TERM PAPER

ON
STRATEGIC MANAGEMENT

TOPIC: MARKETING STRATEGY USED BY PUBLIC AND

PRIVATE SECTOR.

BANKS: HDFC (PRIVATE BANK)

SBI (PUBLIC BANK)

SUBMITTED TO: - SUBMITTED BY:-

Lect. Mrs. Anju saini Gurpreet Singh
L.S.B. Sec. -1803A26
Regd. 10808888

Lovely Professional University

 CONTENTS

Sr. No. Topics

1. INTRODUCTION
2. Marketing strategy

Types of strategies
3. Marketing Mix
4. Marketing strategy in banking

Marketing mix in banking sector

5. Need, Scope and Objective of Study
6. Research Methodology
7. Introduction to the Banks

Overview of SBI bank

Marketing strategy used by SBI

Overview of HDFC

Marketing strategy used by HDFC

8. Conclusion
9. Bibliography
INTRODUCTION TO THE TOPIC:

PUBLIC AND PRIVATE SECTOR BANKS

All the banks in India were earlier private banks. They were founded in the pre-independence
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 state-owned 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.
Marketing strategy

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. It 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 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

Types of 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 firm’s 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
➢ 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

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

P’s”. A brief description of the four elements of marketing mix (Four P’s) 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 Price Promotion Place
Product variety List price Sales promotion Channels
Coverage
Quality Discounts Advertising
Assortments
Design Allowances Sales force
Locations
Features Payment period Public relations
Inventory
Brand Name Credit cards Direct marketing
Transport
Packaging

Sizes

Services

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 the 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. Bank’s 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:

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

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.

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 makes 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 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

3. Content of message

4. Cost

5. Situation of rivals

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.

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 firm’s image should be prepared with regarding to audience which is composed of
firm’s 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.
NEED FOR STUDY

The research project evaluation of the banking sector in India has primal importance due to
intense competition, and changing banking reforms. This research project is very important
because in today scenario there is strong competition in public and private sector banks. It’s
very important for us to know which sector is performing well and what are the marketing
strategies adopted by banks (public sector or private sector).

SCOPE OF STUDY
The scope of the study is to know the marketing strategies adopted by SBI &HDFC bank. It’s
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.

OBJECTIVE OF STUDY
1. To study the marketing strategies adopted by SBI & HDFC BANK.

2. To study the impact of marketing strategies adopted by SBI & HDFC on customer
satisfaction.

RESEARCH METHODOLOGY

Research means a search for knowledge or gains some new knowledge and methodology can
properly refer to the theoretical analysis of the methods appropriate to a field of study or to
the body of methods and principles particular to a branch of knowledge. A Research
methodology has a specified framework for collecting the data in an effective manner.
Research methodology means a ‘defining a problem, defining the research objectives,
developing the research plan, collecting the information, analyzing the information and
presentation of finding’. The research process that was followed by me consisting following
steps:
Research Define: The definition of problem includes the study of “Marketing Strategies of
HDFC and SBI”

Source of Data: For conducting this project, I have used Secondary data.

Secondary Data: The secondary data can be defined as data collected by someone else for
purposes other than solving problem being investigation and previously meant for another
purpose. . We will use magazines, journals, paper and internet for the collection of data. It
helps us to better determine our problem and formulate an appropriate research design.

It is the data which is collected by others. It is ‘re-used’ by the researcher. The various
sources of secondary data are Websites, Newspapers, Magazine, Books and Journals.

INTRODUCTION TO THE BANK

OVERVIEW OF SBI BANK

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.

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
• 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.

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.

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.

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.

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. It’s 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.

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.
• Country’s 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 bank’s
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.

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.

Porter’s 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

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

BCG Theory: cash cow

There is a lot of growth potential for the banking industry because of increasing disposable
income of customers, increasing working class, more volatility in other 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.

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 RBI's liberalization of the Indian Banking Industry in 1994.
The bank was incorporated in August 1994 in the name of 'HDFC Bank 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. Today, we are proud to say that we are well on our way
towards that goal.

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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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
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Porter’s five forces theory:

5. Threat of competitors:

Top Performing Public Sector Banks

a. Andhra Bank
b. Allahabad Bank
c. Punjab National Bank

Top Performing Private Sector Banks

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

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.
 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.

References
Journals:
• Balasubramanian, (2008) “Financial Performance of Private Sector Banks in India”
Vol.27. No5,pp.146-162
• John C. Howley, Grahame P. Savage, (2009 )“Bank Marketing in the Personal
Sector” Vol. 5, No. 3, pp. 271 – 276
• Sherman & Delener (2008) “PSU banks lose business to their private sector peers”
Vol.14, No.2, pp.468-481
• Vyas & Dhande, (2007) “Study on the Impact of New Private Sector Banks on State
Bank of India”Vol.15, No.2, pp.247-254
• V.Matsuo, (2007) “Compare the Performance of the Three Major Public and Private
Sector banks” Vol.39, No.5, pp.363-379
• http://www.hdfcbank.com/personal/Cards/Credit_Cards/Gold_Credit_Card/cc_prm_g
old.htm

• http://www.hdfcbank.com/
• http://sbi.co.in/
• http://www.thehindubusinessline.com/2004/01/14/stories/2004011401560600.htm
• http://www.thehindubusinessline.com/2005/11/05/stories/2005110502330500.htm
• http://www.etstrategicmarketing.com/smJan-Feb1/per_bank.htm
• http://www.icmrindia.org/casestudies/catalogue/Business%20strategy2/BSTR132.htm
• http://www.icmrindia.org/casestudies/catalogue/marketing
%20communications/CLMC040.htm
• http://www.managementparadise.com/forums/archive/index.php/t-2946.html
• http://www.financialexpress.com/news/SBI%20Plans%20Marketing%20Division;
%20Global%20Consultant%20To%20Formulate%20Strategy/57636/