Banking & Marketing - The First PProduct
1. The First PProduct
First among the Ps of bank marketing is product mix. Product stands for both goods and service combination offered to the public to satisfy their needs. In the highly regulated banking industry all offered the same type of products. Actually the bank takes little time and no additional investment to develop a financial product or service. But the drawback is that no brand can be marketed with unique selling proposition for long because it can be copied immediately. Thus it is better to focus on some selected ideas relating to products, which have immediate operational utility as well as feasibility on banks.
In the evolution of bank products, the products can be categorized into three groups. They are Core products, Formal products, and augmented product. Core products are those products, which define the business. For a bank, some of the core products are Savings Bank Account, Current Account, Term deposit, Recurring deposit, Cash credit, Term loan, overdraft and the like. This has two basic characteristics.
Firstly, they define the business of a commercial bank that is whatever banking service was extended these core products are there.
Second is that, core products do not have strong marketing content, that is, the product must be specifically designed in view of the needs of customers in well defined homogeneous market segment.
Since core products, are used as basic tools of commercial banking and serve the still range of customer segments or at least a large number of them, their marketing content cannot be rated as very high. But these core products are indispensable to any business.
Furthermore, these products provide a basis for the development of more sophisticated and marketing oriented products.
15.1 Formal Product
In the line product evolution, the next type of product is Formal product. Formal product is usually a combination of two or more core products and they have strong marketing content as they cater to some specific customer needs. During the Last few years an ocean of formal products have hit the market due to rising customer expectation and anxiety to attract the attention of customers.
Sulabha, over draft of Canara bank, Vijayasree units of Vijaya bank, Smart Money of Hong Kong Bank, two-in-one of Standard Chartered banks, unfixed deposit of Citibank are some of the examples of Formal products. One of the basic features of services is intangibility. Tangibilising the intangible service product was a major challenge to the marketer. In other words, to help the customer in order to form a metal image of the intangible product is the main function to achieve competitiveness in service marketing.
On the other hand, if banks are applying core products alone, this will create stress upon customers to finalise how to apply core products as according to the requirement of the customer. That means it will restrict the application of bank services which results in limited banking business. Contrary to this, formal product will give right product with specific names as according to the requirements of customers to boost the banking business.
15.2 Augmented Product
This is a further modification of formal product. This is the age of value addition. Everybody is sold to the idea of value added product and services. Now it is common in the market that some ancillary benefits are attached. The main advantage of an augmented product stems from its strong marketing content. Because augmented product is made out of formal product which itself has a strong marketing content. It is further reinforced through value addition. A very good example for augmented product is Smart Money Account with Hong Kong Bank. When one opens a Smart Money Account, an account holder will also get free Any Time Money Card. Or when one opens a fixed deposit account, then the deposit holder will get the facility of safe custody free of cost.
Even though branches do not have the authority to design new products, they can operate by using matrix of Core-Formal-Augmented product in an effective manner. That is why banks are innovating more and more augmented products through proper value addition in their existing formal products. The concept of product packages is by considering customersbehavior. Generally, a customer comes to the bank simply for a product but basically for solving the problems and to satisfy the needs.
Customer needs are varied, complex and multi-dimensional needs. A bank should offer multi-dimensional product otherwise called product package. In the place of offering one or two or a large number of products to the customers, it is by understanding all bank related needs of a customer and then evolve a comprehensive product package which can take care of his entire spectrum of needs. Once the bank gives a tailor-made product it will definitely cultivate a psychological ownership on the customer s mind. Another aspect required in a product policy is local touch that is, by considering local peculiarities, i.e. product must be local-oriented.
