Marketing in the Banking Industry Prescott Valley, Arizona

Abridged Literature Review

Reflective

Annotated Bibliography

While there are many industries in the world that are growing at a rapid pace, one of them is exceedingly doing well. This is because it relies upon the monies and funds of its customers and greatly influences the other industries as well. This is the banking industry. Although a common part of every consumer's life, the banking industry has been growing and developing globally. To understand such growth, the attention instantly goes to the strategic and marketing techniques that have been applied by the people of this industry. Therefore, to gain a thorough and concise outlook of the marketing wonders that have continue to enable the banking industry to succeed at all fronts, the research topic that has been proposed for this research paper is 'marketing in the banking industry'. This topic will not only aid in understanding the marketing methods of this sector, but also help us understand the reasons that make this industry highly influential in the overall consumer market, where it supports other industries as well by means of loans, advances and guarantees to businesses and individuals. Keeping in mind the above benefits to the user of the report, the above topic has been proposed for this study.

Introduction

Banking is one of the most important service industries existing in the economy today with that affect not only the economy itself but also the social aspects as well. Being a service industry by nature, the banking industry focuses mainly on the providence of superior quality services compared to its rivals to its customers in order to gain a greater market share.

Banks have little value without a customer base. It is their deposits with which banks earn investment income, and through giving the customers advances or loans, banks earn interest income. Interest income forms the largest part of a banks' income portfolio, with income from investments coming in at second. The key for a bank's success is not only to create customers for itself, but also retain them via efficient and effective customer service (Perrien, Filiatrault, & Ricard, 1993).

One of the main aspects of providing better services to the customers is to create the perception that they are better than those being provided by the rival banks. This is where marketing steps in to the picture. Banks need to market their products in a manner that not only highlights their superior quality service as well as the product details in comparison to other rival banks that not only appeals to the customers, and convinces them to purchase those banks' services. More than anything, since banking services are value adding services, the customers must feel like that the products will add value to their current banking needs, and will serve them better (Laukkanen & Lauronen, 2005).

The basis of each marketing strategy for banks depends on the same foundations. The primary task for the marketing department of any bank is to identify the financial wants and needs of the customers in the market (Lovelock, 2011). Then accordingly develop banking products and services to satisfy those needs and to convert wants into needs. Pricing for these products and services should be a very meticulous exercise. It should reflect the quality of the product, as well as be competitive with similar products and services offered by rival banks and financial services providers in the market. The pricing will affect the strategies adopted for the promotion of the product and services as well along with the nature of the product and its target market.

The product and services should be marketed to potential as well as existing customers through channels that are available to the bank with regard to its budget. The channels of marketing include on air as well as off air advertisements with promotional schemes, discounts, special time offers and other methods being used along with the use of media like television, radio and newspapers. The products and services being marketed should be as such to meet customer expectations when they arrive at the branches to avail them.

There should be continued research into how to better their products and services, as well as come up with new ones to maintain the customer base and market share, with prospects of increasing it further with improved services, and innovative products.

A major part of marketing for banking companies is the promise of customer satisfaction which is advertised is delivered or not. This largely rests on upon the interaction of the customers with the concerned banking representatives. It must be communicated from the senior-most executives to the junior-most customer-services officers to ensure...

This is forms the basis of relationship marketing.
According to Theodore Levitt, relationship marketing is described as 'an approach which emphasizes the continuing relationships that should exist between an organization and its customers.'(Levitt, 1985).

It is the belief that with the increase in the amount of transactions with the bank, the relationship intensifies with each transaction and subsequent to the sale of the product.Relationship marketing is not only at the customer service point or at relationship manager level but at every point in the organization. The call centre representative handling a query or the operations personnel processing a transaction are both drivers of relationship marketing.

Abridged Literature Review

According to Borugadda Subbaiah, as with any product, the focus point of all marketing strategies is to create such a brand image that the consumer not only recognizes and prefers over rival brands but also relates to. The relating-part is important as this shall cause the consumer to make repeat purchases and become loyal to the brand of the bank (Subbaiah, 2012).

The creation of a brand image is important, especially for potential customers of the bank who have yet to experience the quality of the products and services offered by the bank first-hand. The intangible nature of the bank's products and services makes it difficult for a potential new customer to judge its quality beforehand, unlike with manufactured products, which one can see and touch. Hence, the brand being built by the marketing department will be of crucial important here as it will be a gateway to the endless possibilities that the bank is trying to sell to the potential new customers.

It must be noted that the products and service offered by the bank is inseparable. They success of a product with each and every customer depends on the type of customer service being provided by the bank representative with regard to delivering the product capabilities to the customer. Standardization of banking products and services is not only difficult but pretty much not an option as mentioned before, they both depends upon the bank representative delivering them. Joachim Nagel, member of the Bank for International Settlements, has indicated how the banking markets can be segmented and then targeted in the current economic depression, post-banking crisis of 2008 (Nagel, 2013).

Nagel elaborates how the market segmentation process works in the banking industry. The central rationale behind the segmentation strategy lies in the nature of the bank as a financial institution set up to serve the needs and wants of the customers, rather than battling out for comfortable situations that allow for its own organizational convenience. Segmentation in the banking industry can be achieved by regrouping the products and services into separate departments for each type of customers. The customers can be segmented with regard to their business activity, keeping in mind factors such as the accessibility, measurability and sustainability. Further segmentation of customers can be performed on the basis of their profession, income levels, social status, geographical area etc.

The financial crisis had resulted in a loss in confidence in banks, and a significant rise in the risk-averse secure-investment portfolios, indicating a higher counterparty risk. Today, unsecured trading in maturities that age longer thanthree months are quite rare. One of the major factors that have propelled the marketing in the banking industry forward by a large extent is the technological advancement. Internet Banking and Mobile Banking have taken the products and service being provided to another level, with more and more customers opting for the convenient internet banking services over the inconvenience of visiting the nearby bank branch.

Member of the Board of Governors of the Federal Reserve System, Allen N. Berger, has pointed out that the technological advancements have not only resulted in cost improvements but also have served to increase the lending capacity via "back-office technologies" (Berger, 2003). The technological advancement has also led to more efficient and targeted marketing methods that personally intimate to the customer according to their banking history and their lifestyle of any new promotions and products that might interest them as Vadlamani Ravi (Ravi, 2008). As a result, productivity increases in terms of improved quality but also the variety of banking services being made available.

Since the banking industry is entrusted by the customers with their finances, the need for regulation in the banking industry becomes highly…