Nowadays, the service industry, especially banks, faces increasing competition. In such environment, differentiation is necessary. The general purpose of this thesis is to understand how a bank can achieve differentiation based on a marketing approach. Two research questions will respectively examine the three additional P’s of the marketing mix (People, Presentation or Physical Evidence and Process) and the Customer Relationship Management as possible differentiators. To fulfill the purpose, we introduce an extended model of the CRM concept, including the three additional P’s. After an analysis, it is concluded that the extended model of the CRM concept is actually used as a differentiator. However, as the major Indian bank have a similar strategy; it then appears really difficult to differentiate to a large extent.
The importance of financial services is self-evident for the well being of economies as well as societies. Major providers of such services are banks, next to mortgage credit companies and insurance companies. Banks, in this context, are commercial retail banks, offering a wide range of financial services and even insurance. Main functions of banks are, according to Encyclopedia Britannica (2006), the provision of loans and the acceptance of deposits. Corporate customers use banks for issuing finance instruments and derivatives. The provision of, among others, instruments for saving, financing, payment mediation and risk controlling are offered in markets characterized by federal regulation and stiff competition. Due to the resulting pressure, financial service providers are forced to evaluate current strategies and to find new ways of approaching the market. The service nature of bank offers represents an additional challenge. A possible way to realize distinct offers is to promise and deliver superior solutions to the problems of customers. The fact that services cannot be patented provides great danger to imitation. Marketers must be aware of this threat and have to create offerings that are unique or only imitable at a high cost. Having such an offering provides for differentiation from competitors. In recent years, relationship marketing is an approach that has been used substantially. Marketing techniques can provide some tools for setting a bank apart from competitors, focusing less on products and more on additional services and the establishment of long term relationships with customers. Services customers in general do not buy services because of the service itself, but rather focus on potential benefits gained through that purchase. An example could be that customers of a bank do not purchase a savings product for the pure safekeeping function, but rather for the promised interest payments on it. Consumers have imperfect information and therefore rely upon assistance to gain important and valuable information from the service provider. Financial service providers must therefore offer the required assistance and use this for successful businesses.
The biggest banks can be seen as their respective main competition, due to their offering of similar financial services. A way to remain competitive in the more and more complex banking environment is the use of the Customer Relationship Management (CRM) concept. The basic approach of CRM in a banking context is to center all operations of a bank on its customers, creating a 'CRM state of mind' in an enterprise wide manner. CRM then consists of such sub-concepts as internal marketing, relationship marketing, Total Quality Management (TQM) and customer care. This underlying thesis approaches the topic of bank differentiation from a marketing perspective. However, due to the complexity of the subject of marketing, this thesis apply a Customer Relationship Management approach that is extended by three additional P's (see theoretical framework), from the service marketing literature to narrow the focus of this study....