Consumer Preferences In The Indian Banking Industry Marketing Essay

Consumer Preferences In The Indian Banking Industry Marketing EssayThe Indian banking industry has witnessed a robust growth during the last decade. there are various public, private and multi-national players operating in the industry. Though the wideness of go guest go choice is understood in the sector, there exist various other factors that nodes consider while evaluating banks. In this paper, the customer options in the Indian banking industry are canvas using conjoint synopsis as a statistical tool. The three return judges that are analyzed are bank timings, automatic teller machine network and customer table service reputation. The results show that customers pay a lot of attention to the customer service reputation of the bank. The facilities of the bank regarding severalise timings are also intented up by the customers. Adequate recommendations towards gaining competitive advantage are presented at the end of the paper.Key words conjoined Analysis, Indian B anks, Consumer ServiceIntroductionProduct selection is a complex decision making process involving resolving various trade-offs. For example, a basic trade-off might involve striking chemical equilibrium between damp product features and right price. Since an ideal product consisting of the best possible product features is not always feasible, it is important to learn the customer preference for various product attributes. This information can be use by organizations in an industry during product design and improvements in the current product offering.Conjoint analysis is an move marketing research tool that summons applications in developing an effective product design. It helps the researcher narrow down the product attributes that matter to the customer and quantify the importance attached to various product attributes. Hence, we can answer which attributes are the most important and which are the least important, as discussed in IBM SPSS (2012). The analysis requires the de velopment of an take over questionnaire where in a responsive is required to highlight their preference towards various product attributes combinations.Recently, the technique found applications in various industries to assist product developers and completed players towards effective product design. For illustration, Conjoint Analysis is used in Measuring Consumer Preferences for Sales Promotion Schemes in FMCG Sector in Vyas (2005).Hence, any mull that contributes in understanding customer preference in an industry is critical towards the development of detailed customer profiles and effective product design. In this paper, we seek the application of Conjoint Analysis in understanding the customer preferences in Indian banking industry. The application of Conjoint Analysis in the banking industry can help us better understand the industry in the chase waysUnderstanding product attributes germane(predicate) to customer- the study helps us understand the attributes that are at top of the precedence list of the customers. By analyzing the weights attached to various product attributes, organizations can design their finance products in a better way.Actionable recommendations- The recommendations of the analysis are actionable. For example, issues wish interest rate and basic loan terms that are not under the control of bank are not included as a part of actionable and feasible recommendations. However, banks can work towards improving customer service location, attractive location of ATM and comfortable timings of the branches.Applications- The applications of the study could be used in benchmarking Indian customers against their global counterparts in understanding and predicting the next evolution in the Indian banking industry. The results could be used together with Multidimensional Scaling for organizations desire entrance in the industry or for existing players in understanding brand spatial relation.Hence, the aim of this analysis is to study t he Indian banking customers and find out the utilities of each(prenominal) the product attribute levels and their relative importance. This is done by applying Conjoint Analysis. Due to paucity of time, the study is limited to the bank customers based out of Delhi region. The respondent even out is the FMS MBA students.The study aims to find the customer preferences that are important to the customers while evaluating banks. This study is an exploratory research that can be used for future larger studies. naval division 1 of the study provides a short introduction of the subject matter along with a brief background. Section 2 delves into the existing literature in the area, which has focused on the same subject matter. Section 3 describes the methodology adopted for the study, including the data collection and analysis. Section 4 discusses the results and findings of the analysis.Literature ReviewThere have been various studies in the past that explore customer preference attribu tes in various sectors, in India and abroad. We discuss those studies where Conjoint Analysis has been used.lengi (1998) explored the customer preference in the Turkish Banking industry. They concluded that among other factors, facilities like extended loyalty programs, off-site ATMs, maximum 5-minutes waiting time in the branches are most preferent by the customers. With respect to higher order decision constructs, they also concluded that delivery channels and customer relations have the strongest influence on the respondents preferences.Another study in this domain by Trchrome (2008) also explored the customer preferences in the banking industry. They concluded that customers give importance to type of bank, minimum balance requirements, online banking facilities, customer service quality, and ATM network while evaluating bank options. Of these options, customers give highest importance to balance/fees requirement at the bank (34 %), online banking facilities (24 %) and the type of bank (11 %). In line with this publication, Auruskeviciene, Salciuviene and Virvilaite (2005) explored the banking industry to quantify the marketing image of financial services. There results were as following service quality (41%), prices of services (26%), convenience and availability (17%), categorization of services (13%) as well as bank exterior and interior (3%).As we observe from these studies, customers see a lot of factors while evaluating banks. Of these, branch timings, customer service quality and ATM positioning were explored in the present study.There have been other studies in the sub-segments of the banking industry. Cai and June (2001) analyzed the Internet banking industry to study the alternate in customer preferences in this sub-segment of the industry. They found out that customer service reputation, banking service products and online systems quality matter the most to the customers in online banking. Kubica (2011) used conjoint analysis to segment young clients in the banking industry. They concluded that profiling young customers is a complex process. Png (2003) explored the specific problem of the amount that could be charged to customers for waiting time. slice it can be seen that conjoint analysis has been applied in the global banking industry, its applications in the Indian context is limited. Conjoint analysis application in Indian sectors such as tourism, private label brands (apparel), air freshener and automobile sectors is present.There have been a few studies that explore the consumer preferences in the Indian banking sector. Ananth, Ramesh and Prabaharan (2011) analyze the service quality gap analysis (structured questionnaire) for Indian private banks. They conclude that there are some dimensions in the service quality that are lacking (empathy and accessibility). Komal and rani (2012) also explore the customer preferences in the domain. The key results are that ATM service quality, internet banking services, credit cards portfolio are important factors considered while evaluating banks. Ananth and Arulraj (2011) musical rhythm the banking service quality in Tamil Nadu. They concluded that credit facility (interest rate), Corporate Social Responsibility initiatives and deposit schemes are the most appealing to the Indian consumer.As we see, there is no significant study in the application of conjoint analysis in the Indian banking sector. Hence, the motivation behind this study to explore the consumer preferences in the Indian banking industry through Conjoint Analysis. We intend to understand the product attributes that a prospective bank customer considers while evaluating an Indian bank.methodological analysisThis is an exploratory study. Hence, no hypothesis is formulated. After the results of the analysis are obtained, hypothesis can be developed.Convenience sampling is used for the study. The sample size for the study is 51 respondents. The respondents are from the Full Time and Part Tim e course of the MBA program at FMS Delhi. The respondents were provided with the questionnaire that requires them to rate the various product-attribute combinations on a scale of 0 to 10. The average age of the respondent set is 29.9 years (standard deviation 6.98 years) and the average work experience of the respondents is 6.53 years.After carefully reviewing the contemporary literature, the following factors were found relevant to our studyBranch Hours The time duration for which the branch is openATM Network The location of the ATM network with respect to positioning near the branch or at other places customer Service Reputation The customer learning of the quality of services offered to customers.The level of these product attributes are as followingFactorDescriptionLevels1Branch HoursWeekdays 9-4The branch timings are from 9 AM to 4 PMWeekdays 9-7The branch timings are from 9 AM to 7 PMWeekends alsoThe branch is open on weekdays as well as weekends2ATM NetworkAt branchesThe AT M is available yet at branchesAt branches othersThe ATM is available at branches as well as at other locations3Consumer Service ReputationGoodThe consumer perception of the consumer services is goodAverageThe consumer perception of the consumer services is averagePoorThe consumer perception of the consumer services is poorTable 1 Product Attributes and LevelsAs we observe, there are 18 possible combinations out of these product attributes and levels. The 18 combinations or profiles are presented to the respondents in a survey. Beside the responses, other information like respondents age, work experience, sex and absence/presence of a bank account is also collected. Based on the collected responses, conjoint analysis is applied to find out the part worth estimates of the various product attributes.Since the number of attributes is 3, traditional full-profile methodology of conjoint analysis is used. Based on the responses, dummy variable reversion is used to find the respective pa rt-worth functions for each respondent. These results are then aggregated to find an overall result.FindingsThe data from the 51 respondents is analyzed to find out individual, quaint part worth functions. The utilities of the various product attributes are as followsAttributeLevelAggregate UtilityStandard DeviationBranch HoursWeekdays 9-4-1.011.18Weekdays 9-70.961.02Weekends also0.050.53ATM NetworkAt branches-0.380.44At branches others0.750.88Consumer Service ReputationGood1.590.86Average-1.621.10Poor0.030.65Table 2 Aggregate Utilities of Product Attributes and LevelsAs we observe, the utilities have equal standard deviations to the aggregate value. The importance of the various product attributes are as followsProduct AttributePart Worth (%)Branch Hours34.2ATM Network17.1Customer Service Reputation48.7Table 3 Part Worth of Product AttributesAs we observe, the customer service reputation (48.7 %) is the most important product attribute among the three product attributes. This re inforces the pre-existing perception that customer service reputation is a key factor that is evaluated by the prospective customers. Second, branch hours (34.2 %) as a product attribute is another important attribute that is evaluated by the customers. Positioning of ATMs is the third parameter that is used during customer evaluation (17.1 %).These results highlight the importance of customer service reputation in the Indian banking industry. Indian banks must attempt to improve the customer perception to gain a competitive advantage. An improved service reputation assists the bank in improving the competitive position of the brand. For a new player that is seeking entry in the industry, investments must be enjoin to improving the customer experience and customer perception about the same.Next important parameter is the timings of the branches. As seen, usual timings from 9-4 PM are the least preferred. Customers look forward to some sort of facility in this regard. It can either be related to longer branch timings like 9-7 PM or branches beingness open on weekends. Since the respondent set had people with and without work experience, option of branch hours extending after the usual 4 PM is useful to the working professional. Finally, the positioning of ATM is another important parameter evaluated by the customers. ATM location at the branches and at other places is an attractive preposition.Since it is an exploratory study, there is a go on need for a study with a bigger respondent set and product attributes that would throw deeper insights into the importance of other product attributes to the Indian consumers.