Marketing of Value Added Services in Bfsi

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  • Topic: Bank, Banks of India, Online banking
  • Pages : 21 (6359 words )
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  • Published : July 14, 2009
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INTRODUCTION
A Value Added Service (VAS) can be defined as:
Any service provided by the service provider to promote its main service business (Wikipedia)
Or
Value added services is a term that is used to refer to service options that are complimentary to but also ancillary to a core service offering. (wiseGEEK)
As Kotler as said:
“Over time the augmented benefits become the expected benefits.” The same applies to Value added services, what a customer sees as a value added service today becomes a part of the expected base service in some time. VAS can be said to have a time dimension associated with it. A value added service becomes a basic service when it becomes sufficiently common and widely deployed to no longer provide substantive differentiation on a relative basis. A classic example of this is the ATM machine, when launched it was a VAS by the banks providing it, but now it’s expected by every bank to provide ATM access. It is difficult to mark when a value added service can no longer be called so, but in general, all VAS share some common characteristics : 1.Not a form of basic service but rather adds value total service offering 2.Stands alone in terms of profitability and/or stimulates incremental demand for core service(s) 3.Can sometimes stand alone operationally

4.Does not cannibalize basic service unless clearly favorable 5.Can be an add-on to basic service, and as such, may be sold at a premium price 6.May provide operational and/or administrative synergy between or among other services – not merely for diversification Every VAS will demonstrate one or more of the above characteristics. Furthermore, a value-added service will never stand in stark contrast to any of the above characteristics. TYPES OF VALUE ADDED SERVICES

Value added services can be divided into two categories:

The first kind of value added services are those which stand alone from an operational perspective. They can be bundled with other services but is not mandatory. Eg: when a user wants to use mobile to connect to internet, he can do this with our without the basic voice service facility, using the modems available. More commonly used type of VAS are those which cannot be offered alone. These services “add value” to the base service. In some instances, a value added service is something extra that is provided to a customer at no additional charge. At other times, the ancillary service is offered to an existing customer as an added service that is available for a modest additional fee. Sometimes, the service is introduced as a free service and as people get used to, the service is charged for. The actual pricing structure for value added services will usually depend on whether the providers sees the services as amenities that are intended to create a stronger rapport with customers or as an additional revenue stream. Value added services provide advantages for both the customer and the service provider. Customers have the opportunity to receive something above and beyond their basic needs. Providers benefit from the increased rapport with the client that is likely to translate into a more consistent flow of revenue. These additional custom services often cost the provider little to nothing to provide, yet have the potential to enhance the growth and the reputation of the company significantly.

BFSI INDIA
Banking, Financial Services and Insurance (BFSI) is commonly used by IT/ITES/BPO companies to refer to the services they offer to companies in these domains. Banking may include core banking, retail, private, corporate, investment, cards and the like. Financial Services may include stock-broking, payment gateways, mutual funds etc. Insurance covers both life and non-life. The Indian banking sector has been growing rapidly since the government undertook liberalisation measures in 1991. The sector has been one of the biggest beneficiaries of economic liberalisation; during 1991-2007, its total income grew at a CAGR...
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