1.

1 INTRODUCTION TO THE TOPIC

PUBLIC AND PRIVATE SECTOR BANKS: All the banks in India were earlier private banks. They were founded in the preindependence era to cater to the banking needs of the people. But after nationalization of banks in 1969 public sector banks came to occupy dominant role in the banking structure. Private sector banking in India received a fillip in 1994 when Reserve Bank of India encouraged setting up of private banks as part of its policy of liberalization of the Indian Banking Industry. Housing Development Finance Corporation Limited (HDFC) was amongst the first to receive an 'in principle' approval from the Reserve Bank of India (RBI) to set up a bank in the private sectors. Private Banks have played a major role in the development of Indian banking industry. They have made banking more efficient and customer friendly. In the process they have jolted public sector banks out of complacency and forced them to become more competitive. A countrywide survey reveals that while the private banks have got a tight grip on the purse strings of the salaried class and professionals in the country, a large majority of customers in Corporate India still prefer the time-tested public sector banks for services ranging from securing credit cards to making bond investment and fixed deposits. According to survey, 60% businessmen in India prefer PSU banks when it comes to sourcing credit cards and another 80% of them knock on the doors of stateowned banks for securing personal and educational loans.

The reason: These businessmen find the PSU banks more reliable while the private sector banks seem messy with their difficult-to-comprehend offers. It also points out that the business community feels that the private banks charge high rates of interest and are very "clever" with customers. The preference for public sector banks for insurance is mainly due to general perception that they are more reliable, secure and trustworthy. But for credits and debit cards, they feel private banks provide prompt and efficient service as compared to the outdated services of PSU banks that lead to wastage of time and procedural delays. Public Sector Banks in India: State Bank of India, Allahabad Bank, Andhra Bank, Bank of Baroda, Bank of India, Bank of Maharashtra, Canara Bank ,Central Bank of India , Corporation Bank , Dena Bank , Indian Bank , Indian Overseas Bank , Oriental Bank of Commerce ,Punjab & Sind Bank , Punjab National Bank , Syndicate Bank ,IDBI Bank, Union Bank of India , United Bank of India , UCO Bank , Vijaya Bank.

Private Sector Banks in India: Axis Bank, Bank of Rajasthan, Bharat Overseas Bank, Catholic Syrian Bank, Centurion Bank of Punjab, City Union Bank, Development Credit Bank, Dhanalakshmi Bank, Federal Bank, Ganesh Bank of Kurundwad, HDFC Bank, ICICI Bank, IndusInd Bank, ING Vysya Bank, Jammu & Kashmir Bank, Karnataka Bank Limited, Karur Vysya Bank, Kotak Mahindra Bank.

1.2 HISTORY
HISTORY OF PUBLIC SECTOR BANKS: Nationalized banks dominate the banking system in India. The history of nationalized banks in India dates back to mid-20th century, when Imperial Bank of India was nationalized (under the SBI Act of 1955) and re-christened as State Bank of India (SBI) in July 1955. Then on 19th July 1960, its seven subsidiaries were also nationalized with deposits over 200 crores. These subsidiaries of SBI were State Bank of Bikaner and Jaipur (SBBJ), State Bank of Hyderabad (SBH), State Bank of Indore (SBIR), State Bank of Mysore (SBM), State Bank of Patiala (SBP), State Bank of Saurashtra (SBS), and State Bank of Travancore (SBT). However, the major nationalization of banks happened in 1969 by the then-Prime Minister Indira Gandhi. The major objective behind nationalization was to spread banking infrastructure in rural areas and make cheap finance available to Indian farmers. The nationalized 14 major commercial banks were Allahabad Bank, Andhra Bank, Bank of Baroda, Bank of India, Bank of Maharashtra, Canara Bank, Central Bank of India, Corporation Bank, Dena Bank, Indian Bank, Indian Overseas Bank, Oriental Bank of Commerce (OBC), Punjab and Sind Bank, Punjab National Bank (PNB), Syndicate Bank, UCO Bank, Union Bank of India, United Bank of India (UBI), and Vijaya Bank. In the year 1980, the second phase of nationalization of Indian banks took place, in which 7 more banks were nationalized with deposits over 200 crores. With this, the Government of India held a control over 91% of the banking industry in India. After the nationalization of banks there was a huge jump in the deposits and advances with the banks. At present, the State Bank of India is the largest

commercial bank of India and is ranked one of the top five banks worldwide. It serves 90 million customers through a network of 9,000 branches. HISTORY OF PRIVATE SECTOR BANKS: Private banking in India was practiced since the begining of banking system in India. The first private bank in India to be set up in Private Sector Banks in India was IndusInd Bank. It is one of the fastest growing Bank Private Sector Banks in India. IDBI ranks the tenth largest development bank in the world as Private Banks in India and has promoted a world class institution in India. The first Private Bank in India to receive an in principle approval from the Reserve Bank of India was Housing Development Finance Corporation Limited, to set up a bank in the private sector banks in India as part of the RBI's liberalization of the Indian Banking Industry. It was incorporated in August 1994 as HDFC Bank Limited with registered office in Mumbai and commenced operations as Scheduled Commercial Bank in January 1995. ING Vysya, yet another Private Bank of India was incorporated in the year 1930. Bangalore has a pride of place for having the first branch inception in the year 1934. With successive years of patronage and constantly setting new standards in banking, ING Vysya Bank has many credits to its account.

2.1 MARKETING STRATEGY

HISTORY OF MARKETING STRATEGY The history of marketing strategy is described from its roots in early marketing and later corporate management to its present state. The historical perspective demonstrates how various strategic approaches, such as Bordens marketing mix, Deans Pioneer Pricing Strategies Smiths Differentiation and Segmentation Strategies, Forresters Product Life Cycle, Andrews SWOT Analysis, Ansoffs Growth Strategies, Porters Generic Strategies and BCGS Growth -Share Matrix, can be integrated into a comprehensive conceptual framework for marketing strategy.

DEFINITION AND MEANING: It is a process that can allow an organization to concentrate its limited resources on the greatest opportunities to increase sales and achieve a sustainable competitive advantage. A marketing strategy should be cantered around the key concept that customer satisfaction is the main goal. Marketing strategy is a method of focusing an organization's energies and resources on a course of action which can lead to increased sales and dominance of a targeted market niche. A marketing strategy combines product development, promotion, distribution, pricing, relationship management and other elements; identifies the firm's marketing goals, and explains how they will be achieved, ideally within a stated timeframe. Marketing strategy determines the choice of target market segments, positioning, marketing mix, and allocation of resources.

KEY PART OF THE GENERAL CORPORATE STRATEGY A marketing strategy is most effective when it is an integral component of overall firm strategy, defining how the organization will successfully engage customers, prospects, and competitors in the market arena. Corporate strategies, corporate
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missions, and corporate goals. As the customer constitutes the source of a company's revenue, marketing strategy is closely linked with sales. A key component of marketing strategy is often to keep marketing in line with a company's overarching mission statement

2.2 TYPES OF MARKETING STRATEGIES

Marketing strategies may differ depending on the unique situation of the individual business. However there are a number of ways of categorizing some generic strategies. A brief description of the most common categorizing schemes is presented below: Strategies based on market dominance - In this scheme, firms are classified based on their market share or dominance of an industry. Typically there are four types of market dominance strategies: Leader Challenger Follower Niches Porter generic strategies - strategy on the dimensions of strategic scope and strategic strength. Strategic scope refers to the market penetration while strategic strength refers to the firms sustainable competitive advantage. The generic strategy framework (porter 1984) comprises two alternatives each with two alternative scopes. These are Differentiation and low-cost leadership each with a dimension of Focus-broad or narrow. Product differentiation (broad) Cost leadership (broad) Market segmentation (narrow) Innovation strategies - This deals with the firm's rate of the new product development and business model innovation. It asks whether the company is on the cutting edge of technology and business innovation. There are three types: Pioneers Close followers
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 Late followers Growth strategies - In this scheme we ask the question, How should the firm grow? .There are a number of different ways of answering that question, but the most common gives four answers: Horizontal integration Vertical integration Diversification Intensification

2.3 BENEFITS OF MARKETING STRATEGY

Brand and marketing strategists provide a variety of benefits. First, they provide a single source of responsibility for managing brand and marketing activities. Having a "Brand Champion" can be a very effective way of managing the marketing activities for a brand to ensure maximum benefit. In many cases, having marketing responsibilities dispersed among multiple individuals for a single brand results in a lack of focus and inconsistent messages to the consumer, assuming that marketing occurs at all. Furthermore, it is difficult for an individual with many responsibilities to acquire the depth of knowledge of the market necessary to make good marketing decisions. Brand and marketing strategists fundamentally seek to segment the market for a product, identify those segments that are most attractive and should be targeted, and identify the most effective ways to appeal to the attractive target segments. Their objective is to identify what prices, distribution channels, and advertising will most effectively reach the targeted consumer and induce them to purchase the product. Determining how much promotional spending should be directed towards the channel versus the end consumer is very important in many industries. The improved efficiency of marketing spending is a significant advantage derived from the use of brand and marketing strategists. Brand and marketing strategists also concern themselves with all aspects of the brand, including its name, packaging, labeling, and product quality and cost.
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Because of their closeness to the consumer, brand and marketing strategists can be important resources to guide research and development activities to improve a brand as well. Brand and marketing strategists also are in excellent position to monitor competitive activities and determine what responses are necessary. Whether to introduce brand extensions or not, whether or not the expense of maintaining multiple brands is worthwhile, and how a brand should be positioned are also decisions customarily made by brand and marketing strategists. Frequently, it is beneficial to maintain multiple brands to appeal to different target market segments even within a single product category. Fundamentally, brand and marketing strategists seek to maximize the efficiency of a firm's sales and marketing efforts to attract as much profitable business as possible at the lowest possible expense. Identifying the appropriate mix of promotional activities, product offerings, and research and development activities yields considerable financial benefit to the firm.

3. MARKETING MIX
Meaning and Definition: Marketing Mix means to collect and mix the resources of marketing in the manner that objects of the enterprise may be achieved and maximum satisfaction may be provided to the consumers. The term marketing mix is used to describe a combination of four elements the product, price, physical distribution and promotion. These are popularly known as Four Ps. A brief description of the four elements of marketing mix (Four Ps) is. Product: The product itself is the first element. Products most satisfy consumer needs. The management must, first decide the products to be produced, by knowing the needs of the consumers. Price: The second element to affect the volume of sales is the price. The market or announced amount of money asked from a buyer is known as basic value placed on a product. Promotion: The product may be known to the consumers. Firms must undertake promotion work-advertising, publicity, personal selling etc. which are the major activities. Place: Physical distribution is the delivery of products at the rights time and at the right place. The distribution mix is the combination of decisions relating to marketing channels, storage facility, inventory control, location transportation warehousing etc.

Marketing Mix

Product Product variety Quality Design Features Brand Name Packaging Size

Price List price Discounts Allowances Payment period Credit cards

Promotion Sales promotion Advertising Sales force Public relations Direct marketing

Place Channels Coverage Assortments Locations Inventory Transport

Size

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Services

4. MARKETING IN BANKING
Marketing approach in banking sector had taken significance after 1950 in western countries and then after 1980 in Turkey. New banking perceptiveness oriented toward market had influenced banks to create new market. Banks had started to perform marketing and planning techniques in banking in order to be able to offer their new services efficiently. Marketing scope in banking sector should be considered under the service marketing framework. Performed marketing strategy is the case which is determination of the place of financial institutions on customers mind. Bank marketing does not only include service selling of the bank but also is the function which gets personality and image for bank on its customers mind. On the other hand, financial marketing is th e function which relates uncongenitalies, differences and non similar applications between financial institutions and judgement standards of their customers. The reasons for marketing scope to have importance in banking and for banks to interest in marketing subject can be arranged as: Change in demographic structure: Differentiation of population in the number and composition affect quality and attribute of customer whom benefits from banking services. Intense competition in financial service sector: The competition became intense due to the growing international banking perceptiveness and recently being non limiting for new enterprises in the sector. Increase in liberalization of interest rates has intensified the competition. Banks wish for increasing profit: Banks have to increase their profits to create new markets, to protect and develop their market shares and to survive on the basis of intense competition and demographic chance levels. The marketing comprehension that is performed by banks since 1950 can be shown as in following five stages:
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1. Promotion oriented marketing comprehension 2. Marketing comprehension based on having close relations for customers 3. Reformist marketing comprehension 4. Marketing comprehension that focused on specializing in certain areas 5. Research, planning and control oriented marketing comprehension

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5. THE MARKETING MIX IN BANKING SECTOR SERVICE:

Recently, banks are in a period that they earn money in servicing beyond selling money. The prestige is get as they offer their services to the masses. Like other services, banking services are also intangible. Banking services are about the money in different types and attributes like lending, depositing and transferring procedures. These intangible services are shaped in contracts. The structure of banking services affects the success of institution in long term. Besides the basic attributes like speed, security and ease in banking services, the rights like consultancy for services to be compounded are also preferred.

PRICE The price which is an important component of marketing mix is named differently in the base of transaction exchange that it takes place. Banks have to estimate the prices of their services offered. By performing this, they keep their relations with extant customers and take new ones. The prices in banking have names like interest, commission and expenses. Price is the sole element of marketing variables that create earnings, while others cause expenditure. While marketing mix elements other than price affect sales volume, price affect both profit and sales volume directly. Banks should be very careful in determining their prices and price policies. Because mistakes in pricing cause customers shift toward the rivals offering likewise services.

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DISTRIBUTION The complexities of banking services are resulted from different kinds of them. The most important feature of banking is the persuasion of customers benefiting from services. Most banks services are complex in attribute and when this feature joins the intangibility characteristics, offerings take also mental intangibility in addition to physical intangibility. On the other hand, value of service and benefits taken from it mostly depend on knowledge, capability and participation of customers besides features of offerings. This is resulted from the fact that production and consumption have non separable characteristics in those services. Most authors argue that those features of banking services make personal interaction between customer and bank obligatory and the direct distribution is the sole alternative. Due to this reason, like preceding applications in recent years, branch offices use traditional method in distribution of banking services. PROMOTION One of the most important element of marketing mix of services is promotion which is consist of personal selling, advertising, public relations, and selling promotional tools. PERSONAL SELLING Due to the characteristics of banking services, personal selling is the way that most banks prefer in expanding selling and use of them. Personal selling occurs in two ways. First occurs in a way that customer and banker perform interaction face to face at branch office. In this case, whole personnel, bank employees, chief and office manager, takes part in selling. Second occurs in a way that customer representatives go to customers place. Customer representatives are specialist in

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banks services to be offered and they shape the relationship between bank and customer.

ADVERTISING Banks have too many goals which they want to achieve. Those goals are for accomplishing the objectives as follows in a way that banks develop advertising campaigns and use media. 1. Conceive customers to examine all kinds of services that banks offer 2. Increase use of services 3. Create well fit image about banks and services 4. Change customers attitudes 5. Introduce services of banks 6. Support personal selling 7. Emphasize well service Advertising media and channels that banks prefer are newspaper, magazine, radio, direct posting and outdoor ads and TV commercials. In the selection of media, target market should be determined and the media that reach this target easily and cheaply must be preferred. Banks should care about following criteria for selection of media.: 1. Which media the target market prefer 2. Characteristics of service
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3. Content of message 4. Cost PUBLIC RELATIONS Public relations in banking should provide; 1. Establishing most effective communication system 2. Creating sympathy about relationship between bank and customer 3. Giving broadest information about activities of bank. It is observed that the banks in Turkey perform their own publications, magazine and sponsoring activities. SELLING PROMOTIONAL TOOLS Another element of the promotion mixes of banks is improvement of selling. Mostly used selling improvement tools are layout at selling point, rewarding personnel, seminaries, special gifts, premiums, contests. DEVELOPMENT IN MARKETING SCOPE AT THE ASPECT OF SERVICE MARKETING Marketing scope develops day to day. These developments carry special significance for service sector in which customer and service producer interact closely.

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INTERNAL MARKETING Especially in service sector like external relations, internal relations also have significance. It requires finding and keeping successful personnel. For personnel of the organization to be considered their own goals and service situation, values of the organization are sold to them. The communication techniques carried out for customers are also performed for the personnel in internal marketing and this two techniques go together. For example, the ads that aim creating firms image should be prepared with regarding to audience which is composed of firms personnel. NETWORK MARKETING This approach takes the organization as a sequence which involves producer and customer that market services to each other in the organization. In this structure, the activities of departments that compose organization would be more focused on market. This will also affect the structure of organization. RELATIONSHIP MARKETING It was mentioned that close relationship was established between producer and customer in service sector. In addition to this, life cycle of a customer relationship was also mentioned under the product outline. According to the researchers, maintaining the relationship for extant customer increases the profit of firms. It should be emphasized that this fact has an importance for service sector.

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6. IMPORTANCE OF MARKETING STRATEGY IN CURRENT SCENARIO:

Since the inception of globalization in India, banking sector has undergone various changes. Introduction of asset classification and prudential accounting norms, deregulation of interest rate and opening up of the financial sector made Indian banking sector competitive. Encouragement to foreign banks and private sector banks increased competition for all operators in banking sector. The protective regime by the authority is over. Indian banks are exposed to global competition. Even competition within the country has increased manifold. The almost monopoly position enjoyed by the public sector banks of India is no more in existence. Under this development Indian banks needs to reinvent the marketing strategy for growth. India is a country where there is three tire level of geographical area development. There are full fledged urban areas covering the metropolitan cities and other big cities. On the other hand there are underdeveloped rural areas too. In between these two extreme there is semi urban areas also covering small towns. Prior to nationalization of banks in India, banking was concentrating in the urban areas only. However, after nationalization of 14 large commercial banks in India rural banking was started. To day the scene of Indian banking is different than what it was on the eve of nationalization. Today nearly half of the total branches of the banks are found in the rural areas. However, the spread of the bank in Indian rural and semi urban areas are highly different from state to state and region to region. Many states have fewer networks of bank branches in the rural areas. Under such scenario different marketing approach for different areas is required. If the bank follows the same marketing strategy for all areas the success would be difficult. Marketing approach for urban areas The urban areas of India are developed taking
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into account all parameters of development. The level of income of the people, the literacy rate and level of education as well as awareness of the people about rights of the customer are higher than that of the rural and even semi urban areas. Thus here for effective bank marketing different approach is necessary than that of rural areas. Here the marketing strategy should be based on customer service and the use of modern technology in banking. Under competitive environment for the success of the business, better customer service is of paramount importance. Attracting new customers and retaining existing customers is possible only with customer service. Use of modern technology in urban areas will also go long way for marketing of banking services. Technology based service like credit card, debit card, ATM, anywhere banking, internet banking, and mobile banking are necessary for urban areas. This is because it enables customers to perform banking transactions at their convenience. Business hours of a bank are also an important factor for urban banking. Banking services for long hours, say 12 hours and seven days a week is preferred by urban customers. It is suitable to urban life style. In India many private sector banks, especially co-operative banks and now even some of the public sector banks have also started this practice and they find it successful. To attract business and wholesale customers, banks need to adopt technology based product and service which is suitable to such class of customer. For instance RTGS, collection of out station cheques, issuing the cheques at par at any branch in the country, cash management facility, DD boutiques etc. are necessary. Another strategy for effective marketing is bank need to change the focus from the traditional banking to universal banking. In urban areas the extent and variety of economic activities demands that one institution should meet all financial need of a customer. Under such an expectation of people universal banking would prove
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successful approach for bank marketing. The term universal banking in general refers to the combination of commercial banking and investment banking, i.e., issuing, underwriting, investing and trading in securities. In a very broad sense, however, the term universal banks refers to those banks that offer a wide range of financial services, beyond commercial banking and investment banking, such as, insurance. The idea is to conduct banking and allied activities under one roof. Such allied activities may include credit cards, asset management, housing finance and insurance, all of which are run concurrently with core banking operations. A universal bank is a supermarket for financial products. Under one roof, corporate can get loans and avail of other handy services, while individuals can bank and borrow. For increasing customer base and retention of the existing cliental universal banking approach is effective strategy. Universal banking offers number of benefits to customers as well as the banks. For instance, economies of scale arise in multi-product firms because costs of offering various activities by different units are greater than the costs when they are offered together. The wide range of financial products and services offered holds a greater appeal for the customer than specialized banks due to the comprehensive service provided by a universal bank. This is one of the major factors which is useful for any bank to face competition successfully and increase their market share. Modern banking is heavily depending upon retail banking. To attract retail customer this approach is ideal. Empirical study clearly shows that all most all banks are taking retail customers seriously and focusing their marketing strategy towards them. Universal banking with focus on retail customers made the ICICI banks to acquire first position in Indian banking sector. Other banks of India are also adopting ICICI model for growth. Universal banking approach is beneficial to bank also. For banks economies of scale relate to cost-savings through sharing of overheads and improving
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technology by jointly providing generically similar groups of services. Since universal banking basically provides financial services, the inputs like manpower, infrastructure is more or less same. Necessary changes in the inputs can be made easily. For instance training can be given to staff for providing different financial services to customers. Moreover the most important benefit for the bank is that it is useful to increase the fee based income of the bank. Financial sector passing from lower interest rate regime at present and added to this the process of disintermediation is affecting the main and the traditional source of income for the banks i.e. interest income. All banks are striving hard to increase their fee based income to improve their bottom line. Universal banking can help the banks here positively. Marketing approach for rural areas prior to nationalization of banks in 1969, the rural areas were virtually without banking facility. At that time unorganized sector was dominating in the rural finance. After nationalization of banks in 1969 branches of the banks were started gradually in the rural areas also. To day more than 50 percent branches of the banks are found in the rural areas. However, the distribution of banks in the rural areas is highly uneven. In different state the extent of rural banking is different. Though some of the states have good performance in the rural banking but in spite of that unorganized sector is still dominating in the rural banking. It means here the nature of competition is different. Here banks have to face competition with the unorganized sector. Moreover the rural banking is highly regularized activity by the Government in India. Lending as well as interest rate is regularized. Thus under such environment different marketing approach is required. For effective rural marketing product development, promotion and communication is important. All these parameters banks have to balance with socio-economic factors prevailing in the rural areas. Here bank need to innovate
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product that could attract the depositors. Various loan schemes that are suitable for them for getting funds at right time and also they find convenient to repay. For instance traditional saving bank account may be given a fixed deposit concept that once a particular limit of balance is reached the funds from saving account is automatically converted into fixed deposit attracting higher interest rate. Same way giving more liquidity status to fixed deposit account. In some of the states of India there is considerable amount of NRI deposits. Banks need to develop some scheme which would attract them to bank with. For loans and advances products which are suitable to farmers, small traders, small scale agro based rural industries are already in existence. Banks need to see that how value addition can be made to these existing schemes. Banks also needs to tie up with Non Government Organizations and various Self Help Groups for different types of loans, micro financing etc. This will help the bank for building good image and reputation in the rural areas over and above the business. Another potential area which can be explored by the banks in the rural area is retail banking. With the steady increase in the income of the rural people there is ample scope for retail loan products like housing loans and loans for consumer durables. 5 Marketing through customer services in rural areas is different from that of urban areas. Here personalized banking is the success mantra for banks. Because of high level of illiteracy people prefer to undertake banking transaction themselves. They hesitate to depend upon technology based service. For effective marketing in rural areas bank should have staff with right soft skill like concern for customers problem, positive attitude, good communication and negotiation skill. At every level of dealing with the customer bank need to educate them for banking activities and processes. To attract the customers from the unorganized sector most important factor is to provide the borrower the required finance of right amount and at right time.

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7. DIFFERENCE BETWEEN PUBLIC SECTOR BANK IN INDIA AND PRIVATE SECTOR BANK IN INDIA
Banks in India remained private till 1969 when the then Prime Minister of India, nationalized all of them through an act of the parliament. From 1969 till 1994 there were only public sector banks in India when government allowed HDFC to start the first private bank. The roaring success of HDFC made other private banks to come into the picture and today private banks are giving stiff competition to public sector banks. This article will try to peep into the working styles of public and private sector banks to differentiate between the two. Though State Bank of India is in reality the oldest bank in India having come into existence much before the Allahabad Bank, State Bank of India was called the Imperial Bank of India before independence. Imperial bank was formed in 1921 with the merger of presidency banks known as Bank of Madras, bank of Bengal, and bank of Bombay. Not much headway was made till the nationalization of banks but soon after their nationalization, the banks became a policy instrument of the government of India and the banks started to offer loans to poor and farmers. Thousands of branches of public sector banks were opened in rural areas which allowed people in villages to take advantage of banking facilities. These commercial banks looked after the requirements of industrialists, agriculturists and traders thus becoming a backbone of the Indian economy. They accelerated the growth of Indian economy and worked as wheels of growth taking India to the goal of self reliance in all fields.

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Public sector banks are the banks owned by the government of India or are an undertaking of the government of India. On the other hand private sector banks are those set up by private bodies. It was the process of liberalization, initiated in 1991 under the then Prime Minister of India that the government recognized the need to allow participation of private sector banks in the field of banking. The entry of private banks provided the much needed boost in the quality of services and woke public sector banks from a deep slumber of self praise and inefficiency.

The pace at which private sector banks grew in India under the leadership of banks like HDHC and ICICI was phenomenal and made public sector banks work for the betterment of performance and efficiency. Private sector banks, though they were costly, provided consumer friendly services and customers were attracted to them as they were never so comfortable while dealing with public sector banks. In the process, these banks jolted public sector banks out of their complacency and literally forced them to become better and competitive.

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8. SCOPE OF STUDY OF SBI AND HDFC BANK

The scope of the study is to know the marketing strategies adopted by SBI &HDFC bank. Its not easy for covering all the boundaries for collecting the data. So, this research study is covering some important aspect. In this research study analysis the marketing strategies of SBI and HDFC bank.

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9. INTRODUCTION TO THE BANK

9.1 OVERVIEW OF SBI State Bank of India (SBI) is the largest nationalized commercial bank in India in terms of assets, number of branches, deposits, profits and workforce. With the liberalization of the Indian banking industry in the mid-1990s, SBI faced stiff competition from the private sector and foreign banks which resulted in significant loss of its market share. The case describes the efforts of SBI to regain its lost market share by undergoing a major restructuring exercise which involved redesigning its branch network, providing alternate banking channels, emphasis on lean structure and technology up gradation. The case also discusses how SBI is building its image as a customer friendly bank by launching innovative products & services and promoting its brand. SBI is the largest Indian banking and financial services company (by turnover and total assets) with its headquarters in Mumbai, India. It is state-owned. The bank traces its ancestry to British India, through the Imperial Bank of India, to the founding in 1806 of the Bank of Calcutta, making it the oldest commercial bank in the Indian Subcontinent. Bank of Madras merged into the other two presidency banks, Bank of Calcutta and Bank of Bombay to form Imperial Bank of India, which in turn became State Bank of India. The government of Indianationalised the Imperial Bank of India in 1955, with the Reserve Bank of India taking a 60% stake, and renamed it the State Bank of India. In 2008, the government took over the stake held by the Reserve Bank of India. SBI provides a range of banking products through its vast network of branches in India and overseas, including products aimed at non-resident Indians (NRIs). The State Bank Group, with over 16,000 branches, has the largest banking branch
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network in India. SBI has 14 Local Head Offices and 57 Zonal Offices that are located at important cities throughout the country. It also has around 130 branches overseas. With an asset base of $352 billion and $285 billion in deposits, SBI is a regional banking behemoth and is one of the largest financial institution in the world. It has a market share among Indian commercial banks of about 20% in deposits and loans. The State Bank of India is the 29th most reputed company in the world according to Forbes. Also SBI is the only bank featured in the coveted "top 10 brands of India" list in an annual survey conducted by Brand Finance and The Economic Times in 2010. The State Bank of India is the largest of the Big Four banks of India, along with ICICI Bank, Punjab National Bank and HDFC Bankits main competitors.

HISTORY OF SBI The roots of the State Bank of India rest in the first decade of 19th century, when the Bank of Calcutta, later renamed the Bank of Bengal, was established on 2 June 1806. The Bank of Bengal was one of three Presidency banks, the other two being the Bank of Bombay (incorporated on 15 April 1840) and the Bank of Madras (incorporated on 1 July 1843). All three Presidency banks were incorporated as joint stock companies and were the result of the royal charters. These three banks received the exclusive right to issue paper currency in 1861 with the Paper Currency Act, a right they retained until the formation of the Reserve Bank of India. The Presidency banks amalgamated on 27 January 1921, and the reorganised banking entity took as its name: Imperial Bank of India. The Imperial Bank of India remained a joint stock company
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Pursuant to the provisions of the State Bank of India Act (1955), the Reserve Bank of India, which is India's central bank, acquired a controlling interest in the Imperial Bank of India. On 30 April 1955, the Imperial Bank of India became the State Bank of India. The government of India recently acquired the Reserve Bank of India's stake in SBI so as to remove any conflict of interest because the RBI is the country's banking regulatory authority. In 1959, the government passed the State Bank of India (Subsidiary Banks) Act, enabling the State Bank of India to take over eight former state-associated banks as its subsidiaries. On 13 September 2008, the State Bank of Saurashtra, one of its associate banks, merged with the State Bank of India. SBI has acquired local banks in rescues. For instance, in 1985, it acquired the Bank of Cochin in Kerala, which had 120 branches. SBI was the acquirer as its affiliate, the State Bank of Travancore, already had an extensive network in Kerala.

9.2 MARKETING STRATEGY USED BY SBI

Generic strategies adopted by State Bank of India: 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

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 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 are relevant to the banks short term and medium term and operational needs and policy formulation Overlapping staff training canters: to validate and closely monitor the staff training canters in seven circles attached to the academy.

The Restructuring To overcome the intense competition from private and foreign banks, SBI 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.

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New Products and Service Apart from restructuring, SBI 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, SBI 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. SBI 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, SBI entered into several alliances and tie-ups with automobile, insurance, mutual fund, project finance and medical equipment companies.

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Auto.Finance Unlike other competitors that relied on reduced interest rates to get business, SBI extended the tenure of car loans from five to seven years, thereby lowering the monthly debt repayment burden of the loan seeker. SBI entered into a tie-up with Maruti, the largest automobile manufacturer in India, to provide loans for purchase of Maruti cars at the rate of 10.05 per cent and 11.25 per cent for three years and above three years respectively. After the scheme was introduced, SBI emerged as the largest financier for Maruti cars in India and the number of Maruti vehicles financed grew by 17 per cent in the fiscal 2003-04 over fiscal 2002-03

The Marketing Initiatives SBI 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 centres 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.

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SBI also introduced various other ways of reaching out to customers like

extension of hours of work(SBI increased daily working hours by two hours and Sunday banking was introduced) and

Aggressive marketing through print and television media.

Looking Ahead-Result: Among the factors that will help in realizing this full potential were access to institutional credit to more farmers and appropriate quantity and quality of agriculture credit. Since the Seventies, the decadal average growth rate of the volume of short-term institutional credit to agriculture has stagnated at around 15 per cent, while the growth rate of the volume of long-term credit has in fact declined from 20.2 per cent in the 1970s to11.9 per cent in 1990s. The government has anxiously examined the question of agriculture credit and related issues in consultation with the Reserve Bank of India (RBI), National Bank for Agriculture and Rural Development (Nabard) and commercial banks. Among commercial banks, SBI with its vast network is well placed to fulfill the large commitments of the new government to the farm sector. In the current financial year the government targeted for a 30 per cent increase in the aggregate agricultural credit over the previous year. On interest rate, the rates would remain stable in the short-term. There could be a revision in interest rates in the medium to long-term period. Further, any likely revision would depend on external factors than domestic factors.

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Elaborating on the importance of the right tie-ups and partnerships for the bank, there are a few non-core business areas where SBI is and wherever we have partners, the global majors are our partners. For instance, in insurance, Cardiff, and for cards, GE is our partners. We are becoming a very major player in the Indian economy. For example SBI Cards we are the third largest card company and second fastest growing card company after ICICI. This is the most profitable card company in the country and SBI is doing very well. On technological up gradation, all the 13,650 branches of the bank were fully computerized, also they increased fully integrated ATM network from 4,000 to 6000 today across the country. SBI in its own quiet manner is trying to provide world-class services.

SBI`s Strategies in the current scenario SBI have set up capacity in places where they are not very strong. Its time for them to follow overall SBI philosophy of planning new branches, given the huge untapped potential. Besides, this is also the best time to benefit from their past expansion, since there is a lot of trust in SBI. Brand SBI is very strong, while people may be generally cautious about some other brands. They can not only tap the potential better but can also provide a safe and transparent insurance alternative to the public. The bank is entering into many new businesses with strategic tie ups Pension Funds, General Insurance, Custodial Services, Private Equity, Mobile Banking, Point of Sale Merchant Acquisition, Advisory Services, structured products etc each one of these initiatives having a huge potential for growth.
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SOME OF THE STRATEGIES TO COPE WITH THE CURRENT SCENARIO ARE LISTED BELOW: It is the part of SBI`s philosophy to open new branches .The Bank is forging ahead with cutting edge technology and innovative new banking models, to expand its Rural Banking base, looking at the vast untapped potential in the hinterland and proposes to cover 100,000 villages in the next two years. SBI is planning to hire 11,000 employees in the current fiscal. The Bank is also in the process of providing complete payment solution to its clientele with its over 8500 ATMs, and other electronic channels such as Internet banking, debit cards, mobile banking, etc. Countrys largest lender, State Bank of India (SBI) has prepared a blueprint to go retail in its international operations. Such strategy would help the bank to promote its lead in syndication of loans in the overseas market, at a cheaper cost. The banks overseas operations have been instructed to thrust more on promoting retail banking locally, SBI is assessing that by opening more branches across foreign locations and promoting retail services by mobilising deposits at interest rates as low as 3-3.5%, the bank will be able to increase its operating margins by 250-300 basis points in overseas markets where syndication opportunities arise often.SBI is expected to open \seven new branches over next eight months in the United Kingdom where it operates six branches currently. In response to signals from the central bank, SBI have progressively reduced their PLR from 13.75% to 12.25% during the past few months in stages, and further softening in interest rates cannot be ruled out.

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SBI is introducing loan products at sub-PLR rates - in home loans at 8%, auto loans at 10%, special products for SMEs and... agriculture sector at 8%, but it may not be possible for them to reduce the interest rate beyond a certain point.

SBI is working on infrastructure sector projects, which has seen a growth of 26% in the current year. For the year 2008 the Rs 10,000 crores was sanctioned for the infrastructure projects while in the current year from April 08 to February 09 the amount sanctioned for the infrastructure project is Rs 13,000 crores,out of which project worth Rs 8000 crore is in pipeline. Despite of various viability issues the growth in this sector for SBI is been intact. With market-linked products finding fewer takers, insurance companies are launching more guaranteed products to lure investors. The latest to join the bandwagon is SBI Life insurance with SBI Smart ULIP, a product that guarantees returns based on the highest NAV recorded by the fund in the first seven years.

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PORTERS FIVE FORCES THEORY 1. Threat of competitors:

Top Performing Public Sector Banks a. Andhra Bank b. Allahabad Bank c. Punjab National Bank

Top Performing Private Sector Banks a. HDFC Bank b. ICICI Bank c. AXIS Bank d. Kotak Mahindra Bank

2.

Threat of new entrants: there have been many new entrants in banking

sector like yes bank 3. Threat of substitutes: investors as a substitute can always invest into the

capital markets instead of depositing in their capital in the bank. 4. Buying power of suppliers: changing policies and guidelines of RBI,

interest rates, CRR and SLR maintained by the banks as per RBI norms. 5. Buying power of customers: changing scenarios, increasing and decreasing

disposable incomes, other attractive options available to customers.

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BCG THEORY: There is a lot of the banking

CASH COW growth potential for industry because of disposable income of increasing working in other

increasing customers, class, more

volatility

markets also increasing importance of savings and in this banking industry SBI has shown a growth rate of 13% with a 21 % increase in PAT standing to 62.1 cr in the FY 2008-09. Hence it can be concluded that SBI stands at cash cow in BCG matrix.

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9.3 OVERVIEW OF HDFC The Housing Development Finance Corporation Limited (HDFC) was amongst the first to receive an 'in principle' approval from the Reserve Bank of India (RBI) to set up a bank in the private sector, as part of the liberalization of the Indian Banking Industry in 1994. The bank was incorporated in August 1994 in the name of 'HDFC Bank RBI's

Limited', with its registered office in Mumbai, India. HDFC Bank commenced operations as a Scheduled Commercial Bank in January 1995. HDFC is India's premier housing finance company and enjoys an impeccable track record in India as well as in international markets. Since its inception in 1977, the Corporation has maintained a consistent and healthy growth in its operations to remain the market leader in mortgages. Its outstanding loan portfolio covers well over a million dwelling units. HDFC has developed

significant expertise in retail mortgage loans to different market segments and also has a large corporate client base for its housing related credit facilities. With its experience in the financial markets, a strong market reputation, large

shareholder base and unique consumer franchise, HDFC was ideally positioned to promote a bank in the Indian environment. HDFC Bank began operations in 1995 with a simple mission: to be a World Class Indian Bank. We realized that only a single minded focus on product quality and service excellence would help us get there. proud to say that we are well on our way towards that goal. Today, we are

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HISTORY OF HDFC HDFC Bank was incorporated in 1994 by Housing Development Finance Corporation Limited (HDFC), India's largest housing finance company. It was among the first companies to receive an 'in principle' approval from the Reserve Bank of India (RBI) to set up a bank in the private sector. The Bank started operations as a scheduled commercial bank in January 1995 under the RBI's liberalization policies. Times Bank Limited (owned by Bennett, Coleman & Co. / Times Group) was merged with HDFC Bank Ltd., in 2000. This was the first merger of two private banks in India. Shareholders of Times Bank received 1 share of HDFC Bank for every 5.75 shares of Times Bank. In 2008 HDFC Bank acquired Centurion Bank of Punjab taking its total branches to more than 1,000. The amalgamated bank emerged with a base of about Rs. 1,22,000 crore and net advances of about Rs.89,000 crore. The balance sheet size of the combined entity is more than Rs. 1,63,000 crore.

BUSINESS OBJECTIVES: The primary objective of HDFC is to enhance residential h o u s i n g s t o c k i n t h e Country through the provision of housing finance in a systematic and professional Manner, and to promote home ownership. Another objective is to increase the flow of resources to the housing sector by integrating the housing finance sector with the overall domestic financial markets.

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Business focus HDFC Bank deals with three key business segments. - Wholesale Banking Services, Retail Banking Services, Treasury. It has entered the banking consortia of over 50 corporate for providing working capital finance, trade services, corporate finance, and merchant banking. It is also providing sophisticated product structures in areas of foreign exchange and derivatives, money markets and debt trading and equity research. Wholesale banking services Blue-chip manufacturing companies in the Indian corp to small & mid-sized corporate and agro-based businesses. For these customers, the Bank provides a wide range of commercial and transactional banking services, including working capital finance, trade services, transactional services, cash management, etc. The bank is also a leading provider of for its to corporate customers, mutual funds, stock exchange members and banks. Retail banking services HDFC Bank was the first bank in India to launch an International Debit Card in association with VISA (VISA Electron) and issues the MasterCard Maestro debit card as well. The Bank launched its credit card business in late 2001. By March 2009, the bank had a total card base (debit and credit cards) of over 13 million. The Bank is also one of the leading players in the merchant acquiring business with over 70,000 Point-of-sale (POS) terminals for debit / credit cards acceptance at merchant establishments. The Bank is positioned in various net based B2C opportunities including a wide range of internet banking services for Fixed Deposits, Loans, Bill Payments, etc.

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9.4 Promotions strategy of HDFC Bank FROM doing cross-selling exercises to organizing school-level painting competitions, promotional activities are going to be the main focus of HDFC Bank's marketing strategy this year. HDFC Bank are looking at positioning HDFC as a one-stop financial supermarket and the objective of the promos is not just acquisition of new customers, but also looking at creating product awareness, enhancing usage and also providing value-adds to the customers to reward them for their faith and loyalty. The first promo this year is titled Wheels Of Fortune, which will be on during the month of January. "This promo is targeted at all those customers who avail a personal loan, car or two-wheeler loan. There will be a lucky draw at the end of the promo and the winners would get exotic prizes." Also on the cards is a school-level painting competition on wildlife across cities to promote the Kids Advantage account. The next step to these mass promos, would be more personalized promos. "It plan to send personalized mailers about various products to all those HDFC come in contact with during these mass promotions." The bank has also tied up with Business Today, to sponsor 10,000 copies of the magazine in each metro. The cover of the sponsored copies would be the December issue of Business Today, which rated HDFC Bank as the best bank in the country. On the opposite side, would be an advertorial which would talk about HDFC as a `one-stop financial supermarket'.

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Gold Credit card: For providing the better services to the customers and promoting their business, HDFC has launched the Gold Credit Cards. It's overloaded with travel benefits - discounts, cash back offers, air miles redemption. Platinum Cards Get Additional Benefits: HDFC Bank Platinum Card Customers Get Additional Benefits compared to Gold / silver or other entry level cards. For instance, consider this, HDFC Cards has a CoBranded Online Shop with Surat Diamonds. By virtue of being HDFC Bank Customer, you are already getting big discount. Now add any item to your cart and enter 558818 [6 Starting Digits of Platinum Card], you get additional discount. This is just one such instance. You also get Petrol Surcharge Waiver, IRCTC Charges Waived, etc.

Clear Trip Discount to Debit Card Holders Use your HDFC Bank Debit Card to book any flight, hotel or train & get 10%* cash back Domestic Air Offer - Book any Domestic Flight and get 10% cash back on Base Fare or Rs.250 cash back per booking (whichever is less). Trains - Book any Train and get 10% cash back or Rs.50 cash back per booking (whichever is less) International Air Offer - Book any International Flight and get 10% cash back on Base Fare or Rs.600 cash back per booking (whichever is less). Hotels Offer - Book any Hotel (Domestic/International) and get 10% cash back on Base Price or Rs.500 cash back per booking (whichever is less). To avail the cash back kindly enter coupon code HDFCTRIP during step 3 of the booking process before payment.

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PORTERS FIVE FORCES THEORY 1. Threat of competitors: Top Performing Public Sector Banks d. Andhra Bank e. Allahabad Bank f. Punjab National Bank

Top Performing Private Sector Banks e. ICICI Bank f. AXIS Bank

g. Kotak Mahindra Bank

2. Threat of new entrants: there have been many new entrants in banking sector like yes bank 3. Threat of substitutes: investors as a substitute can always invest into the capital markets instead of depositing in their capital in the bank. 4. Buying power of suppliers: changing policies and guidelines of RBI, interest rates, CRR and SLR maintained by the banks as per RBI norms. 5. Buying power of customers: changing scenarios, increasing and decreasing disposable incomes, other attractive options available to customers.

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BCG THEORY: CASH COW Growth and margins Having the funds to grow is only half the problem. However, will the company actually grow? The sluggish rate of growth in the economy suggests that growth could indeed pose a problem. In fact, in the first quarter of the financial year-ended 2009, HDFC Bank was able to record only a 43 per cent growth in profits. This, however, may not be good enough to justify the valuation commanded by the stock. And if, due to the slowdown, the bank is forced to invest in government securities rather than in loans, which generate higher returns, the margins will be affected. On the other hand, competition from other banks may increase. Hence it can be concluded that HDFC BANK stands at cash cow in BCG matrix.

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11. CONCLUSION
Liberalization has really changed the banking industry. It is no longer enough for banks to just manage money efficiently; they also have to manage customers, who now have a wide choice of alternatives. The future promises to be even more exciting, interesting and challenging, thanks to technology.

No longer will banks, or any large organization, treat customers as a group and segment them into just some demographic and psychographic profiles. The Internet has enabled us to talk to each customer as an individual, with different needs and requirements. Products will need to be developed to meet those needs, and services will become the crucial differentiators. For years, customers were part of the banks Fixed Assets; now they have moved into the Current Assets category, and it will be a task keeping them there.

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12. BIBLIOGRAPHY
Websites: http://www.hdfcbank.com/ http://sbi.co.in/ http://www.thehindubusinessline.com http://www.etstrategicmarketing.com

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