Term Report on KASB

Bank
Consumer Behavior

Submitted to: Submitted By:

Ms. Tahira Zia Suresh Kumar
Sumeet Kumar
Zeeshan Khan
Contents
Contents..................................................................................................................... 2

BACKGROUND TO KASB BANK....................................................................................4

INTRODUCTION TO CONSUMER BANKING ..................................................................5

Introduction to Education Asaan (EA).........................................................................6

Features..................................................................................................................6

Decision making perspective......................................................................................7

UNDERSTAND CB as MARKETERS...............................................................................9

Target market...........................................................................................................10

Segmentation...........................................................................................................11

Geographic Segmentation:....................................................................................11

Demographic Segmentation..................................................................................11

Socio-Cultural Segmentation.................................................................................12

Benefit Sought Segmentation................................................................................12

Psychological Segmentation..................................................................................12

VALUES & LIFESTYLE SURVEYS.................................................................................14

Need identification/ Motivation.................................................................................15

Parents/institutions................................................................................................15

Educational institutions:........................................................................................16

PERMS (Product positioning and differentiation, Environmental analysis, marketing

Research, Marketing mix development, and Segmentation)....................................17

Positioning and Differentiation..............................................................................17

Economic Environment..........................................................................................17

Political Environment.............................................................................................17

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 Consumers............................................................................................................18

Competition Analysis.............................................................................................18

Market Research.......................................................................................................19

Marketing Mix........................................................................................................... 25

Product.................................................................................................................. 25

Price......................................................................................................................26

Placement.............................................................................................................26

Promotion..............................................................................................................26

TRIO OF NEEDS.........................................................................................................26

Power....................................................................................................................26

Affiliation............................................................................................................... 27

Achievement.........................................................................................................27

Consumer Perceptions..............................................................................................27

Perceptual Selection..............................................................................................28

Halo effect.............................................................................................................28

Attitude formation and change.................................................................................29

Recommendation and Conclusion............................................................................30

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BACKGROUND TO KASB BANK
KASB Bank through its network of 41 branches in 15 major cities of Pakistan offers
unique and innovative financial solutions to a large portfolio of investment, corporate
and consumer banking customers. The Bank has been assigned medium to long term
entity rating by PACRA of A (Single A) and short term rating of A1 (Single A One).

The Bank’s aim is to assist you in fulfilling your banking needs of today and realizing
your ambitions for tomorrow, by offering a comprehensive range of financial services,
while ensuring service excellence. Further, we provide our customers access to a
broader range of funding sources, made possible by the Group's strong network of local
and international relationships. The Bank also offers a host of financial services offered
by the KASB Group.

Location of KASB Branches Nationwide

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INTRODUCTION TO CONSUMER BANKING
Does a trip to your bank bring memories of long queues to get to a teller or ATM? Are
you confused about the advantages of fixed deposits over traditional savings accounts,
but are too afraid to ask? Do you know which loan best suits your requirements?
Today's banking environment offers much and leaves you, the customer, wondering
what the best is for you, your family and your business.

At KASB Bank, we focus on understanding you, our customer. From your current
financial position to future financial requirements, we at KASB Bank have developed a
comprehensive product range for you. Whether you want to build a home, arrange
finances for your higher education or marriages for your children, with a diverse
financial product offering coupled with our commitment to service, KASB Bank makes
banking “Asaan” again.

We, at Consumer Banking cherish relationships. We foster the trust sustained with our
unique market segments. Our loan products cater to diverse financial needs and
dispense flexibility to our customers, enabling them to enjoy complete peace of mind.
By embracing a service culture, we offer a robust support mechanism for our customers
with a network of 35 branches countrywide, a full service Call Center, ATM/Debit Card
network, and payment drop box facility.

With KASB Bank’s Consumer Banking products, we assure a positive impact on your
lives.

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Introduction to Education Asaan (EA)
For the in- depth analysis on the consumer behavior practices in the corporate world,
we have chosen KASB Bank as our organization. We will be analyzing their education
loan facility called EDUCATION ASAAN.

Education Asaan is a credit line solely for education financing. It is a convenience

product that facilitates parents/guardians in making their children fee payments on time.
It also helps educational institutes to manage their cash flows efficiently.

Features

• Credit line Facility solely for the purpose of Educational Institutes Fee Payment
• Credit Facility equivalent to the annual Educational Institute fee
• Flexibility in repayments (Option of revolving credit)
• Option of enrollment of multiple children in the program
• Education protection covers through Child Education Continuation Plan
(optional), ensuring that a parent’s/guardian’s child will be able to continue his
education in case of death of the parent or guardian. On death of parent/guardian
EFU Life will pay remaining future tuition fee as a lump sum to school.
• This benefit would be restricted to an amount of Rs. 1 million
• Maximum Insurance Coverage not exceeding Rs. 1 million
• Optional Credit Shield Insurance Cover 0.40 paisa per Rs. 100.
• Customer to be informed about fee payment status through monthly statements
• Convenient mode of payments
• Direct debit instructions.
• Drop boxes at Educational Institutes premises/KASB branches

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Decision making perspective
. . . Proposes that buying results from consumers perceiving that they have a problem
and then they move through a series of rational steps to solve the problem. The generic
decision model proposes that the consumer goes through five stages:

 Problem Recognition

 Search

 Alternative Evaluation

 Choice
 Post acquisition Evaluation

The first stage is when the customer recognizes that he has a problem. The problem
recognition stage can be identified through this picture:

Then after the individual has identified his problem then he goes on to search for ways
to solve the problem and he goes into the market to find a solution to this problem and
they go search for educational financing products.

The next step is the one in which they Evaluate alternatives available in the market. The
alternatives available to them are:

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Then the next step is the one in which the customers have to make a CHOICE. There is
a high probability that they will select KASB EDUCATION ASAAN. This is because if
you look at the products being offered by other banks they are not purely education
products that have been tailored to met the education needs of the customers and they
are either credit cards or personal loans. Only KASB is offering a proper structured
education product.

Post acquisition Evaluation is when consumers evaluate a product after they have
started using it. If it exceeds their expectation then it creates customer delight and if it is
below their expectation then it creates customer disgust.

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UNDERSTAND CB as MARKETERS
As marketers KASB has identified that acquiring good education is a priority for its
customers and so they made a product tailored specifically to meet this need and to
reduce the hassle of paying school fees.

“Education Asaan” is a customized convenience product for both Educational

Institutions and its customers. It is designed to eliminate late fee payments, resulting in
improved cash flows, effective administration and the same time provides the
Educational Institution with the tool to enhance its relationship with parents

Simultaneously, the product offers a credit line to the parents facilitating them in times of
financial crunch and enabling them to make Educational Institution fee payments in a
hassle free & timely manner.

After it has understood need

and behavior of customers
KASB BANK tries to predict
reactions, and it does this by
analyzing its competition
closely and trying to make their
product a product that
consumers find is convenient
and that reduces hassle. Also
it analyses what impact
changes in interest rate for
Education Asaan will have on
consumers and what will tier
reaction be to an increase in
the rate.

And they act accordingly when changing interest rates after predicating consumer
reactions.

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Target market
The target market for the KASB Education Asaan loan is divided into two groups:

1. Parents belonging to middle & high income group whose children are studying in
well reputed and good profile educational institutions located in main tier cities like
Karachi, Lahore, Islamabad & Rawalpindi

2. Educational institutions charging high fees i.e. Rs 3,000 per month and above

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Segmentation
KASB segment their consumers on the following basis

A. Geographic Segmentation

B. Demographic Segmentation

C. Socio-Cultural Segmentation

D. Benefit sought Segmentation

E. Psychological Segmentation

F. VALS

Geographic Segmentation:
KASB bank segments their audience geographically for their product Education Asaan
(EA). They offer the EA loan facility in

• Karachi

• Lahore

• Islamabad

• Rawalpindi

The reason being that most of the high profile, well-known and prime educational
institutes are situated in these cities and such institutions are their target market.

Demographic Segmentation
KASB also segments their audience demographically on the basis of the Income group

KASB EA loan is for the parents belonging to middle or high income group.

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Socio-Cultural Segmentation
Parents:

Educational institutions

They have segmented their educational institutes according to their respective standing
in the education sector. Their audience is high profile institutes with an expensive fee
structure.

Benefit Sought Segmentation

Benefit Sought segmentation can also applied by KASB bank. The loan facility is for
parents who want their children to go to good institutes, but they face difficulties in
keeping up with the fee structure. EA is a solution for such people because provide with
them installments facilities.

This product is also for educational institutions who want a smooth fee collection and
management system.

Psychological Segmentation
Psychological segmentation is done to understand the needs, motivation, perception,
attitudes and level of involvement.

The need in the case of EA loan facility is:

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A. For parents- they are seeking a solution through which they can send their kids
to good schools and can pay the high fees comfortably

B. For Educational Institutes- they are seeking an efficient fee collection system that
takes care of all the problems related to fee collection process

Now, their motivation is the solution provided in the shape of Education Asaan (EA).
They target market will see it as cure to their prevailing financial and management
problems respectively.

As a lot of planning and consideration goes in the process of taking a loan it’s a high
involvement item. People think a lot when taking a loan and want to be highly satisfied.
So when offering such kind of products the marketer should keep in mind that they
should not leave any stone unturned in satisfying the customer.

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VALUES & LIFESTYLE SURVEYS

As an individual, all of us have personality traits, attitudes, or needs that are similar to
those of other people. VALS measures the underlying psychological motivations and
resources that many consumers share that predict each group's typical choices as
consumers. One can identify its target market by using eight different types of VALS 2
segments.

Innovators are those who have high resources and high innovation while the survivors
have the low resources and low innovation. Other segments are thinkers, believers,
achievers, strivers, experiencers and makers. Kasb’s Education Asaan is for those with
low resources that is it is for Makers.

They are Makers as they constantly value practicality and self sufficiency and they will
choose KASB’s Education Asaan as it offers the lowest charged as compared to other
products in the market so it will appeal to them on pragmatic grounds.

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Need identification/ Motivation

KASB identified the need for both parents and education institutions.

Parents/institutions
KASB bank identified the problem that most parents have when their children are opting
for an expensive school. The following question arise in a parents mind

• What could be the easiest way of paying fee?

• Monthly hassles at the time of depositing fee

• No Financial Control…No saving

• Increased cost of living…what about my child’s future?

• Delay in Payments…Late payment charges

• Month end …….

• Time to give Educational Institutes Fee

KASB bank considered all these questions and came up with a product call education
asaan. The product is customized to give solution to all the above mentioned queries.

All the above listed questions are consumer motives for the marketer. And keeping
these motives in mind they designed a product with features that act as cues to the
consumer motives. For example timely payments without any delay can be a cue to the
motive that due to late payments parents have to give late payment charges. Now the
behavior of the consumer will be the response to the cue. Response can vary in this

15
case either the consumer will go and apply for the loan or he could also refrain from it
based on his past experiences with the loans facilities or the banking sector in general.

Educational institutions:

Benefits that educational institutions seeks from the KASB Education asaan facility are
as above

For an educational institution motives can be all the factors listed above, and all the
features that KASB is providing keeping in view these motives will be cues for
educational institutions. The response will result from the effectiveness of the cues on
the key people.

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PERMS (Product positioning and differentiation,
Environmental analysis, marketing Research,
Marketing mix development, and Segmentation)
Positioning and Differentiation
All well reputed / established Educational Institutions (School / Colleges / Universities)
having comparatively higher fee structures, operating within the main tier cities of
Pakistan and the parents & students associated with these institutions for the purpose
of acquiring education as well as Parents belonging to middle & high income group
whose children are studying in well reputed and good profile educational institutions
located in main tier cities like Karachi, Lahore, Islamabad & Rawalpindi as well as.

“Education Asaan” is a customized convenience product for both Educational

Institutions and its customers designed to eliminate late fee payments, resulting in
improved cash flows, effective administration and the same time provides the
Educational Institution with the tool to enhance its relationship with parents. Education
Assan is a product that has been tailored to meet the requirements of parents as
opposed to education products of other banks that are on credit card principles or give
personal loan which can be used for educational purposes.

Economic Environment
Economic Environment plays an important role in the banking industry. Keeping in view
the present situation, Pakistan is going through a liquidity crisis and banks are short of
money. And on the consumer due to high inflation people have a high cost of living. So
the situation is that now banks will lend to the consumer but on a higher rate and this
will discourage the consumer from taking loans as he already have inflationary
pressures on him.

Political Environment
Political instability is at peak during this time. This is resulting in disappointment for the
youth. Most of them want to go abroad and study.

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Consumers
There are very mixed views of the consumers on taking loans. Some people have very
negative believes towards taking loans and this counts in their attitude and effect. They
feel that they are being betrayed through various loop holes and high markup. On the
other hand people have a very encouraging attitude toward personal loans. This is due
to their belief that taking loans is good for them and their pockets.

Competition Analysis

Bank Product Name APR Credit Limit

KASB Education Asaan 21.96 Up to 300K schools

%
Up to 500K College /
Univ.

BAF Credit Card Feature 35% Equal to Credit Card

Limit

SCB Personal Loan can be 17.5% Rs.50,000 – 1.5 Million

used for education 25%
purposes

There are only 3 banks which provide educational loans and KASB is one of a kind.
Being the only bank that provides education loans KASB bank has a competitive
advantage. EA has the largest credit limit and the lowest APR. KASB understands its
competitors and their products. Keeping their competitors product in view they devised
EA to be unique and a product that fully satisfies every need of the consumer.

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Market Research
Market Research is the backbone if any organization. At KASB is has equal importance.
KASB people analyze their competitor’s product, evaluate it and then devise their own
unique product according to market needs

We conducted a small survey with a sample size of 20 people to find out how they feel
about EA loan. This took place at the defence branch of KASB, Khyaban-e-Shabaz

The analysis is as follows

Age count
20-29 4
30-39 2
40-49 9
50-59 1
60+ 4
Grand Total 20

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20
Gender Count
Male 7
Female 13
Grand Total 20
Income Count
Less than 20K 5
20K-50K 9
Above 50,000 6
Grand Total 20

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Q1 count
Strongly
Disagree 2
Disagree 2
Neutral 4
Agree 4
Strongly 8
Agree
Grand Total 20

Q2 Count
Strongly 4
Disagree
Disagree 5
Neutral 1
Agree 7
Strongly 3
Agree
Grand Total 20

Q3 Count
Strongly 2
Disagree
Disagree 3

Neutral 5
Agree 7
Strongly
Agree 3
Grand Total 20

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Q4 Count
Strongly
Disagree 6

Disagree 3

Neutral 3

Agree 4
Strongly
Agree 4

Grand Total 20

Q5 Count
Strongly
Disagree 2
Disagree 2
Neutral 7
Agree 6
Strongly
Agree 3
Grand Total 20

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 Q6 Count
Strongly
Disagree 2
Disagree 2
Neutral 5
Agree 3
Strongly
Agree 8
Grand Total 20

Q7 Count
Strongly
Disagree 4
Disagree 4
Neutral 6
Agree 1
Strongly
Agree 5
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 Grand Total 20

Marketing Mix
Product
Education Asaan is a revolving loan. Its key features are:

- Credit line Facility solely for the purpose of Educational Institutes Fee Payment

- Credit Facility equivalent to the annual Educational Institute fee

- Flexibility in repayments (Option of revolving credit)

- Option of enrollment of multiple children in the program

25
- Education protection covers through Child Education Continuation Plan
(optional), ensuring that a parent’s/guardian’s child will be able to continue his education
in case of death of the parent or guardian. On death of parent/guardian EFU Life will
pay remaining future tuition fee as a lump sum to school.

- This benefit would be restricted to an amount of Rs. 1 million

- Maximum Insurance Coverage not exceeding Rs. 1 million

- Optional Credit Shield Insurance Cover 0.40 paisa per Rs. 100.

- Customer to be informed about fee payment status through monthly statements

- Convenient mode of payments

Price
They have a very competitive pricing schedule. The pricing chart is present in the
appendix.

Placement
EA is offered to all the students studying in the educational institutions approved by
KASB bank. This facility is also for students who are not enrolled in these approved
institutions. This product is for parents belonging to middle and upper income group.

Promotion
KASB doesn’t advertise through the traditional means. They send brochures and flyers
to a list of students provided to them by the approved educational institution. For other
people they have mentioned about this facility on their website.

TRIO OF NEEDS
Power
The power need related to an individual desire to control his or her environment. In the
case of EA the consumer want control over their finance. Either be it parents of
education institutions; they need control and flexibility over their finance.
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Affiliation
The affiliation need suggests that behavior is strongly influenced by the desire for
friendship, for acceptance, for belonging. Every parent wants their child to go to best
schools possible. They take pride in that. They want to be affiliated with good
educational institutions. And in the case of educational institutions, they are being
affiliated with a good, reliable bank like KASB bank.

Achievement
Individuals with a strong need for achievement often regard personal accomplishment
as an end in itself. EA loan is for students who want to be at a specific position in their
career and will try really hard to achieve it. EA gives them a way to their goal.

For educational institutional, achievement would be in a way if they provide quality

education and best facilities. Institutes take pride in providing education to even people
who have a financial problem. And for this purpose EA is there to help them out.

Consumer Perceptions
Considering the Pakistani mind set people have very mixed perceptions about taking
personal loans. Some people are anti loans and this is for various reasons. Ours
religion and culture plays an important role in this perception. It’s embedded in people
minds that they will be in more trouble if they take a loan. This perception can also be
linked religiously. As in Islam its haram to give or take interest. If we look around we will
see that due to lack of awareness, a lot of people fail to repay their loans and create
troubles for themselves. The number of such people is really high, so other people
27
associated with them, who even want to take loans, refrain from it. And this develops a
belief in them that personal loans are harmful.

On the other hand there are people who have a very positive attitude toward taking of
personal loans. This is because they are aware of their responsibilities when applying
for a loan. They make the payments on time and fully avail the facility, without any
hassles. This attitude is developed through past experiences or learning. If they don’t
have a past experience, they research about it; basically they try to minimize the risk.
As a lot of intense decision making is involved in the process of taking a loan it’s a high
involvement product. The decision making hierarchy would be

High involvement: beliefs attitudes behavior

The problem lies in the beliefs of the consumer, as we have discussed above.

Perceptual Selection
Perceptual selection depends on 2 factors

1. Consumer previous experience

2. Their motives at the time

In case of EA the motive plays a very huge role. They consumer will only notice EA if he
have a motive to look for a educational loan, otherwise he will completely ignore EA.
Consumers past experience will play an important role in the formation of expectations.
If the consumer had been a victim of false banking claims then it’s most likely that
expectations towards this service would be very low or vice versa

Halo effect
Halo effect is a perceptual bias where we assume that a person or company has many
negative qualities if they have one negative quality. This is strongly applied on the
banking industry. We tend to generalize things on the basis of very small attributes. For
example, if the bank’s ATM didn’t work 2 out of 5 times we make a conclusion that this
is not a good bank, regardless of trying its other services. Or if the bank is foreign we
assume that it’s the best bank no matter what the truth is. So for a small bank like KASB

28
it’s difficult to prevent this effect. People don’t really consider KASB when they think of
taking an education loan.

Attitude formation and change

Changing consumer attitude is not an easy task, especially about personal loans.
Changing the basic motivational function can contribute in changing the attitude. We
believe that KASB should focus on the knowledge function. They should communicate
their product features clearly. They should focus on telling their consumer that how EA
is different from other products available in the market. This will help in creating
29
consumer awareness about the product. By creating awareness the general belief of the
consumer about the banking sector regarding having loopholes, will most likely subside

Recommendation and Conclusion

We feel that KASB should work more on changing the perception the consumer
perception regarding the personal loan facility. They should lower down the transaction
cost and should make the EA criteria more flexible.

Other than this KASB bank is a great organization that take care of its consumers fully.

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