ELK ASIA PACIFIC JOURNAL OF MARKETING AND RETAIL MANAGEMENT

Transcription

1 ATTRIBUTES BASED PERCEPTUAL MAPPING OF BRANDS USING 7PS OF SERVICES MARKETING: AN EMPIRICAL STUDY ON RETAIL BANKING SERVICES Dr. Ritesh K. Patel Academic Associate, Marketing, Indian Institute of Management, Ahmedabad ABSTRACT Services are intangible, inseparable, heterogeneous and perishable. These special features make it difficult for a prospective customer to evaluate a service before purchase, as is possible in the case of a product. Therefore, marketing service becomes even more important than marketing a product, so that the brand communicates a promise and evokes trust in prospective customers. Marketing of services essentially require the application of 7ps against the conventional 4Ps of marketing. This is because the services have certain distinct characteristics, which make them different from products. An attempt has a) been made in the following text to explain the significance of each one of them in the banking context. b) Keywords: 7Ps of Services Marketing, Perceptual Mapping, Services Marketing, Retail Banking, Discriminant Analysis, etc. Introduction: Services are intangible, inseparable, heterogeneous and perishable. These special features make it difficult for a prospective customer to evaluate a service before purchase, as is possible in the case of a product. Therefore, marketing service becomes even more important than marketing a product, so that the brand communicates a promise and evokes trust in prospective customers. Marketing is often treated as the domain of products, because it is easier to market a product through a name, a logo, a colour scheme or whatever, all of which can be easily communicated and widely circulated through the product, its packaging, label etc. Marketing a service is to that extent more difficult, but nonetheless merits serious attention. The main differences that influence the marketing of services are: They could vary in quality. The customer is actively involved during service creation. They are intangible and not storable. Therefore, marketing of services has gained prime focus to create trust in invisible purchases. When we talk about service marketing, a question arises as to how service companies adopt a series of approaches to build strong brands. They are (Arora, 2005): 1. Dare to be different to carve out a distinct brand personality. 2. Determine own fame by standing for something that is important to target customers. 3. Make an emotional connection with the intended audience, and 4. Internalise the brand by involving employees in the care and nurturing of the brand. a. Table 1.: Role of Extended Ps in Services Branding Traditional Elements Contextual Cues

2 Product Superior Quality Trusted brand Image Unusual or additional features Extended Guarantees Tangibilisation Price Value addition Special Discounts Preferential Credit Items People Highly trained staff Better customer care Greater efficiency Personal attention Specialist skills Process Advances in technology, e.g. ATMs, Call Centers Systems, e.g., cash-dispenser, ticketvending machines Fast response time Promotion Innovative advertising campaigns Physical Evidence Loyalty Promotions Comfortable surroundings Special Offers Superior décor Direct Mail Qualifications PR, Sponsorships Evidence of professional standing, e.g., Place membership of professional bodies Extensive availability Strong, Recognisable Corporate image, e.g. More outlets than Staff Uniforms, house style competitors High Quality tangibles Innovative methods, e.g. Supporting literature tele-banking Careful selection of quality channels Source: Chowdhary, Nirmit, and Chowdhary, Monika, Text book of Marketing of Services The Indian Experience, pg: 125. The studies conducted in India and abroad on marketing strategies of banking sector revelled that banks can base their marketing strategies on various parameters which are broadly in terms of 7Ps of marketing viz. product, price, place, promotion, people, physical evidence, and process (Arora, 2005). Marketing of services essentially require the application of 7ps against the conventional 4Ps of marketing. This is because the services have certain distinct characteristics, which make them different from products. An attempt has been made in the following text to explain the significance of each one of them in the banking context (Arora, 2005). 1. Product A product is a good or service, which offers a basic set of features representing its ability to satisfy certain basic needs. Since banks deal in services, which are intangible, heterogeneous, perishable and variable in nature, the need is to tangibles the core services offered. Branding a service, improving its quality, providing after sales service are a few examples of how a service can be tangibilised. For example: fixed account is a generic service product, which is augmented in the form of two in one account through the

3 additions of various features such as cheque and debit cards, over draft facilities, monthly statement etc. The product offerings of banks generally include: Current accounts: cheque books, standing orders, electronic fund transfer. Savings: Deposit accounts, money market deposits. Loans: overdraft, housing loans, business loans, personal loans. Card Services: ATM, CASH, and Credit Card. Advisory Services: Wills, Trusts, executorships, tax planning, investment advice, money management etc. Financial Services: pensions, personal equity plans, insurance products etc Others: Travel and Foreign exchange services. 2. Place The concept of Place in the world of banking is essentially the distribution systems through which the financial services are delivered to the customers. Traditionally, for banks the place for transitioning business in a bank branch. But, today the developments in Information Technology (IT), changing customer desire and needs for greater convenience and vulnerability of branches to excess costs, the trend is towards the introduction of Automated Teller Machines (ATMs) (off site and on site), Vessel Traffic Management System (VTMS) and Environmental Technology Opportunities Portal (ETOPS). These activities have transcended the bank branches and have reached the customer s home or work place through facilities like home banking, telebanking and satellite banking etc. 3. Price Banks have not, until recently, viewed price as a major element of marketing strategy because of government regulations with respect to price. However, pricing is becoming more important as a result of deregulation, increasing competition and decreasing consumer loyalty to particular banks. Pricing for banks take a number of forms: Service charges for different types of transactions e.g. debit, cheque clearance, standing orders etc. Interest rate for loans and overdrafts. Fees for services, fixed or on a commission basis. Interest rates, on current/deposit/saving etc. In setting their fees, charges and interest rates, the banks are influenced by the Government/RBI legislation, competitor activities, cost structures, demand factors etc. 4. Promotion There are several objectives of a bank s promotional activities viz. to build image and reputation, to differentiate among competitors, to generate interest and knowledge, to attract new customers and to generate customer loyalty. The promotion mix includes the following: Advertising Personal Selling Sales Promotion Public Relations Direct Marketing 5. People The people component reflects the important role played by individuals in the provision of financial services. The term People here refers to all those persons concerned with supplying the services to the

4 customers. In the banking context, it refers to the bank personnel. Since banks essentially deal with intangibles, which at times are difficult for the mind to grasp, the customers rely heavily on the bank staff that provides them service. This act has led many banks to build and develop specialist sales team to meet more specific needs of the corporate clients. 6. Physical Evidence The physical evidence component refers to the environment in which the service is delivered and also the tangible items, which are associated with that service, such as wallets or documents. It is generally recognised that physical evidence can be subdivided in two components. Firstly, peripheral evidence which can be possessed by the consumer but has little independent value e.g. a cheque book, Secondly, essential evidence that cannot be possessed by consumer but has independent value e.g. a bank branch. The provision of physical evidence is likely to be most obvious in the product and price components of the marketing mix, although promotion too can play an important role in creating a tangible image for the service and the bank. 7. Process The processes/procedures theme focuses on the mechanisms by which the service is delivered. This includes business policies for service provision, procedure, degree of mechanization etc. The emphasis on process arises from several sources. First, the heterogeneity of services raises the issues of quality management providing the service may be highly visible to the consumer and will need to be flexible enough to accommodate potential demand variations. Third, the intangibility of services means that the process by which the service is provided has an important influence on the consumer s assessment of service quality. Literature Review Retail Banking has always been an integral part of the banking activities world over but it is only in the recent past that it has gathered special momentum (Sodhi, 2004). Though, internationally this revolution started in 80 s with the advent of credit cards followed by other products of Retail Financial Services, yet, as far as India is concerned the year 1995 marks the starting point of Retail Banking Revolution with Foreign Banks and new Generation Private Banks taking the lead. The future of retail banking in India depends on those banks which have a dynamic retail strategy and are well diversified in products, services and distribution channels and have at the same time managed to achieve a good level of cost efficiency are the ones that are most likely to succeed in the longer term (Sodhi, 2004). Ghosal (2008) has studied the subject of Brand Management in Banks and has come out with a Model for Brand Management in Banks (see, Figure 1.7) and has studied the case study of Amalgamated Banks of South Africa (ABSA) and it s Branding Strategies and derived a conclusion that brand building strategy helps banks grow organically by providing more innovative products and services, achieving higher level of motivation among employees, adopting up-to-date technology, creating awareness and creating a direct link with customers. Anshul (2003) has highlighted on the topics like, the role of a brand, positioning the brand, planning brand-building programmes, Monitoring and Tracking the Brand, Experience Branding and Brand Building on the Web. And has concluded that up till now financial service companies never felt a need to develop and leverage a brand as they were protected from the onslaught of competition. But now with the opening ups of markets, the strength and the marketing leverage that a brand provides cannot be overemphasised. Trust is a focal key in the development of the relationship between banks and customers. It is also acknowledged in marketing theory as the basic policy in developing sustainable long-term relationships (Crosby et al., 1990: Ritter, 1993; and Doney and Cannon, 1997), to build a mutually beneficial relationship with customer on the basis of mutual trust (Dayal et al., 2001), and to enhance competitiveness (Barney and Hasen, 1994). Generally, trust is viewed as an essential element for successful relationships (Moorman et al., 1993; Morgan and Hunt, 1994; and Berry, 1995).

5 Ethics in banking is important because that determines the chances of banks providing complete product information, not divulging confidential information about customers and not selling customers information to third party (Mukherjee et al., 2003). A 2002, Gartner Survey of large financial services providers (Gartner, 2004), including banking, investment firms, insurance, and credit cards, asked respondents: Which strategy is most important in terms of driving your retail marketing initiatives? Customer retention was mentioned by only nine per cent of financial institutions, whereas acquiring new customers was the first priority for 43 per cent. Given that new customer is the most expensive to acquire and service and have the least loyalty, these priorities are clearly misplaced. Gartner estimates that retaining on high-profit customer or up-selling a mid-level to become a high-profit customer can cost one-tenth of acquiring a new mid-level customer. Indian rural market comprises 12.2 per cent of world s population, a market twice as large as the US Indian rural market comprises 75 per cent of India s population living in six lakh villages speaking 33 languages (Verma R, 2004). Globally, the mainstream financial institutions have realised now that the poor are bankable (Chakrabarty, 2009). The banks like State Bank of India (SBI) and Industrial Credit and Investment Corporation of India (ICICI) are focusing heavily on their rural-banking initiatives. Singh and Bijor (2009), feels that marathons are perfect platforms for mass brands. Marathons are inclusive events that cut across barriers of caste, creed and economic status. The day of a marathon is one when the rich, the middle class and the poor all run together. So, the event appeals to brands that require a wide cross section of appeal. Standard Chartered bank is extensively using the power of marathon to build its positive and socially responsible brand image among its customer base (Singh and Bijor, 2009) Research Design The researchers have used exploratory research design to find out the determinants of corporate brand image in banking industry. The researchers have used non-probability based convenience sampling method to draw samples from the population of banks. The market surveys were conducted in six major cities of Gujarat, Ahmedabad, Vadodara, Surat, Rajkot, Jamnagar and Bhavnagar. Seven major bank brands, ICICI, Housing Development Finance Corporation Limited (HDFC), AXIS, Bank of Baroda (BoB), SBI, CITI and Hong Kong & Shanghai Banking Corporation Bank (HSBC) banks were selected as subjects of current study. The researchers have approached 45 branch managers of these banks for filling out the survey forms. Most of the questions were constructed using likert scale techniques to measure the managers' views towards current practices of their bank brand. Data Analysis and Interpretations The researcher has collected customer s responses on the statements related to 7Ps of services marketing, using which; we can now draw a perceptual map based on its attributes. Perceptual maps can be best seen on two dimensions. We will try to find out the perception of consumers on 7Ps of marketing regarding their bank. Table 2: 7ps of Service Marketing (Perception for Various Banks) Statement Regarding Bank Services on 7ps BANK BRAND AXIS HDFC ICICI CITI HSBC BOB SBI Mean Mean Mean Mean Mean Mean Mean Product: I will use other products/services offered by this bank in near future Innovative Knowledgeable Is for whole family Has variety of services

6 Price: Adaptable Provides quick, efficient services Place: My bank is easily reachable I can bank with this bank whenever I want Promotion: Offers fun promotions I would be interested in merchandise with my bank name on it People: Has friendly & courteous staff Is understanding/knowing the client Staff Response Staff Knowledge Experience and Expertise Dressing of Staff Members Physical Evidence: Has a stylish and attractive looks Physical Ambience (Cleanliness, Air Conditioning, etc.) Branch Floor Space Adequate Parking Facilities Seating/Waiting Arrangements Stationary Availability (Forms, pins, Gum, etc.) I like to visit the website of my bank Process: Transparent Is convenient to bank with Inquiry Counter (Client Help Desk) Banking Hours/Branch Timings Combined Mean Rank For Banks BANK BRAND AXIS HDFC ICICI CITI HSBC BOB SBI Source: Primary data collected for the study The above Table 2 shows the mean score and respective statements on the 7 Ps of service marketing for the respective bank. We can see a moderate amount of variation in the mean figures. Table 3: Correlation Pooled Within-Groups Matrices (Perception of Various Banks) Correlation Product Price Place Promotion People Physical Process Evidence Product Price Place Promotion People Physical Evidence

7 Process 1 The above table shows inter-item correlation (Pearson s statistics). The correlation value ranges between 0 to 1 where value 1 represents exact correlation and the value 0 represents no correlation between two variables (Nargundkar, 2008). Looking at the values in table we can find that product is moderately correlated with all other Ps of marketing. Price, People and Physical Evidence are highly related with the other Process. Place, Promotion and People are also moderately related with the Physical Evidence. Table 4: Eigen values (Perception of Various Banks) Function Eigen value % of Variance Cumulative % Canonical Correlation a a a a a a First 6 canonical discriminant functions were used in the analysis. Looking at the above table 4, we can find Eigenvalue, the per cent of variance (column 3) and cumulative variance (column 4). Here we can find that Function 1 and function 2 accounts for almost 77.2 per cent of the total variance. Hence, we will use two dimensional perceptual mapping to draw out the discrimination among the various bank brands. Table 5: Standardized Canonical Discriminant Function Coefficients Function Product Price Place Promotion People Physical Evidence Process Looking at the standardised canonical discriminant functions coefficients in the table 5, we can find that attributes like product, price and physical evidence are found to be strong on function 1 and place, promotion, people, and process are found to be strong on function 2(marked with bold letters in the table 5). Bank Name Table 6: Functions at Group Centroids Function AXIS HDFC ICICI CITI

8 HSBC BOB SBI standardized canonical discriminant functions evaluated at group means Looking at the function at group centroid in table 6, we can found that CITI, HSBC are strong on function 1 (marked with the bold letters) and AXIS, HDFC and BoB are strong on function 2. Whereas, ICICI and SBI are not able to discriminate themselves on any of the function. Using the standardized coefficients of the attributes on the function 1 and 2 (refer Table 5), the plot for the different attributes has been plotted as shown in the Chart 1. Based on the distances of the attribute vectors from the axis, it can be concluded that dimension 1 is heavily discriminating on the attributes like product, price and physical evidence the same can be seen in the Table 5 with the scores of 0.292, 0.306, and for product, price and physical evidence respectively. But Dimension 2 is heavily discriminating on the factors like promotion, people and process, which is also evident from Table 5, with values of 0.215, 0.435, and 1.024respectively. Now let us look further and find out the perceptual positioning of banks in the minds of its customers using the above mentioned attributes of 7Ps of marketing. Looking at Chart 1, It appears that HDFC, AXIS, ICICI and BoB are not able to discriminate themselves on either dimensions and hence scores moderately on both the dimensions. We can see that in the chart also looking at the position of these banks. They are very near to each other and hence we can say that customers of these banks are not able to discriminate between these brands and they perceive very less difference among these bank brands. It might be the case because HDFC, AXIS, and ICICI all are private sector banks and more or less they offer same type of products and services to their customers. CITI Bank Scores high on Dimension-1 (product, price and physical evidence) because of its premier look branches and scores moderate on Dimesnion-2 (promotion, people and process). HSBC Banks Scores high on Dimension- 1 (product, price and physical evidence) but its score negative on the Dimension-2 (Promotion, People and Process). That means customers are not satisfied with the staff of the bank, promotion activities and its existing process.

9 Dimension 2 ELK ASIA PACIFIC JOURNAL OF MARKETING AND RETAIL MANAGEMENT PROCESS PRODUCT PRICE PLACE PROMOTION PEOPLE PROMOTION 0.2 AXIS PLACE BOB CITI HDFC ICICI 0 PRICE SBI HSBC PRODUCT PHYSICAL EVIDENCE PEOPLE PHYSICAL EVIDENCE PROCESS AXIS HDFC ICICI CITI HSBC -1 Chart 1: Attributes (7Ps) based Perceptual Map of Seven Bank Brands Recommendations for Marketers Perceptual maps are often used in brand research to represent consumers perceptions of brands or products on two or more dimensions represented by X- and Y-axes, each with ends that have opposite meaning (e.g. bitter vs. sweet, cheap vs. expensive, quality vs. price). Each brand has a position in the perceptual map space that reflects their relative similarity or preference to other brands with regards to the dimensions of the perceptual map. With the help of perceptual maps we can transform consumer judgments of similarity or preference into distances represented in a multidimensional space. On the whole, perceptual maps are useful tools to infer underlying dimensions from similarity or preference evaluations provided by respondents about brands. They can help us determine: How brands are perceived in relation to each other, which is important in competitive market analysis. What dimensions to evaluate brands are used, which allows to identify messages that resonate with the target audience. How many dimensions may be at work in specific evaluation situations, which helps to focus brand positioning & helps identify potential marketing tactics to reach target client. Well in the above research we have found that banks such as HDFC, ICICI and AXIS are not able to discriminate themselves on either dimension. Whereas, bank brand like CITI, and HSBC are found to be strong on dimension 1 (product, price and physical evidence), Well these banks are having vast amount of

10 multinational banking experience. The branches of these foreign banks are found to be more attractive compared to their Indian peers. These banks are also strong on their product portfolio due to their international experience. Well one more thing we can find here is almost all the Indian private sector bank brands are perceived to look similar on the mental perceptual maps of their customers. This might the case in India because majority of the products, charges (prices) are been designed and regulated by RBI, due to which we can find these similarities. Bank marketers can attract their customer on the other fronts of 7Ps except product and price as these are been strictly governed by the regulatory authorities and hence banks are not able to discriminate their brand image in these areas. Banks can focus on other addition 3 Ps of service marketing like People, Process, and Physical Evidence. Using these additional Ps of service marketing, Indian banks can build their unique brand image and can compete with other well established brands in the industry. People, Process, and Physical Evidence can be improved in banks by following ways: 1. People: Banks can train their existing employees on continuous basis by establishing central training centre. BoB is operating Bank of Baroda Staff College in various cities of India. 2. Process: Establishing strong guidelines for the product process in banks. i.e. Home Loan in just 7 Days, Gold Loan in 5 Minutes, etc. The bank management can develop strong process standards to standardise the major customer processes in bank. 3. Physical Evidence: As we all know that banks can not differentiate much in terms of their product offerings but they can definitely create their unique physical appearance, which will create a distinct brand image in the minds of customers. i.e. Kotak bank uses dark red colour in its sign board. It also used wooden furniture in all the branches. They have the same design same style of furniture, fixtures and exteriors in almost all the branches across the country. Due to this Kotak bank brand is easily noticeable by the customer and can give a better service experience to customer while availing the services from the bank branch. Academic Implications Future researchers can test the attributes based perceptual mapping techniques using 7Ps of services marketing in the other service industries like Hotel, Airlines, Travels, Tourism, Restaurants, Insurance, Mutual Funds, Hospitals, etc. References Arora Sangeeta (2005), Marketing of Financial Services, Deep & Deep Publisher. Pvt. Ltd., New Delhi. AdapaSujana (2008), Discriminant Analysis of Adaptors and Non-Adopters of Global Brands: Empirical Evidence from India and Malaysia, ICFAI Journal of Brand Management, V (4), Anshul Kaushesh (2003), Building Financial Services Brand", Marketing Mastermind, March, India. Barney, J.B. & Hansen, M.H. (1994),Trust worthiness as a source of Competitive Advantage, Strategic Management Journal, 15, Berry, L.L. (1995), Relationship Marketing of Services-Growing Interest, Emerging Perspectives, Journal of the Academy of Marketing Science, 23(4), Chakrabarty, K.C. (2009), Financial Inclusion: Taking Banking to the Poor, The Analyst,, India, pp Chowdhary, Nirmit, & Chowdhary, Monika, Text book of Marketing of Services The Indian Experience,125. Crosby, L., Evans, K. & Cowles, D. (1990), Relationship Quality in Service Selling: An interpersonal Influence Perspective, Journal of Marketing, 54(3),

11 Dayal, S., Landesberg, H. &Zeisser. M. (2001), Building Trust On-Line, TheMckinsey Quarterly, 4. Doney, P.M. & Cannon, J.P. (1997), An Examination of the Nature of Trust in Buyer-Seller Relationships, Journal of Marketing, Gartner, G.(2004), Relationship Marketing,, Delhi: Kogan Page Ghosal, S.N. (2008), "Branding as a strategy for organic growth of banks", Marketing Mastermind,, pp Hair, J.F., Anderson, R. E., Tatham, R.L. et al. (1998), Multivariate Data Analysis, (5th ed.)., New Jersey: Prentice-Hall Kothari, C.R. (2004), Research Methodology Methods & Techniques, New Delhi: New Age International Pvt. Ltd. Malhotra N.K. (2004), Marketing Research, Delhi : Pearson Education.. Moorman, C. Deshpande, R. &Zaltman, G. (1993), Factors Affecting Trust in Market Research Relationships, Journal of Marketing, 57, Morgan, R. & Hunt, S. (1994), The Commitment-trust theory of Relationship Marketing, Journal of Marketing, 58, Mukherjee, A. & Nath, P. (2003), A Model of Trust in Online relationship Banking, International Journal of Bank Marketing, 21(1) Nargundkar, R. (2008), Marketing Research Text and Cases, Delhi: Tata McGraw-Hill, Ritter, D. S. (1993), Relationship Banking; Cross Selling the Bank s Products & Services to meet your Customer s Every Financial Need, Chicago: Bankers Publishers. Co. Singh, K. (2009), Quantitative Social Research Methods, New Delhi: Sage Publications.. Singh, V. & Bijor, H. (2009), Do Marathons have mass brand value?, The Economic Times, (5th ed.), 4. Sodhi, P. S. (2004), Retail Banking in the New Flavor, IBA Bulletin, Tamilarasan, R. (2008), Service Branding- A Trust on Invisible Purchases, Marketing Mastermind, 22. Verma, R. (2004), Rural Marketing, Marketing Mastermind, 46.