Evolution Of Bank Marketing In India Marketing Essay

Published: 2021-08-10 17:40:09
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INTRODUCTION
Bill Gates, (Founder, Microsoft Corp.) once told, ‘The Internet is becoming the town square for the global village of tomorrow.’ Digital Marketing has empowered consumers with a great deal of information and detail that was previously not heard of. This empowerment had its own advantages and limitations which could be utilized by the industry. With the introduction of Web 2.0, an interactive element to the internet saw the emergence of social networks. The world witnessed a lot of changes in social media, from theglobe.com (1995) to facebook.com (2003). Ever since then, social networks are continuously evolving, sprucing up communication amongst people around the globe.
Business Industries, adapting to rapidly changing interaction channels are now resorting to the use of social networks to keep in touch with their potential and existing customers. Banks, being the apex institutions of economies are also resorting to marketing using social networking sites like Facebook, Twitter etc. to keep in touch with their existing customers and also to attract new customers. Majority of the banks in the United States of America started using digital media, more importantly the social media to communicate with its clients. Such interactions were subject to regulations issued by Financial Industry Regulatory Authority. The reach of this media is phenomenal, however certain internal and external issues like compliance issues, possibility of brand damage and other reasons make the utilization of this media debatable. Despite the odds, statistics suggests that top 35 banks across the globe; claim some 8,817,837 likes out of a combined 1.5 billion customers from facebook alone, according to Retail Banker International, Timetric.com.
EVOLUTION OF BANK MARKETING IN INDIA
Until 1950’s, marketing was not familiar and selling services were considered not professional by bankers. The buildings resembled Greek temples which silently emphasized the importance of banks and wore a rigorous outlook. Even the bank tellers rarely smiled, and maintained their dignity. However, in late 1950’s, marketing concept slowing invaded the banking sphere in the west. Marketing was then considered more on advertising and promotional lines. Slowly customer satisfaction also blended in and became an inherent factor to be considered by 1970’s.
However these changes were not witnessed in Indian Banking sector along the same timeline owing to various socio-economic political factors. Banker’s attitudes and understanding of marketing changed significantly by 1960’s. They started looking at marketing from mere friendly tellers, to customer convince. Indian bankers started understanding the benefits of market segmentation and marketing positioning and started implementing them effectively. There were many factors that were detrimental to the effective implementation of marketing strategies’ like lack of competition, where SBI was enjoying government ownership while private commercial banks were cater to needs of the controlling houses. They did not care much for the public either. It was perfect phase of class banking. However after nationalization of the 14 banks and privatization in 1991, existing banks started facing the competition of foreign banks and other new private banks.
Since 1991, banking industry in Indian has seen a definite face-lift. Over the time, banks have grown with the international trend, in varying phrases. Indian banks started off by using print and visual media to advertise and communicate, now have expanded their reach over the internet, mobile phones etc. they evolved customer relationship management tools and deployed them effectively to retain customers and find potential target groups.
DIGITAL REVOLUTION
Digital revolution made the social media marketing possible. With its onset, it took customer experience to a new height. It provided a lot of information at an accessible form. Customers could now sort products – price, functionality, or combination of various attributes. They could use forums to get the experience of other users and expert reviews. Once the reviews are not good, the customers are unforgiving. These have led to the creation of empowered customers, and those corporations who do not wish to play by these rules, pay heavily.
Thus it called for those marketers to carefully re-think their approach towards marketing strategy and the whole business world as such.
From
To
Technology as an enabler
Technology as a driver
Seller centric
Customer centric
Physical assets
Knowledge assets
Vertical integration
Virtual integration
Functional focus
Cross-function integration
Planning process
Agility experimentation and learning
Firm-focus strategy
Network-focused strategy
Decreasing returns to scale
Increasing returns to scale
(Brian, 2010)
The development of the Internet as a communication medium has been through a number of stages, the most notable being Web 1.0 and Web 2.0. Web 1.0 was more of a narrow and relatively static medium. They were structured using Hyper Text Markup Language, which allowed people to download information and contact the marketers if desired. They sometimes had appearances of interactivity but in reality were mostly linear, one-way communications.
Web 2.0 saw the emergence of real interactivity on the net. Aided by the advent of consumer-friendly websites, and powerful search engines, the ability to find, view and interact with websites became easy. New programming technologies enabled constant and continuous feedback between marketers and consumers at every stage of online process. This being the most significant and recent development, led to the emergence of social networks, e-communities and social networking features of marketing websites, thus bringing millions of customers in contact with each other.
Digital revolution has done more than offer new choices media. It has also significantly changed consumer behavior. One of the fundamental ways that it has changed consumer behavior is in their ability to adapt to new technologies. This makes them look for newer technologies and they become ready even before a new product becomes available.
Digital revolution has also reshaped the way consumers purchase their products. The advent of forums, information sites containing detailed reviews by experts and users, blogs and other customized research aids helps them to know a product in detail even before they have visited a showroom and started to collect the respective brochures. This pulled the powers from the salesman and put it into the hands of the consumers.
With information just a click away, the empowered customers are now being actively involved in production as well as consumption. They are called the ‘prosumers’.
DIGITAL MARKETING
Digital marketing is offshoot of advances in digital technology, which occasioned the birth of Internet, the World Wide Web and the interactive media. It is more complicated and challenging than offline marketing; however if handled well it can be far more rewarding.
Digital marketing is defined as the promotion of products and services or brands via one or more forms of electronic media by Business Dictionary. It extends beyond internet marketing to include channels that do not require the use of the internet. It includes mobile phones (both SMS and MMS), social media marketing, display advertising, search engine marketing, and any other form of digital media but not including those forms that do not offer an instant feedback and return.
A few important terms to be noted are Noise and Buzz. Noise, as the name suggests is the disturbance that prevents the message from reaching the consumers effectively. It could be due to advertising clutter, customer in attention or negative publicity. Buzz is a type of noise, which was created by web, where social conversations are about the product.
There are two different approaches in digital marketing that people can opt to use for their business. The first one is pull digital marketing which involves the consumer looking for information on a product through the internet, usually via various search engines. The other approach is push digital marketing which involves the marketer sending emails and other campaigns to the consumer containing information on their product or service offering. In order to succeed in digital marketing the website content must be developed using the search engine optimization skills such as the use keywords and inclusion of links in the content.
CHANNELS OF DIGITAL MARKETING
There are plethoras of digital marketing tools and many of them are evolving day-by-day. Those channels which are searching marketing, e-commerce and e-branding, advertising on the web, online applications and mobile marketing, affiliate marketing, the social web are briefly explained below.
Search Marketing – Search marketing, uses search engines to drive traffic to one’s website. There are three types of search marketing, namely pay per click, natural search and contextual search.
PAY PER CLICK is online advertising where searchers are directed to a website after clicking on an advertisement within a search engine.
NATURAL SEARCH is the section of search engines where the results are purely based on an algorithm to help improve relevancy for the searcher.
CONTEXTUAL SEARCH is advertisement in the form of text and image ads within the content of a site.
E-Commerce and E-Branding – E-Branding is the creation and development of communications strategies specifically for brands to have meaning and content on the web. A brand needs a face, a representative, a personality to which people can connect with and recognize the brand. A step further is E-commerce which operates are an online market. The buyer and seller interact online after the former sees the display of products. Money is paid either on delivery, or by credit card or debit card, net transfers.
Advertising on the web – It refers to the graphical advertisement that appears next to content on websites, instant messaging (IM) applications, emails & other digital formats. They are called as banners and they include text, images, audio, animations, and video and sometimes even interactive content. Display advertising also facilitates tracking. It gives details about how many persons have visited the website, how many clicked on the advertisements, and their journey to the website and what was viewed on their page. This helps to ascertain Return on Investment (ROI) which has not been possible in other media.
Online applications and mobile marketing – Ever since the advent of Apple App store and Android Google Play store and other apps (applications) store, advertising has become easy. The developers who allow their app to be free usually make space for advertisers so that they are able to earn an income from their free applications too. Mobile marketing is the easiest and the fastest way to reach a customer, cookies are set to understand what kind of pages the user browses and user specific advertisements are made available when he uses the phone.
Affiliate marketing – It is an arrangement between the website management (affiliate website) and the person who wishes to advertise their content through publishing it in their website. The website management agrees to place the advertisements in its page, and there by attracting the existing or potential customers to visit the merchant’s webpage for a share in profits. They different types of affiliate marketing are Pay per Click (PPC), Pay per Sale, and Pay per Load.
PAY PER CLICK – it is an arrangement where, when a promising customer clicks on the advertisement on the website, which in turn leads them to the merchant’s page. For every click some amount is deposited into the webpage management’s account.
PAY PER SALE – as the name suggests, the webpage management’s account gets a certain percentage of premium out of every sale which the merchant and that was initiated through the click on the webpage.
PAY PER LEAD- each time promising customer registers with the merchant’s webpage, merchant pays the website management a pre agreed amount as per their agreement.
Social Web – It is a way to describe the conversations or interactions that people are having online. The social web includes social networks, blogs, wikis, micro blogging, forums, content communities and Podcasts. Marketers interact with the potential customers; retain existing customers by addressing their grievances adequately or simply by connecting them at a more personal level.
OBJECTIVES
The aim of this study is
To understand how Banks, all around the world utilize social media for marketing their products and services.
To analyze the social media’s impact in Indian private sector banks
To understand Indian customers’ perception towards banks operating via social media
METHODOLOGY
For the purpose of this study, a survey is conducted among the customers who access their banks using the social media website like facebook and twitter. A sample size of 55 is taken to analyze the reach and mindsets of young consumers who are from India. An online questionnaire is sent to a few Banks like AXIS, HDFC and ICICI where few more inputs are collected. Using varied statistical tools, conclusions are arrived at.
LIMITATIONS
There are a few limitations in this study, which are listed below
Scope of the study is limited to Indian private sector banks only and hence a complete overview of banks in social media cannot be determined
The sample size of questionnaire is limited to 55, which is a small group to arrive at any generalized conclusions
Secondary data is being used to determine the social penetration of three major Banks ICICI, AXIS and HDFC which might not be accurate.
CHAPTERS
Chapter 1
Introduction
Chapter 2
Review of Literature
Chapter 3
Social Media Marketing by Bankers
Chapter 4
Indian Private sector Bank’s reach using Facebook
Chapter 5
Customer Perception of Banks in Social Media
Chapter 6
Conclusion
Chapter 2 – REVIEW OF LITERATURE
Marketing has been a very important factor for any business to thrive, more so with the service industry. With the evolution of technology, digital marketing has had its impact felt on the marketers and consumers. A rather recent trend in communication is using social networking to interact with customers. Banking Industry being apex institutions of economies, have also started marketing in the digital way, more importantly using social networks like facebook, twitter, blogs etc. This study focuses on the traditional marketing by banks, the digital revolution which lead to the digital marketing, the channels of digital marketing with special emphasis on social media marketing by bankers.
In 2010, Sheehan Brian, in his book ‘Basics Marketing 02: Online Marketing’ explains the evolution of Digital Marketing, and how customers affected the business and thereby required a change in Business outlook. Jerry Wind and Vijay Maharajan published their paper ‘Digital Marketing; Global Strategies From World Leading Experts’ discussed the way Online marketing evolved from Web 1.0 to Web2.0 to the next level Web 3.0 and giving a perspective on how technology evolved and the manner in which they are being used.
In 2012, Marian Cramers, a social Media Analyst along with Radian6, conducted a study on ‘Data Driven Social Media: the shortest distance to a rational conversion’ where an in-depth analysis of 9 Financial service Institutions. This report provides an in-depth analysis of the consequences of being a high street name in the 21st century banking, and it offers advice on how to turn a series of 140-character comments into a focused and valuable two-way conversation. They considered British banking Institutions, like American Express, Barclays, Citigroup, Deutsche Bank, HSBC etc. They set the date between June 1st to August 20th, 2012 where UK-only conversations were mapped and linked used Excel-plug-in and Radian6 insights dashboard to analyze the trend lines by mapping out the responses of the customers. The results were presented in a trend lines mapping out the days and time of the day when reactions of customers were high owing to the financial turmoil that prevailed in the UK during the time. They concluded saying that Banks are lagging behind when it comes to social media and they need to have effective policy, to address this claim. Also any new product could be effectively spread using this tool and it is not simply like any other tool but an insight to their behavior and perceptions and needs to be used at its maximum possible advantage
In April 2012, a study was conducted by Michael A. Stelzner on – ‘2012 Social Media Marketing Industry Report - How Marketers are Using Social Network to Grow’. This study covered over 3,800 marketers irrespective of the industry they belong to, and were questioned on wide variety of essential questions. The author used survey to judge their perceptions and presented them using graphs. The major findings of the report are; Marketers place high value on social media. They are analyzing ways to measure return on investment (ROI) and find prospective customers. Video marketing is the next big thing in the market and they wish to learn more about Google+. The benefits listed out were more business exposure, increasing traffic, providing market insight and the tools which used were Facebook, Twitter, LinkedIn, blogs and YouTube. However they also said that social media takes a lot of time, almost 6 hours a week and social media outsourcing was underutilized. Peter Ghali, Senior Product Manager at iContact published a white paper on ‘Social Media Marketing: an Introduction for Email Marketers in 2011’. They surveyed 414 iContact customers to understand the challenges and goals they face with social media. This paper analyses the varied means of making social media more comfortable for marketers. There were pictorial representations given to familiarize marketers with social media.
In 2012, Cicero Consultancy brought out a study under Chris Jackson, Head of Cicero’s Digital team on ‘Made in Heaven or Marriage from Hell? Social Media and the Financial Sector’. The report is based on 158 online interviews with senior decision makers, from financial sector in October and November 2011. Respondents worked in a variety of departments across the length and breadth of the organization. The research was global in its reach and captured perspectives of finance professionals working across the globe and across varied sub-sectors in finance. The report aims to provide an analysis on current perspective and the future perspective in the financial sector towards the social media. The respondents answered various queries which have been presented in various graphs. They concluded that the initial reluctance is now fading away and they are now looking beyond the hurdle of compliance and the fear of reputational damage. The eroded trust could be rebuilt using social media and that; the success of a financial firm is solely based on how they make the most of it. In 2011, Accenture published a paper, on ‘Social Banking: The Social Networking Imperative for Retail Banks’ in 2011 which analyzed the benefits and the challenges by their expert panel. They conducted a survey to show how customers react and perceive retail banking in social media sphere, which gather 42% positive response among the adult population. They went on listing what they want from banks at the social media sphere. Accenture then presented the benefits of using social media which were enhancing the brand, reducing costs, creating and improving innovation, and increasing revenue. However there were a few road-blocks that needs to analyzed and proceeded. Finally they give means to put in place an effective strategy to implement. They conclude saying social media, when handled properly will become the DNA of an organization in the years to come. In 2011, Social Media Solutions presented a paper on ‘Banking on 2011 Social Media Guide’. In the paper they listed a variety of tools of social media and giving the benefits and challenges faced by the bankers. The panel also presented various examples where banks effectively used social media to their benefits like Missouri Bank in Facebook, Wachovia and Bank of America in Twitter. They concluded on tips on how to effectively use social media to one’s advantage.
In 2011, Accenture recently published a paper authored by John Keast, Digital Lead, Banking, North America on ‘Achieving High Performance in Banking: Winning with Customers via the Digital Channel’ in 2011. The paper focused on the strategies that a bank needs to incorporate when dealing with digital channel. Given the fact that digital channel being the most cost-effective channel, it can also give direct insights into customer behavior and perceptions. Banks need to align their structure by including the following changes, by adopting a clear strategy, and fast-paced execution; balanced outlook by collaborating short-term and long term goals; a supportive work environment between the chief marketing officer and chief information officer; presenting relevant information to its customers; using digital diagnostics to their advantage and provide essential information to the seeker. When these are adopted by a Banking industry, they get better by making customer-centric approach and thereby getting their trust and thereby establishing themselves which would do great benefits in the long run.
In 2010, Financial Social Media published a Compliance Guide in 2010, for financial industry professionals engaging in social networking sites. This regulation is proposed by Financial Industry Regulatory Authority and governs the US firms. This molded the social media sphere where must conscious information is given and thereby insisting the trust worthiness of the firm and even protecting the firm themselves.
This study gives us an insight about digital marketing, with special emphasis on social media marketing by financial institutions especially banks. Social media does not only promote financial products, but also acts as a effective CRM tool, a tool to measure reach of marketing and other varied forms as per the innovative thinking of a bank. However there also exists a varied internal and external challenge that needs to be effectively handled. One important issue to be considered is that even if banks decide to keep away from social media, the customers would still debate, discuss and argue about the developments and perceptions, it is hence prudent to be part of their conversations and answer their queries. While its impact is widely felt and acknowledged around the globe, my intention of this study is identify how Indian private sector banks are using this social media; to analyze how do bankers perceive this arrangement and thereby understand if it really benefitted them; simultaneously an understanding of customer’s opinion about their bank being present in facebook or twitter to arrive at a conclusion on the extent of social media market penetration by banks.
Chapter 3 - Social Media Marketing by Bankers
Social media marketing refers to the utilization of social media by corporate and business houses to promote their business by gaining traffic and attention to their sites using the social media sites. However with usage, marketers have realized that, social media can be used in many other ways apart from merely promoting their products, it can be a useful tool to gain insights about customer preferences; it can be used as an effective CRM tool; a tool which can analyze about product preferences. When all other industries adapted to social media, banking industry was still deliberating on its adaption. However, social media had its own impact on the banking industry – their brands were being discussed online. Hence banks felt it would be prudent of they were present when their brands were discussed online.
Social Media – Penetration
In the recent times, social media has become a place where people react about current happenings. This has an impact on the brands; while it can be considered being a market research tool, the presence of the brand would definitely be beneficial to handle some adverse situation.
The graph below shows trend lines of 10 banks in United Kingdom during the 1 June to 2- August 2012. The graph shows the number of posts that were posted regarding the banks during the time frame, limited to people living in UK. It was exactly the time period when the UK’s financial industry faced turmoil.
trend lines.jpg
The first high in the graph is Natwest’s IT failure – on June 22nd which recorded 42,331 posts and continued to be discussed the next day. The second peak was that of Barclays bank’s interbank lending controversy which saw a total of 60,688 posts being recorded about the bank, the bank’s activities and its CEO. The last peak was about HSBC and the financial compliance investigations. It was recorded for two days July 17th and 18th with a record high of 62,494 posts in a single day. An interesting fact is that on a normal day, posts rarely exceeded 10,000 posts.
This shows the impact which a social media has on banking industry irrespective of presence of the bank. Hence financial industry preferred to opt for their presence and take steer of the issues being discussed.
Banks in Social Media
Social media offers the next generation of marketing, which is more personalized and direct, answering the customers’ needs. Almost 43% of adults who were active online users wanted to connect with their banks and avail its services. The services they are interested to avail are receiving alerts about promotions and specials, offering customer service, to be able to read reviews of other customers, offering current and relevant financial advice are a few to name. This shows that there is demand for such services.
Given the perks for this media, the monetary investment required is also very less. Banks spend around 2-10% of their marketing budget. However social media requires investment of time and knowledge; and if both these elements are not properly administered, then results might not be favorable. Social media requires time – it indicates the time require to manage the content, and answering queries; time also denotes the return on investment, which in case of social media takes time to pay off. The next important factor is knowledge, without adequate knowledge on how social media works a firm cannot establish itself. However, caution must be exercised because social media is a vast, dynamic and confusing area of competence and poorly conceived initiatives squander time, resources, and leadership support if not executed properly.
A bank must have an effective strategy to adapt social media in a bank. They need to re-structure their frame-work by aligning their business goals with their social media. A bank must have a clear and specific strategy which allows the banker to capitalize the moment. They must also ensure that there is a smooth flow of information between chief marketing officer and chief information officer to reap higher success. When a banker offers social media, they shift and become customer-centric organization, which is exceedingly beneficial to a bank, which is predominantly client based industry.
Benefits – Social Media Marketing
There are many benefits that bankers reap out of social media, they are explained as under:
Enhancing its brand – The American Express created an online forum to OPEN, which connected business with each other and provided valuable content with which they wanted to have a relationship. Today their monthly traffic is as high as 1.5 million visits. This enhanced brand loyalty and helped the bank to be a part of important conversations.
Reducing costs – Social media can be viewed as a major contributor to cost reduction efforts, especially when it comes to sales, marketing and service. Bank of America was the world’s first and largest bank in the world to use Twitter to help its customer solve issues. Information is disseminated faster and easier via twitter which drives the customer costs down and also creating brand impressions on a social network.
Creating and improving innovation – Banks can create more customized and tailor made products to reflect real-time demand. Chase Bank created a community of mass affluent consumers and they in turn designed their own credit-card to their specific needs, it was called Chase Priority Club Reward card. This kind of initiatives gives customers upper hand of decision making.
Increasing revenue – while there are no apparent examples to show a direct bearing of social media over increasing a bank’s revenue, there result is pretty obvious in other fields. For example USAA a financial service provider for US armed forces, have allowed site visitors to rate and write review on its products like auto or house insurance. This has in fact boosted sales over 15,000 products in the first year itself.

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