Formulation of Services Marketing Strategies of Private Commercial Banks in Bangladesh

Abstract

The study examines the formulation of marketing strategies of some selected Commercial Banks of Bangladesh.The study examines following specific objectives: To examine the marketing strategy of private commercial banks, To determine the relative importance placed by the bank customers on different bank factors in selecting a bank.To study of variety of services and products offered by private commercial banks Bangladesh. Based on the literature review the following null hypotheses are framed and tested with suitable statistical tools.There is no significant relationship between assurance and customer satisfaction.There is no significant relationship between empathy and customer satisfaction.There is no significant relationship between reliability and customer satisfaction.There is no significant relationship between responsiveness and customer satisfaction.There is no significant relationship between tangibility and customer satisfaction. The study mainly considered mixed method techniques-both qualitative and quantitative. The researcher collected data from bank executives on the basis of conversations techniques, depth interview and focus group discussions. The researcher collected data from clients-borrowers and depositors on the basis of interview schedule. This is cross sectional study because the researcher administered questionnaire among clients one point of time. The study considered both primary and secondary data. Primary data collected on the basis of interview schedule through personal interview. Secondary data collected on the basis of journal articles, books, websites from different banks. Here the researcher mainly considered Likert Scale in the case of close ended questions. The researcher mainly employed semi-structured questionnaire (both open-ended and close-ended questions) when administered survey among the respondents. The study area consists of Dhaka and Narayanganj districts and the respondents were urban clients of this region.The study period over the years 2012-2022. The primary data collection was carried out between the period from 2019-2022.The study focused on private commercial banks in Bangladesh. Thus, target population was commercial banks in Bangladesh.The directory of Bankers’ Association of Bangladesh used as sampling frame of the study.Sampling unit constituted only clients of the bank-borrowers and depositors. The study applied judgement sampling technique in selecting the banks(Dhaka Bank, Prime Bank, Merchantile Bank, Bank Asia and Mutual Trust Bank Limited). Clients(borrowers and depositors) selected on the basis of simple random sampling procedure.The sample size of the clients was 385. Both descriptive and inferential statistical techniques were used to analyze the data. Descriptive statistics such as mean, standard deviation, frequency distribution, multiple response analysis, skewness and kurtosis were used to present summary statistics of the study variables. Among the inferential statistics, Confirmatory Factor Analysis(CFA) was used to identify the relationship between dependent and independent variables. For analyzing data, the researcher employs SPSS (Statistical Package for Social Sciences) and Smart PLS (Partial Least Square) software. The major findings of the study are summarizing as follows based on the analyzed data: The sample of bank customers used in this study included more males (61 percent) than females (39 percent). According to occupation, 42 percent respondents were service holders and 39 percent respondents were businessman, around 9 percent were students, 7 percent were retired persons, and 2 percent were housewives. According to income level, 27 percent respondents belong to income level 60,001TK to 80,000TK, 22 percent respondents belong to income level 20001 to 40,000TK, 20 percent respondents belong to income level 40,001TK to 60,000TK, 15 percent respondents belong to income level less than 20,000TK , 9 percent respondents belong to income level 80,001TK to 100,000TK and 8 percent respondents belong to income level more than 1,00,000Tk. According to age structure ,29 percent respondents belong to age group 31-40 years , 27 percent respondents belong to age group 41-50 years , 22 percent respondents belong to age group 21-30 years, 14 percent respondents belong to age group less than 20 years, and 9 percent respondents belong to age group 50 years and above. According to education level, 38 percent respondents got graduate certificate , 22 percent respondents cross high school level, 22 percent respondents cross primary school level and 18 percent respondents got post graduate certificate. According to number of banks in use, 38 percent respondents involve with 3 banks and 22 percent respondents involve with 2 banks, 22 percent respondents involve with only 1 banks and 18 percent respondents involve with 4 and above banks. According to benefits from banks, 95 percent respondents said they are benefitted from banks and 5 percent respondents said they are not benefitted from banks. According to bank offered services, 88 percent respondents receive savings account services, 58 percent respondents receive credit card services , 53 percent respondents receive loan borrowing services, 50 percent respondents receive foreign exchange services, 42 percent respondents receive current account services, 30 percent respondents receive transfer payment services and 57 percent respondents receive other services . According to problems facing for getting services, 99 percent respondents complaints bank imposed excessive charges, 84 percent respondents complaints network related problems basically BEFTN, 84 percent respondents complaints network related problems basically RTGS , 81 percent respondents complaints long queues, 79 percent respondents complaints long waiting time to get services, 77 percent respondents complaints misbehavior from staffs,68 percent respondents complaints long duration for getting loans, 60 percent respondents complaints refuse to open letter of credit(LC) due to shortage of dollars, 54 percent respondents complaints refuse to exchange torn notes, and 42 percent respondents complaints refuse to open student file due to shortage of dollars. According to suggestions for improvement of services, 99 percent respondents focused on expedite loan processing, 71 percent respondents focused on tokens to maintain queues and 52 percent respondents focused on internal marketing i.e. trained up staffs how to behave with clients. The SEM results show that mean score of the most of the items mean score more than 3 and standard deviation more than 0.9.Mean value of the most of the tangible items above 3. Same thing is applicable for reliability, empathy and responsiveness items and their mean value also more than 3. On the other hand, mean value of assurance items less than 3.Individual items are reliable because most of the standardized loadings are greater than 0.7.Most of the factor loadings of assurance more than 0.7 except A3.Customer satisfaction factor loading is 1 due to single item.Most of the factor loadings of empathy more than 0.7 except E1. Most of the factor loadings of reliability more than 0.7 except R1 and R2. Most of the factor loadings of responsiveness more than 0.7 except RES6. Most of the factor loadings of tangibles more than 0.7 except T5. The AVE values exceeded the recommended value of 0.5(Fornell and Larcker, 1981), demonstrating adequate convergent validity. Composite reliability values indicated that all constructs were well above the recommended value of 0.70(Hair et al, 2010). Cronbach’s alpha values for most of the constructs also met the minimum threshold of 0.60, suggesting that the constructs were acceptable. All items VIF value less than 5 and it indicates that there is no multicollinearity problems among independent variables. Most of the cases we didn’t find there is any cross loading problems except empathy related items i.e. E2 and E3. All the values (ranging from 0.645 to 0.838) were below the acceptable range of 0.85, indicating the discriminant validity. There is exceptional case in customer satisfaction. The value of customer satisfaction is 1 due to 1 item makeup the construct. The discriminant validity exists when all the values of HTMT ratio are less than 0.85. All the values (ranging from 0.252 to 0.371) were below the acceptable range of 0.85, indicating the discriminant validity. But empathy value is more than 0.85. R2 and Adjusted R2 value were 0.886 and 0.884 respectively that is quite good. R2 value is 0.886 exceed the suggested threshold of 0.02 supporting good predictive accuracy (Krey et al. 2019). The factor loadings of most of items greater than 0.7. It shows correlation coefficient and R2 value. R2 value of the model is 0.886 respectively. There is positive correlation between assurance and tangibility with customer satisfaction and there is negative correlation between reliability and responsiveness with customer satisfaction. There is significant relationship between assurance, responsiveness and empathy with customer satisfaction and their t values were 3.781,3.269 and 50.98. The t values of all items more than 2 and that indicates the items significance at 5 percent level. There is no relationship between reliability and tangibility with customer satisfaction . But there is relationship between assurance, empathy and responsiveness with customer satisfaction and they are significant at 1 percent level. Because t values of those constructs were more than 2. According to executive opinion towards bank marketing strategies, all respondents said they follow service differentiation strategy, 84 percent respondents said they follow new market strategy, 82 percent respondents said they follow market penetration strategy, 82 percent respondents said they follow market segmentation strategy, 68 percent respondents said they follow offensive strategies, 66 percent respondents said they follow geographic expansion strategy, 66 percent respondents said they follow strategy for cutting costs and 32 percent respondents said they follow defensive strategies. To improve service quality of banks, we should focus on few issues:1.They should emphasis on segmentation, targeting and positioning strategy in a right track. 2. They should prepare probable prospects list and communicate with them interim period.3.When clients visit their website , they will get answer instantly through chat bot.4.They should introduce updated software.5.To minimize time, they can introduce account opening system through online.6.Memorandum of Understanding(MOU) signed with different corporate bodies and hotels, restaurants and hospitals.7.Set up strong customer complaints department to solve clients problem through online and offline.8. Launch new products and services to attract more clients.9. Banking charge should be reasonable to attract more clients10. Strong team building and team work required for marketing personnel.11. Strong relationship marketing and internal marketing program required to improve the service quality of banks.12. Periodic survey required to improve the service quality of banks. A bank's long-term customer and profit goals are intended to be attained through the use of a consistent and workable set of guiding principles in a given context. However, the strategic marketing process must be completed before a plan can be developed. In order to further the goals and objectives of the bank, this entails analyzing market opportunities, choosing target audiences, and allocating marketing resources. The techniques chosen and used by the various banks and their branches should serve as the foundation for any insightful examination of bank marketing.Without a question, the marketing tactics chosen play a significant role in how successfully banks market their services. Since the market for banks' services and goods is dynamic and subject to quick changes as a result of unstable and changing economic conditions, increased competition, technological advancements, and cost inflation, banks will pay more attention in the future to the choice of appropriate marketing strategies. With the four Cs, marketing mix usage in the banking industry is growing daily. Therefore, the concept of bank marketing is crucial for every bank. The major goal of this study is to gain a general understanding of bank marketing, understand the function of marketing in the banking sector, and determine which elements of the marketing mix—product, pricing, place, and promotion—are most crucial for a bank. Use of the 4'P and 4'C (customer solution, customer cost, customer communication, and customer convenience) for banks and implementation of it in bank marketing concepts and the method marketing is creating important for a bank? Additionally, the integration of additional 3Ps (people, process, and physical evidence) is crucial for a bank in the current environment.Bank marketing has evolved into a crucial survival tool that is reshaping the global banking sector. Business connections are being redefined by the rise of bank marketing, and the most prosperous banks will be those who can actually deepen their ties with their clients. A wide range of banking products and services are now made available to retail and wholesale customers through an electronic distribution channel known as e-banking, thanks to technological innovation and severe rivalry among existing banks. The interactions between banks and their internal and external customers are changing as a result of technology. Future research ought to concentrate on a larger sample size and customers from every type of bank. To ascertain which of the customer-important service quality characteristics to concentrate on, a research utilizing the SERVQUAL instrument might be conducted in the future by assigning weights to the various service quality dimensions. As e-banking expands globally, more research evaluating the quality of e-banking services might be conducted.