Definition of Marketing
According to Kotler (2000), the term marketing can be defined as being a societal process by which individuals and groups obtain what they need and want through creating, offering, and freely exchanging products and services of value with others.
But as Cooke et al. (1992) state, definitions of marketing change as a result of environmental changes, or because our knowledge of the subject improves, or indeed through a combination of these two reasons.
This statement from Cooke et al. (1992) is proven true by a new definition issued by the AMA in 2004 (Keefe 2004), which now defines marketing as “an organizational function and set of processes for creating, communicating and delivering value to customers and for managing customer relationships in a way that benefits both the organization and the stakeholder.”
While this new description still puts emphasis on process – that is fundamental to marketing – we also notice that the words ‘value’, ‘managing customer relationships’ and ‘stakeholders’ have been brought to centre stage.
2.2 Marketing in Banking
Deryk Weyer, ex President of the Institute of Bankers and ex Chairman of Barclays Bank UK, defines the bank marketing as “a process, consisting of identifying the most profitable markets now and in future; assessing the present and the future needs of the customers; setting business development goals and making plans to meet them; and managing various services and promoting them to achieve the plans – all in the context of a changing environment in the market” (B. Subbaiah, 2012)
Marketing scope in banking industry should be considered under the service marketing framework. P. Ekerete (2005) divides banks’ offerings in two broad categories namely consumer finance and corporate finance. This study focuses on consumer finance, which is, retail banking.
Retail banking has been undergoing a revolution since the abolition of controls and apart from size there is little to differentiate banking institutions from one another (Richardson & Robinson, 1986).
The adoption and implementation of the marketing concept by banking institutions have been slow but profitable in many countries while in many other ones they are still product-oriented. Nevertheless, the traditional product-oriented banks are becoming increasingly customer-oriented focusing more and more on customer loyalty.
This change is due to the fact that every business wants profit, and to increase profit they need to increase their customer base. Through marketing, banks introduce their offerings to the target market. Through marketing, potential customer is generated; and when these customers use the service of the organization it increases its profitability (Mansor, Abdullah & Rahim, 2011).
According to Önce (2000), sited by Mubeen (2012), marketing in the banking sector is considered of great importance because of change in demographics, intense competition in the industry and to increase the profits. Prof. Dr. Günal Önce also divides the bank marketing activities into 5 categories:
Promotion oriented marketing comprehension
Marketing comprehension based on having close relations for customers
Reformist marketing comprehension
Marketing comprehension that focused on specializing in certain areas
Research, planning and control oriented marketing comprehension
2.3 Marketing Mix in Banking Industry
According to Chai Lee Goi (2009), Borden (1965) claims to be the first to have used the term marketing mix and that it was suggested to him by Culliton’s (1948). But (Bennett, 1997) mentions that McCarthy (1964) offered the “marketing mix”, often referred to as the “4Ps”, as a means of translating marketing planning into practice.
The concept of 4Ps has been criticized by number of studies, examples Lauterborn (1990), Möller (2006), Popovic (2006) and Fakeideas (2008). However, inspite of its deficiencies, the 4Ps remain a staple of the marketing mix. For Chai Lee Goi