Marketing of Trust


Najmul Hoda
Asst. Director
Institute of Productivity & Management

Marketing has come a long way since its inception in the American Management system in the early 20th Century.

In India, we can trace back the real concept of Marketing to our beloved Mahatma Gandhi's philosophy which underlines that, "The customer is the King." Marketing as a discipline followed a distinct pattern of evolution. The early Industrialisation era lasted from the time of invent of first steam engine to the World War. Then, the main focus was on the production and due to the uniqueness of the products, the customers did not have much choice to make. The organizations largely focused on the volumes of units produced/manufactured. With the passing of time, the economies grew and hence there was a surge of different types of products in the same and the industry and the customers got the opportunity to choose from different products. At one point of time, we could not have imagined that we would feel puzzled that a simple writing instrument like pen would be available in so many forms and shapes that each time we go to buy a pen, we would choose a different one. Hence, there was a need to study the consumer behavior and their psychology in detail.

Today, almost all the organizations were forced to shift their focus from simply manufacturing the best and large volumes to manufacturing that which the customer demands. There came the existence of Marketing departments who acted as an interface between the customers and the industry. They had the data and the information about the real needs of the customers. A very recent development in the field of Management which is now adopted by a majority of organizations is the Integrated Marketing concept where Marketing is the center of all activities in an organization. The Human Resources are trained and developed to suit the customer requirement, the Production department works on satisfying the needs of the customers and around the Marketing Department revolves all the essential functions.

Banking is one of the oldest industries of the world. Starting from a simple system called Barter System, where goods were exchanged for goods, the medium of currency was introduced and trade ceased to be limited to just exchange of goods. The introduction of money (read currencies) in the economies saw new face of the economy and the start of a system called banking. There were two groups of people, one called the deficit sector and the other the surplus sector. Now these intermediaries called the Banks acted as intermediaries between these two ends of the societies. And quite obviously, when the surplus sector lent their monetary resources for utilization by someone else, they needed a return. Most importantly, it was not just the returns they needed but also the safety of their resources placed with the intermediaries. The society always has threats and dangers from different forces. This led to the compulsion or the normal earning individual to place their hard earned income with an institution that promises their safety and the customers can TRUST them.

In recent times, we have seen how people withdraw in desperation from banks when there is even a single mild rumour about the weakness of the bank. This has been witnessed in some Indian banks in the recent past. This is the result of that very ingredient lacking TRUST. A person can be convinced that it is just a chance that Cadbury's chocolates contained worms, but it is very difficult to convince a customer that just a single depositor's money was not taken care of by chance.

Marketing of banking products is in a way different from other products. And the main reason for this difference lies in the very fact that here the product is something entirely different from other ones. Here the product is just one thing TRUST.

Theoretically the services differ from physical goods in following respects.

1. Intangibility Service is absolutely intangible. One can never see, taste, touch this product but just feel it. When a customer enters a bank premise for the first time and interacts with the staff or the officer, he immediately perceives that he is being given importance or is being taken for granted. The products are all intangible. Many people argue that there is actually a physical substance in the form of cheque, DD, receipts. Infact these are not the product that they are offered, they are actually the acknowledgement of those offers.

2. Perishability Another interesting feature of this product is that it is perishable. One does not take away the movie reels or toy cars in Essel World, rather he just takes away the experience with him. Similarly, in a bank, the customer takes away the warm reception, effective solution to his banking problem, to name a few.

3. Heterogeneity It is not possible to standardize the services. Different customers requiring the same service require different treatment. The product is the same Savings or Current account but a particular customer likes to talk about everything whereas the other simply likes to get his work done instantly. So, your service is bound to be varying for different customers.

4. Variability Another important feature is that there are varying level of demands. There are off times and peak times. There are influences beyond the control of the organization. If a bank is located in a Muslim locality, you find the branch vacant at the time of Friday prayer and there is a sudden surge of customers after the prayer. The branch has to accommodate the customers no matter what time they come and in what numbers.

5. Buyer involvement Unlike the physical goods where the buyer gets ready-made products at the retail store or dealer's showroom, here, the entire operation starts after the customers orders the product. This makes this product completely different from other products.

Now when the services are so different form other products, how to market them. For marketing a physical product, there is a need to have a good product, good pricing strategy, efficient distribution system and effective promotion mechanism. In case of services, there are tools that gain major focus. These are -

1. People Human resource, in layman terms - the staff, form the most significant tool in the marketing of services. It is the staff in the front office who will attract or distract a customer. Hence, there is an impending need for continuous training and development of this vital resource.

2. Physical Evidence The common adage, " The first impression is the last impression," holds true for the services. The very ambience, the interiors of the branch should exude a message of empathy, trust and discipline.

3. Process As stated above in the preceding paragraph that the entire operation starts after the customer orders a product, it is necessary to have a very scientific arrangement of the sections and other facilities to facilitate the smooth flow of operations.

The above theoretical concepts can be found in all books of Management and it certainly holds good for a typical service organization. These form the building stone of the marketing of services products.

In the last decade, there has been a paradigm shift in the attitude of banks towards customers across the industry. There is now a full-fledged marketing department in most of the organizations and decisions taken now are mainly customer-centric. Indian banking has the distinction of infusing technology and adapting the modern banking system in just a decade time as compared to 2-3 decades taken by the developed countries. 

The important point to remember is that in a fit to increase the turnover and make the balance sheets look rozy, the modern banks have missed out on one basic fact. This is an industry where the product is not the ATM, anywhere banking or decent air-conditioned branches. Here, the product is TRUST. All other tools are simply a facilitator and the main product can never be done away with. This is the differentiating tool and we may have a new concept of banking called techno-social banking.

Najmul Hoda
Asst. Director
Institute of Productivity & Management

Source: E-mail June 4, 2007


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