Description
Bank marketing deals with providing services to satisfy customers' financial needs and wants. To satisfy these financial needs, customers want specific services.
Service Marketing Mix with Special Reference to Indian Banking
Abstract
Bank marketing deals with providing services to satisfy customers' financial
needs and wants. To satisfy these financial needs, customers want specific
services. Service marketing mix plays an important role in bank marketing. It
consists of the various elements of a marketing programme which need to be
considered in order to successfully implement the marketing strategy and
positioning in the markets. This paper discusses elements of service marketing
mix; product, price, place, promotion, people, process and physical evidence
in Indian banking and explores that price fairness and transparency,
distributing banking services in convenient way, behavior of employees,
customers' education, tangibility and process through technology play
important role in differentiating banking services from its competitors.
Keywords:
Bank Marketing, Service Marketing Mix, India
Introduction
The services sector is the most significant sector, which contributes maximum
to the GDP in Indian economy. Among fast growing developing countries,
India is distinctive for the role of its service sector. Although there are other
emerging markets where the share of services in GDP exceeds the share of
manufacturing, India stands out for the size and dynamism of its services
sector. The share of services in India's GDP increased rapidly from 30.5 per
cent in 1950-51 to 55.2 per cent in 2009-10. If construction sector is also
included, the share increases to 63.4 per cent in 2009-10 (Economic Survey
2010-11).
In India, the banking sector is a central component of services sector. Banks
are the most common institutions for transfer of funds and investments. Prior
to economic liberalisation, public sector banks enjoyed a monopoly over
market due to protectionist policies of the government. The liberalization
policy of the Government of India in 1991 permitted entry to foreign and
private banks in the banking industry, leading to increased competition.
Because of increased competition, banks are exploring marketing strategies to
differentiate their services from their competitors. For designing effective
marketing strategies, knowledge of service marketing mix is essential. This
paper examines the role of service marketing mix (product, price, place,
promotion, people, process and physical evidence) in Indian banking sector.
Service Marketing Mix
Bank marketing deals with providing services to satisfy customers' financial
53
*Research Scholar, Faculty of
Management Studies, Mody Institute of
Technology & Science (A Deemed University)
Lakshmangarh, Disst. – Sikar, Rajasthan
Vinita Kaura*
Pacific Business Review International
Volume 6, Issue 5, November 2013
www. p b r . c o . i n
www. p b r . c o . i n
Pacific Business Review International
54
needs and wants. To satisfy these financial needs, customers want
specific services. All the techniques and strategies of marketing are
used so that ultimately they induce the people to do business with a
particular bank. This requires satisfaction of customers.
Traditional marketing mix can not be responsible for the total
marketing function of a service organization like banks. It requires
all elements of service marketing mix. Service marketing mix
plays an important role in bank marketing. It consists of the various
elements of a marketing programme which need to be considered
in order to successfully implement the marketing strategy and
positioning in the markets. It helps in differentiating services of a
particular bank from its competitors.
Product
Core product is core benefit that a customer is buying while
purchasing a product. According to Lovelock and Wirtz (2006), the
core product is a vital constituent of the services offering and
basically addresses two questions; first, “what do the buyers get
when they purchase the product” and “what business are we in”?
Schneider and Bowen (1995) also argued that fancy facilities,
modern equipment, stylish uniforms and terrific signs can never
countervail for bad/mediocre food, poor financial advice, an
inappropriate will, or lousy music. Hauser and Clausing (1988)
also demonstrated the influence of diverse product (or service)
attributes on customers' perceptions. The quality of this core
product largely influences and sometimes may be the ultimate
determinant of the overall service quality from the viewpoint of the
customers (Schneider & Bowen, 1995).
In the banking sector, the core products are 'deposits' and
'advances'. All the banks have these two main products and
differentiation of banking services with reference to core product
is difficult to achieve. Banks differentiate their services on the
basis of value added services which mainly cover information
technology based services. And, customer has to be tech-savvy for
availing these value added services. Some example of value added
services are: mobile banking, mobile and DTH (Direct to Home)
recharge through internet banking, electronic fund transfer, etc.
Price
Zeithaml (1988) has defined price as “what is given up or
sacrificed to obtain a product”. Jacoby & Olson (1977) defined
objective price as the actual price of a product/ service. Perceived
price was defined according to Zeithaml (1988) as the price that is
encoded by the consumer. Chang and Wildt (1994) defined
perceived price as the consumers' perceptual representation or
subjective perception of the objective price of the product / service.
Price perceptions are formed in relation to internal reference
prices; the theoretical justification for which can be found in
prospect theory (Varkie and Colgate 2001), that explains that
losses or sacrifices are encoded by consumers with respect to
internal reference points (Thaler 1985). According to Biswas and
Blair (1991) consumers recognize prices as high or low,
depending on their internal reference points, which are established
either by exposure to competitive prices or past prices.
Price in banking sector means interest rate and service charges.
Prices are being controlled by RBI in banking sector but limited
deregulation has allowed banks to differentiate their services on
the basis of differential interest rates. Due to complexity of pricing
structure in loans, maintaining transparency without hidden
charges is an essential prerequisite for differentiating bank
services.
According to Dutta and Dutta (2009), for Indian banking services
evaluation, there is not much differentiation in the price (due to
regulations by RBI). Therefore, the main differentiator for banking
ser vi ce eval uat i on woul d be Ser vQual di mensi ons,
systematization of services, servicescape and social responsibility
(Dutta and Dutta, 2009). It implies that price is not important in
Indian banking industry. But, Associated Chambers of Commerce
and Industry of India (2009) survey on growth and emergence of
public and private sector banks in India reveals that private sector
banks are not preferred for traditional items, such as loans, as their
offers are difficult to understand and perceived rate of interest is
high, whereas public sector banks are perceived more reliable with
lower rates of interest. In Indian banking industry where
differentiation is not much in terms of prices, it is required to be fair
and transparent without hidden charges.
Place
Place in banking services means providing banking services at
right time in convenient way. Inseparability of production and
consumption is the most intriguing characteristic of services.
Service provider's physical connection to the service, the
customer's involvement in the service production process and
involvement of other customers in the service production process
create challenges for service provider. As income of people is
rising, there is inclination towards convenience related services.
Growing demand of laundry services, housekeeping, home
delivery grocery outlets are some example of services that reflect
convenience orientation of people.
When customers can't go to service provider to buy services due to
time or location, they are provided services through home delivery.
While reserving a seat in advance, customer may expect
convenience from the reservation service provider. Similarly bank
customer may expect proximity of ATM or bank branch while
withdrawing money or 24X7 hrs. facility for electronic
transactions. Banking services delivered via the Internet, mobile
phone interface, voice response system, call center, automatic
teller machines and via face to face in a branch or visit at customer's
home not only have various cost implications for bank but also
drastically affects the nature of service experience for the
customer. If more complexity is associated with a service
purchase, customers prefer face to face interaction with service
provider.
For availing loan service, customers have to rely on personal
channels. Therefore convenience of location plays important role
on customer perception regarding banking services. Customers
with higher knowledge about a service are more likely to use self-
service channels like ATM and internet banking. But, convenience
is a key driver of channel choice for the majority of consumers
(Berry et al., 2002). Milligan (1997) suggests that banks with an
extensive branch office system and ATM network would have the
opportunity to attract customers who are in convenience segment.
Promotion
Marketing communication helps in differentiating the services
when there is no perceptible difference available (Jauhari and
Dutta 2009). A clear focus on the interplay between customers and
www. p b r . c o . i n
Volume 6, Issue 5, November 2013
55
promotion is an unavoidable aspect of bank marketing. Through
promotion, banks communicate their brand messages and their
offers to customers.
Allahabad Bank, State Bank of Hyderabad and Union bank are
providing education loan but Alllahabad bank focuses on a better
career; State Bank of Hyderabad focuses on right support and
Union bank talks about the good future (Jauhari and Dutta 2009).
In a service setting, marketing communication tools are especially
important because they help create powerful images and a sense of
credibility, confidence and reassurance (Lovelock et al., 2004).
Without effective communications, prospects may never learn of a
service firm's existence, what it has to offer them or how to use its
products to best advantage. In the emerging competitive markets,
marketers are using promotional tools in aggressive way to
differentiate their services from their competitors. Promotion is
actually communication with customers. In banking services, it
helps in communicating with customers regarding offering new
products, change in interest rate, festival season offers, opening
new branches etc. effective media used by banks to communicate
about its services at right time helps in satisfying its customers.
Due to complexity of prices involved, customers are left with little
choice but to interact with employees to get more clarity. Choosing
the right advertising medium by banks for communicating its
services helps to satisfy its customers. In Indian banking sector,
aggressive and attractive promotional strategies are not visualized.
Most often, important schemes are verbally communicated to
customers by employees. Decision to buy particular banking
services largely depends on decision convenience provided by
employees. Notice boards at branches also play significant role in
providing information to customers.
People (Customers and Employees)
Customers and employees both participate in service delivery.
Their participation is unavoidable in service delivery. So, both are
responsible for effective service delivery. Customers can't be
separated from the production process of service firms and can
contribute to their own satisfaction. But, the level of participation
may be different across different service firms (Hubbert, 1995). If
consumers' presence is required during service delivery, it is
termed as low participation. For example, In Movie Theater,
service is provided regardless of any individual purchase. Payment
may be considered the required input from customers. If
consumers' inputs are required for service creation, it is termed as
moderate participation. These inputs may be in the form of
information, personal effort or physical possession. A customer
has to give all relevant information and physical documentation to
an accountant for preparing tax return. In case of high
participation, customer co-creates the service product. Here
customers have to actively work with service provider to
coproduce the service. In weight reduction program customer has
to actively follow all the instructions given by instructor to reduce
weight. Mills and Moberg (1982) highlighted that in service
transactions, the raw material to be converted to service output
depends, to a great extent, on the facts and information furnished
by the customer. Also, clients play a crucial role in influencing the
outcome of the transformation process as well. In banking
services, customers' inputs are required for producing services like
opening account, granting loan or other services. So customer
participation is considered as moderate.
If customers believe they are partially (or totally) to blame for the
failure, they will be less dissatisfied with the service provider than
when they believe the provider is responsible and could have
avoided the problem (Bitner,1990). If bank customers are giving
all required information to employees which is required for
producing services like opening account, granting loan or other
services then services may be produced without delay. For
pensioners, submission of live certificate is must once in a year
otherwise pension will be stopped. So customer role is important
in banking sector. Banking customers may enjoy using the
computer to obtain airline tickets, or they may like to do all of their
banking via ATMs and automated phone systems. Customer
education plays an important role in making them learn regarding
their role.
According to Armando (2005), successful service providers can
satisfy customer's banking requirements through human element,
particularly 'face-to-face' interaction with the customer. It is
worthwhile to mention that employees' behaviour plays an
important role in differentiating banking services. Welcoming the
customer with smiling face, friendliness, politeness,
understanding customers' problems, etc. have positive impact on
customer perception. Jones and Dent (1994) found that a smiling
face has a valuable effect on customer behaviour. In India people
rely more on social bonding than individualistic approach.
Business transactions in a collectivistic culture like India
emphasizing social bonding are different from those of
individualistic cultures emphasizing structural bonding (Dash et
al., 2007). Therefore, employees' behavior plays a dominant role in
differentiating banking services.
Physical Evidence (Tangibility)
Tangibles are defined as the appearance of physical facilities,
equipment, personnel and communication material (Zeithaml et
al., 2009). Tangible indicators in the physical environment of a
service firm influence behaviour of customers and their future
purchase decisions (Burgers et al., 2000). Consumers look at
tangible elements and assume about the service firm and its
performance (Lenka et al., 2009). Better tangible aspects of service
quality of the bank branches enhance customers' satisfaction
(Lenka et al., 2009). Apart from the physical décor of the
workplace, tangible aspects also include display of current
guidelines regarding rate of interest in each investment plan,
required service charges for different bank transactions, and other
facilities provided by the banks (Lenka et al., 2009).
Physical evidence is important for banks as this is the environment
in which the service is delivered and where the bank employees
and customers interact. Furniture, equipments, staff members,
pass book, cheque book, information boards, etc. provide
tangibility to banks. Customers use tangible cues to assess the
quality of services provided. According to Bitner (1992) physical
environment helps to distinguish a service provider from its
competitors and facilitates to influence customer behaviour.
Process
Since customers are present during service delivery, 'process' is
important for customer satisfaction. Process explains how services
are being delivered by service organization. If customer does not
have sufficient time, he seeks bank that provides effort and time
saving banking services. Technology has remarkable influence on
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Pacific Business Review International
56
the growth of service delivery options (Dabholkar & Bagozzi,
2002). More and more banks have adopted latest technological
tools to deliver their services and this has resulted in reduced costs,
creation of value-added services for customers (Zhu et al. 2002),
and the facilitation of their employees' jobs and ultimately, the
provision of self-service options for customers (Dabholkar &
Bagozzi, 2002). Technology invasion in Indian banks started with
the introduction of magnetic ink character reader, currency note
counting machine and automation of front-and-back-office
operations of the branches (Lenka et al., 2009). According to
Milakovich (1995) process improvement has become the focal
point of the service quality revolution, because of its promptness in
responding to customers than their competitors. Ahire et al. (1995)
also elucidated that, by improving the quality of the processes
directly or indirectly, the overall quality of the products or services
can be made better. Another study by Zemke and Schaaf (1990)
quoted a study conducted by Cambridge Reports, a Massachusetts-
based research firm, which found that 44% of the respondents
indicated that 'ease of doing business with' was the basic motive for
choosing a financial firm. IT based services help in improving the
service process by responding to customers more speedily while
facilitating the work. Information technology improves customer
service as it is convenient to access and use (Bitner, et al., 2000).
Technology-enabled services provide constant, reliable and
quality service (Lenka et al., 2009).
Conclusion
All the above service marketing mix elements revolve around
customers. Differentiating the services from competitors is the
principal requirement of every service organization. Knowing
customers' perceptions regarding services offered to them will
help to know their feeling about service marketing mix and
relationship of these factors with satisfaction will help marketers
to decide marketing strategies for their customers. In banking
services price fairness and transparency, distributing banking
services in convenient way, behavior of employees, customers'
education, tangibility and process through technology play
important role in differentiating services from competitors.
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doc_415272421.pdf
Bank marketing deals with providing services to satisfy customers' financial needs and wants. To satisfy these financial needs, customers want specific services.
Service Marketing Mix with Special Reference to Indian Banking
Abstract
Bank marketing deals with providing services to satisfy customers' financial
needs and wants. To satisfy these financial needs, customers want specific
services. Service marketing mix plays an important role in bank marketing. It
consists of the various elements of a marketing programme which need to be
considered in order to successfully implement the marketing strategy and
positioning in the markets. This paper discusses elements of service marketing
mix; product, price, place, promotion, people, process and physical evidence
in Indian banking and explores that price fairness and transparency,
distributing banking services in convenient way, behavior of employees,
customers' education, tangibility and process through technology play
important role in differentiating banking services from its competitors.
Keywords:
Bank Marketing, Service Marketing Mix, India
Introduction
The services sector is the most significant sector, which contributes maximum
to the GDP in Indian economy. Among fast growing developing countries,
India is distinctive for the role of its service sector. Although there are other
emerging markets where the share of services in GDP exceeds the share of
manufacturing, India stands out for the size and dynamism of its services
sector. The share of services in India's GDP increased rapidly from 30.5 per
cent in 1950-51 to 55.2 per cent in 2009-10. If construction sector is also
included, the share increases to 63.4 per cent in 2009-10 (Economic Survey
2010-11).
In India, the banking sector is a central component of services sector. Banks
are the most common institutions for transfer of funds and investments. Prior
to economic liberalisation, public sector banks enjoyed a monopoly over
market due to protectionist policies of the government. The liberalization
policy of the Government of India in 1991 permitted entry to foreign and
private banks in the banking industry, leading to increased competition.
Because of increased competition, banks are exploring marketing strategies to
differentiate their services from their competitors. For designing effective
marketing strategies, knowledge of service marketing mix is essential. This
paper examines the role of service marketing mix (product, price, place,
promotion, people, process and physical evidence) in Indian banking sector.
Service Marketing Mix
Bank marketing deals with providing services to satisfy customers' financial
53
*Research Scholar, Faculty of
Management Studies, Mody Institute of
Technology & Science (A Deemed University)
Lakshmangarh, Disst. – Sikar, Rajasthan
Vinita Kaura*
Pacific Business Review International
Volume 6, Issue 5, November 2013
www. p b r . c o . i n
www. p b r . c o . i n
Pacific Business Review International
54
needs and wants. To satisfy these financial needs, customers want
specific services. All the techniques and strategies of marketing are
used so that ultimately they induce the people to do business with a
particular bank. This requires satisfaction of customers.
Traditional marketing mix can not be responsible for the total
marketing function of a service organization like banks. It requires
all elements of service marketing mix. Service marketing mix
plays an important role in bank marketing. It consists of the various
elements of a marketing programme which need to be considered
in order to successfully implement the marketing strategy and
positioning in the markets. It helps in differentiating services of a
particular bank from its competitors.
Product
Core product is core benefit that a customer is buying while
purchasing a product. According to Lovelock and Wirtz (2006), the
core product is a vital constituent of the services offering and
basically addresses two questions; first, “what do the buyers get
when they purchase the product” and “what business are we in”?
Schneider and Bowen (1995) also argued that fancy facilities,
modern equipment, stylish uniforms and terrific signs can never
countervail for bad/mediocre food, poor financial advice, an
inappropriate will, or lousy music. Hauser and Clausing (1988)
also demonstrated the influence of diverse product (or service)
attributes on customers' perceptions. The quality of this core
product largely influences and sometimes may be the ultimate
determinant of the overall service quality from the viewpoint of the
customers (Schneider & Bowen, 1995).
In the banking sector, the core products are 'deposits' and
'advances'. All the banks have these two main products and
differentiation of banking services with reference to core product
is difficult to achieve. Banks differentiate their services on the
basis of value added services which mainly cover information
technology based services. And, customer has to be tech-savvy for
availing these value added services. Some example of value added
services are: mobile banking, mobile and DTH (Direct to Home)
recharge through internet banking, electronic fund transfer, etc.
Price
Zeithaml (1988) has defined price as “what is given up or
sacrificed to obtain a product”. Jacoby & Olson (1977) defined
objective price as the actual price of a product/ service. Perceived
price was defined according to Zeithaml (1988) as the price that is
encoded by the consumer. Chang and Wildt (1994) defined
perceived price as the consumers' perceptual representation or
subjective perception of the objective price of the product / service.
Price perceptions are formed in relation to internal reference
prices; the theoretical justification for which can be found in
prospect theory (Varkie and Colgate 2001), that explains that
losses or sacrifices are encoded by consumers with respect to
internal reference points (Thaler 1985). According to Biswas and
Blair (1991) consumers recognize prices as high or low,
depending on their internal reference points, which are established
either by exposure to competitive prices or past prices.
Price in banking sector means interest rate and service charges.
Prices are being controlled by RBI in banking sector but limited
deregulation has allowed banks to differentiate their services on
the basis of differential interest rates. Due to complexity of pricing
structure in loans, maintaining transparency without hidden
charges is an essential prerequisite for differentiating bank
services.
According to Dutta and Dutta (2009), for Indian banking services
evaluation, there is not much differentiation in the price (due to
regulations by RBI). Therefore, the main differentiator for banking
ser vi ce eval uat i on woul d be Ser vQual di mensi ons,
systematization of services, servicescape and social responsibility
(Dutta and Dutta, 2009). It implies that price is not important in
Indian banking industry. But, Associated Chambers of Commerce
and Industry of India (2009) survey on growth and emergence of
public and private sector banks in India reveals that private sector
banks are not preferred for traditional items, such as loans, as their
offers are difficult to understand and perceived rate of interest is
high, whereas public sector banks are perceived more reliable with
lower rates of interest. In Indian banking industry where
differentiation is not much in terms of prices, it is required to be fair
and transparent without hidden charges.
Place
Place in banking services means providing banking services at
right time in convenient way. Inseparability of production and
consumption is the most intriguing characteristic of services.
Service provider's physical connection to the service, the
customer's involvement in the service production process and
involvement of other customers in the service production process
create challenges for service provider. As income of people is
rising, there is inclination towards convenience related services.
Growing demand of laundry services, housekeeping, home
delivery grocery outlets are some example of services that reflect
convenience orientation of people.
When customers can't go to service provider to buy services due to
time or location, they are provided services through home delivery.
While reserving a seat in advance, customer may expect
convenience from the reservation service provider. Similarly bank
customer may expect proximity of ATM or bank branch while
withdrawing money or 24X7 hrs. facility for electronic
transactions. Banking services delivered via the Internet, mobile
phone interface, voice response system, call center, automatic
teller machines and via face to face in a branch or visit at customer's
home not only have various cost implications for bank but also
drastically affects the nature of service experience for the
customer. If more complexity is associated with a service
purchase, customers prefer face to face interaction with service
provider.
For availing loan service, customers have to rely on personal
channels. Therefore convenience of location plays important role
on customer perception regarding banking services. Customers
with higher knowledge about a service are more likely to use self-
service channels like ATM and internet banking. But, convenience
is a key driver of channel choice for the majority of consumers
(Berry et al., 2002). Milligan (1997) suggests that banks with an
extensive branch office system and ATM network would have the
opportunity to attract customers who are in convenience segment.
Promotion
Marketing communication helps in differentiating the services
when there is no perceptible difference available (Jauhari and
Dutta 2009). A clear focus on the interplay between customers and
www. p b r . c o . i n
Volume 6, Issue 5, November 2013
55
promotion is an unavoidable aspect of bank marketing. Through
promotion, banks communicate their brand messages and their
offers to customers.
Allahabad Bank, State Bank of Hyderabad and Union bank are
providing education loan but Alllahabad bank focuses on a better
career; State Bank of Hyderabad focuses on right support and
Union bank talks about the good future (Jauhari and Dutta 2009).
In a service setting, marketing communication tools are especially
important because they help create powerful images and a sense of
credibility, confidence and reassurance (Lovelock et al., 2004).
Without effective communications, prospects may never learn of a
service firm's existence, what it has to offer them or how to use its
products to best advantage. In the emerging competitive markets,
marketers are using promotional tools in aggressive way to
differentiate their services from their competitors. Promotion is
actually communication with customers. In banking services, it
helps in communicating with customers regarding offering new
products, change in interest rate, festival season offers, opening
new branches etc. effective media used by banks to communicate
about its services at right time helps in satisfying its customers.
Due to complexity of prices involved, customers are left with little
choice but to interact with employees to get more clarity. Choosing
the right advertising medium by banks for communicating its
services helps to satisfy its customers. In Indian banking sector,
aggressive and attractive promotional strategies are not visualized.
Most often, important schemes are verbally communicated to
customers by employees. Decision to buy particular banking
services largely depends on decision convenience provided by
employees. Notice boards at branches also play significant role in
providing information to customers.
People (Customers and Employees)
Customers and employees both participate in service delivery.
Their participation is unavoidable in service delivery. So, both are
responsible for effective service delivery. Customers can't be
separated from the production process of service firms and can
contribute to their own satisfaction. But, the level of participation
may be different across different service firms (Hubbert, 1995). If
consumers' presence is required during service delivery, it is
termed as low participation. For example, In Movie Theater,
service is provided regardless of any individual purchase. Payment
may be considered the required input from customers. If
consumers' inputs are required for service creation, it is termed as
moderate participation. These inputs may be in the form of
information, personal effort or physical possession. A customer
has to give all relevant information and physical documentation to
an accountant for preparing tax return. In case of high
participation, customer co-creates the service product. Here
customers have to actively work with service provider to
coproduce the service. In weight reduction program customer has
to actively follow all the instructions given by instructor to reduce
weight. Mills and Moberg (1982) highlighted that in service
transactions, the raw material to be converted to service output
depends, to a great extent, on the facts and information furnished
by the customer. Also, clients play a crucial role in influencing the
outcome of the transformation process as well. In banking
services, customers' inputs are required for producing services like
opening account, granting loan or other services. So customer
participation is considered as moderate.
If customers believe they are partially (or totally) to blame for the
failure, they will be less dissatisfied with the service provider than
when they believe the provider is responsible and could have
avoided the problem (Bitner,1990). If bank customers are giving
all required information to employees which is required for
producing services like opening account, granting loan or other
services then services may be produced without delay. For
pensioners, submission of live certificate is must once in a year
otherwise pension will be stopped. So customer role is important
in banking sector. Banking customers may enjoy using the
computer to obtain airline tickets, or they may like to do all of their
banking via ATMs and automated phone systems. Customer
education plays an important role in making them learn regarding
their role.
According to Armando (2005), successful service providers can
satisfy customer's banking requirements through human element,
particularly 'face-to-face' interaction with the customer. It is
worthwhile to mention that employees' behaviour plays an
important role in differentiating banking services. Welcoming the
customer with smiling face, friendliness, politeness,
understanding customers' problems, etc. have positive impact on
customer perception. Jones and Dent (1994) found that a smiling
face has a valuable effect on customer behaviour. In India people
rely more on social bonding than individualistic approach.
Business transactions in a collectivistic culture like India
emphasizing social bonding are different from those of
individualistic cultures emphasizing structural bonding (Dash et
al., 2007). Therefore, employees' behavior plays a dominant role in
differentiating banking services.
Physical Evidence (Tangibility)
Tangibles are defined as the appearance of physical facilities,
equipment, personnel and communication material (Zeithaml et
al., 2009). Tangible indicators in the physical environment of a
service firm influence behaviour of customers and their future
purchase decisions (Burgers et al., 2000). Consumers look at
tangible elements and assume about the service firm and its
performance (Lenka et al., 2009). Better tangible aspects of service
quality of the bank branches enhance customers' satisfaction
(Lenka et al., 2009). Apart from the physical décor of the
workplace, tangible aspects also include display of current
guidelines regarding rate of interest in each investment plan,
required service charges for different bank transactions, and other
facilities provided by the banks (Lenka et al., 2009).
Physical evidence is important for banks as this is the environment
in which the service is delivered and where the bank employees
and customers interact. Furniture, equipments, staff members,
pass book, cheque book, information boards, etc. provide
tangibility to banks. Customers use tangible cues to assess the
quality of services provided. According to Bitner (1992) physical
environment helps to distinguish a service provider from its
competitors and facilitates to influence customer behaviour.
Process
Since customers are present during service delivery, 'process' is
important for customer satisfaction. Process explains how services
are being delivered by service organization. If customer does not
have sufficient time, he seeks bank that provides effort and time
saving banking services. Technology has remarkable influence on
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Pacific Business Review International
56
the growth of service delivery options (Dabholkar & Bagozzi,
2002). More and more banks have adopted latest technological
tools to deliver their services and this has resulted in reduced costs,
creation of value-added services for customers (Zhu et al. 2002),
and the facilitation of their employees' jobs and ultimately, the
provision of self-service options for customers (Dabholkar &
Bagozzi, 2002). Technology invasion in Indian banks started with
the introduction of magnetic ink character reader, currency note
counting machine and automation of front-and-back-office
operations of the branches (Lenka et al., 2009). According to
Milakovich (1995) process improvement has become the focal
point of the service quality revolution, because of its promptness in
responding to customers than their competitors. Ahire et al. (1995)
also elucidated that, by improving the quality of the processes
directly or indirectly, the overall quality of the products or services
can be made better. Another study by Zemke and Schaaf (1990)
quoted a study conducted by Cambridge Reports, a Massachusetts-
based research firm, which found that 44% of the respondents
indicated that 'ease of doing business with' was the basic motive for
choosing a financial firm. IT based services help in improving the
service process by responding to customers more speedily while
facilitating the work. Information technology improves customer
service as it is convenient to access and use (Bitner, et al., 2000).
Technology-enabled services provide constant, reliable and
quality service (Lenka et al., 2009).
Conclusion
All the above service marketing mix elements revolve around
customers. Differentiating the services from competitors is the
principal requirement of every service organization. Knowing
customers' perceptions regarding services offered to them will
help to know their feeling about service marketing mix and
relationship of these factors with satisfaction will help marketers
to decide marketing strategies for their customers. In banking
services price fairness and transparency, distributing banking
services in convenient way, behavior of employees, customers'
education, tangibility and process through technology play
important role in differentiating services from competitors.
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