Strategies Adopted By HDFC Bank
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International Journal of Management Research & Trends ISSN: 0976-9781
Volume 3, Issue 2, 2012 ©Rani & Panchantham
Strategies Adopted By HDFC Bank
Uma Rani T.S. Asociate Prof, MBA Department, Indra Ganesan College of Engineering, Trichy
Dr. Rtn. N. Panchanatham, Professor & Head, Department of Business Administration, Annamalai University,
Chidambaram.
ABSTRACT
Change is continuous process in all sectors of the world. Another significant impact of banks
today is the technology issue. In this study the business banking products of HDFC bank, that
best suits the needs of the borrower were analysed. The Customer feels that loans to be obtained
require a process that is extremely complicating and time consuming. This calls for an
ombudsman setup separately for the domain. The observation and findings of the study have
helped to give useful recommendations to bank. The implementation of the suggestion can help
to improve strategies and build competencies over that of their competitors. This study has there
by helped the researcher by giving exposure into new concepts in today’s banking scenario as
the interface shifts from service to products.
KEY WORDS:
HDFC Bank, Business Banking products, Marketing Strategies, Customer satisfaction,
Documentation, Interest rates and the factors that influence the Bank Marketing Strategy.
INTRODUCTION
Banks play a positive role in economic development of a country as repositories of community’s
savings and as purveyors of credit. Indian Banking has aided the economic development during
the last fifty years in an effective way. The banking sector has shown a remarkable
responsiveness to the needs of planned economy. It has brought about a considerable progress in
its efforts at deposit mobilization and has taken a number of measures in the recent past for
accelerating the rate of growth of deposits. As recourse to this, the commercial banks opened
branches in urban, semi-urban and rural areas and have introduced a number of attractive
schemes to foster economic development.
The activities of commercial banking have growth in multi-directional ways as well as multi-
dimensional manner. Banks have been playing a catalytic role in area development, backward
area development, extended assistance to rural development all along helping agriculture,
industry, international trade in a significant manner. In a way, commercial banks have emerged
as key financial agencies for rapid economic development.
By pooling the savings together, banks can make available funds to specialized institutions
which finance different sectors of the economy, needing capital for various purposes, risks and
durations. By contributing to industries, government securities, bonds and debentures of term-
lending institutions in the fields of agriculture and now housing, banks are also providing theseInternational Journal of Management Research & Trends ISSN: 0976-9781
Volume 3, Issue 2, 2012 ©Rani & Panchantham
institutions with an access to the common pool of savings mobilized by them, to that extent
relieving them of the responsibility of directly approaching the saver. This intermediation role of
banks is particularly important in the early stages of economic development and financial
specification. A country like India, with different regions at different stages of development,
presents an interesting spectrum of the evolving role of banks, in the matter of inter-mediation
and beyond.
Technology in Banking
Innovations in information and communication technology are perceived to be the important
factor for productivity and growth. The relationship between IT and Banking is fundamentally
high. Because of which expected to reduce costs, increase volumes and facilitate customized
products. Public sector must adopt the technology adoption in order to compete with Private and
public sector banks Retention of the customers can be made through adoption of new technology
like ATM, telephone banking, on-line bill payment and Internet banking.
Market Focused or Customer Focused
Any Bank whether a market-focused, or customer-focused, must first determines who are its
potential customers desire, and then builds the business or service. Marketing theory and practice
is justified in the belief that customer use a product or service because they have a need, or
because it provides a perceived benefit. Two major factors of marketing strategy are The
recruitment of new customers (acquisition) and the retention and expansion of relationships with
existing customers (base management).
II THE ORGANIZATION PROFILE
HDFC Bank was incorporated in August 1994 at Mumbai, and, currently has an nationwide
network of 761 Branches and 1977 ATM's. It commenced operations as scheduled Commercial
Bank in 1995.HDFC Bank is a young and dynamic bank, with a youthful and enthusiastic team.
Our business philosophy is based on four core values - Customer Focus, Operational
Excellence, Product Leadership and People. We believe that the ultimate identity and success
of our bank will reside in the exceptional quality of our people and their extraordinary efforts.
For this reason, we are committed to hiring, developing, motivating and retaining the best people
in the industry. HDFC Bank began operations in 1995.
Mission is to be "a World Class Indian Bank", benchmarking ourselves against international
standards and best practices in terms of product offerings, technology, service levels, risk
management and audit & compliance. The objective is to build sound customer franchises across
distinct businesses so as to be a preferred provider of banking services for target retail and
wholesale customer segments, and to achieve a healthy growth in profitability, consistent with
2International Journal of Management Research & Trends ISSN: 0976-9781
Volume 3, Issue 2, 2012 ©Rani & Panchantham
the Bank's risk appetite. We are committed to do this while ensuring the highest levels of ethical
standards, professional integrity, corporate governance and regulatory compliance.
We provide business loan for short or long term financial needs of business organizations. A lot
of times it is important for businessmen to acquire a certain amount of money for running their
enterprise. It is well known that without the required capital no business can run. For any
business whether in initial stage or in growth phase, capital is required to keep up the
momentum. Increase our market share in India’s expanding banking and financial services
industry by following a disciplined growth strategy focusing on quality and not on quantity and
delivering high quality customer service.
Business Strategy of HDFC Bank Emphasis the Following
• Leverage our technology platform and open scaleable systems to deliver more products to
more customers and to control operating costs.
• Develop innovative products and services that attract our targeted customers and address
inefficiencies in the Indian financial sector.
• Continue to develop products and services that reduce our cost of funds.
• Focus on high earnings growth with low volatility.
III REVIEW OF LITERATURE
Saritha. P and P. Mohan Reddy, (2009) Marketing strategies vary industry wise. The
marketing strategies of service industry are quite different form production sector. Within the
service industry, financial services industry requires a unique advertising strategy. The present
paper is an attempt through a light on marketing strategies in public and private sector banks.
The prevalence of competition in the banking sector has necessitated banks to differentiate their
products and services by adopting different marketing strategies; therefore a comparative study
of marketing strategies of public sector banks and private sector banks is done in this research
paper. The study made it clear that there is no significant difference in the marketing strategies of
public and private sector bank.
Roig et al., (2006) analyzed the dimensionally of the concept of customer’s perceived value in
the banking sector of Spain. A total of 200 customers were selected for survey. The result of
confirmatory factor analysis and linear regression analysis indicated that customers perceived
value in banking sector composed of six dimensions; functional value of the establishment.
Functional value of the personnel, functional value of the service, functional value of price
emotional value and social value.
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Volume 3, Issue 2, 2012 ©Rani & Panchantham
Bodla B.S. (2004) has made a study an “service quality perception in banks . An indian
perspective”. The objective of the study is to examine and measure the quality of services
provided by commercial banks in India . Empirical survey is conducted to determine expectation
and perception of the quality of services offered by the banks. The scope of this study is
restricted to Chandigarh, Delhi and Haryana and the study covers four private sector and four
public sector Banks. The SERVQUAL instrument developed by Paramusraman, zeithmal and
Berry has been used for the measurement of service quality in selected banks. The study reveals
that actual delivery of services by both private and public sector banks falls short of expectations
of customer on a large majority of the elements of service quality . Never the less private sector
are found to have an edge over public sector banks in terms of quality services being offered to
customer.
Sureshchandear et al. (2003) investigated the critical factors of customer-perceived service
quality in the banks of India. The three groups of banks in India (Public sector, Private sector and
foreign banks) were compared with respect to each of the five factors of service quality (core
services, human element, tangibles of service and social responsibility). A total of 452 customers
from 51 different banks were approached, from whom 277 (from 43 banks) valid responses were
obtained. The results of confirmatory factor analysis and ANOVA showed that as regards
customer perception of service quality, the technological factor(i.e., core service and
systematization of the service delivery) contributed more in differentiating the three sector while
the people-oriented factor(i.e., human element of service delivery) contributed less to the
discrimination. The results also indicated that foreign banks were performing well, followed by
private sector banks and public sector banks.
Michael Porter (1990), in his later research quoted that the competitive advantage is achieved
through innovation. In its broadest sense this includes both new technologies and new processes.
New bases for competing better means of competition new production process and new
marketing approaches are all aspects of innovation. Encouraging firms to make major long run
innovations is particularly critical. Michael Porter (1990) in another journal cited that company’s
developing strategies to achieve the competitive advantage would invaluably establish a
competitive edge for their country.
OBJECTIVES OF THE STUDY
• To analyze the marketing strategies adopted by HDFC Banks to sell its products.
• To evaluate the factors that influences the Bank Marketing Strategy of HDFC Bank.
• To evaluate the personal profiles that influence the Marketing Strategies adopted by
HDFC.
4International Journal of Management Research & Trends ISSN: 0976-9781
Volume 3, Issue 2, 2012 ©Rani & Panchantham
SCOPE OF THE STUDY
The survey is confined to opinion survey about HDFC Bank Ltd products at Trichy
The study also involves identifying and analyzing the purpose of bank products.
LIMITATIONS OF THE STUDY
• As the survey has been conducted only on 100 respondents
• Unwillingness of some respondents to provide information is another limitation.
• Findings of the study are influenced by personal bias of the respondents.
• There was a time constraint which disabled a personal interaction with the customers
IV RESEARCH METHODOLOGY
Research Design - Descriptive study
Location - Trichirappalli District (Both Urban and Rural)
Sampling technique - Stratified Random Sampling (Data collected from
Customers having Saving Account)
Sample size - 175
Research Approach - Structured questionnaire through Interview Schedule
Sources of Data - Both Primary and Secondary data
Statistical Tools - Inter Correlation, Friedman Rank Test & Regression
V ANALYSIS AND INTERPRETATION
Table 1
Inter Correlation among the various Marketing Strategies and Overall Bank Marketing
Strategy
Customer Value Overall
Functional Relationship Infrastru Added Promotion Bank
Oriented Mangement cture Services al Marketing
Strategies Strategies Strategies Strategies Strategies Strategies
Functional Pearson
Oriented Correlation 1
Strategies
Sig. (2-
.000
tailed)
Customer Pearson
Relationship Correlation .613(**) 1
Mangement
Sig. (2-
.000
tailed)
Infrastructur Pearson .269(**) .296(**) 1
©AJCUT 5International Journal of Management Research & Trends ISSN: 0976-9781
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e Strategies Correlation
Sig. (2-
.000 .000
tailed)
Value Added Pearson
.454(**) .337(**) .351(**) 1
Services Correlation
Sig. (2-
.000 .000 .000
tailed)
Promotional Pearson
.324(**) .270(**) .181(**) .588(**) 1
Strategies Correlation
Sig. (2-
.000 .000 .000 .000
tailed)
Overall Pearson
Bank Correlation
.677(**) .679(**) .472(**) .656(**) .497(**) 1
Marketing
Strategies
Sig. (2-
.000 .000 .000 .000 .000
tailed)
N 175 175 175 175 175 175
** Correlation is significant at the 0.01 level (2-tailed).
A bivariate correlation was undertaken between the various Marketing Strategies adopted by
Banks. The output confirms that significant positive relationship exists between all the Bank
Marketing Strategies. The relationship between Functional Oriented Strategies towards Customer
Relationship Management (0.613(**)) and Overall Marketing Strategy are highly Positive
Correlated (0.677(**)). The relationship between Functional Oriented Strategy towards Value
added Services Strategy (0.454) and Promotional Strategy (0.323) are Moderately Correlated and
Infrastructure Strategy (0.269) are just correlated with the Functional Oriented Strategy. No
significant negative relationship exists between the various Marketing Strategies and with
Overall Marketing Strategy. The CRM Strategy is highly positive correlated with Overall Bank
Marketing Strategy (0.679). CRM is moderately correlated with Value added Services (0.337)
and Infrastructure (0.296) and Promotional Strategy (0.270) are just correlated with the CRM
Strategy. Thus customer Relationship Management Strategy, Functional Strategy and Value
added services Strategy are High Positively correlated towards the Overall Bank Marketing
Strategy.
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Volume 3, Issue 2, 2012 ©Rani & Panchantham
Friedman Rank Test
Table 2
Factors influence the Customer Perception towards the Current Marketing
Strategies adopted by banks.
Friedman test has been used to find out if there exist a significant difference between the
customer perception towards the factors that influence the Bank Marketing Strategies.
S.No Rank Inferential
Factor influencing the Bank (Ascending Statistics
Marketing Strategy Mean Rank Order)
1 Location Convenience
4.65 3
2 Account Security
4.08 1
3 Easy accessibility
4.10 2
4 Availability of online banking
5.66 4 N=175
5
Mobile banking 5.70 5 Chi-
6 Square=904.562
Tele banking 7.15 9
Df = 11
7
Better service& Friendly staff 6.54 8 P=0.000*
8 Significant
Greater spread of ATMs 5.87 6
9
Bank's Image 5.98 7
10
Recommendations by
8.39 11
friends/relatives
11 Employer's insistence for salary a/c 7.88 10
*pInternational Journal of Management Research & Trends ISSN: 0976-9781
Volume 3, Issue 2, 2012 ©Rani & Panchantham
In the above table, it can be found that there exists a significant difference towards the customer
Perception on the factors that influence the marketing Strategies of Banks. (p-valueInternational Journal of Management Research & Trends ISSN: 0976-9781
Volume 3, Issue 2, 2012 ©Rani & Panchantham
Regression
Regression test was applied to predict the nature and closeness of relationship between Bank
Marketing Strategy and Respondent Status in the Family, gender, age, educational qualification,
Occupation, Monthly Income. The result found was there is significant association between Bank
Marketing Strategy and Respondent Status in the Family, age, Occupation, Monthly Income. The
other demographic factors like, Gender and educational Level does not influencing Bank
Marketing Strategy. R value indicates the relationship between independent variable and
dependent variable, i.e. the relationship between Respondent Status in the Family, gender, age,
educational qualification, Occupation, Monthly Income and Bank Marketing Strategy in terms
of Percentage. R Square value indicates that the variables explained with the Percentage of
variations towards Overall Bank Marketing Strategy. R Square value for Respondent Status in
the Family is 1.8 %, gender is 0.2%, age is 1.5%, educational qualification is 0.4%, Occupation
is 1%, Monthly Income is 6.2 % of variations towards the Overall Bank Marketing Strategy.
Multiple regression equation Y = X (B value)
Y-----Dependent variable, Here Bank Marketing Strategy is the Dependent Variable
X------Independent variable, Demographic Factors are Independent Variable.
For Respondent Status in the Family, X=-0.158, Gender, X= -.0024, Age, X=0.186
Educational qualification, X=0.09, Occupation, X= -0.141, Monthly Income X= 0.339. If p
value is less than 0.01 or 0.05, then the significant relationship exist between independent
variable and dependent variable. For Respondent Status in the Family, Monthly Income, p value
is less than 0.05 and Age, Occupation, the p value is less than 0.01. So association exist between
Bank Marketing Strategy and Respondent Status in the Family, age, Occupation, Monthly
Income. Regression depends on how and to what extent the demographic variables influencing
the Customer Perception towards the Bank Marketing.
©AJCUT 9International Journal of Management Research & Trends ISSN: 0976-9781
Volume 3, Issue 2, 2012 ©Rani & Panchantham
Demographic factor influencing the Bank Marketing Strategies
Table 4
R Unstanda
R square F rdized Sig
Demographic value value value Constant coefficient T value
factors (B)
Marital status 0.204 0.042 21.360 1.727 -0.125** -4.622 0.000
Religion 0.067 0.005 2.244 1.143 0.043 1.498 0.135
Current
Residence 0.115 0.013 6.604 1.997 -0.120* -2.570 0.011
Status of
current
Residence 0.013 0.000 .083 2.230 -0.015 -.0288 0.773
Stay with the
Family 0.047 0.002 1.094 1.102 0.020 1.046 0.296
Possessing a
Own a House 0.020 0.000 .202 1.375 0.012 0.450 0.653
Note: *pInternational Journal of Management Research & Trends ISSN: 0976-9781
Volume 3, Issue 2, 2012 ©Rani & Panchantham
X------Independent variable, Here Demeographic factors are Independent Variable.
For and Marital Status, X= -0.125 Religion, X= .0043 Current Residence , X=-0.120 Status of
current Residence, X = -0.015, Stay with the Family X=0.020 and Possessing a Own House
X=0.012. If p value is less than 0.01 or 0.05, then the significant relationship exist between
independent variable and dependent variable. For Marital Status, p value is less than 0.01 and
Current Residence the p value is less than 0.05. So association exist between Bank Marketing
Strategy and Marital Status and current Residence of the Respondent. Regression depends on
how and to what extent the demographic variables influencing the Customer Perception towards
the Bank Marketing.
Table 5
Current position of the respondent Position influencing the Bank Marketing Strategies
Current R Unstandardiz
Position of the R square F ed T
respondent value value value Constant coefficient(B) value Significance
Paying of -
Housing Loan .095 .009 4.431 2.318 -.084* 2.105 .036
Critical Stage of
Documentation .057 .003 .273 2.318 -.084 -.522 .603
In which Bank
you have an 11.24
account .452 .205 126.37 1.480 .110** 1 .000
Type of account
with the Bank .127 .016 7.989 1.878 .120** 2.827 .005
Type of dealing
with most
frequented -
Bank .233 .054 15.142 2.407 -.083** 3.891 .000
Any Other
Bank account .038 .001 .713 2.131 -.058 -.845 .399
©AJCUT 11International Journal of Management Research & Trends ISSN: 0976-9781
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Bank with
Maximum no.
of ATM
Transaction .325 .106 57.943 1.653 .080** 7.612 .000
Frequency of -
visit .090 .008 3.968 2.183 -.044* 1.992 .047
Note: *pInternational Journal of Management Research & Trends ISSN: 0976-9781
Volume 3, Issue 2, 2012 ©Rani & Panchantham
how and to what extent the demographic variables influencing the Customer Perception towards
the Bank Marketing.
FINDINGS
Inter correlation coefficient was found among the various dimensions of marketing
strategies like Functional Strategies, Customer Relationship Management Strategies,
Infrastructure Strategies, Value added services Strategies and Promotional Strategies.
Multiple Regression was applied to find out the relationship that exists between the
Customer Perception on Marketing Strategies and the Demographic factors. The result
shows that there exist relationship between the Age of the respondent, Occupation,
Monthly Income, Education Level, Marital Status and Respondents Status in the Family.
Regression test was applied to predict the nature and closeness of relationship between
Bank Marketing Strategy and Respondent Status in the Family, gender, age, educational
qualification, Occupation, Monthly Income. The result found was there is significant
association between Bank Marketing Strategy and Respondent Status in the Family, age,
Occupation, Monthly Income. The other demographic factors like, Gender and
educational Level does not influencing Bank Marketing Strategy.
Regression test was applied to predict the nature and closeness of relationship between
Bank Marketing Strategy and Marital Status, Religion, Current Residence , Status of
current Residence, Stay with the Family and Possessing a own House. The result found
was there is significant association between Bank Marketing Strategy and Marital Status,
current Residence. The other demographic factors like, Religion, Status of current
Residence, Stay with the Family and Possessing a own House does not influence the
Bank Marketing Strategy.
Regression test was applied and the result found was there is significant association
between Bank Marketing Strategy and Paying Housing Loan, In which bank the
respondent has an account, Type of account in the Bank, Type of dealing with the Bank,
Bank with Maximum no. of ATM transaction and frequency of visit.. The other factors
like, Critical Stage of Documentation and any other Bank Account does not influence the
Bank Marketing Strategy.
SUGGESTIONS
• The customers are very enthusiastic in using more reliable and innovative net banking
services. So net banking service must be provided with free from cyber crimes.
©AJCUT 13International Journal of Management Research & Trends ISSN: 0976-9781
Volume 3, Issue 2, 2012 ©Rani & Panchantham
• The interest rates of frequently changing and the customers get confused with the actual
interest rate at the current date. And the bank must inform each and every customer must
be personally informed about the interest rates.
• The customers are not fully satisfied with the speed and quick service of banking. This
must be formulated and speedy services must be provided to the customers.
• Since the different age group of the customers requires different category of product
features and services they must be provided accordingly to their expectations.
• Periodic meetings must be conducted by HDFC in order to provide necessary information
and details to the customers.
• Customer relationship management strategy, functional oriented strategy, value added
services strategy are the most influencing factors adopted by the banks. Yet
infrastructure and promotional strategies are to be improved in order to delight its
customers.
CONCULSION
As we all know that Indian banks are becoming more and more innovative and gradually
dominating the market. They are capturing market share from their counterpart of the foreign
bank by offering services by an innovative way. The observation and findings of the study have
helped to give useful recommendations to bank. The implementation of the suggestion can help
to improve strategies and build competencies over that of their competitors as a straight forward
opinion from a sample of customers have been obtained to make observations.
BIBLIOGRAPHY
• Bodla.B. S. (2004)“service quality perception in banks . An indian perspective”. “An
Indian Perspective”, Prajnam, Volume XXXIII, Number 4th , PP 321-335.
• Jyotsna Sethis & Nishwan Bhatia, (2008) “Elements of Banking and Insurance”,
PHI, New Delhi,
• Khan M.Y, (2005), “Indian Financial Market: Theory and Practice”, Vikas Publishing
House, New Delhi.
• Micheal Porter, (1990) “The competitive advantage of nations” Harvard Business Review
March-April 1990.P.No 73-93, “New Global strategies for competitive advantage”,
planning review, May-June 1990.P.N0.4-14
• Philip Kotler, “Marketing Management”, Prentice Hall of India Pvt Ltd, 12th Edition,
2005 John Wiely & sons (Asia) Pvt Ltd, 4th Edition.
14International Journal of Management Research & Trends ISSN: 0976-9781
Volume 3, Issue 2, 2012 ©Rani & Panchantham
• Roig Juan Carlos Fandas, Garcia Javer Sanchez, Tena Miguel Angel Moliner and
Monzonis Jaume Llorens (2006), “Customer Perceived Value in Banking Services”,
International Journal of Bank Marketing, Vol.24.No 5. Pp.266-283
• S.M. Jha,(1994) “Services Marketing”, Himalaya Publishing House, Mumbai, 1994.
• Saritha. P and P. Mohan Reddy (2009) “Marketing Strategies of Financial Services In
Banks- A Comparative Study” AJBMR, Volume 4, No.2.
• Suresh Chandrasekaran, Anantharaman and Kamalanbhan,(2002) “ Managements
perception of Total Quality Service in Banking Sector of a Developing Economy, A
critical Analysis, “The International Journal of Bank Marketing” Volume 20, PP 181-
196.
WEBSITES
www.wikipedia.com
www.hdfcbank.com
www.google.com
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