Concept of Marketing in Banks

 

Banking is a Service Industry. A "Bank" is a commercial enterprise engaged in creation of services  for satisfaction of consumer's wants. A bank is concerned with creation and distribution of services. In this context, Bank Marketing refers to identification of the most profitable markets. In order to understand the meaning of the term "marketing", we need to know what market is. In simple words, a "market" is a place where buyers and sellers meet each other to enter into transactions. The transactions include and cover transactions of ideas, goods, services and information. The exchange of goods or services for money is a transaction. The offerings may the physical products, services, ideas and information. These offerings have value for their customers. 

DEFINITIONS OF BANK MARKETING 

"Sir Frederick Seebohmn defines Bank Marketing as the creation and delivery of customer-satisfying services at a profit to the bank"

"Kenneth Andrew spelt Bank Marketing as the matching of bank's resources with the customer's needs in the most profitable manner"

 "A more specific definition is given by Deryk Vander Weyer who looks at bank Marketing as a proactive business strategy aimed at organizational excellence"

"Still and Cundiff define marketing as the business process by which products are matched with markets and though which transfers of ownership are affected"

"The American Marketing Association has defined Marketing as the activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large"

You can observe that all the above definitions point out to a well laid strategy focusing on the customer. The customer is the center and all the activities have to be focused towards

• Identifying the needs of customers
• For satisfying these needs, develop appropriate products
• Providing them with efficient delivery channels for availing the services 
• Making the services available continuously

DIFFERENCE BETWEEN SELLING & MARKETING 

The buying & selling are two sides of the same coin. Selling is different from marketing; it is a part or component of marketing. 'Marketing' starts with the product idea and ends with customer satisfaction whereas 'Selling' is normally concerned with the transfer of goods and services to the consumers or prospective consumers for exchange of money. But the both "Sales" & "Marketing" plays vital role in accomplishing the objectives of an Organization. 

• Marketing is consumer oriented whereas selling is basically production oriented and concentrates much on production and distribution of goods. 
• Marketing approach calls for involvement in identifying and analyzing the profit potential of different marketing opportunities whereas selling focuses on means of achieving a certain volume of sales. 
• The scope of the term 'Marketing' is much wider than that of the term 'Selling'. Marketing includes all activities starting with the idea of producing of a product or service to satisfy the needs of the customers and ending with the satisfaction of the customers and ending with the satisfaction of the customer. As against this, selling refers to the functions and activities undertaken to secure the sale or distribution of products already produced by the firm.
• The object of marketing is to earn profits through satisfaction of customer's needs while on the other hand selling concentrates on sale volume and makes efforts to earn and maximize profits by selling more quantity of products.  

CUSTOMER

A customer, also known as a client is a current or potential buyer of a product (goods or services). A customer may view, check, experience the service but not purchase. 

The biggest challenge for an organization is to create a customer. Creating a customer means identifying needs in the marketplace, finding out which needs the organization can profitably serve and developing an offering to convert potential buyers into customers. The marketing professionals are mostly responsible to create customers. 

The activities, which are necessary to create a customers, are as follows:

• To identify the customer needs. 
• To design the goods & services that meet those identified needs.
• To communicate the information about those goods & services to prospective buyers.
• To make goods & services available at times and places that meet customers' needs. 
• To price goods & services to reflect costs, competition and customers' ability to buy.
• To provide necessary service and follow-up to ensure customer satisfaction after the purchase.

EVOLUTION OF MARKETING

Marketing has changed over the centuries, decades and years. The production centered system systematically changed into relationship era of today and over the period; the specializations have emerged such as sales versus marketing & advertising versus retailing. The overall evolution of marketing has given ri se to the concept of business development. Marketing has taken the modern shape after going through various stages. 

Production Orientation Era:

The era was marked by narrow product-lines; pricing system based on the costs of production and distribution, limited research, primary aim of the packaging was to protect the product, minimum promotion and advertising meant, "Promoting products with a lesser quality". The mantra for marketing success was to "Improve production and distribution". The rule was "availability and affordability is what the customer wants".

Product Orientation Era:

The attitude changed slowly and approach shifted from production to product and from the quantity to quality. The prevailing attitude of this period was that consumers favor products that offer the most quality, performance and innovative features and the mantra for marketers was 'A good product will sell itself', so does not need promotion.

Sales Orientation Era:

The increased competition and variety of choices/options available to customers changed the marketing approach and the attitude was "Consumers will buy products only if the company promotes/sells these products". This era indicates rise of advertising and the mantra for marketers was "Creative advertising and selling will overcome consumers' resistance and convince them to buy".

Marketing Orientation Era:

The shift from production to product and from product to customers later manifested in the Marketing Era which focused on the "needs and wants of the customers" and the mantra of marketers was, 'The consumer is king! Find a need and fill it. The approach is shifted to delivering satisfaction better than competitors are.

Relationship Marketing Orientation Era:

This is the modern approach of marketing; today's marketer focuses on needs/wants of target markets and aims at delivering superior value. The mantra of a successful marketer is 'Long-term relationships with customers and other partners lead to successes'.

The concept of Marketing in banking industry emerged in the late fifties in the West. Observers cite the early 1960s as the period when the banker's attitude and comprehension about marketing changed. Bank directories, publications and banking trade journals of the period show a gradual transition from usage of the term "public relations" to "marketing". Beyond the mid and late sixties, the bank customers wanted more convenience, more services, and more personal (or technical) assistance. The business of banking became more complicated in the process. During the later years, Commercial Banks which had been very 'commercial' in orientation became increasingly interested in retail side of the business. The very nature of banking changed beyond the 1960s. And the change was essentially a marketing response - doing what the customer wanted.

FEATURES OF MARKETING

Marketing Management refers to planning, organizing, directing, control of the activities which facilitate the exchange of goods and services between the producers and end consumers. Firms today need to spend money to create time, place and ownership utilities.

The main features of modern marketing are as follows: 

1. Exchange is the essence of marketing

Marketing revolves around commercial exchange. This also involves exchange of technology, exchange of information and exchange of ideas.

2. Marketing is Goal Oriented

The ultimate goal of marketing is to generate profits through the satisfaction of the customer.

3. Marketing is a continuous process

Marketing is not an isolated, static process but is a complex, continuous and interrelated process. It involves continuous planning, implementation and control. It is an important functional area of the management.

4. Marketing is Consumer Oriented

All firms exist because of their business to satisfy the human needs, wants and demands. The ultimate objective of marketing is to find out what the consumer wants and how to fulfill consumer need. This leads to production of the goods and services as per the needs of the customer.

5. Marketing starts with consumer and ends with consumer

Marketing is consumer oriented and it is very important to know what the consumer wants.

6. Marketing is a science as well as art

Marketing has evolved from economics but it has a closer relationship with social and behavioral sciences. Marketing is closely associated with streams of science as well as humanities and subject lines such as Economics, Law, Psychology, Anthropology, Sociology, Information Technology, etc. Marketing heavily depends upon the demographic features of the target market, political environment, philosophy, mathematics, statistics, etc.

MARKETING CONCEPT

The Marketing Concept is a customer orientation backed by integrated marketing aimed at generating customer satisfaction as the key to satisfying organizational goals.

The marketing concept replaces and reverses the logic of the sales concept. The sales concept starts with the product or service and considers the task as one of these using selling and promotion to stimulate a profitable volume of sales. As against this, the marketing concept starts with the firm's existing and potential customers and their needs. It plans a coordinated set of products and programmes to serve these needs; and it hopes to build its profits on creating meaningful value satisfaction.

The three salient features of the concept are:

Customer Orientation 

This calls for a basic reorientation of the organization from looking inward towards its products/services to looking outward towards the customer's needs.

Integrated Marketing

This can be best explained in the words of Peter Drucker, "The purpose of a Company is to create a Customer:" It implies that not only sales or marketing but all departments of any organization must recognize that their actions have a profound effect on the company's ability to create and retain customers.

Customer Satisfaction

 The third important factor is the idea that the deciding factor in the company's prosperity will be the amount of customer satisfaction that it manages to generate. It must be recognized that customer's satisfaction is not the only or sole aim of business, it is the by-product. The aim of the marketing concept is more to help than to please.

Considering the competitive threats to banks, fast changes in socio economic conditions and changing profile of the customer's preferences and life style bankers have still to do a lot to formulate and reformulate suitable strategies. The task on hand is to determine the ever changing needs and interests. of target customers and to deliver the desired satisfaction more effectively than the competitors in a way that preserves and enhances the society's well being.

FUNCTIONS OF MARKETING

Marketing functions start from identifying the consumer needs and end with satisfying the consumer needs. The universal functions of marketing involve buying, selling. transporting, storing, standardizing and grading, financing. risk taking and securing marketing information. However, modern marketing has some other functions such as gathering the market info and analyzing that info, market planning and strategy formation. To assist in product designing and development also comes under the marketing functions. The marketing functions have been discussed here in brief.

Market Information

To identify the needs, wants and demands of the consumers and then analyze the identified information to arrive at various decisions for the successful marketing of a firm's products and services is one of the most important functions of marketing. The analysis involves judging the internal weaknesses and strengths of the organization as well as politico-legal, social and demographic data of the target market.

Market Planning

Market planning aims at achieving a firm's marketing objectives. These objectives may involve increasing market presence, dominating the market or increasing market share. The market planning function covers aspects of production levels, promotions and other action programmes.

Product Designing and Development 

The product design helps in making the product attractive to the target market. In today's competitive market environment, not just the cost matters but the product design, suitability, shape, style, etc. also matter a lot in taking production decisions.

Physical Distribution

The physical distribution functions of marketing involve transporting and storing. The transporting function involve moving products from their points of production to locations convenient for purchasers and storing function involve the warehousing products until needed for sale. Packaging, Labeling and Branding: Packaging involves designing package for the products, labeling means putting information required/specified on a product's covering. Packaging and labeling serve as promotional tools nowadays. Branding distinguishes the generic commodity name to a brand name.

Customer Support

Customer support is a very important function of marketing. It involves pre sales counseling, after sales service, handling the customer. complaints and adjustments, credit services, maintenance services, technical services and consumer information. For example, water purifier comes with an onsite service warranty of 7 years, helps in marketing and is an important marketing function as well. 

IMPORTANCE OF MARKETING

Whether a firm is a profit making organization or a non profit making organization, marketing has to play a very important role in the firm's business, society and country. While raising the standard of living by designing products suitable to needs and wants of the customers, marketing also helps in development of the national economy. Producing goods & services for the society according to the needs and create demand for them and thus improving the standard of living of the people is one of the most important role played by marketing.

For a firm, marketing helps in reducing the cost of business by reducing market distribution cost. Marketing also helps in increase in the employment opportunities. The successful marketing channel involves services of wholesalers, retailers, transporters, storage functionaries, finance professionals, insurance services and so on. By creating, maintaining and increasing the demand, marketing indirectly adds to the national income. Marketing also helps to build a cushion against slack business and recession.

MEANING AND FUNCTIONS OF MARKETING MANAGEMENT 

Management is the process of planning, organizing, directing, motivating and coordinating and controlling of various activities of a firm. Marketing is the process of satisfying the needs and wants of the consumers. Management of marketing activities is Marketing Management. Philip Kotler defines Marketing Management as "Marketing Management is the analysis, planning, implementation and control of programmes designed to bring about the desired exchanges with target audiences for the purpose of personal and mutual gain. It relies heavily on adoption and coordination of the product, price, promotion and place for achieving response". 

Following is a brief summary of functions of Marketing

Marketing Objectives : Marketing management determines the marketing objectives. The marketing objectives may be short term or long term and need a clear approach. They have to be in coherence with the aims and objectives of the organization. 

Planning : After objectively determining the Marketing Objectives, the important function of Marketing Management is to plan how to achieve those objectives. This includes sales forecast, marketing programmes formulation, marketing strategies. 

Organization : A plan once formulated needs implementation. Organizing functions of marketing management involves the collection and coordination of required means to implement a plan and to achieve pre-determined objectives. The organization involves structure of marketing organization, duties, responsibilities and powers of various members of the marketing organization. 

Coordination : Coordination refers to harmonious adjustment of the activities of the marketing organization. It involves coordination among various activities such as sales forecasting, product planning, product development, transportation, warehousing, etc. 

Direction : Direction in marketing management refers to development of new markets, leadership of employees, motivation, inspiration, guiding and supervision of the employees. 

Control : Control refers to the effectiveness with which a marketing plan is implemented. It involves the determination of standards, evaluation of actual performance, adoption of corrective measures. 

Staffing : Employment of right and able employees is very crucial for the success of a market plan. The market manager coordinates with the Human Resource Manager of an organization to be able to hire the staff with desired capability.

Analysis and Evaluation : Marketing management involves the analysis and evalution of the productivity and performance of individual employees.