Ph.

D Synopsis

Study of Consumer Behavior towards

Permission based E-mail Marketing in
Selected Indian Banks

Submitted to

School of Business Studies,

Shobhit University
Meerut

Submitted by
NIMIT GUPTA

Under the Guidance of

Dr. Vikas Nath

School of Business Studies

Shobhit University, Meerut
2008
1. Area of Research work: Management
Specialization: Marketing

2. Topic of the proposed research work:

“A study of Consumer Behavior towards Permission based E-Mail Marketing

in
Selected Indian Banks”

3. Objective of Research Work

(i) To find out whether there exists awareness of Permission

Marketing in selected banks under study and the customer of banks
in general.

(ii) To examine the extent to which the Permission Marketing Practices

(PMP) is being practiced by selected banks under study.
.
(iii) To find out whether there exists a difference in Permission
Marketing Practices (PMP) in selected private banks and public
banks.

4. Methodology of the Research Work:

Population: Permission Marketing is growing concern for several banking
institutions, therefore the study will include all banking institutions which are
concerned and are practicing Permission Marketing in our country. The
population frame comprises of banks as per the members of Indian Banking
Association. The Association has classified the banks into three categories
viz.
(1) Public sector banks. (2) Private sector banks (3) Foreign banks.
Sample: It is neither feasible nor desirable to conduct the study on all the
banks practicing Permission Marketing. Therefore, out of 71 listed banks,
purposively 5 banks from each sector will be initially chosen at random for
the study. There will be 15 units which will constitute the sample for the
study.

Similarly there are thousands of consumers availing the services who have
serious concerns and reservation for Permission Marketing. For the purpose
of the study 100 consumers for private / foreign sector banks and 100
consumers for public sector banks will be selected on the basis of
systematic sampling to assess their perception of Permission Marketing
being practiced by banks, which influences their decisions. However, the
exact sample size will be determined statically keeping in mind the nature of
scales used in questionnaire & validity of the questionnaire.

Extent: The study shall be limited to Delhi territory only as most of the
banks have at least one branch / office in Delhi

Data Collection: Data for the study will be collected both from the primary
and secondary sources. While for the primary data the selected Banks and
the consumers will be directly approached, for secondary data all published
literature on the subject available and other magazines, journals research
reports published, resources available on Internet viz Delnet & EBSCO will
be consulted.

Questionnaire / Schedule: Keeping in mind the objectives of the study,

Questionnaires / Schedules will be developed by the researcher. Two sets
of the questionnaires / Schedules will be prepared. While one set is for the
Banks, the other set will be for the consumers.
Data Analysis: The data collected through the above tools will be analyzed
with the help of appropriate Statistical techniques such as Chi Square test, t
test, Z test, ANOVA, Factor Analysis and other tests using SPSS.

5. Literature survey:
The Concept of permission marketing is not a known area from the
decades, therefore the literature review is confined to the latest studies and
researches carried over the world. The literature is reviewed in many facets
which include:

5.1 Introduction to Permission Marketing

The world is entering in an era that's going to change the way almost
everything that is marketed to almost everybody (Godin, 1999). Advertising
will remain a competitive weapon. Companies that advertise better will do
better, than companies that advertise worse. But advertising simply doesn't
work as well as it used to. Marketing is a contest for people's attention .But
no human being can pay attention to 3,000 messages every day .This will
give rise to Interruptions in their daily life and they generally try to avoid that.
This attitude of consumers is giving way to a new model of permission
marketing. The world is entering in an era that's going to change the way
almost everything that is marketed to almost everybody (Godin, 1999).

According to Seth Godin the traditional "Interruption Marketing" approach

just doesn't work anymore. Godin (1999) the philosopher of management
has proposed new idea- Permission Marketing. Here, consumers provide
marketers with the permission to send them certain types of promotional
messages. This is seen as reducing clutter and search costs for the
consumer while improving targeting precision for marketers. Consumer
interest is seen as the key dependent variable that influences the degree of
participation. Consumer interest is positively affected by message relevance
and monetary benefit and negatively affected by information
entry/modification costs, message processing costs and privacy costs.
Although the term “permission marketing” was coined by Godin (1999), the
general idea of customer permission in direct marketing had surfaced earlier
in the marketing literature, mainly in the context of privacy issues in direct
marketing. For example, Milne and Gordon (1993) discuss the role of
customer permission along with volume, targeting and compensation in the
context of direct mail. However, their reference is to an individual's providing
a direct marketer the permission to share his or her personal information
with others.

Permission Marketing (also called Invitational Marketing) envisions every

customer shaping the targeting behavior of marketers. Consumers empower
a marketer to send them promotional messages in certain interest
categories. Typically, this is done by asking the consumer to fill out a survey
indicating interests when registering for a service. The marketer then
matches advertising messages with the interests of consumers. This is a
new idea.

Even though targeting appropriate customers has been recognized early on

as a core marketing principle, most targeting today can best be described
as “targeting on averages.” The advertiser obtains the average profile of the
consumer and chooses, say, a TV show that matches the target consumer
profile most accurately. This leads to low targeting precision since not all
consumers match the profile. Permission marketing is built around rational
calculations by both parties.

5.2 Holistic Approach to Permission Marketing.

According to Nath & Gupta (2006) permission marketing can be viewed as:

• As a Strategy
Permission marketing is a strategy, primarily utilizing email and mobile
technology, to send consumers information that they have agreed to
receive. It asks for and receives permission from the consumer to receive
marketing messages. In short, customers volunteer to be marketed to.

• As an Investment

Permission Marketing is an investment as good things are rarely free.

Acquiring solid permission from targeted customers is an investment in time
and technology which can be referred to as a long term investment in
customers toward loyalty and commitment.

• As a Campaign

Permission marketing is a campaign which converts strangers into friends

and friends into customers by providing useful information and desired
products and services. This campaign makes the potentials as
ambassadors of the brand owned by the organization.

• As a Marketing Tool

Permission marketing is a tool for getting better response rates, increased

trust, brand affinity and better deliverability .It will focus on attraction and
retention of customers by using the mechanism of offer and acceptance or
an agreement.

• As a Technique

Permission marketing is a technique that requires the approval of the

customer. Permission marketing aims to create an audience with a high
interest level by sending certain types of marketing information only to those
who have specifically requested it.
 • As a Communication Process

Permission Marketing refers to a communications process, between the

marketer and the consumer in which consumer gives "permission" to the
marketer to participate and provides feedback to express his/her
satisfaction or dissatisfaction.

5.3 Importance of Permission Marketing

The importance of permission marketing is increasing and it has brought

significant changes in world economy. Organizations are adopting
permission marketing strategies in order to provide the best and relevant
information to some specific set of potentials. It’s not just about
“Entertainment”, it's about “Education”. The concept of permission
marketing is widely practiced around the world as it has opened new vistas
to the entrepreneurs. In India this concept is still in its infancy stage and
Indian organizations as well as consumers are still not clear and aware of
this modern marketing principle as quoted by Seth Godin.

There is lot of research and study required to make Indian population

converse for this concept of pre – permission. With more research and
experience the concept will serve as a handy tool to obtain and retain the
informed customers in this ever changing dynamic business scenario where
information is serving a major role in making a match between customers
expectations and organizations service. Permission marketing if practiced,
as a strategy, it would pave the way to revolutionize the marketing system
ensuring dual benefits to customers and organizations.
5.3.1 Importance for Banks
Permission Marketing refers to be an useful tool for Banks. Banks which
uses due strategy of customer centricity would always like to focus on few
selected but profitable customer. The use of permission marketing makes
them more competitive in terms of truncation in marketing cost at the one
side and segmentation of adequate banking customers. Also it will make
sure that banks would be able to draw a good positioning in the mind of
consumers (either present or potential) if they target it right. Banks will also
avoid themselves to be negatively placed if they promote themselves
without prior permission.

So, on the both views it becomes an important issue to deliberated and

researched upon to make aspects clear.

5.3.2 Importance for customers

Permission Marketing is a selfish game, in which consumers also give the
permission for some individual benefit. Consumers will be benefited either
by up gradation of their knowledge or due to some rewards which may be
linked directly or indirectly with the banking services. Customers therefore
will give their consent for such promotions.

Also, sometime consumer gives permission unknowingly by not

concentrating on various terms and conditions and after that behaves in
reverse manner.

5.4 Permission Marketing: A customer Driven Approach

Recently, Sheth, Sisodia and Sharma (2000) have proposed the concept of
customer-centric marketing, which includes what they call co-creation
marketing. Co-creation marketing envisions a system where marketers and
consumers participate in shaping the marketing mix. In the authors’ own
words, “Co-creation marketing enables and empowers customers to aid in
product creation (e.g., Gateway computers), pricing (e.g., priceline.com),
distribution and fulfillment (e.g., GAP store or GAP online delivered to the
house), and communication (e-mail systems)” (Sheth, Sisodia & Sharma
2000, p. 62). Hence, permission marketing can be viewed as focusing on
the communication aspect of a larger concept called co-creation marketing.
Gilmore and Pine II (1997) had also earlier identified collaboration between
marketers and consumers as one form of one-on-one marketing.

The central tenet of permission marketing is consumer-initiated

communication followed by an active two-way exchange. Even though

exchange is considered to be the bedrock of marketing theory, hence,

consumers may not perceive themselves as legitimate partners in a

relationship. Since consumers are required to provide detailed information

continually in a permission-marketing program, they must perceive some

value in exchange

One-to-one communication plays a central role in customer relationship

management (CRM) and positions e-mail as an important strategic tool

(Newell, 2000). Marketers increasingly use e-mail to acquire customers,

inform them of new products, and enhance customer relationships

(Krishnamurthy, 2000). But as e-mail marketing grows, the volume of

commercial e-mail sent explodes and inboxes overflow. A Jupiter research

study (2001) found that, for 2% of Internet users, e-mail is the primary

reason for going online. Furthermore, a Carnegie ell on University

survey revealed that e-mail was used on70% of all Internet sessions.

This growing number of e-mail users, together with their high usage

makes e-mail the dominant Internet application.

5.5 Permission Marketing Practices.
Permission Marketing is a practice that involves the meticulous
management of trust, as marketers strategically leverage trust into
dependence, and dependence into profit. Through this process, decision-
making powers are gradually shifted towards marketers and casual
customers are transformed into total members. When carried out correctly,
Permission Marketing is the most effective and sustainable marketing
methodology.

The permission Marketing practices aim is to initiate, sustain and develop a

dialogue with customers, building trust and over time lifting the levels of
permission, making it a more valuable asset.

According to Macpherson (2001), one of the theories behind permission

marketing is that, presumably, a customer who has give permission to
receive promotions is a better, more loyal, and more profitable customer
overall. It entails a shift in power from the marketer to the consumers.
Costumers’ permission has to be sought; consumers realize the power in
the data they can provide.

According to Farris (2001), permission marketing practices mainly adopted

by organizations includes practicing ‘digital marketing’, such as database
marketing internet marketing, email marketing and mobile / SMS marketing
with the advent of latest technologies, mobile marketing, SMS marketing
and e-mail marketing with permission (not always) are becoming the major
practical approach for converting a stranger into friend, and a friend into a
customer out of the two, permission based e-mail marketing is more
practiced due to it’s wider reach, cost efficiency and retainability
5.6 Permission based e-mail Marketing.
Permission marketing (PM) is commonly defined as promotional e-mail
to recipients who consented to receive commercial messages from the
sender, typically by signing up at the Company’s Website (IMT
Strategies, 1999). Permission relationships start with the consumer’s
explicit and active consent to receive commercial messages and always
give consumers the possibility to stop receiving messages at any time.
Permission Marketing appeals to advertisers because it enables global
diffusion of communication messages, while enabling customization
without sacrificing the economies of scale of a one-source message
originator. Like few other media, opt-in e-mail potentially results in
synergies even though multiple audiences are targeted and multiple
themes are used .Although acclaimed as the embodiment of global one-
to-one communication uniquely suited to personalization and keen
targeting(IMT Strategies, 1999), PM presents problems and challenges
such as segmentation, building quality e-mail lists, spam, and privacy.

Many Thai banks are currently implementing Internet banking. Banks that
offer service via this channel claim that it reduces costs and makes them
more competitive. Thai firms suggest that security of the Internet is a major
factor inhibiting wider adoption. Those already using Internet banking seem
to have more confidence that the system is reliable, whereas non-users are
much more service conscious, and do not trust financial transactions made
via Internet channels .(Mark Speece, 2003) .The study found most
consumers (88%) feel in control of their inboxes, up from 79% four years
ago, and over half of consumers (58%) believe email is a great way for
businesses to keep in touch.

Merkle's email marketing study discovered that half of respondents made a

purchase online as a direct result of a permission-based marketing
message, up 5% from last year. Poor email practices cause consumers to
be turned off, with around a third claiming to have stopped doing business
with at least one company because of poor email marketing. Likewise, good
email marketing programs influenced half of respondents to do business.
Relevancy is key, and the study found that consumer-centric messages
were the ones that consumers considered most relevant, i.e. transaction
confirmations (ranked number 1) and account summaries. Relevancy also
plays a part in opting-out, with 73% of respondents doing so if the email
content is not relevant.

Consumers’ interaction with PM has increased over time, and continues

to present opportunities for marketers in defining their brand, driving
behavior, and promoting long-term engagement and loyalty with
customers. Marketers who continue to invest in quality email programs
will recognize higher engagement and response rates, subscriber
retention, and maximize value from their email relationship with
customers.

Increasingly, organizations are turning to personalized e-mail as the

preferred, cost effective method for communicating with customers and
building lasting relationships. It allows for greater personalization while
providing faster feedback than traditional media such as direct mail.
However, e-mail marketing is falling victim to its own success, as
legitimate marketers are struggling to separate their messages from the
deluge of unsolicited communication (spam).

In addition to consistently enforcing opt-in and opt-out preferences,

organizations must also secure permission to use the rich customer
information they need to design personalize-mails. According to
Forrester Research, two-thirds of consumers say that most of the-mails
they receive don’t offer anything that interests them. To make e-mails
more relevant and effective, organizations must leverage information
about personal preferences.
 Forty-three percent of e-mail users believe signing up for permission-
based e-mail from retailers and banks leads to more unsolicited e-mail,
while nearly one-third believe the unsubscribe button in e-mail offers
does not work. Despite such attitudes signaling an erosion of
confidence, nearly one-half of online users opting in to receive e-mail
marketing messages have been influenced to make purchases from
them. Increasing e-mail volumes, changes in composition of messages
in the inbox, and use of secondary e-mail accounts will continue to
challenge marketers to cut through the clutter. (US E-mail Marketing
Consumer Survey, 2006)

With Permission Based Email Marketing, loyal clients are just an e-mail
away. Where traditional marketing campaigns fail, e-mail can shine through.
E-mail marketing allows companies to speak one-to-one with their audience
in a respectful, intelligent and creative way. It is extremely cost-effective,
provides the foundation for future marketing initiatives, and delivers
measurable results.

Research and practice has proved that the output coming from the
permission based email list is comparatively much higher than any other
direct marketing tool. It has a magnetic effect on the traffic flow. No sooner
does the email fire, that the click report, automatically generates a higher hit
ratio. (Ray Lam, 2008)

The theory of reciprocity (Dr. Robert. B. Cialdini) had focused that when
something generous was done for a person, that person often felt motivated
to reciprocate the goodwill. This tendency of human behavior is directly
applicable to permission based email marketing campaigns. The study
examines the effects of e-mail marketing on brand loyalty and also reveals
the kinds of e-mail content valued by consumers. Data were gathered from
890 consumers, who were users of a multinational cosmetics brand and had
received regular permission-based e-mail messages from the marketer.
Results reveal that regular e-mail marketing has positive effects on brand
loyalty.

Consumers exposed to e-mail marketing recommended the brand to their

friends. Loyal customers appreciated regular communication and various
other information content from the brand more than mere offers. These
results encourage marketers to keep in frequent contact with customers via
e-mail with the aim of enhancing brand loyalty. (Merisavo, Marko; Raulas,
Mika, 2004)

6. Implications of the study

Permission Marketing is bizarre technique to be adopted to market the

product, especially to some selected and few customers, who are ready to
be the customers and had provided their permission. The concept of
permission marketing is unique and new in Indian concept. Moreover with
the advent of latest techniques like mobile and email, Marketing with the
permission is becoming most common tool for growth. Although
Customers were receiving promotional messages from marketers by
the way of mobile phones and e-mail but the truth is that, as various
researches revealed that customers were not happy to give permission
and also got annoyed because it will not fetch any benefit to them.

There exist various laws on privacy, consumer protection, both at national

and at international level. The laws are federal as well as provincial in
nature. The review focuses that most of the laws were enacted way back
and were providing benefits to the individuals in International context but not
in Indian context. .However in Indian Context, nothing great had been
undertaken by the Government. Indian Government had passed the
Information Technology Act 2000, followed by TRAI regulations to curb
unsolicited commercial calls. However both of them were not so effective
and still lack in their approach of management of privacy.
 Therefore, the finding of the study will have several outcomes and it will be
useful to banking industry, future researchers and society at large. The
finding of the study will be useful for banking industry to be aware of their
status with respect to permission marketing being practiced by them, so that
appropriate action can be taken to target selected but appropriate
customers. The findings of the study will be useful to the future researchers
to design and improve the methodology i.e., conduct more focused and
broad studies in this area. The society in general and consumers in
particular will be benefited by the Permission Marketing Practices.

Proposed Plan of Work

1 Chapter I: Introduction to Permission Marketing

2 Chapter II: Review of related literature.

3 Chapter III: Research Methodology

4 Chapter IV: Findings and Analysis of Data.

5 Chapter V: Interpretation of Findings, Conclusions,

Limitations and Suggestions

Appendices

Bibliography

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