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Table of Contents

Frontmatter

Chapter 1. The roles of marketing in bank management

Abstract
As the role of the financial services sectors — banking, insurance, building societies, hire purchase, franchising, consumer credit and general household financial services, etc. — continues to grow in the economies of most of the Western nations, pressures are mounting for a more effective marketing management of the financial services offered by the banks. This applies especially to the banking sector, as it represents probably the most important financial sector, not just in terms of turnover, profits and employment, but also in its paramount impact on the other spheres of the economy. For these reasons, in the last few years there has been a growing interest in applying marketing techniques and tools in the field of banking. This growing interest has generated a relatively large number of publications, mostly descriptive, mainly in the last four to five years. Along with this change in approach has come a change in the banks’ services, training, attitudes and images, marketing strategies, and patterns of organisation and control as elaborated in this book.
Arthur Meidan

Chapter 2. Customer behaviour and market segmentation

Abstract
The initial studies of bank customer behaviour started with the banks’ interest in the services they offered, and the customers’ attitudes, beliefs and perceptions about those services. The questions employed in the market research tests asked six basic questions, namely: who is the customer; what does the market buy; when does the market buy; who is involved in the buying; why does the customer buy; how does the market buy? The information gained has been used to improve the design of services, relationships and bank communications. The studies highlighted the importance of factors such as the bank’s image and identified the existence of market segments. Much of the current research efforts concentrate on segmenting the market into customer groups with different needs, buying styles and responses to promotions. Strategies are then developed to appeal to the identified segments.
Arthur Meidan

Chapter 3. Branch location and distribution

Abstract
Branch location and distribution are an important but much overlooked area of bank marketing. In marketing, distribution is the means through which a seller makes his product available to the buyer. In the marketing of consumer or industrial goods, this is achieved through the use of various middlemen who comprise what is known as a channel of distribution. Since this is not possible with a service such as banking, a channel of distribution for banking should be considered in a somewhat different manner. A good definition of distribution in banking is any means of increasing the availability and/or convenience of a service that increases its use or the revenue from its use.
Arthur Meidan

Chapter 4. Advertising and communications

Abstract
Advertising is non-personal communication directed at target audiences through various media in order to present and promote products, services and ideas, the cost of which is borne by an identified sponsor or sponsors. Advertising in banking alerts a potential user that a service or product will help him to reach an objective, for example, somewhere to keep his money safely or borrowing to buy a new house.1 The basic definition of ‘communication’ is to succeed in conveying one’s meaning to others, but within the context of marketing this can be done in a variety of ways, using a variety of media. We will use communications in the marketing sense, that is, as a means of persuasion that results either in some desired action — such as buying a particular product or service — or in a change of attitude or behaviour that is likely to lead eventually to the desired action. The main techniques used for communications are personal selling, promotion and publicity (public relations), all of which will be dealt with separately.
Arthur Meidan

Chapter 5. Product development and pricing

Abstract
The special nature of the banking industry creates similar problems with regard to both product development and pricing. Banks offer a wide range of services that consumers use to different extents, in effect creating a product that is customised to the individual consumer. Hence banks offer a highly non-standard product at a highly non-uniform price.
Arthur Meidan

Chapter 6. Marketing research

Abstract
The word ‘marketing research’ is used to describe a variety of quite different activities. The complete research function is to provide, analyse and interpret a flow of relevant information about the bank markets, so that management and marketing decisions are made with real knowledge and understanding of all the facts. Marketing research is the search and utilisation of information from all available sources and its adaption to banks’ marketing needs.
Arthur Meidan

Chapter 7. Controlling the marketing programme

Abstract
As the banking industry shifts from a supply or ‘production’ orientation to one that recognises the significance of the market in determining banking success, three implications for bank management have become apparent; first, bank plans must be built around market needs — not market needs in general — but the identified needs of the bank’s branches’ own trading area. Thus planning should not only reflect the economic and demographic character of the market segments, but also their attitudes and values regarding money, savings, spending and security; second, incorporation of market variables in bank planning makes possible a balance of market opportunities, bank resources and competitive position in the interests of growth and profitability; finally, with so many marketing activities in operation at one time, the bank runs the risk of confusing customers and alienating prospects. In a full service bank, the problem is particularly acute. A bank must communicate an image that is both secure and prudent, but also progressive and modem. Therefore, planning — however detailed — is not enough. Co-ordination involves control over the activities and the people responsible for them. If the goals are established in sufficient detail at the outset, the control task is made easier because precise goals can be used as measures of performance for control.
Arthur Meidan

Chapter 8. Bank marketing strategies

Abstract
The literal meaning of the word strategy is ‘the art of the general’, deriving from the ancient Greek word for general — strategos. In fact, the usage of the word dates back to at least 400 BC, but did not appear in writings until the late eighteenth century. Prior to Napoleon’s times, the word had a military connotation implying the art and science of directing military forces to defeat an enemy or to mitigate the results of defeat. Although deriving from an ancient heritage, the term strategy has found its way into bank management literature in the past decade or so. To the banking people the term strategy has come to mean the type of decision made by top executives and members of banks’ board of directors concerning the relationship between the bank organisation as a whole and its environment. In other words, strategy describes those critical boundary- spanning decisions that define the framework and direction for overall bank marketing organisation and management, providing answers to questions such as:
1.
In what specific business should the bank be, in terms of mix of services/products offered and customers served?
 
2.
What course of action should the organisation pursue, in terms of emphasis, timing, priorities?
 
3.
How should the bank resources be acquired and how should these resources be deployed for more efficient marketing operations?
 
4.
What major market opportunities are most compatible with banks’ top management definition of marketing goals, objectives and missions, etc.?
 
Arthur Meidan

Chapter 9. Marketing of bank credit cards

Abstract
The development of the credit card is probably the most significant phenomenon of the modem banking scene. Basically, the use of credit cards enables one to take advantage of the two essential aspects of the banking function: (i) The transmission of payments, (ii) The granting of credit. The development of the bank credit card allowed for the first time the use of these two functions together.
Arthur Meidan

Chapter 10. Bank marketing administration

Abstract
In essence, administering involves the following activities:
(a)
delegating authority to ‘line’ manager;
 
(b)
selecting appropriate staff personnel to work with programme;
 
(c)
communicating purposes and appropriate details of programme to employees;
 
(d)
establishing performance evaluation and reward system.
 
Arthur Meidan

Backmatter

Additional information