A BRAINWAVE INTO FACTORS THAT INFLUENCE MARKETING STRATEGIES ADOPTED BY HDFC BANK.pdf

8/14/2019 A BRAINWAVE INTO FACTORS THAT INFLUENCE MARKETING STRATEGIES ADOPTED BY HDFC BANK.pdf

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International Journal of Management Research & Trends ISSN: 0976-9781

Volume 3, Issue 2, 2012 Rani & Panchantham

Strategies Adopted By HDFC BankUma Rani T.S. Asociate Prof, MBA Department, Indra Ganesan College of Engineering, Trichy

Dr. Rtn. N. Panchanatham, Professor & Head, Department of Business Administration, Annamalai University,

Chidambaram.

ABSTRACT

Change is continuous process in all sectors of the world. Another significant impact of banks

today is the technology issue. In this study the business banking products of HDFC bank, that

best suits the needs of the borrower were analysed. The Customer feels that loans to be obtained

require a process that is extremely complicating and time consuming. This calls for an

ombudsman setup separately for the domain. The observation and findings of the study have

helped to give useful recommendations to bank. The implementation of the suggestion can help

to improve strategies and build competencies over that of their competitors. This study has there

by helped the researcher by giving exposure into new concepts in todays banking scenario as

the interface shifts from service to products.

KEY WORDS:

HDFC Bank, Business Banking products, Marketing Strategies, Customer satisfaction,

Documentation, Interest rates and the factors that influence the Bank Marketing Strategy.

INTRODUCTION

Banks play a positive role in economic development of a country as repositories of communitys

savings and as purveyors of credit. Indian Banking has aided the economic development during

the last fifty years in an effective way. The banking sector has shown a remarkable

responsiveness to the needs of planned economy. It has brought about a considerable progress in

its efforts at deposit mobilization and has taken a number of measures in the recent past for

accelerating the rate of growth of deposits. As recourse to this, the commercial banks opened

branches in urban, semi-urban and rural areas and have introduced a number of attractiveschemes to foster economic development.

The activities of commercial banking have growth in multi-directional ways as well as multi-

dimensional manner. Banks have been playing a catalytic role in area development, backward

area development, extended assistance to rural development all along helping agriculture,

industry, international trade in a significant manner. In a way, commercial banks have emerged

as key financial agencies for rapid economic development.

By pooling the savings together, banks can make available funds to specialized institutions

which finance different sectors of the economy, needing capital for various purposes, risks and

durations. By contributing to industries, government securities, bonds and debentures of term-

lending institutions in the fields of agriculture and now housing, banks are also providing these


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institutions with an access to the common pool of savings mobilized by them, to that extent

relieving them of the responsibility of directly approaching the saver. This intermediation role of

banks is particularly important in the early stages of economic development and financial

specification. A country like India, with different regions at different stages of development,presents an interesting spectrum of the evolving role of banks, in the matter of inter-mediation

and beyond.

Technology in Banking

Innovations in information and communication technology are perceived to be the important

factor for productivity and growth. The relationship between IT and Banking is fundamentally

high. Because of which expected to reduce costs, increase volumes and facilitate customized

products. Public sector must adopt the technology adoption in order to compete with Private and

public sector banks Retention of the customers can be made through adoption of new technology

like ATM, telephone banking, on-line bill payment and Internet banking.

Market Focused or Customer Focused

Any Bank whether a market-focused, or customer-focused, must first determines who are its

potential customers desire, and then builds the business or service. Marketing theory and practice

is justified in the belief that customer use a product or service because they have a need, or

because it provides a perceived benefit. Two major factors of marketing strategy are The

recruitment of new customers (acquisition) and the retention and expansion of relationships with

existing customers (base management).

II THE ORGANIZATION PROFILE

HDFC Bank was incorporated in August 1994 at Mumbai, and, currently has an nationwide

network of 761 Branches and 1977 ATM's. It commenced operations as scheduled Commercial

Bank in 1995.HDFC Bank is a young and dynamic bank, with a youthful and enthusiastic team.

Our business philosophy is based on four core values - Customer Focus, Operational

Excellence, Product Leadership and People. We believe that the ultimate identity and success

of our bank will reside in the exceptional quality of our people and their extraordinary efforts.

For this reason, we are committed to hiring, developing, motivating and retaining the best people

in the industry. HDFC Bank began operations in 1995.

Mission is to be "a World Class Indian Bank",benchmarking ourselves against international

standards and best practices in terms of product offerings, technology, service levels, risk

management and audit & compliance. The objective is to build sound customer franchises across

distinct businesses so as to be a preferred provider of banking services for target retail and

wholesale customer segments, and to achieve a healthy growth in profitability, consistent with


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the Bank's risk appetite. We are committed to do this while ensuring the highest levels of ethical

standards, professional integrity, corporate governance and regulatory compliance.

We provide business loan for short or long term financial needs of business organizations. A lot

of times it is important for businessmen to acquire a certain amount of money for running theirenterprise. It is well known that without the required capital no business can run. For any

business whether in initial stage or in growth phase, capital is required to keep up the

momentum. Increase our market share in Indias expanding banking and financial services

industry by following a disciplined growth strategy focusing on quality and not on quantity and

delivering high quality customer service.

Business Strategy of HDFC Bank Emphasis the Following

Leverage our technology platform and open scaleable systems to deliver more products tomore customers and to control operating costs.

Develop innovative products and services that attract our targeted customers and addressinefficiencies in the Indian financial sector.

Continue to develop products and services that reduce our cost of funds. Focus on high earnings growth with low volatility.

III REVIEW OF LITERATURE

Saritha. P and P. Mohan Reddy, (2009) Marketing strategies vary industry wise. The

marketing strategies of service industry are quite different form production sector. Within the

service industry, financial services industry requires a unique advertising strategy. The present

paper is an attempt through a light on marketing strategies in public and private sector banks.

The prevalence of competition in the banking sector has necessitated banks to differentiate their

products and services by adopting different marketing strategies; therefore a comparative study

of marketing strategies of public sector banks and private sector banks is done in this research

paper. The study made it clear that there is no significant difference in the marketing strategies of

public and private sector bank.

Roig et al., (2006)analyzed the dimensionally of the concept of customers perceived value in

the banking sector of Spain. A total of 200 customers were selected for survey. The result of

confirmatory factor analysis and linear regression analysis indicated that customers perceived

value in banking sector composed of six dimensions; functional value of the establishment.

Functional value of the personnel, functional value of the service, functional value of price

emotional value and social value.


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SCOPE OF THE STUDY

The survey is confined to opinion survey about HDFC Bank Ltd products at Trichy

The study also involves identifying and analyzing the purpose of bank products.

LIMITATIONS OF THE STUDY As the survey has been conducted only on 100 respondents Unwillingness of some respondents to provide information is another limitation. Findings of the study are influenced by personal bias of the respondents. There was a time constraint which disabled a personal interaction with the customers

IV RESEARCH METHODOLOGY

Research Design - Descriptive study

Location - Trichirappalli District (Both Urban and Rural)Sampling technique - Stratified Random Sampling (Data collected from

Customers having Saving Account)

Sample size - 175

Research Approach - Structured questionnaire through Interview Schedule

Sources of Data - Both Primary and Secondary data

Statistical Tools - Inter Correlation, Friedman Rank Test & Regression

V ANALYSIS AND INTERPRETATION

Table 1

Inter Correlation among the various Marketing Strategies and Overall Bank Marketing

Strategy

Functional

Oriented

Strategies

Customer

Relationship

Mangement

Strategies

Infrastru

cture

Strategies

Value

Added

Services

Strategies

Promotion

al

Strategies

Overall

Bank

Marketing

Strategies

Functional

Oriented

Strategies

Pearson

Correlation 1

Sig. (2-

tailed).000

Customer

Relationship

Mangement

Pearson

Correlation .613(**) 1

Sig. (2-

tailed).000

Infrastructur Pearson .269(**) .296(**) 1


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e Strategies Correlation

Sig. (2-

tailed).000 .000

Value Added

Services

Pearson

Correlation .454(**) .337(**) .351(**) 1

Sig. (2-

tailed).000 .000 .000

Promotional

Strategies

Pearson

Correlation.324(**) .270(**) .181(**) .588(**) 1

Sig. (2-

tailed).000 .000 .000 .000

Overall

BankMarketing

Strategies

Pearson

Correlation .677(**) .679(**) .472(**) .656(**) .497(**) 1

Sig. (2-

tailed).000 .000 .000 .000 .000

N 175 175 175 175 175 175

** Correlation is significant at the 0.01 level (2-tailed).

A bivariate correlation was undertaken between the various Marketing Strategies adopted by

Banks. The output confirms that significant positive relationship exists between all the Bank

Marketing Strategies. The relationship between Functional Oriented Strategies towards Customer

Relationship Management (0.613(**)) and Overall Marketing Strategy are highly Positive

Correlated (0.677(**)). The relationship between Functional Oriented Strategy towards Value

added Services Strategy (0.454) and Promotional Strategy (0.323) are Moderately Correlated and

Infrastructure Strategy (0.269) are just correlated with the Functional Oriented Strategy. No

significant negative relationship exists between the various Marketing Strategies and withOverall Marketing Strategy. The CRM Strategy is highly positive correlated with Overall Bank

Marketing Strategy (0.679). CRM is moderately correlated with Value added Services (0.337)

and Infrastructure (0.296) and Promotional Strategy (0.270) are just correlated with the CRM

Strategy. Thus customer Relationship Management Strategy, Functional Strategy and Value

added services Strategy are High Positively correlated towards the Overall Bank Marketing

Strategy.


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Friedman Rank Test

Table 2

Factors influence the Customer Perception towards the Current Marketing

Strategies adopted by banks.Friedman test has been used to find out if there exist a significant difference between the

customer perception towards the factors that influence the Bank Marketing Strategies.

*p


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In the above table, it can be found that there exists a significant difference towards the customer

Perception on the factors that influence the marketing Strategies of Banks. (p-value


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Regression

Regression test was applied to predict the nature and closeness of relationship between BankMarketing Strategy and Respondent Status in the Family, gender, age, educational qualification,

Occupation, Monthly Income. The result found was there is significant association between Bank

Marketing Strategy and Respondent Status in the Family, age, Occupation, Monthly Income. The

other demographic factors like, Gender and educational Level does not influencing Bank

Marketing Strategy. R value indicates the relationship between independent variable and

dependent variable, i.e. the relationship between Respondent Status in the Family, gender, age,

educational qualification, Occupation, Monthly Income and Bank Marketing Strategy in terms

of Percentage. R Square value indicates that the variables explained with the Percentage of

variations towards Overall Bank Marketing Strategy. R Square value for Respondent Status in

the Family is 1.8 %, gender is 0.2%, age is 1.5%, educational qualification is 0.4%, Occupation

is 1%, Monthly Income is 6.2 % of variations towards the Overall Bank Marketing Strategy.

Multiple regression equation Y = X (B value)

Y-----Dependent variable, Here Bank Marketing Strategy is the Dependent Variable

X------Independent variable, Demographic Factors are Independent Variable.

For Respondent Status in the Family, X=-0.158, Gender, X= -.0024, Age, X=0.186

Educational qualification, X=0.09, Occupation, X= -0.141, Monthly Income X= 0.339. If p

value is less than 0.01 or 0.05, then the significant relationship exist between independent

variable and dependent variable. For Respondent Status in the Family, Monthly Income, p value

is less than 0.05 and Age, Occupation, the p value is less than 0.01. So association exist between

Bank Marketing Strategy and Respondent Status in the Family, age, Occupation, Monthly

Income. Regression depends on how and to what extent the demographic variables influencing

the Customer Perception towards the Bank Marketing.


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Demographic factor influencing the Bank Marketing Strategies

Table 4

Demographic

factors

R

value

R

square

value

F

value Constant

Unstanda

rdized

coefficient

(B)

T value

Sig

Marital status 0.204 0.042 21.360 1.727 -0.125** -4.622 0.000

Religion 0.067 0.005 2.244 1.143 0.043 1.498 0.135

Current

Residence 0.115 0.013 6.604 1.997 -0.120* -2.570 0.011

Status of

current

Residence 0.013 0.000 .083 2.230 -0.015 -.0288 0.773

Stay with the

Family 0.047 0.002 1.094 1.102 0.020 1.046 0.296

Possessing a

Own a House 0.020 0.000 .202 1.375 0.012 0.450 0.653

Note: *p


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X------Independent variable, Here Demeographic factors are Independent Variable.

For and Marital Status, X= -0.125 Religion, X= .0043 Current Residence , X=-0.120 Status of

current Residence, X = -0.015, Stay with the Family X=0.020 and Possessing a Own House

X=0.012. If p value is less than 0.01 or 0.05, then the significant relationship exist betweenindependent variable and dependent variable. For Marital Status, p value is less than 0.01 and

Current Residence the p value is less than 0.05. So association exist between Bank Marketing

Strategy and Marital Status and current Residence of the Respondent. Regression depends on

how and to what extent the demographic variables influencing the Customer Perception towards

the Bank Marketing.

Table 5

Current position of the respondent Position influencing the Bank Marketing Strategies

Current

Position of the

respondent

R

value

R

square

value

F

value Constant

Unstandardiz

ed

coefficient(B)

T

value Significance

Paying of

Housing Loan .095 .009 4.431 2.318 -.084*

-

2.105 .036

Critical Stage of

Documentation .057 .003 .273 2.318 -.084 -.522 .603

In which Bank

you have an

account .452 .205 126.37 1.480 .110**

11.24

1 .000

Type of account

with the Bank .127 .016 7.989 1.878 .120** 2.827 .005

Type of dealing

with most

frequented

Bank .233 .054 15.142 2.407 -.083**

-

3.891 .000

Any Other

Bank account .038 .001 .713 2.131 -.058 -.845 .399


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Bank with

Maximum no.

of ATM

Transaction .325 .106 57.943 1.653 .080** 7.612 .000

Frequency of

visit .090 .008 3.968 2.183 -.044*

-

1.992 .047

Note: *p


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how and to what extent the demographic variables influencing the Customer Perception towards

the Bank Marketing.

FINDINGS

Inter correlation coefficient was found among the various dimensions of marketingstrategies like Functional Strategies, Customer Relationship Management Strategies,

Infrastructure Strategies, Value added services Strategies and Promotional Strategies.

Multiple Regression was applied to find out the relationship that exists between theCustomer Perception on Marketing Strategies and the Demographic factors. The result

shows that there exist relationship between the Age of the respondent, Occupation,

Monthly Income, Education Level, Marital Status and Respondents Status in the Family.

Regression test was applied to predict the nature and closeness of relationship betweenBank Marketing Strategy and Respondent Status in the Family, gender, age, educational

qualification, Occupation, Monthly Income. The result found was there is significant

association between Bank Marketing Strategy and Respondent Status in the Family, age,

Occupation, Monthly Income. The other demographic factors like, Gender and

educational Level does not influencing Bank Marketing Strategy.

Regression test was applied to predict the nature and closeness of relationship betweenBank Marketing Strategy and Marital Status, Religion, Current Residence , Status of

current Residence, Stay with the Family and Possessing a own House. The result found

was there is significant association between Bank Marketing Strategy and Marital Status,

current Residence. The other demographic factors like, Religion, Status of current

Residence, Stay with the Family and Possessing a own House does not influence the

Bank Marketing Strategy.

Regression test was applied and the result found was there is significant associationbetween Bank Marketing Strategy and Paying Housing Loan, In which bank the

respondent has an account, Type of account in the Bank, Type of dealing with the Bank,

Bank with Maximum no. of ATM transaction and frequency of visit.. The other factors

like, Critical Stage of Documentation and any other Bank Account does not influence the

Bank Marketing Strategy.

SUGGESTIONS

The customers are very enthusiastic in using more reliable and innovative net bankingservices. So net banking service must be provided with free from cyber crimes.


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The interest rates of frequently changing and the customers get confused with the actualinterest rate at the current date. And the bank must inform each and every customer must

be personally informed about the interest rates.

The customers are not fully satisfied with the speed and quick service of banking. Thismust be formulated and speedy services must be provided to the customers.

Since the different age group of the customers requires different category of productfeatures and services they must be provided accordingly to their expectations.

Periodic meetings must be conducted by HDFC in order to provide necessary informationand details to the customers.

Customer relationship management strategy, functional oriented strategy, value addedservices strategy are the most influencing factors adopted by the banks. Yetinfrastructure and promotional strategies are to be improved in order to delight its

customers.

CONCULSION

As we all know that Indian banks are becoming more and more innovative and gradually

dominating the market. They are capturing market share from their counterpart of the foreign

bank by offering services by an innovative way. Theobservation and findings of the study have

helped to give useful recommendations to bank. The implementation of the suggestion can help

to improve strategies and build competencies over that of their competitors as a straight forward

opinion from a sample of customers have been obtained to make observations.

BIBLIOGRAPHY

Bodla.B. S. (2004)service quality perception in banks . An indian perspective. AnIndian Perspective, Prajnam, Volume XXXIII, Number 4th, PP 321-335.

Jyotsna Sethis & Nishwan Bhatia, (2008) Elements of Banking and Insurance,PHI, New Delhi,

Khan M.Y, (2005), Indian Financial Market: Theory and Practice, Vikas PublishingHouse, New Delhi.

Micheal Porter, (1990) The competitive advantage of nations Harvard Business ReviewMarch-April 1990.P.No 73-93, New Global strategies for competitive advantage,

planning review, May-June 1990.P.N0.4-14

Philip Kotler, Marketing Management, Prentice Hall of India Pvt Ltd, 12 th Edition,2005 John Wiely & sons (Asia) Pvt Ltd, 4thEdition.


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Roig Juan Carlos Fandas, Garcia Javer Sanchez, Tena Miguel Angel Moliner andMonzonis Jaume Llorens (2006), Customer Perceived Value in Banking Services,

International Journal of Bank Marketing, Vol.24.No 5. Pp.266-283

S.M. Jha,(1994) Services Marketing, Himalaya Publishing House, Mumbai, 1994. Saritha. P and P. Mohan Reddy (2009) Marketing Strategies of Financial Services In

Banks- A Comparative Study AJBMR, Volume 4, No.2.

Suresh Chandrasekaran, Anantharaman and Kamalanbhan,(2002) Managementsperception of Total Quality Service in Banking Sector of a Developing Economy, A

critical Analysis, The International Journal of Bank Marketing Volume 20, PP 181-

196.

WEBSITESwww.wikipedia.com

www.hdfcbank.com

www.google.com
http://www.wikipedia.com/http://www.wikipedia.com/http://www.hdfcbank.com/http://www.hdfcbank.com/http://www.google.com/http://www.google.com/http://www.google.com/http://www.hdfcbank.com/http://www.wikipedia.com/

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