches in the rural areas.

Informing Customers about Products

The bank should embark upon aggressive marketing of its products, particularly at the time of launching a new product, which will inform the perspective customers regarding product and at the same time relieve staff at branch level from explaining the product to all customers.

Customer Convenience

In a service industry like banking where product differential is hard to maintain and quality of service depends upon the service provider, from whom it cannot be separated. So the bank employees have to render services to the satisfaction of the customer, not as per their own conveniences or whims.

Re-orient Staff

Sincerity of efforts in implementation of the measures is lacking among the bank staff. It is a fact that its employees are not able to rise up to the expectations of its customers. They lack in their behaviour, attitude and efficiency. The phenomenon is glaring at urban centers. Therefore, it calls for an immediate attention which is missing link in the entire process of marketing, and the bank should undertake all such steps to motivate and reorient its staff.

Sale of Products and Services through E-delivery Channels

After the Information Technology Act, many new e-delivery products have been introduced. These e-delivery channels are very helpful in enhancing the marketing of various products and services. Thus Indian banks should sale the products and services through e-delivery channels.

Sale of Products and Services through Web-sites

Internet is a network of network which connects the world. Thus, banks should sale their products through web-site. This will enhance the marketing of the products not only at the national but also at the international level.

MARKETING OF BANKING SERVICESBank marketing is the aggregate of functions directed at providing services to satisfy customers financial (and other related) needs and wants, more effectively and efficiently than the competitors keeping in view the organizational objectives of the bank

Why bank marketing is necessary?? The existence of the bank has little value without the existence of the customer Its aim is to create and win more and more customer and retain them through effective

customer service. Appropriate promise to a customer through a range of services and also ensure

effective delivery through satisfaction is important.

Concept of bank marketing: Identifying the most profitable markets now and then. Assessing the present and future needs in customer. Setting business development goals and making plans to meet them. Managing services and promoting them. Adapting to a changing environment in the market.

Marketing Mix : It consist of 7 P’s of marketing:

Pricing:

Buyer looks for satisfaction which differs from person to person. Keeping in view the level of satisfaction of particular segment, the banks have to

frame the pricing strategies. Since RBI regulates the rates of interest, organization are supposed to serve weaker

sections and rural regions of the country. Includes interest, fee, commission charged by the bank.

Place:

Objective is to get right product, at right place, at right time and at least cost. It refers to the establishment and functioning of branches and other through which

banking services are delivered.

It can be accessed by large section of people.

Promotion: Advertising Publicity Sales promotion Personal selling Push and pull strategies.

Product:

The product mix of a company includes of all different product lines a company offers to customers. The product line of a bank might include more than 100 different services.

Deposits Advances International banking Consultancy Miscellaneous

Process:

It refers to the system used to assist the organization in delivering the service. It aids to the customer satisfaction. It involves:

Speeding delivery of services Reducing paperwork. Standardization of procedures. Customization as per individual demand.

Physical Evidence:

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

People:

People are the employees that are service providers. In banking sector, the service provider plays an important role in rendering the customers the good and satisfactory service. It is extremely essential that the service provider understands what his customer expects from him.The position in the eyes of customers will be perceived by attitude, appearance, and behavior of the customer contact employee.

7 P’S OF MARKETING FOR HDFC BANK

PRODUCT MIX

1. DEPOSITSHDFC Bank offers wide variety of Deposit Products to suit our requirements. Coupled with convenience of networked branches/ over 11,473 ATMs and facility of E-channels like Internet and Mobile Banking, HDFC Bank brings banking at your doorstep. Savings Account: HDFC Bank offers a power packed Savings Account with a host of convenient features and banking channels to transact through.Senior Citizen Services: The Senior Citizen Services from HDFC Bank has several advantages that are tailored to bring more convenience and enjoyment in your life.Fixed Deposits: Safety, Flexibility, Liquidity and Returns! A combination of unbeatable features of the Fixed Deposit from HDFC Bank. Recurring Deposits: Through HDFC Bank Recurring Deposit you can invest small amounts of money every month that ends up with a large saving on maturity. So you enjoy twin advantages- affordability and higher earnings.Roaming Current Account: Only Roaming Current Account from HDFC Bank travels the distance with your business. You can access your accounts at over 3336 networked branches across the country.Bank @ Campus: Thanks to bank@campus, child can now surf the Net and access all the details of his / her account at the click of a mouse! No need to visit the bank branch at all.HDFC Bank Salary Account: is a benefit-rich payroll account for Employers and Employees. As an organization, you can opt for our Salary Accounts to enable easy disbursements of salaries and enjoy numerous other benefits too.

2. INVESTMENTS

Along with Deposit products and Loan offerings, HDFC Bank assists you to manage your finances by providing various investment options such as:

HDFC Bank Tax Saving Bonds Government of India Bonds Investment in Mutual Funds Initial Public Offers by Corporate Investment in "Pure Gold" Foreign Exchange Services Senior Citizens Savings Scheme

3. ANYWHERE BANKING HDFC Bank is the second largest bank in the country. It services millions of customer accounts through a multi-channel access network. This includes more than 3336 branches and extension counters, over 11,473 ATMs, Call Centre and Internet Banking. Thus, one can access the various services HDFC Bank has to offer at anytime, anywhere and from anyplace.

4. LOAN

a) Home Loans b) Personal Loans c) Car Loans d) Two Wheeler Loanse) Commercial Vehicle Loansf) Loans against Securities g) Farm Equipment Loans h) Construction Equipment Loans i) Office Equipment Loans j) Medical Equipment Loans

5. CARDSa) Credit Card b) Debit cum ATM Card c) Travel Card

6. DEMAT SERVICESHDFC Bank Demat Services boasts of an ever-growing customer base of over 15 lacs account holders. In their continuous endeavor to offer best of the class services to our customers we offer the following features:

Digitally signed transaction statement by e-mail. Corporate benefit tracking. e-Instruction facility - facility to transfer securities 24 hours a day, 7 days a week

through Internet Interactive Voice Response (IVR) at a lower cost. Dedicated specially trained customer care executives at their call centre, to handle all

queries.

7. MOBILE BANKING

With HDFC Bank, banking is no longer what it used to be. HDFC Bank offers Mobile Banking facility to all its Bank, Credit Card and Demat customers. HDFC Bank Mobile Banking enables you to bank while being on the move.

8. NRI SERVICES

ONLINE MONEY TRANSFER facility available to NRIs worldwide through the click of a button!Benefits:

FREE Money transfers into accounts with over 30 banks in India Demand Drafts issued and payable at over 2104 locations in India ONLINE Tracking of the status of your funds SUPERIOR Exchange rates OFFLINE MONEY TRANSFER facility is also available across geographies through

our local branches and in association with partner banks/ exchange houses.

PRICING MIX

The pricing decisions or the decisions related to interest and fee or commission charged by banks are found instrumental in motivating or influencing the target market.The RBI and the IBA are concerned with regulations. The rate of interest is regulated by the RBI and other charges are controlled by IBA.The pricing policy of a bank is considered important for raising the number of customers’ vis-à-vis the accretion of deposits. Also the quality of service provided has direct relationship with the fees charged. Thus while deciding the price mix customer services rank the top position.The banking organizations are required to frame two- fold strategies. First, the strategy is concerned with interest and fee charged and the second strategy is related to the interest paid. Since both the strategies throw a vice- versa impact, it is important that banks attempt to establish a correlation between two. It is essential that both the buyers as well as the sellers have feeling of winning.

Pricing Bank Products Starts With Three Basic Questions.

1. What rate does the bank need to meet its financial objectives?The answer is, “it depends.”Some considerations for loan and deposit pricing are:

ROA or ROE objectives Related income taxes Earning assets to total assets Equity-to-asset ratio Cost to service earning assets being funded or deposits funding an earning asset Pricing for the activities and risks associated with the product Rate tiers based on product balances Asset and liability mix

Another element to consider in the pricing of earning assets is the risk of loss. Most notably, this is relevant in loan pricing. Many banks assign a risk weighting to individual loans over a certain size or based on loan type and assign a credit risk charge based on those ratings.Customer relationships are difficult to assign a value to in the pricing process. Customers will generally press for some price concessions in consideration of other relationships they have with the bank. Asset and liability mix also impacts pricing results. Generally speaking, banks operating with higher loan-to-asset ratios are able to afford to pay more for deposits. Likewise, banks can afford to be more competitive on certain deposit products if they have fewer maturities in a particular timeframe or less total outstanding balances in a product line.

2. What is the market rate for the core product?

Customers have more distribution channels available to them today than at any other point in history. In the past 10 years, the number of bank locations has increased 20%. Of course, there are the mortgage bankers, the Internet, and a host of other financial service providers competing for your customer’s loan and deposit business.The point is, the competitive marketplace always ensures that if a financial institution is charging too much for loans or paying too little for deposits, its share of the market will likely dwindle as existing and prospective customers find alternative providers. You can do all the math you want to determine required pricing points, but if your pricing is uncompetitive, your market share will shrink.

3. What would the bank have to do to sales and operations to make its rates the most competitive in its market?

Pricing is a key issue for the associates who sell bank products to your customers. The fact is, lenders want the lowest rates, and people dealing with depositors want to pay the highest rates. You need the right balance of fee income, strategies to reduce operating costs, and a healthy asset and liability mix to change your required pricing.

PLACE

This component of marketing mix is related to the offering of services. The services are sold through the branches.The 2 important decision making areas are: making available the promised services to the ultimate users and selecting a suitable place for bank branches.The number of branches OF HDFC: 1900 in India and 33 in Mumbai.

Why they select the place as branch? The selection of a suitable place for the establishment of a branch is significant with

the view point of making place accessible. The safety and security provisions Convenient to both the parties, such as the users and the bankers Infrastructure facility Market coverage

PROMOTION MIX

Advertising: Television, radio, movies, theatres Print media: hoardings, newspaper, magazines Publicity: road shows, campus visits, sandwich man, Sponsorship Sales promotion: gifts, discount and commission, incentives,etc. Personal selling: Cross-sale (selling at competitors place),personalized service Telemarketing: HDFC one source Call center (mind space)

PROCESS

Flow of activities: all the major activities of HDFC banks follow RBI guidelines. There has to be adherence to certain rules and principles in the banking operations. The activities have been segregated into various departments accordingly.Standardization: HDFC bank has got standardized procedures got typical transactions. In fact not only all the branches of a single-bank, but all the banks have some standardization in them. This is because of the rules they are subject to. Besides this, each of the banks has its standard forms, documentations etc. Standardization saves a lot of time behind individual transaction.Customization: There are specialty counters at each branch to deal with customers of a particular scheme. Besides this the customers can select their deposit period among the available alternatives.Number of steps: numbers of steps are usually specified and a specific pattern is followed to minimize time taken.Simplicity: in HDFC banks various functions are segregated. Separate counters exist with clear indication. Thus a customer wanting to deposit money goes to ‘deposits’ counter and does not mingle elsewhere. This makes procedures not only simple but consume less time. Besides instruction boards in national boards in national and regional language help the customers further.Customer involvement: ATM does not involve any bank employees. Besides, during usual bank transactions, there is definite customer involvement at some or the other place because of the money matters and signature requires.

PHYSICAL EVIDENCES

Physical evidence is the material part of a service. Strictly speaking there are no physical attributes to a service, so a consumer tends to rely on material cues. There are many examples of physical evidence, including some of the following:

Internet/web pages Paperwork Brochures Furnishings Business cards The building itself (such as prestigious offices or scenic headquarters)

The physical evidences also include signage, reports, punch lines, other tangibles, employee’s dress code etc.

Signage: each and every bank has its logo by which a person can identify the company. Thus such signages are significant for creating visualization and corporate identity. Financial reports: The Company’s financial reports are issued to the customers to emphasis or credibility. Tangibles: bank gives pens, writing pads to the internal customers. Even the passbooks, chequebooks, etc reduce the inherent intangibility of services.

Punch lines: punch lines or the corporate statement depict the philosophy and attitude of the bank. Banks have influential punch lines to attract the customers. Employee’s dress code: HDFC bank follows a dress code for their internal customers. This helps the customers to feel the ease and comfort.

THE PEOPLE

All people directly or indirectly involved in the consumption of banking services are an important part of the extended marketing mix.Knowledge Workers, Employees, Management and other Consumers often add significant value to the total product or service offering. It is the employees of a bank which represent the organisation to its customers. In a bank organization, employees are essentially the contact personnel with customer. Therefore, an employee plays an important role in the marketing operations of a service organisation.To realize its potential in bank marketing, HDFC become conscious in its potential in internal marketing - the attraction, development, motivation and retention of qualified employee-customers through need meeting job-products. Internal marketing paves way for external marketing of services. In internal marketing a variety of activities are used internally in an active, marketing like manner and in a coordinated way. The starting point in internal marketing is that the employees are the first internal market for the organization. The basic objective of internal marketing is to develop motivated and customer conscious employees. A service company can be only as good as its people. A service is a performance and it is usually difficult to separate the performance from the people. If the people don’t meet customers' expectations, then neither does the service. Therefore, investing in people quality in service business means investing in product quality.

SERVQUAL MODEL OF BANKING INDUSTRYSERVQUAL was originally measured on 10 aspects of service quality: reliability, responsiveness, competence, access, courtesy, communication, credibility, security, understanding or knowing the customer and tangibles. It measures the gap between customer expectations and experience.

By the early nineties the authors had refined the model to the useful acronym RATER:

Reliability Assurance Tangibles Empathy Responsiveness

For Banking:

Reliability:

An excellent bank provides its services at the time it promises to do so. An excellent bank insists on error-free records. When an excellent bank promises to do something by a certain time, it does so. Employees in an excellent bank are always willing to help you.

Assurance:

Behaviours of staff instil confidence in customers. Customers feel safe in their transactions. Friendliness and courtesy of staff. Staff having knowledge to answer questions. When customers have problems employees in an excellent bank will be sympathetic

and reassuring.

Tangible:

An excellent bank’s reception desk employees are neat in appearance. An excellent bank’s physical facilities are visually appealing.

Excellent banks have modern looking equipment. An excellent bank’s credit cards, cheques and similar materials are visually appealing.

Empathy:

An excellent bank has the customer’s best interest at heart. The employees of an excellent bank understand customer’s specific needs. An excellent bank has employees who give customers personal attention. An excellent bank has working hours suitable for all customers.

Responsiveness:

Employees in an excellent bank tell you exactly when the services will be performed. Prompt service. Staff willingness to help. Prompt response from staff.

SERVQUAL MODEL OF HDFC BANKThe most popular dimensions of service quality--features five dimensions: tangibles, reliability, responsiveness, empathy, and assurance. The tangibles dimension corresponds to the aforementioned physical environment aspect, the reliability dimension corresponds to the service outcome aspect, and the remaining three represent aspects of interaction quality.

Both the costs and the revenue of firms are affected by repeat purchases, positive word-of- mouth recommendation, and customer feedback. Moreover, there is strong evidence that service quality has either a direct influence on the behavioural intentions of customers and/or a n indirect influence on such intentions, mediated through customer satisfaction.

RATER is an instrument that might be used to define and measure banking service quality and to create useful quality-assessment tools.

The RATER may finally provide the following benefits to the HDFC bank:

1. It is the first approach to add and mix the customers’ religious beliefs and cultural values with other quality dimensions. 2. It provides for multi- faced analysis of customer satisfaction. 3. It links quality with customers’ satisfaction and service encounter. 4. It provides information at several levels, already organized into meaningful groupings. 5. It is a proven approach, which results in usable answers to meet customers’ needs. 6. It is empirically grounded, systematic and well documented.

Banks managers can use the RATER model and its dimensions first to identify the following issues:

To identify those areas where improvement should be made and resources can be allocated. For instance, they need to know the level of quality in their banks and they can manipulate to make bank-wide improvement in quality performance. Also they can use benchmarking to compare their performance and other banks‟, which have already implemented quality program that will help to prioritise the quality management efforts.

DIMENSIONS OF SERVICE QUALITY

TANGIBILITY: This dimension deal with modern looking equipments and visual appealing part of HDFC banks.

RELIABILITY: This dimension has a direct positive effect on perceived service quality and customer satisfaction in HDFC bank. Bank must provide error free service and secure online transactions to make customers feel comfortable.

RESPONSIVENESS: Customers expect that the HDFC bank must respond their inquiry promptly. Responsiveness describes how often a bank voluntarily provides services that are important to its customers. The responsiveness of HDFC bank services have highlighted the importance of perceived service quality and customer satisfaction.

ASSURANCE: Customer expects that the HDFC bank must be secured and the behaviour of the employees must be encouraging.

EMPATHY: Individual attention, customized service and convenient banking hours are very much important in today’s service in HDFC bank

GAP ANALYSIS OF HDFC BANK

Gap 1: The customers expect a better service from the bank. But the survey we did that on customer service HDFC is lacking behind its competitors. Competitors like ICICI, Max Newyork and SBI are ahead of it and it’s also reflected by the number of customers that SBI have. The customer feels that the “reply to the customer compliant” by the bank is not

prompt. And also there is long waiting time as the service delivery is not prompt.

Gap 2: The customer wants a good service at less cost which the bank is unable to understand.

Gap 3: The customer wants the banks should be in their reach, but the branches of HDFC is not strategically located and hence here the company is unable to understand the customer’s voice and its due to poor servicescape. A few customers in our survey the charges for the facilities provided by the bank are higher than the nationalized banks.

Gap 4: The employees in the HDFC bank are very much comfortable with the technology but their banking knowledge and other customer queries is poor. And the reason for this behaviour was that the front line employee in the bank switches job very fast.

Gap 5: Now the major gap is this, as first of all the customers have more faith on nationalized banks and secondly what is promoted by the HDFC bank and what actually perceived by customers are different, in case of responsiveness the bank in its promotion shows that the employee are very responsive but reality is different.