Marketing Practices of Uttara Bank Limited

The main focus of this report is to analysis Marketing Practices of Uttara Bank Limited. General objectives of this reports are to get practical exposure to organizational environment as well as to understand the system and methodology adopted in conducting day to day banking by The Uttara Bank Limited, to analyze the marketing practices of Uttara Bank Limited, to point out the tools of marketing mix adopted by Uttara Bank Limited and to provide some suggestions and recommendations to improve their performances of marketing.

The Objectives of the Report

The prime objectives of the report is to get practical exposure to organizational environment as well as to understand the system and methodology adopted in conducting day to day banking by The Uttara Bank  Limited. Besides this report has been composed to obtain the following objectives:

• To analyze the marketing practices of  Uttara Bank Limited
• To point out the tools of marketing mix adopted by Uttara Bank Limited
• To provide some suggestions and recommendations to improve their performances of marketing.

PROFILE OF UTTARA BANK LTD.

Background History

UTTARA BANK LTD. started its operation from 3^rd August 1999. This is a scheduled private commercial bank, which was established on May 20, 1999 under Bank Companies Act 1991. In 1^st July 2004 UTTARA BANK LTD. converted full pledged Islamic bank from conventional bank. At present, there are 30 branches in operation spread all over the country. Within a very short period of time, UTTARA BANK LTD. has been able to create an image for itself and has earned significant reputation in the banking sector of Bangladesh. This institution attracted the customer’s attention through its different schemes. All these efforts ultimately lead to the profit generation for the Bank. For survival and growth of any business institution profit generation is must. Like other commercial banks, UTTARA BANK LTD. has specific target for collecting as well as distributing those deposits through different Credit programs for consumers and businesses. Prudent investing by the management and constant monitoring helps the Bank to attain its target and contributes to the growth of the bank as a whole and particularly its branches.

The Bank started its Journey with an authorized capital of Taka 1000 million and a paid up capital of Taka 313 millions contributed by the sponsors. The sponsor directors of the bank are well-established businessman and professionals of the country having business in and out Bangladesh. The company philosophy –“Local Bank global network “ has been precisely the essence of the legend of the banks success.

The Principal Businesses of Uttara Bank Ltd.

Trade Financing

After setting up UTTARA BANK LTD. added new strength in its trade financing activities. Previously there was limited used of “SWIFT” which is very crucial in efficient modern banking correspondence. Now UTTARA BANK LTD. bank has correspondence with over 800 financial institutions worldwide. UTTARA BANK LTD. bank provides L/C payment, L/C advising, negotiation, reimbursement, shipping guarantee, export bill collection services to its valued clients. UTTARA BANK LTD. Bank’s one of the strongest international banking arms, helping to serve their clients through its global network.

Corporate Banking

Uttara bank Ltd. Bank corporate banking arm provides a range of products and services that address the financing needs and transaction structuring requirements of large and mid-sized corporate customers. Services provided include loan syndication and asset sales, corporate advisory, trade finance, and working capital and term financing. Working closely with the Bank’s trading professionals; Corporate Banking also provides a range of foreign exchange, interest rate management and risk management products.

Private Banking

The Private Bank at UTTARA BANK LTD. Bank meets client needs with a line of discretionary portfolio management, custodial services, foreign exchange, deposit services, credit facilities, and personal banking services.

Retail Banking

Retail Banking at UTTARA BANK LTD. Bank provides all types of clients with typical banking services such as, savings accounts, current accounts, call and short-term deposit accounts, fixed deposit accounts, time deposits, foreign currency accounts and secure locker services.

Conception about marketing of Banking Services.

Evolution of the Marketing Concept

The Role of marketing in the banking industry continues to change. For many years the primary focus of bank marketing was public relations. Then the focus shifted to advertising and sales promotion. That was followed by focus on the development of a sales culture.

Although all the elements of the marketing concept – customer satisfaction, profit integrated framework and social responsibility – will remain important, customer satisfaction must receive the greatest emphasis in the years ahead.

The chief concerns of most bank executives still focus on legal and regulatory issues, according to most surveys. Community banks are particularly concerned with eliminating barriers that give unfair advantages to financial services competitors, such as credit unions. However, another concern pertains to technology: keeping nonblank competitors out of the payment system.

Table: Bankers Identify Near-Team and Long Term Concerns

When this gateway system was first proposed, access to the Internet was very new and few banks had the resources and knowledge to set up their own direct-access lines for customers. Customers have shown a growing interest in online banking services, and banks have responded  quickly putting in place proprietary sites on the World Wide Web and offering PC banking.

Within the next five years, 93 percent of community bank executives surveyed say they plan to offer telephone banking, and 79 percent plan to offer PC banking.

When asked which technology holds the most potential for the future, bank executives identified call centers first. As customers continue the transition the transition into a high-tech world in which they want information and answers more quickly and accurately than ever before, call centers offer the ideal bridge. With 24-hour access to either automated information or live operators, customers do everything from check their accounts to apply for a loan. Bank executives also identified PC banking as having the most promise for the future, followed by Interest access and broad function kiosks.

Marketing and Competition

In view of the declining profitability and productivity of the banking sector and extremely low rate of profit percentage, the determination of the financial health of the system requires drastic remedial measures not only to build up investor confidence but also to combat competition from all over. It is time that the pros and cons of the oncoming banking era are properly understood and advantage taken of various opportunities. This will require an efficient marketing approach to bank management in which target markets will be tackled successfully along with effective satisfaction levels and in which the usual basic elements – product, pricing, promotion and distribution will be taken care of in a proper format of an efficiently working marketing organization.

The nationalized banks must face competition from private banks, non-banking financial institutions, foreign banks and others. The competition is in the fields of deposits and credits, foreign trade, consumer credit and miscellaneous banking activities. The competition will benefit customers and force the banking system to raise its productivity, minimize expenses, and remain sensitive to evolving issues. Narasimham Committee Reports while recommending internal autonomy long with compliance with prudential norms suggested rule-based credit policies, fiscal balance and a gradual movement towards liberalization.

To deal with the competition from foreign banks, the Indian banks should go in for diversification and extension of services as well as expansion of products and business. Economic freedom and innovative spirit have contributed greatly to the success of the market-oriented financial sector in the Western countries. Directed credit and investment has done just the opposite. Interventionism is not necessarily bad provided it is associated with a committed leadership. Indian financial sector had for more than four decades, neither full economic freedom nor a well disciplined interventionism so that it cost operational flexibility as well as functional autonomy both of which were concerned with profitability performance and related factors.

Marketing Concepts

Its application to Banking, when we apply marketing to the banking industry, the bank marketing strategy can be said to include the following –

1. A very clear definition of target customers.
2. The development of a marketing mix to satisfy customers at a profit for the bank.
3. Planning for each of the ‘source’ markets & each of the ‘use’ markets (A Bank needs to be doubly market – oriented – it has to attract funds as well as were of funds & services.
4. Organisation & Administration.

Bank Marketing

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:

• The bank cannot exist without the customers.
• The purpose of the bank is to create, win, and keep a customer.
• The customer is and should be the central focus of everything the banks does.
• 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.
• Ultimate aim of a bank is to deliver total satisfaction to the customer.
• Customer satisfaction is affected by the performance of all the personal of the bank.

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. For developing marketing philosophy and marketing culture, a bank may require a marketing coordinator or integrator at the head office reporting directly to the Chief Executive for effective coordination of different functions, such as marketed research, training, public relations, advertising, and business development, to ensure customer satisfaction. The Executive Director is the most suitable person to do this coordination work effectively in the Indian public sector banks, though ultimately the Chief Executive is responsible for the total marketing function. Hence, the total marketing function involves the following:

1. Market research e. identification of customer’s financial needs and wants and forecasting and researching future financial market needs and competitors’ activities.
2. Product Development e. appropriate products to meet consumers’ financial needs.
3. Pricing of the service e., promotional activities and distribution system in accordance with the guidelines and rules of the Reserve Bank of India and at the same time looking for opportunities to satisfy the customers better.
4. Developing market e., marketing culture – among all the customer-consciousness ‘Personnel’ of the bank through training.

Thus, it is important to recognize the fundamentally different functions that bank marketing has to perform. Since the banks have to attract deposits and attract users of funds and other services, marketing problems are more complex in banks than in other commercial concerns.

Increasing Importance of Marketing in Banking Industry

The various other factors which have led to the increasing importance of marketing in the banking industry are categorized as follows:

Government Initiatives

The Bangladeshi economy embarked on the process of economic reform and various policy measures initiated by the government resulted in the increasing competition in the banking industry, thereby highlighting the importance of effective marketing. The standing Committee Report evidence of the Government’s desire to ‘re-regulate’ the banking industry so as to encourage efficiency through competition. The Government initiatives include:

 Deregulation of Interest Rates

The bank may reduce their Minimum Lending Rates so as to attract customers (individual and corporate). Such reduction in lending rates reduce the spread between the deposit rates and lending rates, i.e. the banks margins would decline and they would have to increase their volumes or provide attractive services so as to maintain profits. This calls for bank marketing.

Increasing Emphasis on Bank Profitability:

With the Bangladesh Bank Report, banks have been directed to improve their efficiency, productivity and profitability. Banks are required to be self-sufficient. In fact, the report has adopted the BIS standards of capital adequacy (though in a phased manner).

Foreign Banks

Foreign banks offer stiff competition to the Bangladeshi Banks and with their superior services and technologies offer them a competitive advantage. Thus indigenous Banks have to effectively apply marketing concepts to attract customers.

Entry of New Private Banks

In the early ‘90s new competition emerged in the form of new Private Banks, who brought along with them a high technology-based banking matching with International Standards and have made a significant dent in the banking business by capturing substantial share in the profits of the banking industry.

Reduction of Statutory Liquidity Ratio:

With the Government’s aim of reducing the SLR to 25 percent, the banks will have surplus funds for which they will have to attract users.

Social Environment

Increasing Urbanization, Education and Awareness: The higher literacy level, migration to urban areas and higher awareness due to the boom in the mass media have important implications for the retail banker. He needs to be conscious of the fact the increasing proportion of people are aware of financial service and are, therefore demanding and expecting higher quality services.

Increasing Urbanization, Education and Awareness: The higher literacy level, migration to urban areas and higher awareness due to the boom in the mass media have important implications for the retail banker. He needs to be conscious of the fact the increasing proportion of people are aware of financial service and are, therefore demanding and expecting higher quality services.

Decline in Traditional Indian Values (Borrowing as Taboo), Rising Consumerism, Rise in the Percentage of Working Women.

Technology Development

Modernization of Technology has facilitated the introduction of new banking services as to attract new customers. An example of this is the ‘Automated Teller Machines’ or the facility of ‘Any Time Money’. Also in foreign countries, banks are experimenting with money transmission at Point of sale, e.g., petrol station linked with banking network.

Credit is Easier to Obtain

Growing Importance of Non-Banking Financial Institutions: Fixed Deposits being offered by the NBFC’s are very attractive for the public, because of the wide gap of interest rates offered by banks on term deposits and that offered by the NBCS’s. further, they offer a variety of specialized services to their customers so as to attract and retain them.

 Disintermediation: The increasing role of capital markets in mobilizing funds is reducing the importance of banks as intermediaries. Companies are directly approaching the savers through the capital markets. Mutual funds help in attracting the small investors who do not want to take much risk.

Marketing Concepts – Its Application to Banking

When we apply marketing to the banking industry, the bank marketing strategy can be said to include the following:

1. A very clear definition of target customers.
2. The Development of marketing mix to satisfy customers at a profit for the bank.
3. 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).
4. Organization and Administration.

Consumer Behavior and Segmentation

Need for 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 tits 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 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. 4,00,000 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 Bangladesh

The private commercial banks of Bangladesh has already initiated to adopt the market segmentation concept.  They actually segmented  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.

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.

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.

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.

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.

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 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 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 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 processes 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 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.

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 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 apposition 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.

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 to the bankers and call this bakers’ promotion. Like this, the incentives offered to the customers are known as customers’ promotion. There are a number of tools generally used in the different categories of organizations in the face of the nature of goods and services sold by them. The gift, contests, fairs and shows, discount and commission, entertainment and traveling plans for bankers, additional allowances, low interest financing and retalitary are to mention a few found instrumental in promoting the banking business.

As and when the banking organizations offer new services and schemes, the tools of sales promotion are required to be innovated. This is with the motto of stimulating the new and old customers. An important thing in the very context is the changing needs and requirements of customers/prospects. The bank professionals bean outstanding task of studying the competitors’ strategies which would he them in initiating the process of innovation. Here it is important to mention the promotional incentives to the customers would focus on decisions related to the selection of a tool. There are a number of considerations to streamline the process. The bank professionals are supposed to study the market conditions and make necessary suggestions, specially regarding the incentives.

It is a blending process and bank professional have to be sure the whatever the provisions, they make are fulfilled on priority basis. More incentives more efficiency or a vice-versa conditions more efficiency, more-incentives motivate bankers substantially.

Word-of-Mouth Promotion: Much communication about the banking services actually take place by word-of-mouth information which is also known as word-of-mouth promotion. In the banking industry, we find use of different components of promotion and in the context it is essential that we also talk about word-of-mouth communication which makes the process of influencing the prospects effective by sensitizing the word-of-mouth recommendations. The persons engaged in communication, the hidden salesforce who play an incremental role in increasing the demand. An important question regarding the word-of-mouth communication is related to its intensity of sensitizing the persuasion process.

The problem before the bank professionals is to identify the persons to be included in the list of word-of-mouth promoters. It is supposed that a bank manager is well aware of the social composition of his/her command area. The oral publicity plays an important role in eliminating the negative comments and improving the services. This helps you know the feed back which may simplify the task of improving the quality of services.

It is important that a branch manager has an in-depth knowledge of his/ her command area and a list of word-of-mouth promoters is prepared. Organizing dinner, offering to them a gift and seeking their cooperation are the process to use this tool of promotion. A satisfied group of customers is considered to be the most successful hidden promoters. A branch manager showing his/her excellence in improving the quality of services in his/ her command area, establishing an edge over the services of the competing banks, promoting LGD marketing (lunch, golf, dinner marketing) successds in instrumentalising the word-of-mouth promotion. It is against this background that this component of the promotion mix is found getting due place.

In this component of the promotion mix, we find two important considerations, first the bank professionals are required to make it sure that the promised services reach to the ultimate users and second, the word-of-mouth promoters are offered small but new incentives which have not been offered by their competitors. The list of word-of-mouth promoters is to be based on a survey result or on the personal experiences of a branch manager. A revision in the list is made possible as and when circumstances necessitate so. The innovative peripheral services offered by the banks are well publicized and the word-of-mouth promoters focus on the same intelligently.

The Price Mix

In the formulation of product mix, the pricing decisions occupy a place of outstanding significance. 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 Bangladesh Bank  and the  Banking Association are concerned with the regulations. The rate of interest is regulated by the BB and other charges are controlled by the Banking Association. To be more specific in the Bangladesh setting, we find this component of the marketing mix significant because the banking organizations are also supposed to subserve the interests of weaker sections and the backward regions. The public sector commercial banks in particular are supposed to play developmental role with societal approach. It is natural that this specific role of the public sector commercial banks complicate the problem of pricing.

Pricing policy of a bank is considered important for raising the number of customers vis-à-vis the accretion of deposits. Of course, there are a number of factors to influence the process but it is also right to mention that the key role in the entire process is played by the Bangladesh Bank. A National Consumer Survey Conducted by the L.H. Associates reveals that the quality of Consumer service was one of the three top issues and the consumers ranked the quality of their bank relationships as even more important as the fees charged for the services. To be more specific when we find a number of domestic and foreign banks working in the Bangladeshi economy, the Bangladesh Bank bears the responsibility of making the business environment conductive. The non-banking organizations and foreign banks have been found attracting customers by offering to them a number of incentives. The potential customers or investors frame their investment plans in the face of pricing decisions made by the banking organizations. While formulating the pricing strategies, the banks have also to take the value satisfaction variable into consideration. The value and satisfaction can’t be quantified in terms of money since it differs from person to person, keeping in view the level of satisfaction of a particular segment, the banks have to frame their pricing strategies. The policy makers are required to be sure that the service offered by them is providing satisfaction to the customers concerned. The pricing decisions may be to bit liberal, if the potential customers are found shifting to the non-banking investments. In this context, it is pertinent that pricing is used as motivational tool.

The banking organizations are required to frame two-fold strategies. First, the strategy is concerned with interest and fee charged and second, the strategy is related to the interest paid. Since both the strategies throw a vice-versa impact, it is pertinent that banks attempt to establish a correlation between the two. It is essential that both the buyers as well as the sellers have a feeling of winning as shown in figure.

The banks have to take the value satisfaction variable into consideration while designing the pricing strategies. McIver and Naylor opine that a marketing manager has to regard price as a variable to be traded off against product quality and promotion rather that as an absolute where the lowest price is not desirable.

The BB has to be more liberal so that the public sector commercial banks make decisions in the face of changing business conditions. There is no doubt in it that the commercial banks bear the responsibility of energizing the social marketing, they are also supposed to bear the social costs. It is also right that the foreign banks have been found making the business environment more competitive. These emerging trends necessitate a close look on the pricing problem. The policy makers find it difficult to bring a change since the regulations of the BB make things more critical. The expenses are not regulated by the BB and the banking organizations are forced to increase the budgetary provisions. The sources of revenue are regulated which complicates the task of bank professionals. This makes it essential that the Bangladesh Bank , the Government of Bangladesh and the banking organizations thing over this complicated issue with a new vision.

 The Place Mix

This component of the marketing mix is related to the offering of services. The two important decision making areas are making available the promised services to the ultimate users and selecting a suitable place for bank branches.

The selection of a suitable place for the establishment of a branch is significant with the viewpoint of making the place accessible and in addition, the safety and security provisions are also found important. The banking organizations are not free to open a branch since the Bangldesh Bank  regulates the subject of branch expansion but so far as the management of branch is concerned, the branch managers have option to select a place which is convenient to both the parties, such as the users and the bankers. In the Bangldeshi perspective, the protection to the bank’s assets and safety to the users and bankers need due weightage. The vulnerable area or regions need adequate provisions to make the branch safe. The management of office is also found significant with the viewpoint of making the services attractive. The furnishing, civic amenities and parking facilities can’t be overlooked.

Another important decision making area is related to the offering of services. This draws our attention on the behavioral profile of bankers. The bankers in general and the front-line-staff in particular bear the responsibility of making available the services-promised to the ultimate users without any distortion often a gap is found generated by front-line-staff that makes an invasion on the image of bank. The bank professionals or a branch manager is required to be sure that whatever the promise has been made regarding the quality of services are not distorted. The BB and the different public sector commercial banks are required to manage the distribution process intelligently and professionally. Thus, the place mix is found to be an important decision making area which requires due attention, both at macro and micro levels. If the banking organizations sell the promises it is essential that the end users get the same without any distortion.

The People

Sophisticated technologies, no doubt, inject life and strength to our efficiency but the instrumentality of sophisticated technologies start turning sour if the human resources are not managed in a right fashion. Generation of efficiency is substantially influenced by the quality of human resources. It is against this background that a majority of the management experts make a strong advocacy in favour of developing quality people and late, the people management has been include dint he marketing mix of organizations is general and the service generating organizations in particular.

Not only the public sector commercial banks but almost all the public sector organization and albeit other government departments, of late, have been facing the problem of quality people resulting into inefficiency, deceleration in the rate of overall productivity and profitability or so. The front-line staff are rough and indecent, the branch mangers are helpless and even the bankers have been found involved in the unfair practices. The public sector commercial banks need to assign on overriding priority to the development of quality people majority of the management of the experts have realized the significance of quality people in the development of an organization and the boardrooms are also found changing their attitudes. The first task before the banking organisatoins at the apex level is to overhaul the recruitment processes. While fixing criteria for selection, they need to assign due weightge to the ethical values. The education and training facilities are required to be innovated. The process of identification and inculcation need to be managed carefully.

The foreign banks and the private sector commercial banks reward for efficiency and at the same time also demonstrative the inefficient bankers. This helps them in improving the efficiency of even the inefficient people. The development of human resources makes the ways for the formation of human capital. Incentives, of course, inject efficiency and the organizations offering more incentives succeed in motivating the people.

• Having better and cost-effective control over operations.
• Enriching the job content of employees at all level (by reducing the drudgery of mundane operations and increasing the analytical content of their work).
• Improving the quality of decision-making, a must in the fast changing environment.

Thus, the key focus areas in which information technology can be employed are:

• Automated processing of back-office operations like processing of forms, policy customerization and product selection, pricing and preparation of quotations, etc.
• Computer assisted telephone and intelligent voice processing for customer call handling, new business marketing or handling after office hours enquires.
• Image processing for documents storage and retrieval, folder management (or all documents related to a customer), and workflow management for the movement of documents with the bank.
• Artificial intelligence and expert systems for complex decision-making like the appraisal of the creditworthiness of clients, designing of innovative instruments and strategy formulation.
• Relational Database Management System (RDBMS) for the systematic use of information which would facilitate the cross-selling of products.
• Electronic Data Interchange (EDI) for company-wise communication and inter-connection of systems for the benefit of both the bank’s MIS and the customer.
• Office Management Systems for accounting and administrative support.

All the above systems should be “client-based systems” and not “line-of-business systems” since these would provide better marketing and service to clients, facilitate cross-selling and customerization of schemes and hence, a better packaging for the product. This would help Indian banks “thing customer”.

All these would, thus, help in the effective management of time. Recourse to mechanized systems like ledger posting machine, cash counting machine and cheque sorting machine would result in reduction in the number of tedious and routine jobs to be handled manually saving time for the people to focus on the customer

Strategies for Effective Bank Marketing in Bangladesh

Since the inception of globalization in Bangladesh, banking sector has undergone various changes. Introduction of asset classification and prudential accounting norms, deregulation of interest rate and opening up of the financial sector made Bangladeshi banking sector competitive. Encouragement to foreign banks and private sector banks increased competition for all operators in banking sector. The protective regime by the authority is over. Bangladeshi banks are exposed to global competition. Even competition within the country has increased manifold. The almost monopoly position enjoyed by the public sector banks of Bangladesh is no more existence. Under this development Bangladeshi banks needs to reinvent the marketing strategy for growth.

The spread of the bank in Bangladeh rural and semi urban areas are highly different from state to state and region to region. Many devision have fewer networks of bank branches in the rural areas. Under such scenario different marketing approach for different areas is required. If the bank follows the same marketing strategy for all areas the success would be difficult.

Marketing approach for urban area: The urban areas of Bangldesh are developed taking into account all parameters of development. The level of income of the people, the literacy rate and level of education as well as awareness of the people about rights of the customer are higher than that of the rural and even semi urban areas. Thus here for effective bank marketing different approach is necessary than that of rural areas.

The marketing strategy should be based on customer service and the use of modern technology in banking. Under competitive environment for the success of the business, better customers and retaining existing customers is possible only with customer service. Use of modern technology in urban areas will also go long way for marketing of banking services. Technology based service like credit card, debit card, ATM, anywhere banking, internet banking, and mobile banking are necessary for urban areas. This is because it enables customers to perform banking transactions at their convenience. Business hours of a bank are also an important factor for urban banking. India many private sector banks, especially co-operative banks and now even some of the public sector banks have also started this practice and they find it successful. To attract business and wholesale customers, banks need to adopt technology based product and service which is suitable to such class of customer. For instance RTGS, collection of out station cheques, issuing the cheques at par at any branch in the country, cash management facility, DD butiques etc. are necessary.

Marketing approach for rural areas:

Banks need t develop some scheme which would attract them to bank with. For loans and advances products which are suitable to tarmers, small traders, small scale agro based rural industries are already in existence. Banks need to see the how value addition can be mad to these existing scheme. Banks also needs to tie up with Non Government Organisations and various Self Help Group for different types of loans, micro financing etc. This will help the bank for building good image and reputation in the rural areas over and above the business. Another potential area which can be explored by the banks in the rural area is retail banking. With the steady increase in the income of the rural people there is ample scope for retail loan products like housing loans and loan for consumer durables.

Marketing through customer services in rural areas is different from that of urban areas. Here personalized banking is the success mantra for banks. Because of high level of illiteracy people prefer to undertake banking transaction themselves. They hesitate to depend upon technology based service. For effective marketing in rural areas bank should have staff with right soft skill like concern for customers’ problem, positive attitude, good communication and negotiation skill. At every level of dealing with the customer bank need to educate them for banking activates and process. To attract the customers from the unorganized sector most important factor is to provide. The borrower the required finance of right amount at right time.

Promotion:

Uttara Bank usually considers all sorts of promotional mix like:

1. Advertising:

Like other banks, Uttara bank also provides their promotional efforts in different media. Since the advertising is the most attractive media, it is used by all the banks. Several times we can see different types of add to persuade the prospective customers showing the attractiveness of the deposit scheme, consumer credit scheme and others.

Beside these, job advertisement is also circulated in the newspaper and internet job side.The following are the media that use by the uttara bank.

a) News Papers.

b) Internet.

c) Billboards.

d) Publication on the Supplementary.

Public Relation: Confirming the corporate social responsibility(CSR) Uttara bank Ltd. also took part in the several beautification project, cleanliness drive. Besides, they also act as sponsor in different events, sports, or the donation especially to the disaster victim people through prime ministers fund.

Personal selling:

Personal selling is the strongest media to promote its product with personal attachment in banking industry. Uttara bank Ltd. also has set of employees to promote their product in the market. They employ the manpower for collecting the deposit; persuade the client to take the credit from the bank. Also, where credit card is available they frequently inform about their card and influence them to take it by their personal quality as well as the organizational norms. In some of the

Cases where fund is inadequate (rural areas), the branch manager even meet different organization to be a corporate client of them promising to pay handsome benefits and services.

Segmentation, Targeting and Positioning:

Market segmentation: Uttara Bank chooses their target based on the income, occupation, and profession of clients across the country.

Market targeting: Uttara Bank has a target market

Product positioning: Uttara Bank is positioned on quality services.

Findings and Recommendations

Problems

The primary purpose of this study report is to get an idea about the “Marketing  Practice of Uttara Bank Ltd”.  After being an intern in this bank it is  found some important points that can be considered as the gap between the theory and practices.

• Uttara bank has massive weakness in adopting modern technology as far as the e-banking implementation is concerned.
• The bank still has traditional product mix (though some are added) and it lacks some product like student saving or like that taking as a target market.
• The Bank has substantial branch network throughout the country but the question is productivity.
• Though Uttara bank has recovered itself in providing the quality service to the customer, still it inadequate compared to the some of the foreign as well as the indigenous bank while survive is a fact.

RECOMMENDATIONS

From the through investigation about marketing practices, its lack of using   modern banking technology and some of the marketing strategy.  To improve the business condition of Uttara Bank Ltd. and to gain the lost market share I suggest implementing the following suggestions:

Management of the Bank is to work for creation of conceptual framework covering core elements of developed “Model Marketing Plan – (MMP)” of UBL to face the competition a changes in the banking industry into the new millennium for sustained growth of business / profitability of the bank. To accomplish the tasks of formulation of “MMP” focus should be made on the following issues:

Business philosophy that identifies current and future opportunities, defines magnitude and quantum, determines target markets and cluster, and decides on products, services and programs to secure entry to markets for economic and financial gains were made. The aim of planned marketing efforts is to understand customers and to ensure that offered products and services adapt to targeted customers’ needs perfectly. The marketing plan to be designed to perform tasks of stimulating demands for Bank’s products and services to influence the level timing and composition of demand help customers’ consummate their business objectives.

Ideas of satisfying the customers’ needs by means of products and the entire cluster of action as associated with creation / delivering and finally consuming the products and services.

The bank should increase the budget on promotional activities.

They should highlights on physical evidence; such as tangible clues and atmosphere of the bank.

They should develop new features of their offerings.

They should employ the skilled manpower.

Process to be employed to interpret markets, customers’ needs and transformation: defining mission / objectives and goals, portfolio plans and new business plans. The plans were structured in 3 (three) operational levels: corporate level, business level and product level. The marketing mission was converted into specific objectives for each level targeted at: profitability, market-share, positioning, risk-diversification and innovation. The objectives to be made quantifiable, realistic and consistent towards useful implementation of the marketing action plan. The portfolio plan involved in reviewing of the current portfolio of businesses and deciding on new businesses and potential thrust sectors.

Identification of market opportunities through analysis of subjective issues, concepts, strategies and techniques of penetration to create market along with efforts to integrate actions based on collected data to fit into real banking solution having operational linkages with the marketing plan “ “Model Marketing Plan – (MMP)” of UBL.

Natural inducement of the target groups to UBL is that customers must perceive greater degree of satisfaction from the offered services. The qualitative improvement and development of cutting-edge products precipitate in higher degree of customers satisfaction and UBL to plan for improvement of services, adding flair to the products like introduction of ATM / On-line banking / Credit Card / Debit Card / introduction of relationship Manager and Customer-friendly deposit schemes.

Finally, Uttara bank must focus on attracting, and getting and retaining qualified personnel for filling up its positions as it is expanding. It is worth spending more on attracting qualified human resources rather than getting the wrong people in the wrong positions.