7 P's of Banking Sector

Executive Summary: Nowadays, the service industry, especially banks, faces increasing competition. In such environment, differentiation is necessary. The general purpose of this thesis is to understand how a bank can achieve differentiation based on a marketing approach. Two research questions will respectively examine the three additional P’s of the marketing mix (People, Presentation or Physical Evidence and Process) and the Customer Relationship Management as possible differentiators.

To fulfill the purpose, we introduce an extended model of the CRM concept, including the three additional P’s.

After an analysis, it is concluded that the extended model of the CRM concept is actually used as a differentiator. However, as the major Indian bank have a similar strategy; it then appears really difficult to differentiate to a large extent. Background The importance of financial services is self-evident for the well being of economies as well as societies. Major providers of such services are banks, next to mortgage credit companies and insurance companies.

Banks, in this context, are commercial retail banks, offering a wide range of financial services and even insurance.

Main functions of banks are, according to Encyclopedia Britannica (2006), the provision of loans and the acceptance of deposits. Corporate customers use banks for issuing finance instruments and derivatives. The provision of, among others, instruments for saving, financing, payment mediation and risk controlling are offered in markets characterized by federal regulation and stiff competition.

Due to the resulting pressure, financial service providers are forced to evaluate current strategies and to find new ways of approaching the market.

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The service nature of bank offers represents an additional challenge. A possible way to realize distinct offers is to promise and deliver superior solutions to the problems of customers. The fact that services cannot be patented provides great danger to imitation. Marketers must be aware of this threat and have to create offerings that are unique or only imitable at a high cost.

Having such an offering provides for differentiation from competitors. In recent years, relationship marketing is an approach that has been used substantially. Marketing techniques can provide some tools for setting a bank apart from competitors, focusing less on products and more on additional services and the establishment of long term relationships with customers. Services customers in general do not buy services because of the service itself, but rather focus on potential benefits gained through that purchase.

An example could be that customers of a bank do not purchase a savings product for the pure safekeeping function, but rather for the promised interest payments on it. Consumers have imperfect information and therefore rely upon assistance to gain important and valuable information from the service provider. Financial service providers must therefore offer the required assistance and use this for successful businesses. The biggest banks can be seen as their respective main competition, due to their offering of similar financial services.

A way to remain competitive in the more and more complex banking environment is the use of the Customer Relationship Management (CRM) concept. The basic approach of CRM in a banking context is to center all operations of a bank on its customers, creating a ‘CRM state of mind’ in an enterprise wide manner. CRM then consists of such sub-concepts as internal marketing, relationship marketing, Total Quality Management (TQM) and customer care. This underlying thesis approaches the topic of bank differentiation from a marketing perspective.

However, due to the complexity of the subject of marketing, this thesis apply a Customer Relationship Management approach that is extended by three additional P’s (see theoretical framework), from the service marketing literature to narrow the focus of this study. Despite the possibility to identify a basic bank loan as a product to some extent, there is always some kind and amount of service involved when speaking about bank offerings. Therefore the terms financial service/s, financial product/s, bank service/s, bank product/s, and bank offering are used interchangeably.

In recent years, financial institutions of all types are operating in an increasingly competitive market environment. In response to this volatile market environment, commercial banks have shown a renewed interest in marketing their products to their customers more effectively. To remain competitive, financial institutions, including banks of all sizes, utilize marketing tools and techniques. Relationship marketing is a way for banks to gain competitive advantage, since technical advances can be copied, whereas relationships cannot.

The service nature of bank offers represents an additional challenge. The banking transactions are invisible; the transfer of money from one account to another cannot be seen and is therefore difficult to evaluate. As a result banks have to be concerned with making them known for more noticeable offerings. The two general definitions of differentiation. The first one is the ‘process of differentiating’. The second offered definition states differentiation as “development from the one to the many, the simple to the complex, or the homogeneous to the heterogeneous”.

Product differentiation is defined as the marketing of slightly modified products. The aim of these products is to become irreplaceable. Products can be modified on two levels, a physical and a psychological level Modifications on a physical level include for example materials used, design and quality aspects. Advertising campaigns and reputation building for the producer are aspects that can lead to different psychological perceptions. Usually both levels of product differentiation are applied, and the use of brand names and trade marks plays an important role in this area.

The concept of differentiation is described as a process of adding distinct characteristics that are not only meaningful but also valued, to the offerings of a company in order to distinguish the goods or services from the ones of competitors. A description of differentiation in a service industry context, claiming that sophisticated companies never offer their branded services as pure commodities. Differentiation at the lowest product level is extremely difficult because these basic products can easily be copied. The difference is created by differing brand relationships from those of competitors, which eads to a distinct image in the mind of a customer. A variety of possible ways of differentiation. Sophisticated companies manage to find chances to distinguish themselves from competitors at every point of customer contact.

Differentiation measures such as form, durability and reparability are devoted entirely to physical aspects of products, and are therefore not applicable in service environments such as the banking sector. The aspect of the ‘physical plant’, relating to image differentiation, deals with facility design. Banks must communicate an image of safety through e. . the architecture of the building, the interior design and materials. There are basically two aspects that reason the use of differentiation: one being competitiveness and the second one being profitability. Successful differentiation increases competitiveness by creating an irreplaceable product, allowing companies to extend product life cycles. Referring to products, the delivery of performance quality has been found to be positively correlated with the Return On Investment (ROI), allowing businesses to charge higher prices for a better product.

As current topic only deals with the problem of differentiation of banks from a marketing perspective to a small extent, the authors of this thesis decide to explore the concept of differentiation through the marketing approach. The marketing mix concept, consisting of the so called 4 P’s: Product, Price, Promotion, and Place (Distribution) presents the starting point of this research. However, it appeared that these traditional marketing factors are not useful in the context of financial service differentiation.

Expanding the concept of the 4P’s of the marketing mix by adding three additional P’s to service environments. The marketing of services in general, relies heavily on the employees of a service provider. The very nature of service delivery requires the contact of at least one employee and the customer. Knowing this, financial service providers can identify people as a major way to make a distinct offering in the mind of its customers. Purpose The general purpose of this thesis is to understand how a bank can achieve differentiation based on a marketing approach. Questions The questions underlying this thesis are:

1. Do the three additional P’s offer sufficient variables that can be used to achieve differentiation for SBI?
2. How can a bank achieve differentiation from competitive banks by focusing on Customer Relationship Management?

Introduction: State Bank of India (SBI) is the largest nationalized commercial bank in India in terms of assets, number of branches, deposits, profits and workforce. With the liberalization of the Indian banking industry in the mid-1990s, SBI faced stiff competition from the private sector and foreign banks which resulted in significant loss of its market share.

The case describes the efforts of SBI to regain its lost market share by undergoing a major restructuring exercise which involved redesigning its branch network, providing alternate banking channels, emphasis on lean structure and technology up gradation. The case also discusses how SBI is building its image as a customer friendly bank by launching innovative products & services and promoting its brand. History: The origin of SBI dates back to the early 19th century, when the Bank of Calcutta was established in Calcutta (present day Kolkata in the state of West Bengal) in June 1806 under the aegis of the Government of Bengal.

Three years after its inception, the bank was renamed Bank of Bengal on receiving its charter. It was a unique banking institution as it was the first joint-stock bank in British India. Next came the Bank of Bombay in April 1840 followed by the Bank of Madras on July 1843. By 1876, the three presidency banks, together with their branches, agencies and sub-agencies, covered major inland trade centers in India. Bank of Bengal had 18 branches while the other two had 15 branches each.

Initially, the business of these anks was restricted to discounting bills of exchange or other negotiable private securities, keeping cash accounts and receiving deposits and issuing and circulating cash notes. The last quarter of the 19th century witnessed rapid commercialization in India owing to the expansion of the railway network, to cover all major geographic regions of the country. The three presidency banks were both beneficiaries and promoters of this commercialization process as they became involved in the financing of practically every trading, manufacturing and mining activity in the Indian sub-continent.

The three presidency banks were amalgamated in January 1921 to form the Imperial Bank of India. The new bank performed the triple role of a commercial bank, a banker’s bank and a banker to the government. However, the quasi-central bank role performed by the Imperial Bank ended with the formation of the Reserve Bank of India (RBI) as the central bank of India in 1935. RBI’s establishment was a catalyst in the conversion of the Imperial Bank into a purely commercial bank. At the time of Independence in 1947, the Imperial Bank had acquired a paramount position in the country’s banking industry. It had a capital base of Rs. 18. 5 mn, deposits of Rs. 2. 7514 bn and advances of Rs. 729. 4 mn.

It had a network of 172 branches and over 200 sub-offices spread all over India. When the first Five Year Plan was launched in 1951, the rural sector was given top priority. The Imperial Bank and other commercial banks too operated mainly in urban areas and had not yet penetrated the rural sector. To overcome this lacuna, it was recommended that a state-partnered and state-sponsored bank be created to take over the Imperial Bank and integrate the former state-owned or state-associated banks with it 7 P’S of BANKING SECTOR ( SBI)

It is very important for any bank to identify the 7 P’s of services so as to understand their customers better and provide them with best of service. The 7 P’s are:

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

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 today’s competitive scenario it has become very necessary for a bank to provide it’s customers with a wide variety of services and the best technology in order to attract them.

Here is an example of some of the products offered by SBI Bank to its customers. Offering SBI Bank’s Savings Account is just the right product for everyone, salaried, employees or businessmen, high net worth individuals and NRI’s. The unmatched package of SBI Bank Savings Bank account given below brings the benefits of better, efficient and hassle free banking.

• ATM Network
• 7-Day Banking
• Telebanking
• iConnect-Internet

Banking Offering SBI Bank has joined hands with Citibank, to give rise to a new kind of card power – unique and unmatched benefits and international SBIlity at the most competitive rates.

The SBI Bank Citibank International Silver Card, the MasterCard and ‘Unique’ Card offers quite a few benefits. Rewards Dial-A-Draft Credit Limit Increase 24-Hour ATMs Photo card Concession on Personal Remittances Overdraft facility Free ATM Card PRODUCT WIDTH AND DEPTH Width Width of the product mix is the number of product lines a company is offering. The product width could be a narrow one or a wide one depending from bank to bank. A wide mix encourages more sales since the banks are able to diversify and provide more to their customers and they also appeal to a larger target market. Depth

Depth of the product mix is the number of product items in each product line. Banks with more schemes and services have more depths than those offering only a few. Here is table giving an example of Width and Depth in the Product Mix: Similarly, different banks plan out their product portfolios and based on that, the depth and width of their product mix can be determined. In today’s scenario, where there is cutthroat competition and new foreign banks entering the Indian markets, it has became more or less like a law to have very wide product lines with more and more number of products in each line. PRICE MIX

The price mix in the banking sector is nothing but the interest rates charged by the different banks. In today’s 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, DMAT etc. Another important aspect of the bank’s pricing policy today is the interest charged on the Home Loans and Car Loans. With India’s economy progressing, there are more and more buyers seeking these loans but at a very competitive interest rate. Let’s understand this with an example.

A particular buyer approaches a bank for a car loan for a period of 3 years. He is charged Rs. 20,000 as interest. However, if a sale representative of another bank comes to know of this deal, he will try to attract the customer by giving him a better deal i. e. a loan at a lower rate on interest. In this way, it is the customer that ultimately benefits. Here is an example of some of the prices charged by SBI bank for their services ATM Card IssueFree – 2 ATM cards issued free if it joint account Add – on CardRS. 100 – Beyond 2 cards Duplicate CardRs. 100 Other General Charges Current AccountSavings Account

Transaction ChargesNILNIL Charges for issue of Cheques bookNILNIL Issue of duplicate statementRs. 25 per pageRs. 25 per page Account closureRs. 100Rs. 100 This example evinces some of the charges that the customer has to pay for the services provided by the bank. 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 and THE INDIAN BANKING ASSOCAITION.

Any one particular bank or a group of banks does not regulate it. The interest rate charged cannot be higher than that decide by the RBI and the INDIAN BANKING ASSOCIATION. Thus, inspite of the constraints in the pricing policy due to the RBI directives there are mainly three types of pricing methods adopted by banks. 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 competitor’s 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 MOST FAVORABLE PRICING STRATEGY This model shows a pricing strategy, which should be adopted in order to ensure maximum satisfaction to both the bank as well as the customers. 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:

1. The trade area
2. Population characteristics
3. Commercial structure
4. Industrial structure
5. Banking structure
6. Proximity to other convenient outlets
7. Real estate rates
8. Proximity to public transportation
9. Drawing time
10. Location of competition
11. Visibility
12. 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.

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:

1. Internet Banking
2. Mobile Banking

This can be better explained with the example of UTI bank. SMS services SMS functions through simple text messages sent from your cellular phone. These messages are recognized by SBI bank to provide you with the required information. For example, when you enter ‘IBAL’ your cellular phone screen will display the current balance in your primary account. Thus with the help of SMS a wide range of query based transactions can be performed without even making a call. SBI was the first organization in India to provide Wireless Application Protocol (WAP) based services.

Mobile commerce using WAP technology, allows secure online access of the web using mobile devices. With WAP one can directly access the ICICI WAP server, check one’s account details and use other value added services. Thus different methods are used by different banks to promoter its services. A bank may have very attractive schemes and services to offer to their customers but they are of no use if they are not communicated properly to the customers. Promotion is o inform and remind the individuals and persuade them to accept, recommend or use of product, service or idea.

However there some very important points that is to be considered before the promotion strategy is made. These points are: Finalizing the Budget Before the bank decides the kind of promotion that should be done, it very important to finalize the budget for it. The formulation of a sound budget is essential to remove the financial constraints in the process. The budget is determined on the basis of volume of business of the bank. In addition to this the intensity of competition also plays a decisive role. Selecting a suitable vehicle Another very important task is to select a suitable vehicle for driving the message.

There are a number of devices to advertise such as broadcast media, telecast media and the print media. The selecting of the mode of advertising is strongly influenced by the kind of budget decided. Usually for promoting banks the most effective and economical form of advertising has been the print media. Making possible creativity Making possible creativity is nothing but the kind of slogans, punch lines etc. that are supporting the message. They should be very creative but yet simple to be understood by the common man. It should appeal to the customers.

It should be distinct from that of the competitors and should be successful in informing and sensing the customers. Testing the Effectiveness It should be borne in mind that the advertisement is first tested for its effectiveness. This should be done with the help of various techniques like testing effectiveness on a sample group. This helps determine the success of the advertisement and in case of any problem the advertisement can be altered and remedied. Instrumentality of Branch Managers At a micro level, it is the responsibility of the branch managers to promote and drive the message to the people in the local area.

They should organize small programs in order to attract people and crate awareness in the local area about the new schemes of the bank. Different Ways of Promotion •Public Relations:

• Personal Selling:
• Sales Promotion:
• Word – of – mouth Promotion:
• Telemarketing:
• Internet:

PEOPLE

In banking term people means customers and the employees. 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 customer’s perception but also the customer base of the organization does so. Customers are broadly classified into three categories Normal Account Holders

Business / Partnership Account Holder Government 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. Process can be broadly classified into to parts

1. Deposit and advances
2. Ancillary Services

Deposits and Advances: In this part customer transactions are considered whether it is cash deposit, check deposit, cash withdrawal, draft making, fixed deposit, recurring deposit.. All these are the part of recurring deposits. In general we can say that monetary transaction is the part of deposits and advances. Ancillary Services: According to 1949 banking services act sub section 6, ancillary services were introduced in the banking sector. In this part bill of exchange, promissory notes, business guarantee given by bank on behalf of an individual to company or country.

We can say that non monetary policies are the part of ancillary services and this part is very important part of banking sector because it deals with the sensitive issue of verifying and giving approval to somebody to do business on the guarantee of bank. PHYSICAL EVIDENCE Physical evidence is the overall layout of the place i. e. how the entire bank has been designed. Physical evidence refers to all those factors that help make the process much easier and smoother. For example, in case of a bank, the physical evidence would be the placement of the customer service executive’s desk, or the location of the place for depositing cheques.

It is very necessary that the place be designed in such a manner so as to ensure maximum convenience to the customer and cause no confusion to him. Let us see an example as to how banks try to make little changes so as to make the service better for their customers. Thus, these are the 7 P’s of services. Each of them plays a very important and a pivotal role in determining the quality of the service provided to the customer. SUGGESTIONS Customer Relationship Management Recent trends for businesses of all industries, as well as banks, show a movement towards a stronger customer orientation, rather than a product orientation.

This customer orientation can be facilitated by developing and implementing CRM systems. CRM is an advancement of relationship marketing, now involving concepts of the overall marketing concept, total quality management, internal marketing, customer care, and relationship marketing. CRM concepts have to be realized within an organization in order to be successful with its external customers. Further, the main focus of CRM is the employees, which eventually achieve relationships with customers, turning a CRM program into success.

A successful CRM program is only possible when the attention is equally divided towards customers and employees. Internal marketing and relationship marketing are identified to be able to achieve a better internal and external business environment, making them a matter of differentiation. In order to successfully implement a CRM concept, the use of sophisticated CRM computer technology is inevitable. Such software can be used to gather data from separate systems or units and provide an overall picture of customers and their relationship with the organization.

Overall marketing concept In terms of the CRM concept, the overall marketing approach as how a bank defines marketing for itself and what the broad goal of the resulting orientation is. Internal Marketing (IM) The concept of internal marketing refers to a marketing approach within an organization, aimed at employees. Internal marketing can be defined as a heavy investment in employee quality performance. Internal marketing is a process where the overall principles of marketing are applied within the company in order to become customer focused to the highest possible extent.

Total Quality Management Total Quality Management (TQM) as an organizational approach, aims to continuously improve the quality of all processes in an organization, products and services. Relationship Marketing An approach to identify individual customers, to create a relationship between the company and its customers that lasts over many transactions; and to manage that relationship to the benefit of the customers and the company. Relationship marketing is a management process engaging in a triangular relationship between marketing, quality and customer service. These three elements are interrelated and serve each other. Furthermore, relationship marketing focuses especially on the retention of customers, establishing a long-term orientation focusing on customer service.

CRM MODEL INTERNAL MARKETING

Three additional P’s: Services, being the fastest growing segment of the economy, provide for additional challenges and opportunities. The traditional 4 P’s were created to fit with tangible goods. Extending the traditional 4 P’s by three additional ones applicable especially in service environments.

The new P’s are referred to as Process, Physical Evidence or Presentation, and People. Kotler refers to the 4 P’s (Product, Price, Place and Promotion) as being universal. Concerning the service marketing field, some additional factors can be introduced. In order to develop service quality: People, Presentation and Process are to be considered also in financial service marketing Process Process is the way to deliver the service, focusing on ensuring availability and uniform quality provided. It will decide how customers will get their needs met in the system.

For example, earlier in the banking industry, the customers were waiting in separate lines for each teller. Deutsch (1990) proposed that a single waiting line for multiples tellers is the most common way of process. The study of Gerstner (2002) presents the branch network of banks consisting of diverse entities, where branches have own micro markets influenced by demographic and economic history. Gerstner (2002) argues that expecting identical sales and performance levels leads some branches to follow goals that are not aligned with their markets, which in return leads to underachievement of these branches.

However, even if the theory claims that the process is an important factor of differentiation in the service industry, it appears that in the Indian banking industry this is not a valid criterion. Indeed, Stefan Nyrinder declared that SEB does not consider the process as a decisive factor to differentiate. Presentation or Physical evidence The presentation is important for banks; since people will develop an according image and style for the bank. If a bank, for example, wants to have the image of a user-friendly bank, its interior will look somewhat like a living room, with sofas, plants, and smiling employees.

On the other hand, if a bank wants to have a hi-tech and efficient image, the interior will show a lot of computers and latest technology as well as hard working and busy employees. Strategically placing, for example, flat screen televisions and computers with online access in a branch offers both, the opportunity to inform and entertain waiting customers as well as the chance for applying branding graphics to such devices, naming brand image as a key factor for corporate survival, proposes that the presentation, or bank office design, is an important step in creating and delivering the desired brand image.

The exterior design can be utilized to communicate e. g. the history and values of the respective institution. The use of color in combination with texture and finishes is identified to be a simple but very effective factor of differentiation, helping to convey particular messages to the customer and creating a special atmosphere affecting employees and customers likewise. Two types of graphics can be used to establish identity, marketing graphics and branding graphics. While marketing graphics promote products and services, branding graphics enhance brand image and should be used complementary with all marketing activities.

Kotler claims, banks have to communicate an image of safety through e. g. the architecture of the building, the interior design and use of building materials. People In the service industries, people are of utmost importance. The service provider is one of the most crucial parts in the provision of services, being for example friendly, knowledgeable and professional. The marketers of the services must select, train and motivate their frontline people. Proper training can make a big difference in the customer satisfaction.

According to Kotler, Internal Marketing “describes the work to train and motivate the employees to serve customers well”. Service marketing requires not only external marketing, but also internal and interactive marketing. For Foss and Stone people in the banking area, and in the service industry in general, are the most important aspect. This is also reinforced by the service marketing triangle. “Building high value, loyal, lifetime relationships is the most powerful competitive tool a firm possesses”.

Management has the task to check, encourage and reward employees for building relationships and checking if the customers are satisfied. As a conclusion, it appears that numerous authors accredit a very important role to people in the differentiation approach. People also have a key part in the general strategy of the bank. An extended CRM model The elements people, the presentation and the process can be considered as a part of the CRM concept as shown before. The authors will thus propose a new model which is considered to be more relevant for a differentiation purpose.

The extended model of CRM consists of three aspects. People, as mentioned before, are targeted by and interact in the IM, TQM, relationship marketing and customer care. Since employees and customers are present in all these four elements, the authors of this thesis decided to include them in one section. Kotler identifies service quality as a key to competitive success. Offering a high quality service is thus a way to differentiate from the competitors. Moreover, there is an increasing competition in the service area, and in such environment, firms need to differentiate.

Service quality strategy, for example a service quality management program, to differentiate. Moreover, service quality is one of the major values expected by the customers. We focus on the service quality, as a way to differentiate, in their model. The extended CRM model proposed, introduces four factors contributing to increase the service quality: the Internal Marketing, the TQM, the relationship marketing and the customer care. The aim of the Internal Marketing is to increase the quality of the services offered by the firm. Total Quality Management is an organization-wide approach to continuously improving the quality of all the organization’s processes, products and services”.

The relationship marketing, consists of building a high value, loyal, lifetime relationship. It is also a competitive tool. The core nature of the relationship obliges the firm to improve its service quality. Indeed, keeping the customer loyal or building a long term relation provokes a high service quality. Reducing the loss of customers, attracting new customers and improving customers and employees satisfaction are three of the aims of the customer care.

A consequence of these aims is an improved service quality. As a result, the authors of the thesis consider internal marketing, TQM, relationship marketing and customer care as subprograms allowing service quality. Therefore service quality is the major objective also in a CRM concept. All parts dealing with the internal marketing, customer care, relationship marketing and TQM are considered as primary differentiation tools. They allow for proposing a good service quality which is the major way of differentiation for banks Presentation and Process are not considered by as important as the people aspect. They will then be presented accordingly as secondary tools of differentiation.

Conclusion

The human element is a major factor of differentiation. As a consequence, a people-based marketing approach has been identified by the authors to be relevant for this study: the Customer Relationship Management (CRM). There are different factors influencing the basic CRM concept: internal marketing, customer care, Total Quality Management, overall marketing and relationship marketing.

The way and to which extent service companies approach and deal with these concepts will eventually create unique organizations that stand out from their competitors. Additionally, the writers of the thesis present the three additional P’s stated in e. g. Kotler , especially adapted for the service area: Process, Presentation and People. The three new P’s can be related and included into the CRM concept, extending the initial model to a more complete one that can be applied to this underlying study. Existing theory from established researchers does not provide for achieving truly outstanding characteristics for a retail bank.

The reason for this may be found in the general image of a bank representing trust and a sense of seriousness. Airlines (Southwest Airlines) for example or restaurants (McDonalds) can contain an image of fun and still operate profitable, thereby being very different than their respective competitors. The number of banks differentiating to such extents can be estimated to be rather small. Banks differentiate within smaller dimensions, being able to retain an image of trustworthiness and seriousness. Secondary tools of differentiation

Process SBI customers have access to service in all SBI branches. Additionally, every branch offers all SBI services (except few), no matter what size or location. All branches are operating independently and are responsible for their operations. In case a branch needs help, it can request different kind of support which will then be provided by the regional banks. The goal is that every branch has to manage the customers who are in the area of their “church tower” The branches of SBI offer similar services at every branch.

However, some special need for example a single business with a large amount of export transactions might not find the service they need at some smaller branch offices, due to the non profitability of offering such a service for a single customer, customers can access all services provided at any offices: Basic services are provided by all branches of SBI, no matter what size, but specialized services like e. g. corporate advisors are available on request in smaller branches. The special competence is provided by regional headquarters. Presentation SBI does not use the physical design of its facilities to differentiate.

As with almost all decisions, every branch is different and responsible for itself. The autonomy of branches is represented by some completely different designs between SBI branches. There is e. g. a futuristically designed SBI office in some in India and abroad, still having a rather old fashioned design. Each office has to justify investments like facility design according to its profitability. The design of the branches of SBI should be characterized as similar, because, customers should recognize the bank they enter no matter which branch they visit.

SBI should pay special attention to the design of its branches, for example, all offices should use specific colors and similar materials.. As a consequence, “when you go to the SBI branch, you can recognize the SBI branch […] you feel home”, personal communication, SBI should use the presentation to differentiate from its competitors. SBI should come with a branch design policy, but does not enforce it at any cost, due to the belief that it is not economically reasonable. However, when branches are refurbished, the design policy has to be followed.