1. 1 | P a g e
SERVICES MARKETING PROJECT
STATE BANK OF INDIA
SHAMBHU MANDAL PGEXP/082
2. 2 | P a g e
1. Project Details…………………………………………………………………………1
2. Contents ………………………………………………………………………….…...2
3. Introduction …………………………………………………………………….……..3
3.2 Service Marketing…...…………………………………………………………….8
3.3 Service Marketing Mix……………………………………………………………8
3.4 Service Quality…………………………………………………………………...15
3.5 Gaps Models Of Service Quality………………………………………………...19
4. Banking In India……………………………………………………………………..26
4.1 Role Of Banks In Indian Economy………………………………………………28
4.2 Classification Of Banks In India…………………………………………………29
4.3 Bank Services In India………………………………………………...…………30
5. State Bank Of India Corporate Profile……………………………………………….35
6. Customer Expectations……………………………………………………………….38
7. Consumer Buying Behaviour……………………………….………………………..40
8. Industry & SWOT Analysis………………………………………………………….41
9. Market Offering Viz Marketing Mix & Brand Positioning………………………….43
9.5 Physical Evidence………………………………………………………………..49
10. Demand & Capacity Management…………………………………………………...53
3. 3 | P a g e
A service is the action of doing something for someone or something. It is largely intangible (i.e.
not material). A product is tangible (i.e. material) since you can touch it and own it. A service
tends to be an experience that is consumed at the point where it is purchased, and cannot be
owned since is quickly perishes. A person could go to a café one day and have excellent service,
and then return the next day and have a poor experience.
According to Irons, (1997:12) pure services are intangible but they do usually add value to, or
make available, a tangible product. They do not result in transfer of ownership and may leave
Zeithaml and Bitner (1996) claim that in the simplest terms services are deeds, processes, and
performances. Their broader definition states that services include all economic activities whose
output is not a physical product, is generally consumed at the time it is produced, and provides
added value in forms that are essentially intangible concerns of the purchaser.
Kotler (1996) defines service as an activity that one party offers another that is essential
intangible and does not result in the ownership of anything. Its production may or may not be
tied to a physical product.
Characteristics of Services
There are five characteristics to a service which will be discussed below.
1. Lack of ownership.
You cannot own and store a service like you can a product. Services are used or hired for a
period of time. For example when buying a ticket to the USA the service lasts maybe 9 hours
each way , but consumers want and expect excellent service for that time. Because you can
measure the duration of the service consumers become more demanding of it.
You cannot hold or touch a service unlike a product. In saying that although services are
intangible the experience consumers obtain from the service has an impact on how they will
perceive it. What do consumers perceive from customer service? the location, and the inner
presentation of where they are purchasing the service?.
4. 4 | P a g e
Services cannot be separated from the service providers. A product when produced can be taken
away from the producer. However a service is produced at or near the point of purchase. Take
visiting a restaurant, you order your meal, the waiting and delivery of the meal, the service
provided by the waiter/ress is all apart of the service production process and is inseparable, the
staff in a restaurant are as apart of the process as well as the quality of food provided.
Services last a specific time and cannot be stored like a product for later use. If travelling by
train, coach or air the service will only last the duration of the journey. The service is developed
and used almost simultaneously. Again because of this time constraint consumers demand more.
It is very difficult to make each service experience identical. If travelling by plane the service
quality may differ from the first time you travelled by that airline to the second, because the
airhostess is more or less experienced.
A concert performed by a group on two nights may differ in slight ways because it is very
difficult to standardise every dance move. Generally systems and procedures are put into place to
make sure the service provided is consistent all the time, training in service organisations is
essential for this, however in saying this there will always be subtle differences.
TYPES OF SERVICES
There are many types of services and to understand them better, they need to be
classified. The services are broadly classified on the following basis:
CLASSIFICATION OF SERVICES BY TARGET EFFECTS
• Services aimed at physical care such as health care, beauty salons, gymnasiums
• Services for intangible assets such as banking, legal consultation, accounting,
brokering, insurance and securities services.
• Services aimed at the mind of the customer such as education, broadcasting,
information, entertainment and amusement.
5. 5 | P a g e
• Services aimed at physical possessions and tangible assets such as transport, repair
and maintenance, cleaning and janitorial, laundry, gardening and veterinary services.
CLASSIFICATION OF SERVICES BY INDUSTRY
Services can be classified on the basis of the industry as shown in the table below:
6. 6 | P a g e
The dichotomy between physical goods and intangible services should not be given too
much credence. These are not discrete categories.
Most business theorists see a continuum with pure service on one terminal point and pure
commodity good on the other terminal point. This continuum is known as a tangibility
For example, a restaurant provides a physical good (the food), but also provides services
in the form of ambience, the setting and clearing of the table, etc. And although some utilities
actually deliver physical goods — like water utilities which actually deliver water — utilities are
usually treated as services. Hence there is a pure service and there is a pure product on the other
side of the tangibility spectrum.
Below given figure shows a tangibility spectrum. In the table we can see that salt is a
pure product whereas teaching is a pure service. The fast food outlets can be considered as a
combination of services and products as food provided is tangible and service provided in terms
of hospitality and service delivery is intangible.
The airline services are not pure services and not pure products. Airline services are somewhere
in the middle of the tangibility spectrum as shown in the figure by fast food outlets.
From this we can also conclude that services are different from the products and hence
the marketing of services is also different from that of products. Let's try to understand
the marketing mix for services which is different from the traditional marketing mix
8. 8 | P a g e
3.2 Service Marketing
Services marketing is difficult to define. Grove & Fisk (1983, 1992) produced work based upon
the metaphor of services as theatre. How appropriate do you feel this metaphor is in defining
services and how may it help or hinder the services marketer? "A service is an act or
performance offered by one party "A service is an act or performance offered by one party to
another. Although the process may be tied to a physical product, the performance is essentially
intangible and does not normally result in the ownership of any of the factors of production"
(Gronroos, 2000 ) It can be difficult to define just what is meant by a service because most
products we buy contain a mixture of both goods and service elements. A meal in a restaurant
contains a combination of goods elements (the food) and service elements (the manner in which
the food is served).
3.3 Service Marketing Mix
The traditional marketing mix is the most basic concept in marketing and is defined as elements
which organizations control and use to satisfy or communicate with customers (Zeithaml and
Bitner, 1996:23). The components of the traditional marketing mix are the four P’s: product,
price, place, and promotion. Careful management of these components is essential for the
successful marketing of goods and services in both long-term and short-term marketing strategies
Conversely, the traditional marketing mix components have been found to be too limited in their
application of services. The intangibility of service offerings is not taken into consideration
because the focus is on the tangibility of products. The price component overlooks the fact that
many services are produced without a price being charged to the final customers, and customers
frequently use price as an indication of service quality. Equally, the simultaneous production and
consumption of service offerings make the distribution component difficult to implement and
control. While the promotion component of the traditional marketing mix concerns itself with
advertising, sales promotions and publicity, services marketing involves service employees and
customers in the real time marketing of services during the interaction process. The limitations of
the traditional marketing mix have lead to exploitation by service marketers of additional
components which services can utilize to satisfy and communicate with customers, resulting in
the adoption of the service mix. The elements off this new concept are: service offerings
(product), price, distribution (place), promotions, people, physical evidence, and processes.
The three new components address the uniqueness of three of the service characteristics. They
focus, firstly, on the inseparability of service marketers from customers, secondly, on the
inability to hold service in inventory which makes it critical for the service process to flow
smoothly and lastly, on the fact that a highly intangible service offering must appear tangible
(Goncalves, 1998:37). The additional components of the service mix can be fully controlled by
the service organization and play a vital role in ensuring that marketing is customer focused, not
9. 9 | P a g e
product focused (Irons, 1997:24). The ensuing sections will provide a detailed description of the
3.3.1. Product (Service offerings):
A product is anything that an organization offers to customers that might satisfy a need, whether
it is tangible or intangible (Palmer and Cole, 1995:15). In contrast, the decisions that face
service marketers concerning service offerings are very different from those related to goods. An
analysis of service offerings shows that it can be divided it into two distinct components namely,
a core service offering that represents the intangible core benefits of services and a secondary
service offering that represents the tangible and augmented elements of the service offerings. The
coreservice offerings are developed with customers’ benefit in mind and place theemphasis on
the customers’ perception of services. The secondary service offeringsillustrate the additional
benefits that the service offers to meet customers’ additionalneeds, and serve to differentiate the
offerings from those of competitors’. Thesebenefits can combine both the tangible and intangible
elements of service offeringsthat facilitate the customer to comprehend the core service.
Because of its intangibility, services are difficult to control and display to
customers.Consequently, service marketers often emphasise the tangible elements of
serviceofferings. The more intangible a service, the greater is the need for tangibleevidence.
Tangible evidence includes packaging, brand name, corporate image,service delivery, and
In the determination of price, service marketers deals very much with the same price issues as
goods marketers. Subsequently, the differences presents itself when the intangible characteristic
of services specifies that price becomes a quality indicator. The art of successful pricing is to
establish a price level that is low enough for the exchange to represent good value to customers,
but high enough to allow service providers to achieve their financial objectives (Palmer and
Cole, 1995:222). The perishable nature of services makes it important to control the demand and
supply of the service offerings. The price component is the easiest to change and normally
provides the quickest results. Manipulation of the price can influence and control quantity
demand. An increase in price will reduce the demand and/or cause a shift to lower usage periods.
Equally, a decrease in price will cause an increase in demand and stimulate new demand for the
service (Kurtz and Clow, 1998:240).
The price of service offerings is often used by customers as an input into their expectations,
purchase decisions, and evaluation of service quality. It is seen as a tangible cue in services with
a high risk and experience properties, to form expectations of the service. Price is used as an
indicator of quality by customers. Thus, the assumption is formed that the higher the price of
service offerings, the more is expected of it by customers.
10. 10 | P a g e
3.3.3. Place (Distribution):
The distribution decision refers to the availability and accessibility of service offerings to
customers. Availability from the customers’ point of view signifies that services are on hand
when they want them, while accessibility is the relative ease with which customers can conduct
service processes with the service providers (Palmer, 1994:33). For pure services, the
distribution decision is of little relevance, though most services involve a tangible component.
As a result, the distribution decision involves physical locations and decisions which
intermediaries use to provide the services.
The promotion mix for the traditional marketing mix is usually broken down into four
components namely advertising, sales promotions, public relations, and personal selling.
However, with the promotion of services, there is a greater need to emphasise the tangible
elements of services such as packaging, brand name, corporate image, service delivery, and
service employees (Palmer and Cole, 1995:16).
The distinctive promotional needs of services stem directly from some of the unique
characteristics of services. The intangibility characteristic of services results in customers
perceiving them as high-risk purchases, with a need for tangible components as evidence of the
service. The inseparability characteristic of services emphasises the fact that the promotion of
service offerings cannot be isolated from service providers. Therefore, the visible production
process, especially the part played by service employees during interaction, is a critical element
in the promotion process. Berry (1989) states that the service promotion challenge is to transform
invisibility into visibility, vagueness into sharpness, uncertainty into evidence and risk into
benefit (Fugate, 1998: online).
The development of a promotional mix for services relies on the detailed specification of
promotion objectives to ensure that that appropriate messages are chosen and effectively
channelled in a cost effective manner to reach the target market. Typical service promotional
to develop an awareness or interest in the organization and its services
to communicate the benefits of purchasing a service
to build a positive image of the organization
to differentiate the organization from its competitors
to remind customers of the existence of the service and the service organization (Palmer
and Cole, 1995:260).
The services promotion mix uses a combination of channels to convey messages to the target
market. These messages are received from sources within the organization and externally.
External sources include word of mouth communications or press editorials, while internal
communications originate from the traditional marketing mix and from the frontline employees.
The combination of communication channels depends on the characteristics of the target market,
the size of the service, the nature of the service and the cost of the various channels (Palmer and
Cole, 1995:260). The promotional mix of a service organization involves the transmission of
11. 11 | P a g e
messages to past, present and future customers. The ultimate aim is to make future customers
aware of the service and influence them towards purchase.
People as an element in the service mix include all the human actors - the firm’semployees
(internal customers), the buyers (external customers), and othercustomers - who play a part in
service delivery and accordingly influence the buyers’ perception of choice in the service
environment (Zeithaml and Bitner, 1996:26). Service employees interact with customers during
service delivery processes and provide cues to external customers concerning the services.
Hence, it can be said that service employees’ competence, attitude, and appearance influence
customers’ perception of services. Customers often experience service employees as
synonymous with the service and no matter how small or large a part they play in the actual
delivery of the service, they are still the focal point of the service for customers. It is crucial that
service organizations stipulate very specifically to their employees what is expected of them
during interactions with customers. To achieve the desired standards of service, service
organizations’ recruitment and training cannot be left to the human resources department only,
but should form an integral part of the service mix decisions. Kheller believes that the heart of
the organization is the people and hiring the right people means hiring people with a service
attitude (Irons, 1997:139). Within successful service organizations, the human resources
department, and the marketing department work together to establish hiring criteria, training
needs, and promotion activities to attract and retain employees who can deliver the quality
service expected by the organizations’ target market.
The marketing department plays an important role in influencing the experience that both
internal customers and external customers will have. External customers choose to visit a service
organization because of the messages relayed through the service mix, or word of mouth
messages communicated by other customers. External customers who encounter an unacceptable
level of service from internal customers, convey negative word of mouth messages about the
service received to other customers. Consequently, it is crucial that marketing departments and
human resources departments work together to ensure that the quality of service delivery by
internal customers leads to positive word of mouth messages to external customers (Gonçalves,
Every employee in an organization must serve other employees in some way or another.
Therefore, just as external customers are needed, so are quality employees (internal customers)
needed. The responsibility lies with service marketers to involve all employees in the marketing
process of an organization. A high level of employee involvement and motivation is directly
linked to an improvement in sales, profitability and customer loyalty.
Processes are the actual procedures, mechanisms, and flow of activities by which services are
delivered (Zeithaml and Bitner, 1996, 21). Customers judge services on the operational flow or
on the actual delivery thereof. The inseparability characteristic of services requires customers to
12. 12 | P a g e
follow a series of extensive or complicated actions to complete the process. Often the logic of
these actions escapes the customers. Whether the service process is standardised or customised,
it is used as evidence by customers to judge service quality. Standardised services will follow a
production-line approach, while customised services command a greater degree of
empowerment. Nonetheless, the moment of truth where customers experience the evidence, is
not a once-off event but an ongoing process.
The main ingredients of services processes are the people who participate in it. Services are of an
integrated nature and the organization’s employees continuously fuse with the external
customers. The production and consumption usually takes place at the same time and research
into customers’ attitudes towards service organizations suggests that customers see a service as
an integral process in which they are intensely involved (Irons, 1997:37). The difference between
service processes and manufacturing processes are that:
the customers are participants in the service processes,
service processes are difficult to structure,
the outcome of services is dependent on internal and external factors,
the output of service processes leaves only promises and memories and
service processes play an integral part in customer satisfaction (Gonçalves, 1998:39).
As a rule, services cannot be fixed to a definite time span, because depending on the nature of the
service, it can take anything from a moment to months to complete. A service can be a well-
defined process, where all participants are aware of the process but a service can also be ill-
defined or not obvious to the participant in the process. Services that offer high degrees of
customisation are usually ill-defined. When service processes progress smoothly, they are hardly
noticed by the customers, who are under the assumption that the process will occur without any
problems every time it is performed. However, when the service process is not completed
successfully, both the internal and external customers are frustrated and distrustful of the service
organization. The success of service processes depends on the loyalty and trust- relationships
organizations can build with customers. Marketing and the other organizational functions should
work together to determine the needs of the internal and external customers and satisfy those
needs by designing and refining effective and efficient customer-friendly service delivery
processes (Gonçalves, 1997:41).
The actual service delivery process can be performed in three locations namely,
• the customer’s environment,
• at a store or an office or
• electronically or via telecommunications.
Management have a great deal of control over the last two service delivery processes.
A service can also be performed on customers, objects, and technological equipment. Knowing
this helps to understand the perceived risk for customers attached to the service purchase.
Service organizations must consider the importance of communication strategies, appearance,
skills, and attitude of service employees. The physical evidence of delivery processes, such as
the delivery vehicles, print matter and delivery employees must also support a service
13. 13 | P a g e
organizations’ image. The perishability characteristic of services influences the service delivery
process through the difficulty it presents in managing supply and demand. Supply and demand
cannot be readily adjusted but techniques such as flexible service hours, price advantages for
customers who buy during low demand periods, special offers that can only be redeemed during
slack time, and refinement of delivery processes, can provide solutions to service organizations.
3.3.7. Physical evidence
The environment in which the service provider delivers the service and where the customers and
the organization interact, as well as any tangible component that facilitates performance or
communication of the service, is referred to as physical evidence (Zeithaml and Bitner, 1996,
26). Service organizations need to provide tangible evidence of the service to develop an image
in the mind of current and prospective customers. Often physical evidence overlaps with the
promotion and distribution mix of the service mix. All tangible representations of services, such
as brochures, letterheads, business cards, report formats, signage, equipment, and physical
facilities where service are rendered, represent the physical evidence of services.
Physical evidence provides service organizations with excellent opportunities to send strong,
consistent, and positive messages regarding the nature of service offerings to customers. Physical
evidence is most successful if it is integrated throughout the organization, meaning that it should
be included in an organizations’ strategic planning. Once it has been accepted by management, it
is the responsibility of the marketing department to implement it throughout the entire
DIFFERENT PHYSICAL EVIDENCE IN DIFFERENT SERVICE SETTINGS
There are essentially three types of encounters between the customer and the service provider.
• The remote encounter: This type of encounter does not bring the two parties face to face but
they may be in touch through letter, e-mail, mail order, delivery machines such as ATM, etc.
Railway reservations through Internet, theatre booking, enquiries, etc. are some examples of this
type of encounters.
• The indirect personal encounter: This type of encounter occurs on telephone, on Internet, etc.
The two parties are not in face to face contact but have some means of instantaneous
communication. The examples are after sales service phone numbers and helplines for credit
cards and bank accounts.
14. 14 | P a g e
• The direct personal encounter: This is the most common encounter for the services provision.
The customer is in face to face contact with the service provider. The appearances of the
employees, uniforms, settings, etc. all contribute to the perception of the service quality.
Internal and external environment and tangible elements together constitute the physical
evidence of a service.
15. 15 | P a g e
3.4 SERVICE QUALITY
Quality is defined as "Degree to which a set of inherent characteristic fulfils requirements" by
Quality is also defined as “Fitness for use” by Joseph M. Juran. Fitness in this definition is
defined by the customer.
Quality can also be defined in simple words as “Conformance to Requirements” as defined by
Philip B. Crosby. The difficulty with this is that the requirements may not fully represent what
the customer wants; Crosby treats this as a separate problem. Quality has particular parameters
or dimensions of measurement. The quality of a product can be measured on the basis of certain
parameters or dimensions as follows:
8. Perceived Image, reputation, brand name, etc.
The dimensions of service quality are different from that of product quality. The determinants of
service quality are as follows:
16. 16 | P a g e
Initially there were 10 dimensions of service quality which were then reduced to only 5
dimensions later. Assurance is a combination of competence, courtesy, credibility and security.
Empathy is a replacement of access, communication and understanding the customer. Hence the
previous model of 10 dimensions is reduced to model of 5 dimensions.
SERVICE QUALTIY DIMENSIONS
The service quality dimensions are already listed earlier and now let us try to understand each
and every dimension in detail.
RELIABILITY – DELIVERING ON PROMISES
Reliability is the ability to perform the promised services dependably and accurately. Normally
this may be turned as “No excuses” service delivery. In its broadest sense, reliability means that
the company delivers on its promises – promises about delivery, service provision, problem
resolution and pricing. One company that effectively communicates and delivers on the
reliability dimension is Federal Express (FedEx). Federal Express a courier service organization
has positioned itself as a reliable organization in terms of handling and delivering the packages.
All firms need to be aware of customer expectations of reliability. Firms that do not provide the
core service that customers think they are buying fail their customers in the most direct way.
ASSURANCE – INSPIRING TRUST AND CONFIDENCE
Assurance is defined as employees’ knowledge and courtesy and the ability of the firm and its
employees to inspire or convey trust and confidence. This dimension is likely to be particularly
important for services that the customer perceives as involving high risk and/or about which they
feel uncertain about their ability to evaluate outcomes, for example, banking, insurance, and
brokerage, medical and legal service.
17. 17 | P a g e
Airlines need to provide an assurance to the customers as flying is considered as a high risk as
compared to railways or road transport. Also ships and cruises have to provide an assurance to
TANGIBILITY – REPRESENTING THE SERVICE PHYSICALLY
Tangibles are defined as the appearance of physical facilities, equipment, personnel, and
communication materials. All of these provide physical representations or images of the service
that customers, particularly new customers, will use to evaluate quality. While tangibles are often
used by service companies to enhance their image, provide continuity, and signal quality to
customers, most companies combine tangibles with another dimension to create a service quality
strategy for the firm.
EMPATHY – TREATING CUSTOMERS AS INDIVIDUALS
Empathy is defined as the caring, individualized attention the firm provides its customers.
Empathy means treating the customers as individuals. The essence of empathy is conveying,
through personalized or customized services, that customers are unique and special. Customers
want to feel understood by and important to firms that provide service to them. Building
relationships is the key factor and helps in building the service quality.
RESPONSIVENESS – BEING WILLING TO HELP
Responsiveness is the willingness to help customers and to provide prompt service. This
dimension emphasizes attentiveness and promptness in dealing with customer requests,
questions, complaints and problems. Responsiveness is communicated to customers by the
length of time they have to wait for assistance, answers to questions, or attention to problems.
Responsiveness also captures the notion of flexibility and ability to customize the service to
MOMENTS OF TRUTH
Each and every point where a customer comes in contact with the service organization is known
as a service encounter. These points of contact create an image or impression in the customers
18. 18 | P a g e
mind about the service provider. This service encounter is also known as “moment of truth”.
Such points of contact thus form moments of truth for a service provider. This concept was used
and formulated by Jan Carlzon who was the CEO of SAS (Scandinavian Airline Services) during
the period 1981-1993.
For example, among the service encounters a hotel customer experiences are checking in to the
hotel, being taken to a room by a bell person, eating a restaurant meal, requesting a wake-up call,
and checking out. In a hospital context, a study of patients revealed that encounters with nursing
staff were more important in predicting satisfaction than were encounters with meal service or
patient discharge personnel. Side from common key encounters, there are some momentous
encounters that like the proverbial “one bad apple” simply ruin the rest and drive the customer
away no matter how many or what type of encounters have occurred in the past.
The Disney Corporation estimates that each of its amusement park customer experiences about
74 service encounters and that a negative experience in any one of them can lead to a negative
overall evaluation. Mistakes or problems that occur in early levels of the service cascade are
particularly critical, because a failure at one point results in greater risk for dissatisfaction at each
19. 19 | P a g e
3.5 GAPS MODEL OF SERVICE QUALITY
The service quality has five dimensions as explained earlier. Also the service quality has a gaps
model in which we can understand different types of gaps in the service quality which can be
filled or closed so as to provide a zero defect service. Different people have developed different
model for the gaps in service quality. The most extensively used and accepted gaps model of
service quality is known as SERVQUAL.
SERVQUAL model consists of five gaps in the service quality. One of the five gaps is customer
gap and the other four gaps are service provider gaps. The central focus of the gaps model is the
customer gap, the difference between customer expectations and perceptions. Hence this gap is
also known as Expectations Gap. Firms need to close this gap – between what customers expect
and receive – in order to satisfy the customers and build long term relationships with them.
The four provider gaps are as follows:
1. Gap 1 – Knowledge Gap
2. Gap 2 – Standards or Design Gap
3. Gap 3 – Delivery Gap
4. Gap 4 – Communications Gap
Measuring gap between expected service and perceived service is routine customer feedback
process that is practiced by leading service companies, Customer satisfaction is dependent on
minimizing the four gaps that are associated with delivery of the service. The market research
gap is the discrepancy between customer expectations and management perception of these
expectations. Gap 1 arises from management’s lack of full understanding about how customers
formulate their expectations based on a number of sources: advertising, past experience with the
firm and its competitors, personal needs, and communication between management and 33 its
contact employees, and reducing the number of levels of management that distance the customer.
The design gap results from management inability to formulate target levels of service quality to
meet perceptions of customer expectation and translate these into workable specifications. Gap 2
may result from a lack of management commitment to service quality or a perception of the
20. 20 | P a g e
infeasibility of meeting customer’s expectations; however, setting goals and standardizing
service delivery task can close the gap. The conformance gap occurs because actual delivery of
the service does not meet the specifications set bay management. Gap 3 can arise for a number of
reasons, including lack of teamwork, poor employee selection, inadequate training, and
inappropriate job design. Customer expectations of the service are formed by media advertising
and the other communication from the firm. Gap 4 is the discrepancy between service delivery
and external communications in the form of exaggerated promises and lack of information
provided to contact personnel.
Communication Market Research
GAP 4 GAP 1
GAP 3 GAP 2
Conformance Service Design
21. 21 | P a g e
CUSTOMER GAP OR EXPECTATIONS GAP
The difference between customer expectations and customer perceptions creates the customer
gap. While customer perceptions are subjective assessments of actual service experiences,
customer expectations are the standards of, or reference points for, performance against which
service experiences are compared. Customers perceive that they get what they think they will
and should. In practice, a customer gap typically exists.
The Gap 5 shown in the following figure of service quality is customer gap or expectations gap
GAPS MODEL OF SERVICE QUALITY
22. 22 | P a g e
KNOWLEDGE GAP – NOT KNOWING WHAT CUSTOMERS EXPECT
This gap is the difference between customer expectations of service and company understanding
of those expectations. Management perceptions about the customer expectations can be different
from the customer expectations. There can be many reasons behind this gap. Some of them are as
follows: Provider may not interact directly with customers, be unwilling to ask about
expectations, or be unprepared to address them.
The key factors leading to this type of gap are as follows:
• Inadequate marketing research orientation
o Insufficient marketing research
o Research not focused on service quality
o Inadequate use of market research
• Lack of upward communication
o Lack of interaction between management and customers
o Insufficient communication between contact employees and managers
o Too many layers between contact personnel and top management
• Insufficient relationship focus
o Lack of market segmentation
o Focus on transactions rather than relationships
o Focus on new customers rather than relationship customers
• Inadequate service recovery
o Inevitable service failures
o Not understanding the importance of service recovery
23. 23 | P a g e
STANDARDS/DESIGN GAP – NOT HAVING RIGHT STANDARDS/DESIGN
The difference between company understanding of customer expectations and development of
customer driven service designs and standards is known as the standards gap or the design gap.
Customer driven standards are different from the conventional performance standards that most
services companies establish in that they are based on pivotal customer requirements that are
visible to and measured by customers.
The key factors leading to this type of a gap are as follows:
• Poor service design
o Unsystematic new service development process
o Vague, undefined service designs
o Failure to connect service design to service positioning
• Absence of customer defined standards
o Lack of customer defined standards
o Absence of process for setting service quality goals
o Absence of process management to focus on customer requirements
• Inappropriate physical evidence and servicescape
o Inappropriate tangibles and physical setting
24. 24 | P a g e
DELIVERY GAP – NOT DELIVERING TO SERVICE STANDARDS
This type of gap is the difference between the service standards or the service design and the
service delivery. It is the discrepancy between development of customer driven service standards
and actual service performance by company employees. Thus even when standards accurately
reflect customers’ expectations, if the company fails to provide support for them – if it does not
facilitate, encourage and require their achievement – standards do no good.
The key factors leading to this type of gap are as follows:
• Deficiencies in human resource policies
o Ineffective recruitment
o Poor employee-technology job fit
o Inappropriate evaluation and compensation systems
• Failure to match supply and demand
o Inappropriate customer mix
o Over reliance on price
• Customers not fulfilling roles
o Customer lack knowledge of their responsibilities
o Customers negatively affect each other
25. 25 | P a g e
COMMUNICATIONS GAP – PROMISES DON’T MATCH PERFORMANCE
The difference between service delivery and the service provider’s external communications is
known as the communications gap. Promises made by a service company through its media
advertising, sales force, and other communications may potentially raise customer expectations
that serve as the standard against which customers assess service quality. The discrepancy
between actual and promised service therefore has an adverse effect on the customer gap.
The key factors leading to this type of gap are as follows:
• Lack of integrated services marketing communications
o Not including interactive marketing in communications plan
o Absence of strong internal marketing program
• Ineffective management of customer expectations
o Not adequately educating customers
• Over promising
o Over promising in advertising
o Over promising in personal selling
o Over promising through physical evidence cues
• Inadequate horizontal communications
o Insufficient communication between sales and operations
26. 26 | P a g e
4. BANKING IN INDIA
Banking in India originated in the last decades of the 18th century. The first banks were The
General Bank of India, which started in 1786, and Bank of Hindustan, which started in 1790;
both are now defunct. The oldest bank in existence in India is the State Bank of India, which
originated in the Bank of Calcutta in June 1806, which almost immediately became the Bank of
Bengal. This was one of the three presidency banks, the other two being the Bank of
Bombay and the Bank of Madras all three of which were established under charters from the
British East India Company. In India, currently there are 25 public sector banks and 30 private
We can divide banking history into three parts.
(1) Post Independence
Post Independence: - India's independence marked the end of a regime of the Laissez-faire for
the Indian banking. The Government of India initiated measures to play an active role in the
economic life of the nation, and the Industrial Policy Resolution adopted by the government in
1948 envisaged a mixed economy. This resulted into greater involvement of the state in different
segments of the economy including banking and finance. The major steps to regulate banking
The Reserve Bank of India, India's central banking authority, was nationalized on
January 1, 1949 under the terms of the Reserve Bank of India (Transfer to Public
Ownership) Act, 1948
In 1949, the Banking Regulation Act was enacted which empowered the Reserve Bank of
India (RBI) "to regulate, control, and inspect the banks in India."
The Banking Regulation Act also provided that no new bank or branch of an existing
bank could be opened without a license from the RBI, and no two banks could have
Nationalization: Despite the control of RBI, Indian banks continue to operate by private person
except SBI. By the 1960s, the Indian banking industry had become an important tool to facilitate
the development of the Indian economy. At the same time, it had emerged as a large employer,
and a debate had ensued about the nationalization of the banking industry. The Government of
India issued an ordinance and nationalized the 14 largest commercial banks with effect from the
midnight of July 19, 1969. 6 more commercial banks nationalized in 1980
27. 27 | P a g e
Liberalization: In the early 1990s, the then Narasimha Rao government embarked on a policy
of liberalization, licensing a small number of private banks. These came to be known as New
Generation tech-savvy banks, and included Global Trust Bank (the first of such new generation
banks to be set up), which later amalgamated with Oriental Bank of Commerce. This move,
along with the rapid growth in the economy of India, revitalized the banking sector in India,
which has seen rapid growth with strong contribution from all the three sectors of banks, namely,
government banks, private banks and foreign banks. The next stage for the Indian banking has
been set up with the proposed relaxation in the norms for Foreign Direct Investment, where all
Foreign Investors in banks may be given voting rights which could exceed the present cap of
10%,at present it has gone up to 74% with some restrictions. Currently banking in India is
generally fairly mature in terms of supply, product range and reach-even though reach in rural
India still remains a challenge for the private sector and foreign banks.
28. 28 | P a g e
4.1 ROLE OF BANKS IN INDIAN ECONOMY
A proper financial growth is important for economic growth of developed and developing
economy. Commercial banking sector should be well regulated & efficient because it is the
financial backbone of households. Banks plays various roles:
Capital Formation: Generally rate of saving is low in underdeveloped country because of deep
rooted poverty but even if proper mechanism there for savings of domestic household that capital
can be available to use for entrepreneurs for productive purpose.
Innovation: Entrepreneurs do various innovations to generate job and improve the quality of life
of the citizens. These innovations which need fund for efficient operation are provided by banks.
Banks provided credit for innovative firm.
Finance for Priority Sector: Commercial bank generally hesitate to give credit to these
underdeveloped sector because these loan may become NPA. Due to RBI regulation these banks
take risk & provide growth opportunity to these sectors by providing and giving credit.
Cheap Money Policy: Bank sucks or pumps money according the requirement of the economy.
Like in recessionary pressure cheap money flows but in inflationary interest rises to tackle
liquidity in the system.
ROLE OF RBI
Regulator & Supervisor of Financial System
Manager of Exchange Control
Issuer of Currency
29. 29 | P a g e
4.2.CLASSIFICATION OF BANKS IN INDIA
Public sector Private sector Cooperative Development
SBI & Associates Axis Rani Laxmibai
urban Co-op Bank,
Bank of Baroda ICICI Mehsana Urban Co-
Op Bank Ltd.
Dena Bank HDFC Surat Peoples Coop
Canara Bank ING Vyasa Kalupur Commercial
UCO Bank HSBC The Kapol Co-
operative Bank Ltd.
Syndicate Bank Standard Chartered Adarsh Co-Operative
Vijaya Bank Kotak Mahindra Sanmitra Sahakari
Examples of banks in India.
EXIM Agriculture Industrial
30. 30 | P a g e
4.3 BANK SERVICES IN INDIA
There have been various services provided by bank in India to customers .We can classified into
5 categories based on the target segment & the money used by the customers. There has been
various sub categories in every broad category.
(A) Personal Banking:
There has been various products/service available in personal banking sector. We would like to
discuss these services one by one.
(1) Accounts & deposits
Types of Deposites Features
Dream Deposit Term deposit plan that enable the customer to
realize their dream at every stage of life
Fixed Deposit Give attractive returns to customers
Recurring Deposit The smallest of customer saving into large one.
Saving Account It is providing 4 percent interest acc to RBI
guidelines. Customer can avail the experience
of banking through ATM, Mobile, Internet
Salary Account Customers can take advantage of efficient
31. 31 | P a g e
Type of Loan
Commercial Vehicle loan
Loan against security, Gold, Ornaments etc.
Other different types of loans are also provided by loans to meet the various requirements of the
Type of Cards Feature
Debit Card These cards offered by banks which has wide
acceptance at various banks ATM, Various
shopping malls gives wide variety of
convenience to customers. They work on the
principle of pay now buy latter.
Credit Card These card works on the principle of buy
now pay latter. It has enhanced the buying
power of the consumers.
Banks offer personalized solution to their customers based on their fund capacity and risk
appetite of the particular customers to deliver greater returns.
Banks offer various investment products like bonds, GOI bonds, Mutual funds, IPO, Insurance
32. 32 | P a g e
(B) Wealth Management
It is the different function in banks that give the wealth management services to HNI, manage
their portfolio. It is the team of experts on investment, banking loans, property services etc.
which provide expertise advice to their client and manage their portfolio to maximize the return.
(C) Corporate Banking
This service can be divided into various heads for the corporate client.
33. 33 | P a g e
CMS(Cash Management Service) Banks provide full range of receivable &
payables services to meet company’s
complex cash management service
Global Trade Service This service designed to meet a range of
short term to medium term trade financing
requirement to seize new business
Forex Desk Banks propose immediate offers for cash,
tom, spot & forward rates depending on
Derivative Desk Banks offer complete interest rate risk
management services through derivative
Investment Banking Banks offer M & A advisory, underwrite the
IPO of companies through alone or forming
Project Finance Banks provide funds for various projects to
companies operating in different sectors
based on the attractiveness of the projects &
Structured Finance It enables the corporate clients to access fund
through cost efficient structures. Banks
provide investment opportunities in various
34. 34 | P a g e
(D) Business Banking
Current Account & Service Benefit is provided by speedy payment &
Business Loan For SME sector, timely finance to leverage on
Trade service Various services like Letter of credit, Bank
guarantee, Export bill negotiation etc. are
provided by banks
Advisory Service Banks provides niche & exclusive investment
banking service to SME sector. It manages
capital raising and special situation solutions.
Business Loans Trade Service
35. 35 | P a g e
5. STATE BANK OF INDIA (SBI) CORPORATE PROFILE
State Bank of India(SBI) is the country’s largest commercial Bank in terms of profits, assets,
deposits, branches and employees. State Bank of India has an extensive administrative structure
to oversee the large network of branches in India and abroad. The Corporate Centre is in
Mumbai and 14 Local Head Offices and 57 Zonal Offices are located in important cities spread
throughout the country. The Corporate Centre has several other establishments in and outside
Mumbai, designated to cater to various functions.
SBI provides a range of banking products through its network of branches in India and overseas,
including products aimed at non-resident Indians (NRIs). SBI has 14 regional hubs and 57 Zonal
Offices that are located at important cities throughout India.
SBI had 14,816 branches in India, as on 31 March 2013, of which 9,851 (66%) were in Rural and
Semi-urban areas. In the financial year 2012-13, its revenue was INR 200,560 Crores (US$ 36.9
billion), out of which domestic operations contributed to 95.35% of revenue. Similarly, domestic
operations contributed to 88.37% of total profits for the same financial year.
As of 28 June 2013, the bank had 180 overseas offices spread over 34 countries. It has branches
of the parent in Moscow, Colombo, Dhaka, Frankfurt, Hong Kong, Tehran, Johannesburg,
London, Los Angeles, Male in the Maldives, Muscat, Dubai, New York, Osaka, Sydney, and
Tokyo. It has offshore banking units in the Bahamas, Bahrain, and Singapore, and representative
offices in Bhutan and Cape Town. It also has an ADB in Boston, USA.
The Canadian subsidiary, State Bank of India (Canada) also dates to 1982. It has seven branches,
four in the Toronto area and three in the Vancouver area.
SBI operates several foreign subsidiaries or affiliates. In 1990, it established an offshore bank:
State Bank of India (Mauritius). SBI (Mauritius) has 15 branches in major cities/towns of the
country including Rodrigues.
In 1982, the bank established a subsidiary, State Bank of India (California), which now has ten
branches – nine branches in the state of California and one in Washington, D.C. The 10th branch
was opened in Fremont, California on 28 March 2011. The other eight branches in California are
located in Los Angeles, Artesia, San Jose, Canoga Park, Fresno, San Diego, Tustin and
36. 36 | P a g e
SBI SHARE HOLDING PATTERN
President of India
Fis Including insurance co's
others includes resident
37. 37 | P a g e
(A) Banking subsidiary
(B) Foreign subsidiary
SBI International (Mauritius) Ltd.
(C) Non banking subsidiary
SBI Capital Markets Ltd
SBI Funds Management Pvt. Ltd
SBI Factors & Commercial Services Pvt. Ltd
SBI Cards & Payments Services Pvt. Ltd. (SBICPSL)
SBI DFHI Ltd
SBI General Insurance Company Limited)
(D) Joint Venture
1. SBI Life Insurance Company Ltd (SBI LIFE)
2. SBI General Insurance Company Limited
SBBJ SBH SBM SBP SBT
38. 38 | P a g e
6. CUSTOMER EXPECTATION
(1) Minimum Tolerable Expectation: After contacting several existing customers (Retail)
of SBI, we realized that some of them have very less expectations. They have opened the
saving account because it is India’s largest public sector bank & their money is safe.
Though many of them don’t expect service as good as that provided by other private
bank, but came to SBI for many loans like Teaser Loan as its interest rate is least in the
(2) Acceptable Expectation: Many customers expect that bank employees will listen to their
problem & serve them in a adequate manner.
(3) Experienced Based Expectation: Many customers believe that most of the time SBI
provides good & fast service but when the staff is on less & during rush hours, due to
higher load they have to wait longer period than usual.
(4) Normative Expectation: Many customers, especially students who have taken education
loan, believe that its interest rate charges are more than what many PSB offer so they
expect that SBI will provide the various installments at the right time without much delay
in various procedures. Many corporate customers believe that they are providing crores
of rupees business to SBI so the bank will provide loan & credit for their future business
(5) Ideal Expectation: Everyone says that you name any product/service in the banking
sector and you will find it at SBI. So many customers open their current and saving
39. 39 | P a g e
account at SBI because they are looking for a one stop banking service at SBI. It provides
insurance, mutual fund and all other the services based on the customer’s requirement.
Expectations of customer:
Minimum waiting time (approximately 5-7 min)
Automatic update on new products/services/schemes.
Floating rate should be most competitive in the industry.
Highest risk free rate of return.
Simplicity of documentation procedure.
There should not be any hidden fee & charge.
40. 40 | P a g e
7. CONSUMER BUYING BEHAVIOR
1) Needrecognition: SBI is providing its service to retail customers as well as corporate
clients. For a retail client there need is safety of their money. Retail customer are looking for
risk free growth of their saving. Corporate client is looking that SBI will manage their cash
flow requirement in such a way that SBI will deploy the idle fund in the most efficient
manner. Meet their requirement of the short term fund in cost effective manner.
2) Information Search:
Information is available in the following ways
a. Internet: The official website of SBI and other government sites promoting Indian
banking. Customers can also give their contact number to the agent so that an SBI
employee can contact him back.
b. Bank Branches: SBI & its associates gas the largest network through bank branches.
So the customer can visit any of the bank branches to gather information.
c. FriendsColleagues: People who have already availing SBI services.
The customer then gathers information for the following parameters:
a) Price (interest rate) b) Convenience (Distance) c) Timeliness of service
Other factor like reliability, assurance responsiveness etc. can also play important role.
3) Evaluation of alternatives:
There are more than 50 banks operating in India currently. So the customers can select a
particular bank based on their requirement like HDFC bank has the specialization in
providing home loan and ICICI is the largest private sector bank.
Customers can do a comparative analysis of various services provided by different banks
based on information available on the internet etc.
4) Purchase decision:
For purchasing a service, the customer has to open a saving & current account most of
the time. It may be possible that for credit card they may not required to open account.
All the terms & conditions are signed after mutual agreement & RBI norms.
5) Consumption of service:
Customers can avail the service consistently as long as they wish to.
41. 41 | P a g e
The total assets size of the banking industry rose by more than five times between March 2000
and March 2010 - from US$ 250 billion to more than US$ 1.3 trillion - a Compound Annual
Growth Rate (CAGR) of 18 per cent compared to the average GDP growth of 7.2 per cent during
the same period. CAR stands around 14 percent which is higher than 8 percent based on BASEL
requirement. According to the central bank's WSS, Indian bank loans increased by 19.9 per cent
year-on- year (y-o-y) as of July 1, 2011. Deposits rose by 18.4 per cent from a year earlier.
Strong regulatory system
Relative insulation from
India is becoming the IT
Credit Quality of bank
Only 40 % residents have access to
Growing per capita income.
Liberalization of ECB norms.
Quality of service is not upto the
mark in rural sector.
Refusal to dilute stake in PSB
Weak sales & marketing team of
PSB compare to foreign bank.
Increasing dependency on global
Threat from cyber attack.
42. 42 | P a g e
Various aspects on the basis of which SBI is doing segmentation are
1) Based on Tenor
2) Based on Geography
3) Based on SEC
4) Based on volume (Retail V/s Corporate V/s Govt.)
5) Based on sector(Priority Lending)
SBI is targeting the retail segment as well as the corporate and government business. Retail
segment has very less value per account compared to the corporate segment. It has different
products available to meet different consumer segment needs.
SBI has positioned itself as a Banker to Every Indian. One can be assured that any banking
service will be available with SBI. Further, being a Public Sector Bank, it also promulgates a
strong Trust among its clients. SBI has positioned itself as a mass marketer in the consumer
mind. One can name any banking service and it will be available with SBI. All the banking
products/ services are available with SBI to satisfy different customer segment need.
43. 43 | P a g e
9. MARKET OFFERING VIZ MARKETING MIX & BRAND POSITIONING
9.1 PRODUCT / SERVICE
SBI has its presence in various domains.
(A) Personal Banking
State Bank of India offers a wide range of services in the Personal Banking Segment. Various
services in personal banking domain include:
SBI term deposit
SBI recurring deposit
SBI home loan
SBI education loan
SBI car loan
SBI personal loan
SBI loan for pensioners
Loan against mortgage of property
Loan against shares & debentures
State Bank of India Caters to the needs of agriculturists and landless agricultural labors through
a network of 8750 rural and semi-urban branches.
(C) International Banking
Agriculture International Corporate SME Services
44. 44 | P a g e
The services include corporate lending, loan syndications, merchant banking, handling Letters of
Credit and Guarantees, short-term financing, collection of clean and documentary credits and
(D) Corporate Banking
SBI is a one shop providing financial products / services of a wide range for large , medium and
small customers both domestic and international.
Working capital financing
Deferred payment guarantee
The Bank has financed over 8 lakh SSI units in the country. It has 55 specialized SSI branches,
99 branches in industrial estates and more than 400 branches with SIB divison.
State Bank Vishwa Yatra Foreign Travel Card
State Bank Vishwa Yatra Foreign Travel Card is available in six Foreign Currencies
viz. US Dollars (USD), Pound Sterling (GBP), Euro (EUR), Canadian Dollar (CAD) and
Australian Dollar (AUD), Japanese Yen (YEN).
SBI Capital Markets Ltd. has expanded its retail broking network to help investors carry
out their broking transactions with confidence.
State Bank offers the convenience of over 43,000+ ATMs in India, the largest network in
the country. This means that customer can transact free of cost at the ATMs of State
Bank Group and wholly owned subsidiary viz. SBI Commercial and International Bank
Ltd., using the State Bank ATM-cum-Debit (Cash Plus) card.
45. 45 | P a g e
The Internet banking portal SBI, enables its retail banking customers to operate their
accounts from anywhere anytime, removing the restrictions imposed by geography and
time. It's a platform that enables the customers to carry out their banking activities from
their desktop, aided by the power and convenience of the Internet.
Using Internet banking services, customers can do the following normal banking transactions
Funds transfer between own accounts.
Group transfer to accounts in State Bank group
Inter banks transfer to accounts with other banks.
Online standing instructions for periodical transfer for the above
Credit PPF accounts across branches.
Request for opening new accounts.
Request for closure of loan accounts.
Request for issue of cheque book.
Utility bill payments.
RTGS / NEFT
RTGS stands for “Real Time Gross Settlement”. It is an electronic payment system in
which payment instructions between banks are processed and settled individually and
continuously, on a real time basis, throughout the day. It is available for transaction
value of Rs.2.00 Lacs and above.
NEFT stands for “National electronic fund transfer”. It is another electronic payment
system in which payment instructions between banks are processed and settled on
deferred net settlement (DNS) basis at fixed times during the day. There is no minimum
or maximum stipulated transaction value for using this facility.
E-RAIL – To Book Railways Ticket Online.
The facility has been launched wef 1st September 2003 in association with IRCTC. The
scheme facilitates Booking of Railways Ticket Online.
46. 46 | P a g e
Bill Payment (e-Pay) will let customers to pay their telephone, mobile, electricity, insurance
and credit card bills electronically over our Online SBI website.
If customer’s biller presents bills online, customer can also give SBI AutoPay instructions
and SBI will pay the bills as and when it falls due.
SAFE DEPOSIT LOCKER
For the safety of customers valuables SBI offer its customers safe deposit vault or locker
facilities at a large number of branches. There is a nominal annual charge, which depends on
the size of the locker and the centre in which the branch is located.
The pricing decisions or the decisions related to interest and fee or commission charged by banks
are found instrumental in motivating or influencing the target market.
The RBI and the IBA are concerned with regulations. The rate of interest is regulated by the RBI
and other charges are controlled by IBA.
The pricing policy of a bank is considered important for raising the number of customers’ vis-à-
vis the accretion of deposits. Also the quality of service provided has direct relationship with the
fees charged. Thus while deciding the price mix customer services rank the top position.
The banking organizations are required to frame two- fold strategies. First, the strategy is
concerned with interest and fee charged and the second strategy is related to the interest paid.
Since both the strategies throw a vice- versa impact, it is important that banks attempt to
establish a correlation between two. It is essential that both the buyers as well as the sellers have
feeling of winning.
Pricing Bank Products Starts With Three Basic Questions.
1. What rate does the bank need to meet its financial objectives?
The answer is, “it depends.”
Some considerations for loan and deposit pricing are:
ROA or ROE objectives
Related income taxes
Earning assets to total assets
47. 47 | P a g e
Cost to service earning assets being funded or deposits funding an earning asset
Pricing for the activities and risks associated with the product
Rate tiers based on product balances
Asset and liability mix
Another element to consider in the pricing of earning assets is the risk of loss. Most notably, this
is relevant in loan pricing. Many banks assign a risk weighting to individual loans over a certain
size or based on loan type and assign a credit risk charge based on those ratings.
Customer relationships are difficult to assign a value to in the pricing process. Customers will
generally press for some price concessions in consideration of other relationships they have with
Asset and liability mix also impacts pricing results. Generally speaking, banks operating with
higher loan-to-asset ratios are able to afford to pay more for deposits. Likewise, banks can
afford to be more competitive on certain deposit products if they have fewer maturities in a
particular timeframe or less total outstanding balances in a product line.
2. What is the market rate for the core product?
Customers have more distribution channels available to them today than at any other point in
history. In the past 10 years, the number of bank locations has increased 20%. Of course, there
are the mortgage bankers, the Internet, and a host of other financial service providers competing
for your customer’s loan and deposit business.
The point is, the competitive marketplace always ensures that if a financial institution is charging
too much for loans or paying too little for deposits, its share of the market will likely dwindle as
existing and prospective customers find alternative providers. You can do all the math you want
to determine required pricing points, but if your pricing is uncompetitive, your market share will
3. What would the bank have to do to sales and operations to make its rates the most
competitive in its market?
Pricing is a key issue for the associates who sell bank products to your customers. The fact is,
lenders want the lowest rates, and people dealing with depositors want to pay the highest rates.
You need the right balance of fee income, strategies to reduce operating costs, and a healthy
asset and liability mix to change your required pricing.
48. 48 | P a g e
Loan amount Upto Rs.30
30 lacs to
Rs. 75 lac
Above Rs.75 lac
to Rs.5 Cr.
Above 5 cr.
8.75% 8.75% 10% 10.25%
during 2nd & 3
9.50%. 9.50% 10% 10.25%
from 4th year
9.75% 10.00% 10% 10.25%
Loan amount Below Rs.5 lacs Rs.5 lacs and above
Interest rate during
9.25% p.a. 9.25% p.a.
Interest rate during 2nd &
3 rd year
10.25% p.a. 10.25% p.a.
Interest rate for 4th &
Interest rate for 6th &
All the interest charge & fee are nationalized and same in all the branches. Further detail is
available on following website. (www.sbiindia.com)
49. 49 | P a g e
It is widely distributed bank in India with 26,500 bank branches including those of associate
banks. It is trying to provide banking services to masses. It has already opened some of the
branches outside India to provide service to foreign travelers & NRI.
This component of marketing mix is related to the offering of services. The services are sold
through the branches. The important decision making areas are: making available the promised
services to the ultimate users and selecting a suitable place for bank branches.
Why they select this place as branch?
The selection of a suitable place for the establishment of a branch is significant with the
view point of making place accessible.
The safety and security provisions
Convenient to both the parties, such as the users and the bankers
Near to station and located on s. v. road well crowded area.
SBI is using different- different medium to promote its services to target market
Advertisement through Television, radio, movies, theatres, hoardings, newspaper,
Sales promotion: gifts, discount and commission, incentives, etc.
Publicity: road shows, campus visits, sandwich man, Sponsorship
Personal selling: Cross-sale (selling at competitors place),personalized service
Telemarketing: SBI one source Call center (mind space)
9.5 PHYSICAL EVIDENCE
Physical evidence is the material part of a service. Strictly speaking there are no physical
attributes to a service, so a consumer tends to rely on material cues. There are many examples of
physical evidence, including some of the following:
50. 50 | P a g e
The building itself (such as prestigious offices or scenic headquarters)
The physical evidences also include signage, reports, punch lines, other tangibles,
employee’s dress code etc.
Signage: each and every bank has its logo by which a person can identify the company. Thus
such signages are significant for creating visualization and corporate identity.
Financial reports: The Company’s financial reports are issued to the customers to emphasis or
Tangibles: bank gives pens, writing pads to the internal customers. Even the passbooks,
chequebooks, etc reduce the inherent intangibility of services.
Punch lines: punch lines or the corporate statement depict the philosophy and attitude of the
bank. Banks have influential punch lines to attract the customers.
51. 51 | P a g e
Processes to avail various services are standardized across the branches. The customer has to
follow particular procedure to avail those services. Also, the employees have to follow certain
pre-defined procedure to provide those services to the customers.
Flow of activities: all the major activities of SBI banks follow RBI guidelines. There has to be
adherence to certain rules and principles in the banking operations. The activities have been
segregated into various departments accordingly.
Standardization: SBI bank has got standardized procedures got typical transactions. In fact not
only all the branches of a single-bank, but all the banks have some standardization in them. This
is because of the rules they are subject to. Besides this, each of the banks has its standard forms,
documentations etc. Standardization saves a lot of time behind individual transaction.
Customization: There are specialty counters at each branch to deal with customers of a
particular scheme. Besides this the customers can select their deposit period among the available
Number of steps: numbers of steps are usually specified and a specific pattern is followed to
minimize time taken.
Simplicity: in SBI banks various functions are segregated. Separate counters exist with clear
indication. Thus a customer wanting to deposit money goes to ‘deposits’ counter and does not
mingle elsewhere. This makes procedures not only simple but consume less time. Besides
instruction boards in national boards in national and regional language help the customers
Customer involvement: ATM does not involve any bank employees. Besides, during usual
bank transactions, there is definite customer involvement at some or the other place because of
the money matters and signature requires.
52. 52 | P a g e
All people directly or indirectly involved in the consumption of banking services are an
important part of the extended marketing mix. Knowledge Workers, Employees, Management
and other Consumers often add significant value to the total product or service offering.
It is the employees of a bank which represent the organisation to its customers. In a bank
organization, employees are essentially the contact personnel with customer. Therefore, an
employee plays an important role in the marketing operations of a service organisation.
To realize its potential in bank marketing, SBI become conscious in its potential in internal
marketing - the attraction, development, motivation and retention of qualified employee-
customers through need meeting job-products. Internal marketing paves way for external
marketing of services. In internal marketing a variety of activities are used internally in an active,
marketing like manner and in a coordinated way.
The starting point in internal marketing is that the employees are the first internal market for the
organization. The basic objective of internal marketing is to develop motivated and customer
A service company can be only as good as its people. A service is a performance and it is usually
difficult to separate the performance from the people. If the people don’t meet customers'
expectations, then neither does the service. Therefore, investing in people quality in service
business means investing in product quality.
People are the most important part of the whole service delivery process. In the case of services,
people are on both sides i.e. the service providers and the customers. SBI has employee base of
around 2 Lac. Any new employee - a clerk or a probationary officer is been given proper training
for 3-6 months. New joiners are trained through various procedures to deliver services to
customers. It depends on the customer what kind of services he wants to avail from the bank and
his cooperation in following the whole process and making it easier for the employee to service
him, thereby making him an important part of the whole process.
53. 53 | P a g e
10. DEMAND & CAPACITY MANAGEMENT
1) As various banking service are seasonal & unpredictable, so matching capacity with demand
efficiently becomes a cumbersome task. The important step which SBI does is to separate bank’s
factory like transaction (like check encashment, withdrawal etc) which are more standardized
than personalized ones (like opening new account, loan application etc). Factory like
transactions are more predictable based on the no of account & past trends. Matching
infrastructure capacity (people, process, system) for factory transaction is the very first step.
2) Bank changes working hour to meet the varying demand, but when overtime crosses the
particular limit bank manager request for more personnel from headquarter.
3) On the job multi skill development program for employee to meet supply in peak hour.
4) Mobile van used by SBI to meet demand from rural area. It reduces the load on the bank
5) Dollar value per employee is the index used to standardize the no of employee per branch.
Credit growth rate > Deposit rate (Bank Increase interest rate)
Credit growth rate < Deposit rate(Bank reduce interest rate)
7) SBI has the maximum number of ATMs (25,000 as on 31 March, 2011) to reduce load on
8) SBI has been continuously recruiting Clerk & Probationary Officer to meet the manpower
requirement at various branches.
9) More & more automation is done to reduce the load on manpower & efficient use of
infrastructure (Automatic note counting machine).
54. 54 | P a g e
SBI is at the top of consumer’s share of mind & share of heart in Indian banking sector. It has the
largest network of bank branches across the India which enables it to deliver its service in
various geographic areas. SBI is the market leader and others follow what SBI does. SBI has
different targeting strategy for various product/ service based on its target segment. As it has
captured more than 20% share of market it can leverage on its economies of scale and economies
of scope. Consumer perceive SBI as the one stop shopping where they can meet the all the
banking service requirement. Consumers perceive SBI as the safest bank due to its government
holding & large customer base.
Following few points which would help SBI in improving its consumer satisfaction which in turn
would also improve its consumer perception.
SBI bank branches should improve to its physical infrastructures (interiors as well
exteriors) to make it comparable to the private bank. Though it is the gradual and slow
process, so SBI can start with urban cities first.
Bank should recruit more personnel to reduce average waiting time per customer. Also, it
would increase the ratio of no of employees per 1000 customers.
Promotion on Electronic media is less when compared to private banks. Bank can
increase expenditure on this to improve its brand building further.