Exploring the Marketing Strategy of Kotak Mahindra Bank - Case Study Example

The Kotak Mahindra Bank Analysis Table of Contents Table of Contents 2 The Kotak Mahindra Bank Analysis Table of Contents 1 Kesavan, S., (2012). Role of It in the Banking Sector, 1(10), 1-8. 19 EXECUTIVE SUMMARY The vast population in the Asia Pacific, the peoples’ high saving rates and the massive economic growth has contributed greatly to the rise of banking institution in this region. These factors have provided major growth opportunities for banks and hence explaining the massive rise in retail lending institutions. However, in order to utilize these growth opportunities, banks will be obliged to serve this retail banking segment in an effective manner. India’s banking system differs significantly from that of the other Asian nations due to its unique geographical, social and economic characteristics. Despite opening up late as compared to other developed nations, the profitability of India’s banking sector is level with that of some developed countries (Prasad & Ghosh, 2005, p. 4). Over the last couple of years, banking strategies have undergone various transformations. Till recently, most of the banks in India had adopted severe cost cutting measures in order to sustain their competitiveness in the market. However, this strategy has become obsolete due to the immense growth opportunities in the banking industry. Instead, the main growth strategy that is currently being used revolves around customer satisfaction. Therefore, it is quite hard to understand the strategic marketing issues faced by organizations and also to develop capabilities for long term prosperity. This report is aimed at exploring the marketing strategy, based on the 7P’s analysis, of The Kotak Mahindra Bank in order to establish and maintain a competitive advantage in the dynamic banking market place. The report concludes by suggesting how the bank can increase the quality of its services by making improvements in 4 of the 7P’s. Introduction to Kotak Mahindra Bank Since its establishment in 1985, the Kotak Mahindra group has grown to be among the most reputed financial organizations in India. Previously, it was a non-banking organization known as the Kotak Mahindra Finance Limited. In February 2003, the group’s flagship company, the Kotak Mahindra Finance Ltd, was licensed to carry out banking services by the Reserve Bank of India (RBI). The approval made banking history since Kotak Mahindra Finance Ltd. was India’s first non banking finance company to fully convert itself to a bank (Prasad & Ghosh, 2005, p. 4). Within a span of 6 years, the Kotak Mahindra bank has spread its wings to various spheres of finances and has created an employee base of 8000+. Currently, it has spread to 82 cities in India where it offers services to 5.9 million customers spread throughout the country and even abroad. The bank has over 217 branches through which it caters for the needs of its customers across its 126 locations in the country where it offers both investment advisory services and traditional banking products. The Kotak Mahindra Bank is equipped with the products, the infrastructure, the experience and most importantly the commitment to convey realistic solutions that actually work to its large customer base. The bank offers comprehensive services and business solutions to its customers such as trade services, credit facilities and cash management services while still keeping in mind the various needs of the business community. Introduction to the 7P’s of service marketing Marketing specialists and professionals use various tactics to attract more customers or to retain the current ones (Clarity Marketing Ltd., 2005, p. 2). These tactics may comprise of different concepts, with the most important one being the use of the 7P’s of service marketing. This section of the report is aimed introducing and explaining the 7P’s of service marketing. The 7P’s of service marketing are; Product Place Promotion People Process Physical Evidence The above can be briefly explained as follows; (a) Product Product refers to what is produced or offered by the company in order to accomplish the needs of the customer. Companies may either produce goods (tangible products) or services (intangible products) (Clarity Marketing Ltd., 2005, p. 2). The Kotak Mahindra Bank offers banking services and thus has services as its products. (b) Place This is used to refer to the place where the customers access and buy the products as well as how the product reaches out to them. (c) Promotion This refers to the measures that a company or organization takes in an attempt to reach out to the customers and ensure that they are well aware of their products they are offering. (d) Price This refers to the sum of money set by the company for its products which the customers should be prepared to pay. (e) People It refers to the customers, employees, management and the general staff in the company. These people are of vital importance in a company as they determine the success or failure of both the brand and the company involved (Clarity Marketing Ltd., 2005, p. 2). (f) Process This refers to methods and procedures involved when providing a service. It is very essential as it ensures that customers are provided with the same quality products and in a timely way. (g) Physical Evidence Physical evidence refers to the physical environment where the company deliver’s services to the consumers as well as the environment under which the customers and the company interact. ANALYZING THE KOTAK MAHINDRA BANK USING THE 7P’S OF SERVICE MARKETING 1. Product As discussed earlier, a product refers to either the goods or services offered by the seller as well as the benefits it delivers to the customers. In India, the Kotak Mahindra Bank is one of the largest financial institutions offering its users banking services and financial solutions encompassing every sphere of life. Since its establishment, the bank has successfully managed to offer unparalleled and novel services to its customers and this has resulted to a massive rise in its customer base. Below are some of the services offered by the bank; i. Banking and savings services These services include: Banking and accounts The bank addresses the entire spectrum of the individuals and corporate financial needs and delivers pragmatic end-to-end solutions. Convenience banking Convenience banking makes it easy and more convenient for customers to carry out their banking transactions. To facilitate this, the Kotak Mahindra Bank has created a wide range of products and services coupled with high standards of customer care in order to make the customers’ life easy and simpler. Examples of this service are Mobile Banking, SMS Banking, Net Banking, Phone Banking as well as a wide range of ATM network. Credit card services NRI services Deposits ii. Corporate and institutional services The Kotak Mahindra bank offers various services to corporate. These are: Investment banking Through the Kotak Investment bank, the bank is able to offer capital market and advisory solutions to both domestic and multinational corporations. Other services in this category include; Corporate finance Institutional equities iii. Investment and insurance services These services include: Life Insurance Estate planning and development Mutual funds Share trading iv. Loans and borrowings Services offered in this category include: Car Finance Through its subsidiary, the Kotak Mahindra Prime Ltd, the bank offers inventory funding to car dealers as well as financing all passenger vehicles. Commercial Loans Home loans Personal loans Loans against property 2. PLACE The Kotak Mahindra Bank has undertaken several measures in order to ensure that their services reach the customers as efficiently as possible. This has helped the bank in ensuring that it has a remarkable standing in the competitive Indian banking sector. The Kotak Mahindra Bank has a main branch located in Mumbai, India. The main office is well equipped with qualified personnel dedicated to serving the banks customers. Moreover, the bank has 217 branches spread out across 126 locations in India in an attempt to ensure that the customers have easy access to the bank. The bank has a wide network of ATM’s (over 800 ATMs) that spreads out to many regions of the country. This facilitates easy and convenient customer access since the customers can withdraw cash from the ATM’s at any time without having to visit the bank. The bank also allows for SMS Banking and Mobile Banking and this means that the customers can conduct transactions using their phones. Both and Net banking also allows the customers to carry out their transactions from the Bank’s website. This can be done from the customer’s home and hence is simple and convenient (Goi, 2005, p. 10). 3. PRICE Pricing decisions that are related to the interest and commission that is charged by banks are found to be very instrumental in influencing the target market. Therefore, the formulation of a pricing strategy is of vital significance. In India, the RBI and the IBA are concerned with making regulations involving pricing. The RBI regulates the interest rates while the IBA controls other charges such as the commission charges. The Kotak Mahindra Bank has tailor made services meant to ensure that the customers get the finest value for their money. It offers various services and charges a lower fee than that charged by most of its competitors. 4. PROMOMTION In an attempt to ensure that customers are fully aware of the different services offered, The Kotak Mahindra bank has implemented a couple of measures. These measures are aimed at guaranteeing that the customers have a place in mind for the bank and the services it offers (Clarity Marketing Ltd., 2005, p. 2). In order to achieve this, a promotion strategy has been introduced. This strategy involves use of all the available media of communication such as radio, T.V, magazines, hoardings, newspapers as well as use of the internet. The bank also carries out campus visits as well as offering sponsorships to needy students all in an attempt to increase its publicity. The bank also carries out sales promotions by rewarding some of their customers with gifts. By using the promotion strategy, the bank is able to ensure that it effectively passes out a message to both the existing and potential customers about its products and services. 5. PEOPLE As stated earlier, the people are of vital importance in a company as they determine the success or failure of the brand and the company. Moreover, more appropriate products are designed whenever the customer is understood better. Since the Kotak Mahindra Bank is a service industry that has a high level of people interaction, it is obliged to employ a staff force that has undergone vigorous training in order to efficiently satisfy the customers. This is done in order to ensure that the staff possess exemplary analytical and technical skills and that they are ready to deliver quality services to the customers in an efficient way. This way, the bank has been able to have one of the best workforces in India. Currently, The Kotak Mahindra Bank has an employee base of 9800. This crew is fully dedicated to providing quality services to the customers. The bank has focused mainly on employee training and use of IT for efficiency at both staff and agent level (Goi, 2005, p. 6). 6. PROCESS Different methods and procedures are involved when providing services to customers to their full satisfaction (Pradeep & Aspal, 2011, p. 59). As discussed earlier, the process of service delivery is very essential as it ensures that customers are provided with high quality products. In the banking industry, the process of service delivery should be customer friendly. The payment process should be fast and accurate in order to avoid delays. The method used for processing should be easy and of the most convenience to the customers. The Kotak Mahindra Bank undertakes several measures in order to ensure the full satisfaction of its customers. The following are the features and techniques that The Kotak Mahindra Bank uses in order to ensure that it offers services that fully satisfy the customer. i. Standardization The bank has standardized some procedures for typical transactions. The standardization has been done in all branches of the bank. The standardization saves the customers a lot of time when carrying out typical transactions. ii. Customization At all the branches, there are specialty counters that deal with customers of a certain scheme. Besides this, customers can select their period of deposit among the various available alternatives. iii. Specification of number of steps The bank has specified the number of steps taken when carrying out a transaction. It has also set a specific pattern of steps to be carried in order to minimize the time taken by customers when making transactions. iv. Simplicity The Kotak Mahindra bank has partitioned its counters into several parts. This way there are separate counters with clear indications on the service that it offers. For example, a customer wishing to deposit money will only have to look for the counter labeled ‘Deposits’ and not elsewhere. This makes procedures both simpler and less time consuming. v. Wide network of ATMs The bank has a wide network of ATMs spread out at various parts of the country. The ATMs do not involve any bank employee and can be accessed at any time. This ensures confidentiality and efficiency (Goi, 2005, p. 7). All the above measures are part of the main process that The Kotak Mahindra bank takes when ensuring that high quality services are delivered to the customers. Moreover, the bank is constantly implementing new measures as technology progresses in order to ensure that it stabilizes its place in the dynamic and ever-changing banking sector. 7. PHYSICAL EVIDENCE As discussed earlier, physical evidence refers to the physical environment where the company delivers services to its consumers as well as the environment under which the customers and the company interact (Pradeep & Aspal, 2011, p. 60). Therefore, distribution of a company’s branches is of vast importance as it increases the avenues where the two can interact. Thus, companies and organizations should make use of all the necessary measures to ensure that the workplaces are easily accessible, comfortable and as user friendly as possible. This ensures that the customers can easily access the company and that they are comfortable while at the business premises. To ensure this, the Kotak Mahindra Bank has taken several measures to ensure that all their offices, branches and ATMs are clean and conducive and customer friendly. The bank’s offices are spacious and well ventilated in order to ensure that the premises can hold the high number of customers that visit the bank. The bank has also employed many qualified and skilled workers to offer services to the large number of clients who visit the bank. This ensures that the customers are attended to quickly hence reducing the amount of time spent by clients in a queue. The bank also has a very user friendly web page that is easy to use and provides the customers with support and other services. Security is of the essence at all the banking premises. The Kotak Mahindra bank has installed state of the art facilities in order to ensure the security of its customers (Goi, 2005, p. 8). The facilities such as CCTV cameras ensure that all the proceedings at the bank can be easily monitored by security officials and recorded for future reference. The bank also has employed security officials to guard the main entrance of the premises as well as the at the ATM branches. All the teller offices at the Kotak Mahindra Bank have been partitioned in order to ensure customer privacy and security. This way, the customer transactions and information remains confidential. Recommendations Although the Kotak Mahindra Bank fully satisfies almost all of the requirements of the 7P’s, there are some improvements that can be made to certain areas in order to increase the quality of services that the bank offers. Making improvements in the sections discussed below would increase the quality of services offered. The overall result of this would be increased customer base as well as profits. The 4 sections of the 7P’s that ought to be improved, as discussed in this section, are Physical environment, Promotion, People and process. 1. Physical Environment The Kodak Mahindra Bank has built modern facilities in its attempt to ensure that customers are fully comfortable while at the premises. Most of the branches, ATMs and offices are well secured, something that is of the essence in any banking organization. However, observations show that the bank lacks basic safety features that are necessary especially in emergency situations. Most of the branches lack basic firefighting equipment such as fire extinguishers. Although they have been neglected, these equipment are very vital as they can reduce the loss of life or reduce damages worth millions whenever a fire or any other catastrophes occur. Installation of these facilities is essential as it gives the customers some sense of security while at the premises. Secondly, despite the fact that the bank has over 200 branches in the country, the bank lacks braches in some, though few, of the remote areas of the country. Most of these areas are densely populated and home to many low and middle income earners who would wish to save their money. However, lack of a nearby bank makes this people spend or save the money in unsafe places. To solve this problem, the bank ought to come in and build branches or set up its banking agents in such areas so as to serve this people while at the same time increasing its customer base. 2. Promotion According to Shafiqulla (2011), India is among the countries in the world with the highest number of illiterate adults (p. 290). Most of these adults are low income earners who would also wish to enjoy the various banking services offered by various banks. However, their level of illiteracy hinders them from enjoying these services. The promotion strategy of the Kotak Mahindra bank mainly revolves around print media, use of the internet and the use of radios and television (Goi, 2005, p. 6). However, the illiterate adults may lack access to these facilities and hence remain unaware of the various services offered by the banks. Instead, the Kotak Mahindra Bank should seek for alternative methods of marketing its services to such people in order to attract them and convince them to join the bank (Goyal & Joshi, 2011, p. 52). Examples of methods that the bank can use is employing sales representatives to market the products and services to the people in a manner and language that they fully understand. The bank may also make use of road shows to the areas with the illiterate people and demonstrate to them the various services offered in a simple way which they understand. By doing this, the bank will have taken its services to some of the people who need it most and also increased its customer base. 3. People Despite having one of the best and most qualified employee base in the country, the Kotak Mahindra bank lacks employees specially trained to offer banking solutions to the large number of illiterate people in the country who are in need of banking services (Shafiqulla, 2011. p. 290). Inside the bank premises, the bank also lacks enough staff to guide these people to the various sections of the bank as well as to assist them with the paperwork. The bank also lacks employee motivation programs. These are very important as they motivate the members of staff to continue working with the bank and also increase their morale. To improve the quality of services presented by the employees, the bank should bonuses and incentives to the employees regularly (Goyal & Joshi, 2011, p. 52). This discourages the illiterate people from visiting the bank. To solve the problem, the bank should employ enough staff to guide, assist and even offer financial advice to these illiterate people (Shafiqulla, 2011. p. 293). 4. Process Previous analysis shows that The Kotak Mahindra Bank has over 800 ATM machines spread out to various regions of the country. These machines are meant to facilitate easy and convenient customer service (Kesavan, 2012, p. 4). However, some of the machines end up getting faulty due to vandalism or due to an error in the system. Failure of these machines to work properly may cause unnecessary inconveniences to the customers resulting in time wastage as well as losses amounting to millions. The bank can solve this problem by ensuring that the ATM machines are regularly serviced (Kesavan, 2012, p. 2). In order to prevent vandalism, the bank can increase the number of security officials present at each machine as well as install security monitoring facilities incase none are installed. CONCLUSION The Kotak Mahindra Bank has successfully managed to differentiate itself from its competitors based on its high level of service quality. It has successfully implemented various marketing strategies and as a result it has amplified its market share despite the presence of tough competition. The results of the bank’s analysis using the 7P’s suggest that there is still some scale of dissatisfaction in some elements of the 7P’s. In order to fully solidify its market place in the dynamic Indian banking sector, the bank ought to make improvements in the sectors indicated in this report. References Clarity Marketing Ltd (2005). The Marketing Mix. 7P's of marketing mix, 1(1), 1-5. Goyal, K., & Joshi, V., (2011). A study of Social and Ethical Issues in the Banking Industry, 2(5), 49-57. Goi, C. L., (2005). E-Banking in Malaysia: Opportunity and Challenges Journal of Internet Banking and Commerce, 10(3), 6-23. Kesavan, S., (2012). Role of It in the Banking Sector, 1(10), 1-8. Pradeep, K., & Aspal, J. (2011). Short Communication. Break Down Of Marketing P’s: “A New Evolution”, 1(1), 59-63. Prasad, A., & Ghosh, S., (2005). Competition in Indian Banking, 1(1), 3-6. Shafiqullah, S., (2011). Regional analysis of urban-rural differentials in literacy in Uttar Pradesh, India, 4(5), 287-296. Read More