Comparative Analysis Of Icici And

PNB Marketing Essay

In financial services, people are primarily bothered about security of their
funds and default risks. After the year 1969, the deposits of banks increased
more than 80 times as a result of the nationalization of banks. The effort to
promote banking business is quite distinguished affair. At present, it has
become very tricky due to the changing trends of industry, increasing
competition and efficiency of regulatory environment, and the financial
system. The complexity in the banking services is also an issue of vital
importance. This is the time when banks are offering new and innovative
services, frequently in the market. The content of promotional tools should
help the customer in making most valuable decision. This can be firmly said
that well-designed promotional strategies are very important to promote
banking services effectively. In marketing any product or service, customer
satisfaction has been given the prime importance. The most frustrating aspect
of bank marketing is lack of management support, lack of inter-departmental
cooperation, crisis management, government intrusion and advertising &
media problems. Banking should bring out the areas requiring improvement
and which further throw light on the measures to improve the quality of
services. Promotional packages are very important for financial service
industry. Thus the orientation of banks should be with a much wider focus in
relation to consumer and market needs, and the consequent marketing
strategies. The challenges put forth by the changing environment have to be
effectively tackled to identify the consumer needs and providing valuable
services through product innovation. In banking the temporal and spatial
dimensions are perceived as more important than traditional dimensions
based on outcome and process elements. Winning new customers costs 10
times more than simply holding into existing ones. The case should be taken
in the marketing of financial services very seriously. While formulating
marketing strategy, a bank should focus attention on:
consumer sovereignty,
attitude,
responsiveness and personal skills of bank staff,
revitalizing the marketing department,
top management support to the marketing department,
Participation of marketing personnel in key bank decisions.
Objectives
With the same perspective, the prime objectives of the study are:
(i) To know about the various promotional tools of Private and Public sectors
banks in India (especially in ICICI and PNB Bank).
(ii) To make a comparative analysis of customers' perception for promotional
strategies of private and public sector banks in India (especially in ICICI and
PNB Bank).
(iii) To find out the key promotional tools for banking services on the basis of
customers responses.
Defining Bank
According to Oxford English Dictionary, Bank is, An establishment for
custody of money received from or on behalf of, its customers. Its essential
duty is the payment of the orders given on it by the customers, its profit mainly
from the investment of money left unused by them. Banking Regulation Act,
1949 (Sec. 5(c)), has defined the banking company as, Banking Company
means any company which transacts business of banking in India. According
to Section 5B, banking means the accepting of deposit of money from the
public for the purpose of leading or investment, which is repayable on demand
or otherwise and are withdraw able by cheque, draft, and order or otherwise.

Changing strategies of Banks
1991
2015
Maintaining Profitability
Service Quality
Credit Portfolio management
Maintaining Profitability
Service Quality
Market / Customer Focus
Regional Economy
Operations/ Systems/Technology
Cost management / Expense reduction
Credit Portfolio Management
Declining Earnings / more Failures
Productivity improvement
Marketing Strategies
Strategy can be defined as the periodic changes a business must introduce to
its structure and operations in order to ensure continuity in the face of
environmental changes. The strategic evolution of a business can thus be
understood in terms of major social institutions such as the State, the market,
community or civil society and their interrelationships that may have a bearing
on its working and thereby the achievement of the principle objectives of its
establishment. Historians recognize moments of profound change when the
balance of power or influence shifts between these institutions.
Overview of ICICI Bank
ICICI Bank is India's second-largest bank with total assets of Rs. 3,674.19
billion (US$ 77 billion) at June 30, 2009 and profit after tax Rs. 8.78 billion for
the quarter ended June 30, 2009. The Bank has a network of 1,485 branches
and about 4,816 ATMs in India and presence in 18 countries. ICICI Bank
offers a wide range of banking products and financial services to corporate
and retail customers through a variety of delivery channels and through its
specialized subsidiaries and affiliates in the areas of investment banking, life
and non-life insurance, venture capital and asset management.
ICICI was established by the Government of India in the 1960s as a Financial
Institution with the objective to finance large industrial projects. ICICI was not
a bank - it could not take retail deposits; and nor was it required to comply
with ICICI Bank now has the largest market share among all banks in retail or
consumer financing. ICICI Bank is the largest issuer of credit cards in India. It
was the first bank to offer a wide network of ATM's and has a large network of
ATM's. ICICI Bank now has the largest market value of all banks in India, and
is widely seen as a sophisticated bank able to take on many global banks in
the Indian market.
HISTORY OF ICICI BANKING SYSTEM
ICICI was formed in 1955 at the initiative of the World Bank, the government
of India and Indian industry representatives. The principal objective was to
create a development financial institution for providing medium-term and long-
term project financing to Indian businesses.
Until the late 1980s, ICICI primarily focused its activities on Project finance,
providing long-term funds to a variety of industrial projects. ICICI Bank was
incorporated in 1994 as a part of the ICICI group. ICICI Bank's initial equity
capital was contributed for 75.0% by ICICI and for 25.0% by SCICI Limited, a
diversified finance and shipping finance lender of which ICICI owned 19.9% at
December 1996. Pursuant to the merger of SCICI into ICICI, ICICI Bank
became wholly-owned subsidiary of ICICI. Effective March 10, 2001, ICICI
Bank acquired Bank of Madura, an old private sector bank, in an all-stock
merger.
FIRSTS IN THE INDUSTRY:-
Introduced concept of branding in the Indian banking industry.

Process, People and Physical evidence brought to life by ICICI.
Product Innovation Put the customer first in the true sense.
Cash on the celebrity fever Introduced the concept of brand ambassadors.
Introduction of DSAs and DSTs.
Unleashed the power of the internet introduced the concept of net banking
and e-mail marketing.
First bank to focus on retail banking as a driver for growth.
Comprehensive data centre availability & data protection solutions.
LIST OF SERVICES PROVIDED BY ICICI:-
The services provided by ICICI bank are:
Accepting deposits,
Lending money to the public,
Transfer of money,
Trustee business (underwriting),
Safekeeping,
Government business,
to a new and risky Business Venture capital (providing startup Capital
operations), Automated teller machine (ATM):
Phone banking, Net banking or Internet banking,
Deposit insurance scheme.
PRICING STRATEGY OF ICICI BANK:-
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--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 twofold 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.
Penetrative pricing aimed at achieving large market share
Philosophy of profit through volume
Effort to drive out competition
Price leader in retail banking product
Aggressive pricing facilitated through low cost of fund acquisition
PLACE MIX:-
This component of marketing mix is related to the offering of services. The
services are sold through the branches. The 2 important decision making
areas are:
Making available the promised services to the ultimate users
Selecting a suitable place for bank branches.
The number of branches OF ICICI: 1900 in India and 33 in Mumbai.
PROMOTION MIX:-
The different components of promotion help bank professionals in promotion
the banking business.
Advertising: Television, radio, movies, theatres. ICICI uses this component of
the promotion mix with the motto of informing, sensing and persuading the
customers. The advertising professionals bear the responsibility of making the
appeals, slogans, messages more creative.
Print media: Hoardings, newspaper, magazines. There are a number of
devices to advertise, such as broadcast media, telecast media and the print
media
Publicity: road shows, campus visits, sandwich man, Sponsorship.
Sales promotion: Gifts, discount and commission, incentives, etc. ICICI also
thinks in favor of their promotional incentives both to the bankers as well as
the customers. The banking organizations make provisions for incentives.

Personal selling: Cross-sale (selling at competitors place), personalized
Service. The personal selling is found instrumental in promoting the banking
business. It is just a process of communication in which an individual exercise
his/her personal potentials, tact, skill and ability to influence the impulse
buying of the customers. Since ICICI gets immediate feedback, the personal
selling activities energies the process of communication very effectively.
Telemarketing: ICICI one sterile Call center.
PROCESS MIX:-
Flow of activities: All the major activities of ICICI 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: ICICI 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,
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 alternatives.
Number of steps: Numbers of steps are usually specified and a specific
pattern is followed to minimize time taken.
Simplicity: In ICICI 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 further.
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.
Overview of PNB Bank
Punjab National Bank (PNB), was registered on May 19, 1894 under the
Indian Companies Act with its office in Anarkali Bazaar Lahore. The Bank is
the second largest government-owned commercial bank in India with about
5000 branches across 764 cities. It serves over 37 million customers. The
bank has been ranked 248th biggest bank in the world by Bankers Almanac,
London. The bank's total assets for financial year 2007 were about US$60
billion. PNB has a banking subsidiary in the UK, as well as branches in Hong
Kong, Dubai and Kabul, and representative offices in Almaty, Dubai, Oslo,
and Shanghai.
Since its humble beginning in 1895 with the distinction of being the first Indian
bank to have been started with Indian capital, PNB has achieved significant
growth in business which at the end of March 2009 amounted to Rs 3,64,463
crore. Today, with assets of more than Rs 2,46,900 crore, PNB is ranked as
the 3rd largest bank in the country (after SBI and ICICI Bank) and has the 2nd
largest network of branches (4668 including 238 extension counters and 3
overseas offices).During the FY 2008-09, with 39% share of low cost deposits,
the bank achieved a net profit of Rs 3,091 crore, maintaining its number ONE
position amongst nationalized banks. Bank has a strong capital base with
capital adequacy ratio as per Basel II at 14.03% with Tier I and Tier II capital
ratio at 8.98% and 5.05% respectively as on March09. As on March09, the
Bank has the Gross and Net NPA ratio of only 1.77% and 0.17% respectively.

PNB has always looked at technology as a key facilitator to provide better
customer service and ensured that its IT strategy follows the Business
strategy so as to arrive at Best Fit. The bank has made rapid strides in this
direction. Along with the achievement of 100% branch computerization, one of
the major achievements of the Bank is covering all the branches of the Bank
under Core Banking Solution (CBS), thus covering 100% of its business and
providing Anytime Anywhere banking facility to all customers including
customers of more than 2000 rural branches. The bank has also been offering
Internet banking services to the customers of CBS branches like booking of
tickets, payment of bills of utilities, purchase of airline tickets etc.Towards
developing a cost effective alternative channels of delivery, the bank with
more than 2150 ATMs has the largest ATM network amongst Nationalized
Banks.
Key Areas of operation
The business operations of PNB can be broadly classified into the key income
generating areas such as National Banking, International Banking, Corporate
Banking, & Treasury operations.
SWOT Analysis
Strengths:-
Brand name: PNB Bank has earned a reputation in the market over the
period of time.
Market Leader: PNB is ranked at 478 in 2008 Fortune Global 500 list, and
ranked 219 in 2008 Forbes Global 2000. With an asset base of $126 billion
and its reach, it is a regional banking behemoth.
Wide Distribution Network: Excellent penetration in the country with more
than 10000 core branches and more than 5100 branches of associate banks
(subsidiaries).
Diversified Portfolio: PNB Bank has all the products under its belt, which help
it to extend the relationship with existing customers Bank has umbrella of
products to offer their customers, if once customer has relationship with the
bank.
Government Owned: Government owns 60% stake in PNB. This gives PNB
an edge over private banks in terms of customer security.
Low Transition Costs: PNB offers very low transition costs which attracts
small customers.
Continued effort to increase low cost deposit would ensure improvement in
NIMs and hence earnings.
Weaknesses:-
The existing hierarchical management structure of the bank, although
strength in some respects, is a barrier to change.
Though PNB cards are the 2nd largest player in the credit card industry, it
has the highest nonperforming assets (NPAs) in the industry, which stand out
to be at 16.28 % (Dec 2007).
Modernization: PNB lags with respect to private players in terms of
modernization of its processes, infrastructure, centralization, etc.
PNB is currently operating at a lowest CAR (8%). Insufficient capital may
restrict the growth prospects of the bank going forward.
Delay in technology up gradation could result in loss of market shares.
Management indicated a likely pension shortfall on account of AS-15 to be
close to Rs50bn
Contribution of retail credit to total bank credit stood at 26%. Significant
thrust on growing retail book poses higher credit risk to the bank.
Opportunities
Global expansion: PNB already has expanded globally and start its
operations internationally in 32 countries like Australia, Bangladesh, etc.... and
has more plans of expansion in other global markets.

Growing retail & SMEs thrust would lead to higher business growth.
Micro Finance: there is a lot of growth opportunity in the area of micro
finance.
Strong economic growth would generate higher demand for funds pursuant
to Higher.
Corporate demand for credit on account of capacity expansion.
Threats
Advent of MNC banks: Large numbers of MNC banks are mushrooming in
the Indian market due to the friendly policies adopted by the government. This
can increase the level of competition and prove a potential threat for the
market share of PNB bank.
Consumer expectations have increased many folds in last few years and the
bank has not been responsive enough to meet them on time.
Private Banks has started venturing into the rural and semi-urban sector.
Stiff competition, especially in the retail segment, could impact retail growth
of PNB and Hence slowdown in earnings growth.
Slow down in domestic economy would pose a concern over credit off-take
thereby impacting earnings growth.
The changing interest rates and the changing policies of RBI.
Generic strategies adopted by PNB
Institution for advanced learning: to provide state of the art training in financial
products to middle level and senior level executives.
Internal consultant/change agent: to act as a catalyst for change in attitudes
and orientation of banking staff and to provide expertise and consultative
support.
Feedback supplier: to capture and structure feedback from trainees and from
the market.
Think tank: to provide expert and inform suggestions, model business
strategies, analysis of market developments from a banker perspective.
Research and development role: to carry out research on contemporary
subjects that is relevant to the banks short term and medium term and
operational needs and policy for mulation.
Overlapping staff training centers: to validate and closely monitor the staff
training centers in seven circles attached to the academy.
Centralization and Decentralization
It has a well defined system for decision making process. The financial
decisions are taken at various levels by different officials depending upon their
positions and also through committee approach. The centralized credit
processing cells are being formed at certain centers for sanction of personal
segment loans and under PNB segments. Its branches source the
applications and forward them to the respective credit processing sale for their
consideration.
Regarding the sanction of loan each officer of the bank considers the loan
proposal sand takes a decision in terms of scheme of delegation of powers,
on merits of proposal. If the bank needs to purchase any kind of equipment
like computers or software branch managers are required to take permission
from high authority. So in term of decision making centralization is high and
low decentralization wherein the managers have some powers to take
decision but at a limited base.
The Restructuring
To overcome the intense competition from private and foreign banks, PNB
planned a major organizational restructuring exercise.
The key aspects involved
Redesigning of branches,
Providing alternate channels;
Focus on a lean structure and
Technological up gradation.
A business process reengineering (BPR) team was constituted in June 2003
with McKinsey & company as consultants. The BPR's basic goal was to create
an operating architecture that would facilitate service delivery of international
standards.

New Products and Services:-
Apart from restructuring, PNB launched several innovative, value-added
products and services to project a customer friendly image. It launched a
special service for corporate customers called 'telebanking and remote login'
to support transactional requests. This facility would be available at 593
branches, and remote login at 269 branches. The banks trade finance
solutions, called EXIMBILLS, were intended to handle trade finance
transactions efficiently and enhance the range of services provided to
corporate and network branches.
In March 2004, PNB announced that it would introduce anywhere banking
facility for its customers over 9000 branches across India in the next two
years. All the branches in Mumbai would provide this facility by December
2004. PNB also launched different customized loan programs to cater to
various sections of society depending on income levels and repayment
capabilities. Interest rates and repayment periods were tailor-made to suit the
customer groups.
Alliances and Tie-Ups
To boost its business, PNB entered into several alliances and tie-ups with
automobile, insurance, mutual fund, project finance and medical equipment
companies.
The Marketing Initiatives
PNB carried out various marketing initiatives to enhance its reach. They
included
Segregating and targeting existing high value customers,
Cross sales of other products,
Setting up call centers and outbound sales force to secure new customers.
Plans were also made to utilize database marketing to pursue large and
medium sized corporate, government and trade finance customers.
Database marketing was expected to draw increased revenue from cross
selling, lower costs and increased customer loyalty. PNB also introduced
various other ways of reaching out to customers like extension of hours of
work (PNB increased daily working hours by two hours and Sunday banking
was introduced) and
Aggressive marketing through print and television media.
Analysis of Marketing Strategies Adopted by ICICI
Bank and PNB Bank:-
Table 1: Promotional Strategies by PNB and ICICI Bank:-
Promotional Tool
Punjab National Bank
ICICI Bank
Advertising on Television
Yes
Yes
Advertising in Newspapers
Yes
Yes
Personal Selling / Personal Contact
No
Yes
In Journals and Magazines
Yes
Yes
Tele Calling by Sales Persons
No
Yes
Outdoor Advertising Hoardings etc
Yes
Yes
Schemes/ Gifts/ Prizes for Customers
No
Yes
Public Relations/ Events/ Programmes
Yes
Yes
Online Marketing/ E-Mail
Yes but few
Yes
Pamphlets/ Propaganda
No
Yes
Letter/ Mail/ with relevant aMaterial
No
Yes
Publishing News in Newspapers
Yes but few
Yes
Explanation
The above table shows the different Marketing Strategies used by Punjab
National Bank and ICICI Bank.
There was difference of promotional Strategies used by these Banks. Some
promotional strategies are used by both these banks like: advertising on
television and News papers, in Journals and Magazines, outdoor advertising
Hoardings, Public relations/ events/ programmes.
Some promotional strategies are not used by both the banks like: Personal
selling/ Personal contact, tele calling by sales persons, schemes/ gifts/ Prizes
for customers, online marketing/ Email, publishing news in news papers.
Suggestions
Skilled human resources are one of the most important pre-requisite for the
efficient management of a large and diverse retail credit portfolio. Only highly
skilled and experienced manpower can withstand the rigour of administering a
diverse and complex retail credit portfolio. So it is advisable to Punjab
National Bank that it should employee highly skilled and efficient employees
for the betterment of the services.
Conclusion
ICICI Bank has excellent staff members in terms of behavior in comparison to
the staff members of PNB.
Services of ICICI Bank are much better than PNB.
The main reasons for satisfaction are competitive rates and true commitment.
The reasons for dissatisfaction are hidden charges.
ICICI Bank follows a centralized system, so as to bring synchronization in the
decision making process which helps the organization to create better
strategies so as to focus on the overall functioning and growth prospects of
the bank.
At the same time it can be concluded that they need to focus on the human
resources in order to achieve the maximum market share.


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