Q) In a Service organization of your choice discuss the marketing strategy with respect to the 7Ps.

Ans) Sector taken= Banking sector Organization taken= Indian Overseas Bank 7 PS of BANKING SECTOR
It is very important for any bank to identify the 7 Ps of services so was understands their customers better and provide them with best of service. The 7 Ps are:

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

PRODUCT MIX
The product itself is the first element. Products most satisfy consumer needs. The management must, first decide the products to be produced, by knowing the needs of the consumer. The product mix of a company includes all different product lines a company offers to its customers. The product line of a bank might easily include more than 100 different services. In todays competitive scenario it has become very necessary for a bank to provide its customers with a wide variety of services and the best technology in order to attract them. The products offered by IOB are: Saving Bank Corporate Salary Account Student Account Platinum Current Account CD Supreme CD Classic CD Super

Retail Products Housing Loan Vehicle Loan Education Loan International VISA card Credit Card Debit Card Third Party Insurance IOB Jeevan Health Care Policy Liability Insurance Term Deposits Fixed Deposit Vardhan Deposit Tax Saver Scheme Various services offered by the bank: NRI accounts Forex collections services Agri business consultancy Personal banking Corporate banking E- banking Atm services Trading services

PRODUCT LEVELS
Core Benefit: It is the main or core reason why the customer will buy the service of the bank. More like the basic purpose or necessity. Basic Product: The core benefit is converted into a basic product. That is the service can used by the customer in order to fulfill his/her needs.

Expected Product: It refers to the set of attributes and conditions expected by the customers when they purchase the service. Augmented Product: It is the additional feature that the banks provide which exceeds the customers expectations. Potential Product: Innovations and product differential is the bases of a Potential Product. If the banks alter its services according to the requirements of the individual customers it reaches this level.

Core Product The basic necessity to use banking services in order to handle finance more efficiently

Basic Product Safety of deposits Loanable funds etc.

Expected Product Timely service Long banking hours Low interest rates

Augmented Product Goods waiting rooms Extensive ATM network Promotional Discounts

Potential Product Mobile and internet Banking New Schemes tailored for specific customers

Thus it can be seen how a particular product passes through different levels. In todays competitive scenario most banks try offering services at the Augmented and Potential level.

PRICE MIX
The price mix in the banking sector is nothing but the interest rates charged by the different banks. In todays competitive scenario where customer is the king, the banks have to charge them interest at a rate in accordance with the RBI directives. Banks also compete in terms of annual fees for services like credit cards, debit cards, etc. Another important aspect of the banks pricing policy today is the interest charged on the Home Loans, Car loans and education loans. Price Charged by IOB for some of the various services offered:

Credit Cards Card Membership/Joining Fee Photocard Annual Fees Hot listing charges Replacement Card Duplicate statement copy Debit Cards International Debit Card REMITTANCES - (DDs/MTs/TTs) Amount of the Instrument

Amount of Charges / Interest NIL Rs.100/- ( only once ) NIL NIL Rs.100/Rs.50/-

NIL

CHARGES (Rs.)

Non-Individuals

Individuals-Rural

Individuals NonRural 20 25 30 2.25 per 1000/ Minimum of Rs. 30 2.00 per 1000/ Minimum of Rs. 225 and Maximum of Rs. 11,140/

Upto & inclusive of Rs. 1000/Above Rs. 1000/- upto Rs. 5000/Above Rs. 5000/- upto Rs. 10000 Above Rs. 10000/- upto Rs. 1 Lakh Above Rs. 1 Lakh

30 30 30

15 20 20

2.50 per 1000/ 1.75 per 1000/ Minimum of Rs. 30 Minimum of Rs. 25 2.25 per 1000/ Minimum of Rs. 250/ and Maximum of Rs. 11,140/ 1.50 per 1000/ Minimum of Rs.175/ and Maximum of Rs. 11,140/

The pricing factor is very important because of the kind of competition that is prevailing today in the Indian market. However it is very important to understand that in the banking sector, the main pricing policy is concerned with the interest rate charged. This interest rate is however regulated by the RESERVE BANK OF INDIA. In spite of the constraints in the pricing policy due to the RBI directives there are mainly three types of pricing methods which are adopted by majority of banks, including IOB. They are: Value pricing: Banks having unique or different products or schemes mainly do this type of pricing. They usually charge a combination of high and low prices depending on the customer loyalty as well as the products. This type of pricing strategy is usually coupled with promotion programmes. Going Rate pricing: The most commonly used pricing technique is the going rate pricing. In going rate pricing, the bank bases its price largely depending on the competitors prices. The banks however have to stay within the RBI directives and compete. The banks may charge higher or lower than their competitors. After 1991 when the foreign banks entered the Indian market this method of pricing has gained increasing importance. Mark up pricing: This is a pricing technique wherein the cost of the service is determined and a small margin is added to it and then the final price is offered to the customers. This type of pricing is the not very popular since in the banking sector it is not very easy to arrive at the cost of the service. Thus most banks use a combination of mark up pricing and going rate pricing. The price should be set in such a manner that the customer is assured that he is not being cheated or overcharged by the bank and at the same time the bank is able to reap maximum profits. Such a pricing stand helps the bank get maximum sales as well as profits since the customer feels that by entering such a transaction he is winning.

PLACE MIX
Place mix is the location analysis for banks branches. There are number a factors affecting the determination of the location of the branch of bank. It is very necessary a bank to situated at a location where most of its target population is located. Some of the important factors affecting the location analysis of a bank are: The trade area Population characteristics Commercial structure Industrial structure Banking structure Proximity to other convenient outlets Real estate rates Proximity to public transportation Drawing time Location of competition Visibility Access

It is not necessary that all the above conditions have to be satisfied while selecting the location but it should be tried to satisfy as many of them as possible. The Trade Area: The trade area is a very important factor determining the place where a bank branch should be set up. For e.g. a particular location maybe a huge trading place for textiles, diamonds or for that case even the stock market. Such locations are ideal for setting up of bank branches. Population Characteristics: The demography of a place is a very important factor. This includes: The income level of the population The average age The average male female population The caste, religion, culture and customs

The average spending and saving habit of people. These factors are very important for a bank as the help them decide the kind of business the branch will get. Commercial Structure: The commercial structure refers to the level of commerce i.e. business activities taking place at a particular location. The higher the level of business activities taking place in a particular location the more preferable it is for setting up a bank branch. Industrial Structure: This is nothing but a combination of the trade area analysis and the commercial structure. However the industrial structure focuses more on the kind of industries operating in a particular location. For example, an area like SEEPZ is marked with a lot of electronic manufacturing units. Thus the industrial structure determines the kind of financial transactions that could take place in a particular location. Banking Structure: The Banking structure refers to the existence of other banks in the area. Whether there is already an efficient network of other bank branches operating at that particular area. Thus the overall infrastructure needed for the working of a bank. Proximity of other convenient outlets: This refers to the other branches of the same bank as well other commercial, entertainment and industrial outlets. Real Estate Rates: This is mainly dealing with the cost factor involved in opening up a bank branch at a particular location. The real estate rate is a very strong factor influencing the location decision for a bank branch.

Proximity to public transportation: The location should be proximate to public transportation facilities. This means it should have bus stops close by as well as it should be proximate to railway stations so as to make it convenient for the common man. Drawing Time: Drawing time refers to the time period during which a customer can draw money from the banks. It should be convenient to the customer and somewhat flexible to accommodate the customers needs. No bank has more than a certain amount with them and in case a customer wants to withdraw an amount more than that available with the bank, the bank needs to draw that amount from other banks. Hence, a location must be such that it facilitates minimum drawing time. Location of Competition: The existence of other banks also means competition. If the level of competition is very high in a particular location, it is necessary that a bank does a lot of market research before opening a branch so as to estimate the kind of business it would get. Visibility: The location of a branch should be such that it is visible and easily noticed by the customers as well other people. Access: The bank branch should be very easily accessible to the customers. If this is not the case, the customer might switch to some other bank, which is more convenient to him and very easily accessible. The location should be such that it is very convenient for the customer to reach. Indian Overseas Bank has opened 433 branches in 2011-12 and plans to add 13 more branches, taking the total number to 2,630, Indian Overseas Bank by the end of this financial year.

Promotion Mix

Promotion is nothing but making the customer more and more aware of the services and benefits provided by the bank. The banks today can use a lot of new technology to communicate to their customers. Two of the fastest growing modern tools of communicating with the customers are: Internet Banking Mobile Banking

Different Ways of Promotion Public Relations: In todays competitive scenario developing strong public relations is very important for any bank to be successful. Bank has a separate Public Relations department. However primarily it is considered as a responsibility of the various bank managers to develop a steady and strong relationship with their present customers as well as potential customers. This can be done by a constant follow up, small programmes etc. Personal Selling: Personal selling is found to be one of the most effective and popular forms of promoting bank business. The main reason for this is that banking is a service in which trust plays a very important role. In personal selling, a bank representative goes to the customers and explains the scheme to the customers. Also he gives the customers any kind consultation he might need. He provides the customers all the information sought by him. The representative tries to persuade the customers to go for the scheme provided by the bank by telling him all the benefits. Here are some of the important features of personal selling It is a direct relation between the buyers and the seller It is oral presentation in conversation It is personal and social behavior It is found to be more effective in service oriented organizations It is based on the professional excellence or expertise of an individual

Sales Promotion: Sales promotions are basically giving the customers some additional benefits, maybe at times just some small gifts, in order to promote the schemes. The more innovative the sales promotions the more positive are the results. Some of the most popular sales promotions techniques are gifts, contests, fairs and shows, discounts and commission, entertainment and traveling plans for bankers, additional allowance, low interest financing etc. It is very important that the sales promotions benefits are designed in such a manner that they are better than those of the competitors. Word of mouth Promotion: This form of promotions is not only very effective in banking services but in any kind of service. However it is more important in banking for the only reason that this is a service where trust plays a very important role. If a particular banks services are recommended by friends, relatives, or other well wishers the person is more influenced and inclined towards that bank. It is very important to note that the internal employees of the bank play a very important role in word of mouth promotion technique. This is because they can start the process by recommending the bank to their friends and relatives and after that it is like a chain, which spreads like a wild fire. Telemarketing: In recent times telemarketing has gained increasing importance as an effective tool for promotion. The telemarketing is a process of making use of sophisticated communication network for promoting the banks. This includes promoting through television, telephone, and radio. Nowadays, cell phones are used extensively for the same. This is the most popular form of promotion. Banks today have started using SMS and many other services supported by cell phones to provide benefits to their customers and thus have tried to increase their sales. In todays competitive and modern scenario it very important that banks makes use of telemarketing techniques very efficiently to have desirable results. Internet: The use of Internet as a promotional tool is increasing. More and more banks are using Internet to promote their services. The online banking has made it even easier for the customers to avail the banks services. No longer do people have to go to their bank branches

for small petty matters like checking their balance etc. All this can be done with the help of a few clicks. Thus, these were the numerous ways in which a bank can promote its services and create more awareness amongst the people.

People
People are the employees that are the service providers. In a banking sector, the service provider plays a very important and determinant role in rendering the customers a satisfactory and a good service. It is extremely essential that the service provider understand what his customers expect from him. In the banking sector, the customer needs to be guided in a lot of matters, which is possible only with the help of the service provider.

The position in the eyes of the customer will be perceived by appearance, attitude and behavior of the customer contact employees. Not only does the customer contact employee influence the customers perception but also the customer base of the organization does so.

To realize its potential in bank marketing, IOB become conscious in its potential in internal marketing the attraction, development, motivation and retention of qualified employeecustomers 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 dont meet customers expectations, then neither does the service. Therefore, investing in people quality in service business means investing in product quality.

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

Flow of activities: All the major activities of IOB 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: IOB has got standardized procedures for 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 IOB 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 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 executives 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. The physical evidences also include signage, reports, punch lines, etc. Signage: Each and every bank has its logo by which a person can identify the company. Thus such signage are significant for creating visualization and corporate identity. Financial reports: The Companys financial reports are issued to the customers to emphasis or credibility. Tangibles: Bank gives pens, writing pads to the internal customers. Even the passbooks, cheque books, 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. The punch line of IOB is Good people to grow with

ASSIGNMENT Marketing of Services

Submitted By: Priyanka Srivastava 110234, A2 PGDM (2010-2012)