DISSERTATION REPORT ON

Relationship Orientation in government banks

from Cons Perspective

Submitted for partial fulfillment of the requirements

for the degree of

Masters in Business Administration

UNDER THE GUIDANCE OF:
SUBMITTED BY:
Dr. Sushil Sharma
Rahul Aggarwal
Reader
MBA (General) (F)
Department of Management
Class Roll No. 24
Kurukshetra University

SUBMITTED TODEPARTMENT OF MANAGEMENT

KURUKSHETRA UNIVERSITY

KURUKSHETRA
Session 2013-15

CONTENTS
Declaration
Guide Certificate
Acknowledgement
Preface
Chapter No.

Title

One: -

Introduction to the Project

1.
2.
3.
4.

Introduction about relationship marketing

The domain and conceptual foundations of relationship marketing
Introduction about banking sector in India
CRM in banking sector and model design for banking
performance enhancement

Two: -

Objective of the study

Three: -

Scope of the study

Four:-

Review of literature

Five: -

Research Methodology

Six: -

Data Interpretation & Analysis

Seven: -

Limitations And Suggestions

Conclusion
Sample Questionnaire

Page No. (s)

DECLARATION

I RAHUL AGGARWAL hereby declares that the Project Report entitled Relationship
orientation in government banks from cons perspective submitted to Kurukshetra
University, Kurukshetra for the completion of Degree of Master Of Business Administration
through Department of Mamagement Kurukshetra University, Kurukshetra is my original
work and the same has not been submitted to any other Institute for the award of any other
degree or diploma.

Signature of the student

(Rahul Aggarwal)

GUIDE CERTIFICATE
Department Of Business Administration
[Department of Management Kurukshetra University]
Thaneser, Kurukshetra- Haryana
Certified that Mr. Rahul Aggarwal, Class Roll No.24, a Student of Master
Of Business Administration in the Department Of management, Kurukshetra University,
Kurukshetra has successfully completed the Project Report entitled
Relationship
orientation in government banks from cons perspective in Haryana Under my guidance
towards the partial fulfillment of his Master Of Business Administration Degree.

(Report Guide)
Dr, Sushil Sharma
MBA Deptt.

ACKNOWLEDGEMENT
No task is a single persons Endeavour. Various factors, situations and people integrated to
provide the back ground for the accomplishment the task. Behind this work like, the kind
help, assistance and valuable advice of many people to whom I will remain indebted.
I therefore take this opportunity to express my heartful thanks to the Management of THE
LOCAL GOVERNMENT BANKS for helping me in completing my research on
Organizational Climate in esteemed organization.
I wish to regard my profound gratitude to Dr. Sushil Sharma for constant Endeavour to enable
me to make this project report to a successful contribution and to others who provide moral
support throughout the whole research.

Rahul Aggarwal
MBA 2nd Year.

PREFACE
Organization climate is what your customer feels during any or all of their relationship with
your organization. In other words organization climate has its roots in the feeling that people
who make up an organization have about organization.
Organization climate is very necessary for better job performance and
productivity. There is positive relationship between performance and organizational climate.
HRD plays an important role for understanding emotional state of organization climate of
employees.
I have choose organization climate as topic of my study because it holds key
role in industrial development. Organization climate kelps in understanding pleasurable state
of employees with their job.
To fulfill the led objective I received the help from local government banks and
their customers. My topic of study is organization climate which examines the internal
environment of company.

INTRODUCTION
INTRODUCTION ABOUT RELATIONSHIP MARKETING
Relationship Marketing is emerging as a new phenomenon. However, relationship oriented
marketing practices date back to the pre-Industrial era. In this article, we trace the history of
marketing practices and illustrate how the advent of mass production, the emergence of
middlemen, and the separation of the producer from the consumer in the Industrial era led to
a transactional focus of marketing. Now, due to technological advances, direct marketing is
staging a comeback, leading to a relationship orientation. The authors contend that with the
evolution of Relationship Marketing, the hitherto prominent exchange paradigm of marketing
will be insufficient to explain the growing marketing phenomena of collaborative
involvement of customers in the production process. An alternate paradigm of marketing
needs to be developed that is more process rather than outcome oriented, and emphasizes
value creation rather than value distribution.
Although marketing practices can be traced back as far as 7000 B.C. (Carratu, 1987),
marketing thought as a distinct discipline was borne out of economics around the beginning
of this century. As the discipline gained momentum, and developed through the first three
quarters of the twentieth century, the primary focus was on transactions and exchanges.
However, the development of marketing as a field of study and practice is undergoing a
reconceptualization in its orientation from transactions to relationships (Kotler, 1990;
Webster, 1992). The emphasis on relationships as opposed to transaction based exchanges is
very likely to redefine the domain of marketing (Sheth et al., 1988). Indeed, the emergence of
a relationship marketing school of thought is imminent given the growing interest of
marketing scholars in the relational paradigm.
In this, we observe, that the paradigm shift from transactions to relationships is associated
with the return of direct marketing both in business-to-business (BTB) and business-toconsumer (BTC) markets. As in the pre-industrial era (characterized by direct marketing
practices of agricultural and artifact producers) once again direct marketing, albeit in a
different form, is becoming popular, and consequently so is the relationship orientation of
marketers. When producers and consumers directly deal with each other, there is a greater
potential for emotional bonding that transcends economic exchange. They can understand and
appreciate each others' needs and constraints better, are more inclined to cooperate with one
another, and thus, become more relationship oriented. This is in contrast to the exchange
orientation of the middlemen (buyers and sellers). To the middlemen, especially the
wholesalers, the economics of transactions are more important, and therefore, they are less
emotionally attached to products.
Indeed, many middlemen do not physically see, feel, touch, products but simply act as agents
and take title to the goods for financing and risk sharing. The separation of the producers
from the users was a natural outgrowth of the industrial era. On the one hand, mass
production forced producers to sell through middlemen, and on the other, industrial
organizations, due to specialization of corporate functions, created specialist purchasing
departments and buyer professionals, thus separating the users from the producers. However,

today's technological advancements that permit producers to interact directly with large
numbers of users (for example, Levi's making custom products directly for the users), and
because of a variety of organizational development processes, such as empowerment and total
quality programs, direct interface between producers and users has returned in both consumer
and industrial markets, leading to a greater relational orientation among marketers. Academic
researchers are reflecting these trends in marketing practice, and searching for a new
paradigm of the discipline that can better describe and explain it.
As with each new shift in the focus of marketing, there are advocates and critics of the
relationship focus in marketing. However, in the same way as Kotler (1972, p. 46) observed
about other shifts in marketing, we believe that the emergence of a relationship focus will
provide a "refreshed and expanded self concept" to marketing. Our optimism stems from at
least four observations: (i) relationship marketing has caught the fancy of scholars in many
parts of the world, including North America, Europe, Australia and Asia, as is evident from
the participation in some of the recent conferences held on this subject (Sheth and Parvatiyar,
1994); (ii) its scope is wide enough to cover the entire spectrum of marketing's sub
disciplines, including channels, BTB marketing, services marketing, marketing research,
customer behavior, marketing communication, marketing strategy, international marketing
and direct marketing; (iii) like other sciences, marketing is an evolving discipline, and has
developed a system of extension, revision and updating its fundamental knowledge (Bass,
1993); and (iv) scholars who at one time were leading proponents of the exchange paradigm,
such as Bagozzi (1974), Kotler (1972), and Hunt (1983), are now intrigued by the relational
aspects of marketing (Bagozzi, 1994; Kotler, 1994; Morgan and Hunt, 1994). In the context
of these developments, the purpose of this paper is to trace the evolution of relationship
marketing and to identify its antecedents. We plan to demonstrate that while relationship
focus in the post-industrial era is a clear paradigm shift from the exchange focus of the
industrial era, it is really a rebirth of marketing practices of the pre-industrial age when the
producers and users were also sellers and buyers and engaged in market behaviors that
reduced the uncertainty of future supply and demand assurances which could not be
otherwise guaranteed due to the unpredictability of weather, raw materials, and customers'
buying power. Our approach mirrors the activities recommended by Savitt (1980) as the
appropriate methodology for conducting historical research.
There is considerable evidence that organizations are increasingly applying relationship
marketing concepts in mass markets. The business press abounds with examples, ranging
from Citibank usage rewards to Saturn picnics (e.g., Aaker 1994). These various approaches
to developing stronger bonds with customers are typically characterized as customer retention
programs, loyalty based management or one-to-one marketing strategies (Reichheld 1996,
Peppers and Rogers 1993). Many of these new marketing practices have been enabled by
advances in information and communications technology and the availability of new
exchange forums such as the World-Wide-Web and the Internet. The focus of relationship
marketing is frequently considered to be customer retention because retention is less costly
than acquisition (Fornell and Wernerfelt 1987; Reichheld 1996) and small increases in
retention rates can have a dramatic effect on the profits of a company (Fornell and Wernerfelt
1987, 1988; Reichheld and Sasser 1990). For example, existing customers tend to purchase
more than new customers (e.g., Rose 1990); and, in most cases, there are efficiencies in
dealing with existing customers as compared to new customers (Reichheld 1996). However,
relationship marketing can refer to all marketing activities directed toward establishing,
developing and maintaining successful relational exchanges (Morgan and Hunt 1994, p.22).
Thus, following Berry (1983, p. 25), we define relationship marketing as marketing activities
that attract, maintain and enhance customer relationships. This chapter focuses on

relationship marketing in mass markets -- that is, in markets in which customers (that is,
potentially large numbers of end users) make exchanges involving goods or services with
manufacturers or service providers. Our view of exchange is not restricted to economic
resources alone -- marketers have long recognized that exchanges can involve social and
psychological resources, as well as economic resources (e.g., Bagozzi 1979).
Specifically, exchanges can involve the transfer of psychological or social resources such as
status, esteem, understanding, affect, information, and time -- as well as economic resources
such as money, goods and services (Foa and Foa 1976). In the remainder of this chapter, we
will address two questions: (1) What are the conditions under which relationship marketing
will be effective in mass markets? (2) What marketing strategies will be most appropriate in
influencing relationship processes and outcomes under these different conditions?
The rest of the chapter addresses the above issues in the following way. First, we discuss the
necessary conditions for a relationship to develop between a customer and an organization.
Next, given that necessary conditions are satisfied, we describe the key product category
characteristics that motivate customers to engage in relational behaviors. Third, we provide a
model that outlines the evaluation process by which customers decide to withdraw, maintain
or enhance a particular relationship. Having outlined the model, we discuss the various
strategies that marketers use to influence parts of this decision process and achieve desired
relational outcomes. We finish the chapter with some key research issues that need to
addressed in the field of relationship marketing in mass markets.
NECESSARY CONDITIONS FOR RELATIONSHIP MARKETING
A relationship develops between a customer and an organization when there are benefits to
both from one or more exchanges. For a profit maximizing firm, the benefits of a relationship
with end users arise from the economics of retention (Reichheld 1996), insulation from
competition (Anderson and Sullivan 1994), and so forth. For the customer, the benefits of a
relationship with the organization include customization and decreased costs due to
efficiencies in dealing with known suppliers, including lower search costs and risk reduction
(Sheth and Parvatiyar 1995). In this section, we discuss some necessary conditions for an
exchange relationship to exist.
Customization- Relationship marketing in mass markets requires that the market consists of
different benefit segments that can potentially be served by differentiated products. In other
words, customization must be possible within the product category for relationships to
develop -- via products (including branding and image), people or technology. Mass
customization is generally considered a tool to build loyalty when mass-market quality is no
longer a sufficient differentiator (Gilmore and Pine 1997). Mass customization began in
service industries, where customization is necessary due to simultaneity of production and
consumption. Service operations or employees may customize the process and/or the
outcome of the service for the customer. For example, a service organization can customize
the process by offering a customer alternative appointment times when a visit to the
customer's premises is required, or it can customize the outcome by offering a customer
tailored product bundles. In manufacturing industries, mass customization entails the use of
flexible processes, structure and management to produce varied and even individualized
products at the low cost of standardized, mass-production systems with short cycle times. For
example, the IBM System/360 has modules for varied configuration needs; Motorola
manufactures a great variety of pagers. At the extreme, many organizations desire one-to-one
relationships with their customers (Peppers and Rogers 1993). Technology has begun to make
such customization possible through the use of multiple media such as telephones, electronic

mail and the world-wide-web for order taking or registering complaints. For example, the
package tracking pages available at the Fedex and UPS web pages can be customized to meet
a particular customers information needs (Hoffman and Novak 1996).
Customer Intimacy- Relationships involve one or more exchanges over time. However, a key
feature of relationship marketing is its explicit recognition that exchanges between
organizations and customers extend beyond strict economic boundaries (Hunt and Morgan
1994). For example, it recognizes that emotions -- as well as cognition -- play a role in the
relationship between the buyer and the seller. In mass markets, relationship marketing can
facilitate customer intimacy by invoking emotions in a variety of contexts. Broadcast media
can create a sense of identification or affiliation with the organization. Organizational
procedures can influence customers perceptions of the fairness of the exchange relationship
(Lind and Tyler 1988). Substantively personalized service can influence customers
perceptions of the helpfulness and friendliness of the organization (Surprenant and Solomon
1987). In favorable situations, these circumstances can invoke emotions such as happiness,
pride, and achievement. In unfavorable situations, these same circumstances can invoke
emotions such as anger and frustration. Customers and employees in organizations who
engage in favorable relationships feel a sense of commitment or connection towards one
another (Morgan and Hunt 1994).
Two Way Interactions-The very notion of an exchange relationship between the organization
and the customer requires a (direct) two way interaction. In mass markets, organizations
typically have a variety of ways of contacting customers via the marketing mix. To practice
relationship marketing in mass markets, managers must ask: Can customers contact the
organization? In service organizations, the customer frequently interacts with the organization
when he/she comes in contact with service employees, such as salesperson, a customer
service representative or a service provider (e.g., the claim taker at an insurance company). In
manufacturing firms, the customer interacts with the organization by mail, toll free telephone
numbers, sweepstakes and contests, e-mail addresses and the world-wide web. Many
organizations keep the addresses and/or phone numbers of their customers on file so that they
can respond to customers who contact them by sending newsletters, information on upcoming
events and appointments, and so forth thereby fostering the relationship. In the case of
computer mediated environments, Hoffman and Novak (1996) have proposed a many-tomany communication model in which customers can actively take part in providing
immediate, iterative feedback to the manufacturer or service provider. At the extreme, two
way interactions occur on a one-to-one basis. For example, amazon.com is a virtual bookstore
for customers with access to the world-wide web. These two way interactions can also reduce
the propensity of customers to switch to new suppliers as customers invest in educating their
suppliers about their needs and have to start all over again with a new supplier (Hart 1996).
Extended Time Intervals-The relationship between an organization and a customer occurs
over a time interval that may encompass one or more exchanges. However, even if the
interval includes a single monetary transaction, the exchange relationship often extends
beyond the time of the actual sale. Since the exchange involves psychological/social
resources, as well as economic resources, the duration of the relationship includes the various
stages of the selling process -- either prior to a particular sales transaction (e.g., interior
decoration or real estate), during the sale (e.g., automobiles), or afterwards (e.g., maintenance
and repair of appliances). In the case of multiple exchanges, the relationship can include
regular or intermittent transactions (e.g., hairdresser, dentist, massage therapist), or
continuous transactions (e.g., telephone companies, electric utilities and cable television).

THE DOMAIN
MARKETING

AND

CONCEPTUAL

FOUNDATIONS

OF

RELATIONSHIP

In the current era of intense competition and demanding customers, relationship marketing
has attracted the expanded attention of scholars and practitioners. Marketing scholars are
studying the nature and scope of relationship marketing and developing conceptualizations
regarding the value of cooperative and collaborative relationship between buyers and sellers
as well as the relationship between different marketing actors, including suppliers,
competitors, distributors and internal functions in creating and delivering customer value.
Many scholars with interests in various sub-disciplines of marketing, such as channels,
services marketing, business-to-business marketing, advertising, and so forth, are actively
engaged in studying and exploring the conceptual foundations of relationship marketing.
However, the conceptual foundations of relationship marketing are not fully developed as yet.
The current growth in the field of relationship marketing is somewhat similar to what we
experienced in the early stages of the development of the discipline of consumer behavior.
There is a growing interest in the subject matter and many explorations are underway to
finding its conceptual foundations. In the floodgate of knowledge, such diverse perspectives
are required for understanding this growing phenomenon. Each exploration offers a
perspective that should help in further conceptualization of the discipline of relationship
marketing. As Seth (1996) observed that for a discipline to emerge, it is necessary to build
conceptual foundations and develop theory that will provide purpose and explanation for the
phenomenon. This is how consumer behavior grew to become a discipline and now enjoys
central position in marketing knowledge. We expect relationship marketing to undergo a
similar growth pattern and soon become a discipline into itself.
The purpose of this chapter is to provide a synthesis of existing knowledge on relationship
marketing by integrating diverse explorations. In the following section, we discuss what
relationship marketing is, examine its various perspectives, and offer a definition of
relationship marketing. Subsequently, we trace the paradigmatic shifts in the evolution of
marketing theory that have led to the emergence of a relationship marketing school of
thought. We also identify the forces impacting the marketing environment in recent years
leading to the rapid development of relationship marketing practices. A typology of
relationship marketing programs is presented to provide a parsimonious view of the domain
of relationship marketing practices. We then describe a process model of relationship
marketing to better delineate the challenges of relationship formation, its governance, its
performance evaluation, and its evolution. Finally, we examine the domain of current
relationship marketing research and the issues it needs to address in the future.
What is Relationship Marketing?
Before we begin to examine the theoretical foundations of relationship marketing, it will be
useful to define what the term relationship marketing means. As Nevins (1995) points out, the
term relationship marketing has been used to reflect a variety of themes and perspectives.

Some of these themes offer a narrow functional marketing perspective while others offer a
perspective that is broad and somewhat paradigmatic in approach and orientation.

Narrow versus Broad Views of Relationship Marketing

One narrow perspective of relationship marketing is database marketing emphasizing the
promotional aspects of marketing linked to database efforts (Bickert 1992). Another narrow,
yet relevant, viewpoint is to consider relationship marketing only as customer retention in
which a variety of after marketing tactics is used for customer bonding or staying in touch
after the sale is made (Vavra 1991). A more popular approach with recent application of
information technology is to focus on individual or one-to-one relationship with a customer
that integrates database knowledge with a long-term customer retention and growth strategy
(Peppers and Rogers 1993). Thus, Shani and Chalasani (1992) define relationship marketing
as an integrated effort to identify, maintain, and build up a network with individual
consumers and to continuously strengthen the network for the mutual benefit of both sides,
through interactive, individualized and value-added contacts over a long period of time.
Jackson (1985) applies the individual account concept in industrial markets to define
relationship marketing as marketing oriented toward strong, lasting relationships with
individual accounts . In other business contexts, Doyle and Roth (1992), ONeal (1989),
Paul (1988), and have proposed similar definitions of relationship marketing.
McKenna (1991) professes a more strategic view of relationship marketing by putting the
customer first and shifting the role of marketing from manipulating the customer (telling and
selling) to genuine customer involvement (communicating and sharing the knowledge).
Berry (1983), in somewhat broader terms, also has a strategic viewpoint about relationship
marketing. He stresses that attracting new customers should be viewed only as an
intermediate step in the marketing process. Developing closer relationship with these
customers and turning them into loyal ones are equally important aspects of marketing. Thus,
he defined relationship marketing as attracting, maintaining, and in multi-service
organizations enhancing customer relationships .
Berrys notion of relationship marketing resembles that of other scholars studying services
marketing, such as Gronroos (1983), Gummesson (1987), and Levitt (1981). Although each
one of them is espousing the value of interactions in marketing and its consequent impact on
customer relationships, Gronroos (1990) and Gummesson (1987) take a broader perspective
and advocate that customer relationships ought to be the focus and dominant paradigm of
marketing. For example, Gronroos (1990) states: Marketing is to establish, maintain, and
enhance relationships with customers and other partners, at a profit, so that the objectives of
the parties involved are met. This is achieved by a mutual exchange and fulfillment of
promises. The implication of Gronroos definition is that customer relationships is the
raison de etre of the firm and marketing should be devoted to building and enhancing such
relationships.
Morgan and Hunt (1994), draw upon the distinction made between transactional exchanges
and relational exchanges by Dwyer, Schurr, and Oh (1987), to propose a more inclusive
definition of relationship marketing. According to Morgan and Hunt (1994): Relationship
marketing refers to all marketing activities directed toward establishing, developing, and
maintaining successful relationships. Such a broadened definition has come under attack by

some scholars. Peterson (1995) declared Morgan and Hunts definition guilty of an error of
commission and states that if their definition is true, then relationship marketing and
marketing are redundant terms and one is unnecessary and should be stricken from the
literature because having both only leads to confusion. Other scholars who believe that
relationship marketing is distinctly different from prevailing transactional orientation of
marketing may contest such an extreme viewpoint.
Relationship Marketing versus Marketing Relationships
An interesting question is raised by El-Ansary (1997) as to what is the difference between
marketing relationships and relationship marketing? Certainly marketing relationships
have existed and have been the topic of discussion for a long time. But what distinguishes it
from relationship marketing is its nature and specificity. Marketing relationships could take
any form, including adversarial relationships, rivalry relationships, affiliation relationships,
independent or dependent relationships, etc. However, relationship marketing is not
concerned with all aspects of marketing relationships. The core theme of all relationship
marketing perspectives and definitions is its focus on cooperative and collaborative
relationship between the firm and its customers, and/or other marketing actors. Dwyer,
Schurr, and Oh (1987) have characterized such cooperative relationships as being
interdependent and long-term orientated rather than being concerned with short-term discrete
transactions. The long-term orientation is often emphasized because it is believed that
marketing actors will not engage in opportunistic behavior if they have a long-term
orientation and that such relationships will be anchored on mutual gains and cooperation
(Ganesan 1994).
Thus, the term relationship marketing and marketing relationships are not synonymous.
Relationship marketing describes a specific marketing approach that is a subset or a specific
focus of marketing. However, given the rate at which practitioners and scholars are
embracing the core beliefs of relationship marketing for directing marketing practice and
research, it has the potential to become the dominant paradigm and orientation of marketing.
As such, Kotler (1990), Parvatiyar and Seth (1997), Webster (1992) and others have
described the emergence of relationship marketing as a paradigm shift in marketing approach
and orientation. In fact, Seth, Gardner and Garrett (1988) observe that the emphasis on
relationships as opposed to transaction based exchanges is very likely to redefine the domain
of marketing.
De-limiting the Domain of Relationship Marketing
For an emerging discipline, it is important to develop an acceptable definition that
encompasses all facets of the phenomenon and also effectively de-limits the domain so as to
allow focused understanding and growth of knowledge in the discipline. Although Morgan
and Hunts definition focuses on the relational aspects of marketing, it is criticized for being
too broad and inclusive. They include buyer partnerships, supplier partnerships, internal
partnerships, and lateral partnerships within the purview of relationship marketing. Many of
these partnerships are construed as being outside the domain of marketing and hence face the
risk of diluting the value and contribution of the marketing discipline in directing relationship
marketing practice and research or theory development (Peterson 1995).
Therefore, Seth (1996) suggested that we limit the domain of relationship marketing to only
those cooperative and collaborative marketing actions that are focused on serving the needs
of customers. That would be consistent with marketings customer focus and understanding

that made the discipline prominent. Other aspects of organizational relationships, such as
supplier relationships, internal relationships, and lateral relationships are aspects being
directly attended to by such disciplines as purchasing and logistics management, human
resources management, and strategic management. Therefore, relationship marketing has the
greatest potential for becoming a discipline and developing its own theory if it de-limits its
domain to the firm-customer aspect of the relationship. However, to achieve mutually
beneficial relationship with customers, the firm may have to cooperate and collaborate with
its suppliers, competitors, consociates, and internal divisions. The study of such relationships
is a valid domain of relationship marketing as long as it is studied in the context of how it
enhances or facilitates customer relationships.
Towards a Definition of Relationship Marketing
An important aspect of Berry, Gronroos, and Morgan and Hunt definitions is that they all
recognize the process aspects of relationship development and maintenance. A set of generic
processes of relationship initiation, relationship maintenance and relationship termination is
also identified by Heide (1994). His definition claims that the objective of relationship
marketing is to establish, develop, and maintain successful relational exchanges.
Wilson (1995) develops a similar process model of buyer-seller cooperative and partnering
relationships by integrating conceptual and empirical researches conducted in this field. Thus,
a process view of relationship marketing currently prevails the literature and indicates that the
discipline is in its early stages of development whereby marketing practice and research
needs to be directed to the different stages of the relationship marketing process.
In addition to the process view, there is general acceptance that relationship marketing is
concerned with cooperative and collaborative relationships between the firm and its
customers. Such cooperative and collaborative relationships are more than a standard buyerseller relationship, yet short of a merger or acquisition relationship. They are formed between
the firm and one or many of its customers, including end-consumers, distributors or channel
members, and business-to-business customers. Also, a prevailing axiom of relationship
marketing is that cooperative and collaborative relationships with customers lead to greater
market value creation and that such value will benefit both parties engaged in the
relationship. Creation and enhancement of mutual economic value is thus the purpose of
relationship marketing. Hence, we define:
Relationship marketing is the ongoing process of engaging in cooperative and collaborative
activities and programs with immediate and end-user customers to create or enhance mutual
economic value, at reduced cost.
There are three underlying dimensions of relationship formation suggested by the above
definition: purpose, parties, and programs. We will use these three dimensions to illustrate a
process model of relationship marketing. Before we present this process model, let us
examine the antecedents to the emergence of relationship marketing theory and practice.
The Emergence of Relationship Marketing School of Thought
As is widely known, the discipline of marketing grew out of economics, and the growth was
motivated by a lack of interest among economists in the details of market behavior and
functions of middlemen (Bartels 1976; Seth, Gardener, and Garrett 1988). Marketings early

bias for distribution activities is evident as the first marketing courses (at Michigan and Ohio)
were focused on effectively performing the distributive task (Bartels 1976). Early marketing
thinking centered on efficiency of marketing channels (Cherrington 1920; Shaw 1912; Weld
1916, 1917). Later the institutional marketing thinkers, because of their grounding in
institutional economic theory, viewed the phenomena of value determination as
fundamentally linked to exchange (Alderson 1954; Duddy and Revzan 1947). Although
institutional thought of marketing was later modified by the organizational dynamics
viewpoint and marketing thinking was influenced by other social sciences, exchange
remained the central tenet of marketing (Alderson 1965; Bagozzi 1974, 1978, 1979; Kotler
1972).
Shift from Distribution Functions to Understanding Consumer Behavior
The demise of the distributive theory of marketing began after World War II as marketing
focus began to shift from distributive functions to other aspects of marketing. With the advent
of market research, producers, in an attempt to influence end consumers, began to direct and
control the distributors regarding product merchandising, sales promotion, pricing, etc. Thus
repeat purchase and brand loyalty gained prominence in the marketing literature (Barton
1946; Churchill 1942; Howard and Seth 1969; Seth 1973; Womer 1944). Also market
segmentation and targeting were developed as tools for marketing planning. Thus the
marketing concept evolved and consumer, not distributor, became the focus of marketing
attention (Kotler 1972). And producers, in order to gain control over the channels of
distribution, adopted administered vertical marketing systems (McCammon 1965). These
vertical marketing systems, such as franchising and exclusive distribution rights permitted
marketers to extend their representation beyond their own corporate limits (Little 1970).
However, marketing orientation was still transactional as its success was measured in such
transactional terms as sales volume and market share. Only in the 80s, marketers began to
emphasize customer satisfaction measures to ensure that they were not purely evaluated on
the basis of transactional aspects of marketing and that sale was not considered as the
culmination of all marketing efforts.
Early Relationship Marketing Ideas
Although Berry (1983) formally introduced the term relationship marketing into the
literature, several ideas of relationship marketing emerged much before then. For example,
McGarry (1950, 1951, 1953, and 1958) included six activities in his formal list of marketing
functions: contactual function, propaganda function, merchandising function, physical
distribution function, pricing function, and termination function. Of these, the contactual
function falling within the main task of marketing reflected McGarrys relational orientation
and his emphasis on developing cooperation and mutual interdependency among marketing
actors. For example, he suggested that:
1.
2.
3.
4.
5.

Contractual function is the building of a structure for cooperative

action;
Focus on the long-run welfare of business and continuous business relationship;
Develop an attitude of mutual interdependence;
Provide a two-way line of communication and a linkage of their interests;
Cost of dealing with continuous contact is much less than casual contacts; by selling
only to regular and consistent customers costs can be reduced by 10-20% (Schwartz
1963).

McGarrys work has not been widely publicized and his relational ideas did not lead to the
same flurry of interest caused by Wroe Aldersons (1965) focus on inter and intra-channel
cooperation. Although the distributive theory of marketing does not anymore enjoy the
central position in marketing, interest in channel cooperation has been sustained for the last
three decades, and many relationship marketing scholars have emerged from the tradition of
channel cooperation research (Anderson and Narus 1990; Stern and El-Ansary 1992; Weitz
and Jap 1995). They have contributed significantly to the development of relationship
marketing knowledge and have been most forthcoming in applying various theoretical ideas
from other disciplines such as economics, law, political science, and sociology. These are
discussed in more detail in other sections of this chapter.
Two influential writings in the 60s and 70s provided an impetus to relationship marketing
thinking, particularly in the business-to-business context. First, Adler (1966) observed the
symbiotic relationships between firms that were not linked by the traditional marketerintermediary relationships. Later, Vardarajan (1986), and Vardarajan and Rajarathnam (1986),
examined other manifestations of symbiotic relationships in marketing. The second impetus
was provided by Johan Arndt (1979) who noted the tendency of firms engaged in business-tobusiness marketing to develop long-lasting relationships with their key customers and their
key suppliers rather than focusing on discrete exchanges, and termed this phenomenon
domesticated markets. The impacts of these works spread across two continents. In USA,
several scholars began examining long-term inter-organizational relationships in business-tobusiness markets, while in Europe, the Industrial Marketing and Purchasing (IMP) Group laid
emphasis on business relationships and networks (e.g., Anderson, Hakansson and Johanson
1994; Dwyer, Schurr and Oh 1987; Hakansson 1982; Halen, Johanson and Seyed-Mohamed
1991; Jackson 1985).
The Nordic School approach to services marketing was also relationship-oriented from its
birth in the 1970s (Gronroos and Gummesson 1985). This school believes that for effective
marketing and delivery of services, companies need to practice internal marketing and
involve the entire organization in developing relationships with their customers (Gronroos
1981). Except for the greater emphasis being placed on achieving marketing paradigm shift
by the Nordic School, its approach is similar to relationship marketing ideas put forth by
services marketing scholars in the United States (Berry 1983, 1995; Berry and Parsuraman
1991; Bitner 1995; Czepiel 1990). To a certain degree, recent scholars from the Nordic
Schools have tried to integrate the network approach popular among Scandinavian and
European schools with service relationship issues (Holmlund 1996).
As relationship marketing grew in 1980s and 1990s, several perspectives emerged. One
perspective of integrating quality, logistics, customer services, and marketing is found in the
works of Christopher, Payne, and Ballantyne (1992) and in the works of Crosby, Evans, and
Cowles (1987). Another approach of studying partnering relationships and alliances as forms
of relationship marketing are observed in the works of Morgan and Hunt (1994), Heide
(1994), and Vardarajan and Cunningham (1995). Similarly, conceptual and empirical papers
have appeared on relationship-oriented communication strategies (Mohr and Nevin 1990;
Owen 1984; Schultz, Tannenbaum, and Lauterborn 1992); supply chain integration
(Christopher 1994; Payne et. al. 1994); legal aspects of relationship marketing (Gundlach and
Murphy 1993); and consumer motivations for engaging in relationship marketing (Seth and
Parvatiyar 1995a).
The Emergence of Relationship Marketing Practice

As observed by Seth and Parvatiyar (1995b), relationship marketing has historical

antecedents going back into the pre-industrial era. Much of it was due to direct interaction
between producers of agricultural products and their consumers. Similarly artisans often
developed customized products for each customer. Such direct interaction led to relational
bonding between the producer and the consumer. It was only after industrial eras mass
production society and the advent of middlemen that there were less frequent interactions
between producers and consumers leading to transactions oriented marketing. The production
and consumption functions got separated leading to marketing functions being performed by
the middlemen. And middlemen are in general oriented towards economic aspects of buying
since the largest cost is often the cost of goods sold.
In recent years however, several factors have contributed to the rapid development and
evolution of relationship marketing. These include the growing de-intermediation process in
many industries due to the advent of sophisticated computer and telecommunication
technologies that allow producers to directly interact with end-customers. For example, in
many industries such as airlines, banks, insurance, computer program software, or household
appliances and even consumables, the de-intermediation process is fast changing the nature
of marketing and consequently making relationship marketing more popular. Databases and
direct marketing tools give them the means to individualize their marketing efforts. As a
result, producers do not need those functions formerly performed by the middlemen. Even
consumers are willing to undertake some of the responsibilities of direct ordering, personal
merchandising, and product use related services with little help from the producers. The
recent success of on-line banking, Charles Schwab and Merryll Lynchs on-line investment
programs, direct selling of books, automobiles, insurance, etc., on the Internet all attest to the
growing consumer interest in maintaining direct relationship with marketers.
The de-intermediation process and consequent prevalence of relationship marketing is also
due to the growth of the service economy. Since services are typically produced and delivered
at the same institution, it minimizes the role of the middlemen. A greater emotional bond
between the service provider and the service user also develops the need for maintaining and
enhancing the relationship. It is therefore not difficult to see that relationship marketing is
important for scholars and practitioners of services marketing (Berry and Parsuraman 1991;
Bitner 1995; Crosby and Stephens 1987; Crosby, et. al. 1990; Gronroos 1995).
Another force driving the adoption of relationship marketing has been the total quality
movement. When companies embraced Total Quality Management (TQM) philosophy to
improve quality and reduce costs, it became necessary to involve suppliers and customers in
implementing the program at all levels of the value chain. This needed close working
relationships with customers, suppliers, and other members of the marketing infrastructure.
Thus, several companies, such as Motorola, IBM, General Motors, Xerox, Ford, Toyota, etc.,
formed partnering relationships with suppliers and customers to practice TQM. Other
programs such as Just-in-time (JIT) supply and Material-resource planning (MRP) also made
the use of interdependent relationships between suppliers and customers (Frazier, Spekman,
and ONeal 1988).
With the advent of the digital technology and complex products, systems selling approach
became common. This approach emphasized the integration of parts, supplies, and the sale of
services along with the individual capital equipment. Customers liked the idea of systems
integration and sellers were able to sell augmented products and services to customers. The
popularity of system integration began to extend to consumer packaged goods, as well as
services (Shapiro and Posner 1979). At the same time some companies started to insist upon

new purchasing approaches such as national contracts and master purchasing agreements,
forcing major vendors to develop key account management programs (Shapiro and Moriarty
1980). These measures created intimacy and cooperation in the buyer-seller relationships.
Instead of purchasing a product or service, customers were more interested in buying a
relationship with a vendor. The key (or national) account management program designates
account managers and account teams that assess the customers needs and then husband the
selling companys resources for the customers benefit. Such programs have led to the
foundation of strategic partnering relationship programs within the domain of relationship
marketing (Anderson and Narus 1991; Shapiro 1988).
Similarly, in the current era of hyper-competition, marketers are forced to be more concerned
with customer retention and loyalty (Dick and Basu 1994; Reicheld 1996). As several studies
have indicated, retaining customers is less expensive and perhaps a more sustainable
competitive advantage than acquiring new ones. Marketers are realizing that it costs less to
retain customers than to compete for new ones (Rosenberg and Czepiel 1984). On the supply
side it pays more to develop closer relationships with a few suppliers than to develop more
vendors (Hayes et. al. 1988; Spekman 1988). In addition, several marketers are also
concerned with keeping customers for life, rather than making a one-time sale (Cannie and
Caplin 1991). In a recent study, Naidu, et. al. (1998) found that relationship marketing
intensity increased in hospitals facing a higher degree of competitive intensity.
Also, customer expectations have rapidly changed over the last two decades. Fueled by new
technology and growing availability of advanced product features and services, customer
expectations are changing almost on a daily basis. Consumers are less willing to make
compromises or trade-off in product and service quality. In the world of ever changing
customer expectations, cooperative and collaborative relationship with customers seem to be
the most prudent way to keep track of their changing expectations and appropriately
influencing it (Seth and Sisodia 1995).
Today, many large internationally oriented companies are trying to become global by
integrating their worldwide operations. To achieve this they are seeking cooperative and
collaborative solutions for global operations from their vendors instead of merely engaging in
transactional activities with them. Such customers needs make it imperative for marketers
interested in the business of companies who are global to adopt relationship marketing
programs, particularly global account management programs (Yip 1996). Global account
management (GAM) is conceptually similar to national account management programs
except that they have to be global in scope and thus they are more complex. Managing
customer relationships around the world calls for external and internal partnering activities,
including partnering across a firms worldwide organization.
A Process Model of Relationship Marketing
Several scholars studying buyer-seller relationships have proposed relationship development
process models (Borys and Jemison 1989; Dwyer, Schurr and Oh 1987; Evans and Laskin
1994; Wilson 1995). Building on that work and anchored to our definition of relationship
marketing as a process of engaging in cooperative or collaborative relationship with
customers, we develop a four-stage relationship marketing process model. The broad model
suggests that relationship-marketing process comprise of the following four sub-processes:
formation process; management and governance process; performance evaluation process;
and relationship evolution or enhancement process.

The Formation Process of Relationship Marketing

The formation process of relationship marketing refers to decisions regarding initiation of
relationship marketing activities for a firm with respect to a specific group of customers or
with respect to an individual customer with whom the company wishes to engage in a
cooperative or collaborative relationship. In the formation process, three important decision
areas relate to defining the purpose (or objectives) of engaging in relationship marketing;
selecting parties (or customer partners) for relationship marketing; and developing programs
(or relational activity schemes) for relationship marketing engagement.
Relationship Marketing Purpose
The overall purpose of relationship marketing is to improve marketing productivity and
enhance mutual value for the parties involved in the relationship. Relationship marketing has
the potential to improve marketing productivity and create mutual values by increasing
marketing effectiveness and/or improving marketing efficiencies (Sheth and Parvatiyar
1995a; Seth and Sisodia 1995). By seeking and achieving strategic marketing goals, such as
entering a new market, developing new product or technology, serving new or expanded
needs of customers, redefining the companys competitive playing field, etc. marketing
effectiveness could be enhanced. Similarly, by seeking and achieving operational goals, such
as reduction of distribution costs, streamlining order processing and inventory management,
reducing the burden of excessive customer acquisition costs, etc. firms could achieve greater
marketing efficiencies. Thus, stating objectives and defining the purpose of relationship
marketing helps clarify the nature of relationship marketing programs and activities that
ought to be performed by the partners. Defining the purpose would also help in identifying
suitable relationship partners who have the necessary expectations and capabilities to fulfill
mutual goals. It will further help in evaluating relationship marketing performance by
comparing results achieved against objectives. These objectives could be specified as
financial goals, marketing goals, strategic goals, operational goals, and general goals.
Similarly, in the mass-market context, consumers expect to fulfill their goals related to
efficiencies and effectiveness in their purchase and consumption behavior. Sheth and
Parvatiyar (1995a) contend that consumers are motivated to engage in relational behavior
because of the psychological and sociological benefits associated with reduction in choice
decisions. In addition, to their natural inclination of reducing choices, consumers are
motivated to seek the rewards and associated benefits offered in relationship marketing
programs of companies.
Relational Parties
Customer partner selection (or parties with whom to engage in cooperative or collaborative
relationships) is another important decision in the formation stage. Even though a company
may serve all customer types, few have the necessary resources and commitment to establish
relationship marketing programs for all. Therefore, in the initial phase, a company has to
decide which customer type and specific customers or customer groups will be the focus of
their relationship marketing efforts. Subsequently when the company gains experience and
achieve successful results, the scope of relationship marketing activities is expanded to
include other customers into the program or engage in additional programs (Shah 1997).
Although partner selection is an important decision in achieving relationship marketing goals,
not all companies have a formalized process of selecting customers. Some follow intuitive

judgmental approach of senior managers in selecting customer partners and others partner
with those customers who demand so. Yet other companies have formalized processes of
selecting relational partners through extensive research and evaluation along chosen criteria.
The criteria for partner selection vary according to company goals and policies. These range
from a single criterion such as revenue potential of the customer to multiple criteria including
several variables such as customer commitment, resourcefulness, management values, etc.
Relationship Marketing Programs
A careful review of literature and observation of corporate practices suggest that there are
three types of relationship marketing programs: continuity marketing; one-to-one marketing;
and, partnering programs. These take different forms depending on whether they are meant
for end-consumers, distributor customers, or business-to-business customers. Table 1 presents
various types of relationship marketing programs prevalent among different types of
customers. Obviously, marketing practitioners in search of new creative ideas develop many
variations and combinations of these programs to build closer and mutually beneficial
relationship with their customers.
Continuity Marketing Programs
Given the growing concern to retain customers as well as emerging the knowledge about
customer retention economics have led many companies to develop continuity marketing
programs that are aimed at both retaining customers and increasing their loyalty
(Bhattacharya 1998; Payne 1995). For consumers in mass markets, these programs usually
take the shape of membership and loyalty card programs where consumers are often
rewarded for their member and loyalty relationships with the marketers (Raphel 1995;
Richards 1995). These rewards may range from privileged services to points for upgrades,
discounts, and cross-purchased items. For distributor customers, continuity marketing
programs are in the form of continuous replenishment programs ranging anywhere from justin-time inventory management programs to efficient consumer response initiatives that
include electronic order processing and material resource planning (Law and Ooten 1993;
Persutti 1992). In business-to-business markets these may be in the form of preferred
customer programs or in special sourcing arrangements including single sourcing, dual
sourcing, and network sourcing, as well as just-in-time sourcing arrangements (Hines 1995;
Postula and Little 1992). The basic premise of continuity marketing programs is to retain
customers and increase loyalty through long-term special services that has a potential to
increase mutual value through learning about each other (Shultz 1995).
One-to-one Marketing
One-to-one or individual marketing approach is based on the concept of account-based
marketing. Such a program is aimed at meeting and satisfying each customers need uniquely
and individually (Peppers and Rogers 1995). What was once a concept only prevalent in
business-to-business marketing is now implemented in the mass market and distributor
customer contexts. In the mass market individualized information on customers is now
possible at low costs due to the rapid development in information technology and due to the
availability of scalable data warehouses and data mining products. By using on-line
information and databases on individual customer interactions, marketers aim to fulfill the
unique needs of each mass market customer. Information on individual customers is utilized
to develop frequency marketing, interactive marketing, and after marketing programs in order

to develop relationship with high yielding customers (File, Mack and Prince 1995; Pruden
1995). For distributor customers these individual marketing programs take the shape of
customer business development. For example, Procter and Gamble have established a
customer team to analyze and propose ways in which Wal-Marts business could be
developed. Thus, by bringing to bare their domain specific knowledge from across many
markets, Procter & Gamble is able to offer expert advice and resources to help build the
business of its distributor customer. Such a relationship requires cooperative action and an
interest in mutual value creation. In the context of business-to-business markets, individual
marketing has been in place for quite some time. Known as key account management
program, here marketers appoint customer teams to husband the company resources
according to individual customer needs. Often times such programs require extensive
resource allocation and joint planning with customers. Key account programs implemented
for multi-location domestic customers usually take the shape of national account management
programs, and for customers with global operations it becomes global account management
programs.
Partnering Programs
The third type of relationship marketing programs is partnering relationships between
customers and marketers to serve end user needs. In the mass markets, two types of
partnering programs are most common: co-branding and affinity partnering (Teagno 1995). In
co-branding, two marketers combine their resources and skills to offer advanced products and
services to mass market customers (Marx 1994). For example, Delta Airlines and American
Express have co-branded the Sky Miles Credit Card for gains to consumers as well as to the
partnering organizations. Affinity partnering program is similar to co-branding except that the
marketers do not create a new brand rather use endorsement strategies. Usually affinitypartnering programs try to take advantage of customer memberships in one group for crossselling other products and services. In the case of distributor customers, logistics partnering
and cooperative marketing efforts are how partnering programs are implemented. In such
partnerships the marketer and the distributor customers cooperate and collaborate to manage
inventory and supply logistics and sometimes engage in joint marketing efforts. For business
to business customers, partnering programs involving co-design, co-development and comarketing activities are not uncommon today (Mitchell and Singh 1996; Young, Gilbert and
McIntyre 1996).
Management and Governance Process
Once relationship marketing program is developed and rolled out, the program as well as the
individual relationships must be managed and governed. For mass-market customers, the
degree to which there is symmetry or asymmetry in the primary responsibility of whether the
customer or the program sponsoring company will be managing the relationship varies with
the size of the market. However, for programs directed at distributors and business customers
the management of the relationship would require the involvement of both parties. The
degree to which these governance responsibilities are shared or managed independently will
depend on the perception of norms of governance processes among relational partners given
the nature of their relationship marketing program and the purpose of engaging in the
relationship. Not all relationships are or should be managed a like, however several
researches suggest appropriate governance norms for different hybrid relationships (Borys
and Jemison 1989; Heide 1994; Sheth and Parvatiyar 1992).

Whether management and governance responsibilities are independently or jointly

undertaken by relational partners, several issues must be addressed. These include decisions
regarding role specification, communication, common bonds, planning process, process
alignment, employee motivation and monitoring procedures. Role specification relates to
determining the role of partners in fulfilling the relationship marketing tasks as well as the
role of specific individuals or teams in managing the relationships and related activities
(Heide 1994). Greater the scope of the relationship marketing program and associated tasks,
and the more complex is the composition of the relationship management team; the more
critical is the role specification decision for the partnering firms. Role specification also helps
in clarifying the nature of resources and empowerment needed by individuals or teams
charged with the responsibility of managing relationship with customers.
Communication with customer partners is a necessary process of relationship marketing. It
helps in relationship development, fosters trust, and provides the information and knowledge
needed to undertake cooperative and collaborative activities of relationship marketing. In
many ways it is the lifeblood of relationship marketing. By establishing proper
communication channels for sharing information with customers a company can enhance
their relationship with them. In addition to communicating with customers, it is also essential
to establish intra-company communication particularly among all concerned individuals and
corporate functions that directly play a role in managing the relationship with a specific
customer or customer group.
Although communication with customer partners help foster relationship bonds, conscious
efforts for creating common bonds will have a more sustaining impact on the relationship. In
business to business relationships, social bonds are created through interactions, however
with mass-market customers frequent face-to-face interactions will be uneconomical. Thus
marketers should create common bonds through symbolic relationships, endorsements,
affinity groups, membership benefits or by creating on-line communities. Whatever be the
chosen mode, creating value bonding, reputation bonding and structural bonding are useful
processes of institutionalizing relationship with customers (Seth 1994).
Another important aspect of relationship governance is the process of planning and the
degree to which customers need to be involved in the planning process. Involving customers
in the planning process would ensure their support in plan implementation and achievement
of planned goals. All customers are not willing to participate in the planning process nor is it
possible to involve all of them for relationship marketing programs for the mass market.
However, for managing cooperative and collaborative relationship with large customers, their
involvement in the planning process is desirable and sometimes necessary.
Executives are sometimes unaware, or they choose to initially ignore the nature of misalignment in operating processes between their company and customer partners, leading to
problems in relationship marketing implementation. Several aspects of the operating
processes need to be aligned depending on the nature and scope of the relationship. For
example, operating alignment will be needed in order processing, accounting and budgeting
processes, information systems, merchandising processes, etc.
Several human resource decisions are also important in creating the right organization and
climate for managing relationship marketing. Training employees to interact with customers,
to work in teams, and manage relationship expectations are important. So is the issue of
creating the right motivation through incentives, rewards, and compensation systems towards
building stronger relationship bonds and customer commitment. Although institutionalizing

the relationship is desirable for the long-term benefit of the company, personal relationships
are nevertheless formed and have an impact on the institutional relationship. Thus proper
training and motivation of employees to professionally handle customer relationships are
needed.
Finally, proper monitoring processes are needed to safeguard against failure and manage
conflicts in relationships. Such monitoring processes include periodic evaluation of goals and
results, initiating changes in relationship structure, design or governance process if needed,
creating a system for discussing problems and resolving conflicts. Good monitoring
procedures help avoid relationship destabilization and creation of power asymmetries. They
also help in keeping the relationship marketing program on track by evaluating the proper
alignment of goals, results and resources.
Overall, the governance process helps in maintenance, development, and execution aspects of
relationship marketing. It also helps in strengthening the relationship among relational
partners and if the process is satisfactorily implemented it ensures the continuation and
enhancement of relationship with customers. Relationship satisfaction for involved parties
would include governance process satisfaction in addition to satisfaction from the results
achieved in the relationship (Parvatiyar, Biong and Wathne 1998).
Performance Evaluation Process
Periodic assessment of results in relationship marketing is needed to evaluate if programs are
meeting expectations and if they are sustainable in the long run. Performance evaluation also
helps in making corrective action in terms of relationship governance or in modifying
relationship marketing objectives and program features. Without a proper performance
metrics to evaluate relationship marketing efforts, it would be hard to make objective
decisions regarding continuation, modification, or termination of relationship marketing
programs. Developing a performance metrics is always a challenging activity as most firms
are inclined to use existing marketing measures to evaluate relationship marketing. However,
many existing marketing measures, such as market share and total volume of sales may not
be appropriate in the context of relationship marketing. Even when a more relationship
marketing oriented measures are selected, it cannot be applied uniformly across all
relationship marketing programs particularly when the purpose of each relationship
marketing program is different from the other. For example, if the purpose of a particular
relationship marketing effort is to enhance distribution efficiencies by reducing overall
distribution cost, measuring the programs impact on revenue growth and share of customers
business may not be appropriate. In this case, the program must be evaluated based on its
impact on reducing distribution costs and other metrics that is aligned with those objectives.
By harmonizing the objectives and performance measures one would expect to see a more
goal directed managerial action by those involved in managing the relationship.
For measuring relationship marketing performance, a balanced scorecard that combines a
variety of measures based on the defined purpose of each relationship marketing program (or
each cooperative/collaborative relationship) is recommended (Kaplan and Norton 1992). In
other words, the performance evaluation metrics for each relationship or relationship
marketing program should mirror the set of defined objectives for the program. However,
some global measures of the impact of relationship marketing effort of the company are also
possible. Srivastava, et. al. (1998) recently developed a model to suggest the asset value of
cooperative relationships of the firm. If cooperative and collaborative relationship with
customers is treated as an intangible asset of the firm, its economic value-add can be assessed

using discounted future cash flow estimates. In some ways, the value of relationships is
similar to the concept of brand equity of the firm and hence many scholars have alluded to
the term relationship equity (Bharadwaj 1994; Peterson 1995). Although a well-accepted
model for measuring relationship equity is not available in the literature as yet, companies are
trying to estimate its value particularly for measuring the intangible assets of the firm.
Another global measure used by firms to monitor relationship marketing performance is the
measurement of relationship satisfaction. Similar to the measurement of customer
satisfaction, which is now widely applied in many companies, relationship satisfaction
measurement would help in knowing to what extent relational partners are satisfied with their
current cooperative and collaborative relationships. Unlike customer satisfaction measures
that are applied to measure satisfaction on one side of the dyad, relationship satisfaction
measures could be applied on both sides of the dyad. Both the customer and the marketing
firm have to perform in order to produce the results in a cooperative relationship and hence
each partys relationship satisfaction could be measured (Biong, Parvatiyar and Wathne
1996). By measuring relationship satisfaction, one could estimate the propensity of either
partys inclination to continue or terminate the relationship. Such propensity could also be
indirectly measured by measuring customer loyalty (Reicheld and Sasser 1990). When
relationship satisfaction or loyalty measurement scales are designed based on its antecedents,
it could provide rich information on their determinants and thereby help companies identify
those managerial actions that are likely to improve relationship satisfaction and/or loyalty.
Evolution Process of Relationship Marketing
Individual relationships and relationship marketing programs are likely to undergo evolution
as they mature. Some evolution paths may be pre-planned, while others would naturally
evolve. In any case, several decisions have to be made by the partners involved about the
evolution of relationship marketing programs. These include decisions regarding the
continuation, termination, enhancement, and modifications of the relationship engagement.
Several factors could cause the precipitation of any of these decisions. Amongst them
relationship performance and relationship satisfaction (including relationship process
satisfaction) are likely to have the greatest impact on the evolution of the relationship
marketing programs. When performance is satisfactory, partners would be motivated to
continue or enhance their relationship marketing program (Shah 1997; Shamdashani and
Sheth 1995). When performance does not meet expectations, partners may consider
terminating or modifying the relationship. However, extraneous factors could also impact
these decisions. For example, when companies are acquired, merged, or divested many
relationships and relationship marketing programs undergo changes. Also, when senior
Corporate executives and senior leaders in the company move relationship marketing
programs undergo changes. Yet, there are many collaborative relationships that are terminated
because they had planned endings. For companies that can chart out their relationship
evolution cycle and state the contingencies for making evolutionary decisions, relationship
marketing programs would be more systematic.
Relationship Marketing Research Directions
Wilson (1995) classified relationship marketing research directions into three levels: concept
level, model level and process research. At the concept level he indicated the need to improve
concept definitions and its operationalization. Concept level research relates to identifying,
defining and measuring constructs that are either successful predictors or useful measures of

relationship performance. Several scholars and researchers have recently enriched our
literature with relevant relationship marketing concepts and constructs. These include such
constructs as trust, commitment, interdependence, interactions, shared values, power
imbalance, adaptation, mutual satisfaction, etc. (Doney and Cannon 1997; Gundlach and
Cadotte 1994; Kumar, Scheer and Steenkamp 1995; Lusch and Brown 1996; Morgan and
Hunt 1994; Smith and Barclay 1997).
At the model level, scholars are interested in presenting integrative ideas to explain how
relationships are developed. Several integrative models have recently begun to emerge
providing us a richer insight into how relationships work and what impacts relationship
marketing decisions. The IMP Interaction model (Hakansson 1982) was based upon insights
obtained on more than 300 industrial marketing relationships. By identifying the interactions
among actors, the IMP model traces the nature and sources of relationship development. The
IMP model and its research approach have become a tradition for many scholarly research
endeavors in Europe over the past 15 years or more. The network model (Anderson,
Johansson and Hakansson 1994; Iacobucci and Hopkins 1992) uses the social network theory
to trace how relationships are developed among multiple actors and how relationship ties are
strengthened through networks. Bagozzi (1995) makes a case for more conceptual models to
understand the nature of group influence on relationship marketing.
A more evolutionary approach of integrative models is to look at the process flow of
relationship formation and development. Anderson and Narus (1991) and Dwyer, Schurr and
Oh (1987) along with numerous other scholars have contributed towards our understanding of
the relationship process model. By looking at the stages of the relationship development
process, one could identify which constructs would actively impact the outcome
considerations at that stage and which of them would have latent influences (Wilson 1995).
The process model of relationship formation, relationship governance, relationship
performance, and relationship evolution described in the previous section is an attempt to add
to this stream of knowledge development on relationship marketing.
For practitioners, process level research could provide useful guidelines in developing and
managing successful relationship marketing programs and activities. Some research has now
started to appear in the marketing literature on relationship marketing partner selection
(Schijns and Schroder 1996; Stump and Heide 1996). Mahajan and Srivastava (1992)
recommended the use of conjoint analysis techniques for partner selection decisions in
alliance type relationships. Dorschet. al. (1998) proposes a framework of partner selection
based on the evaluation of customers perception relationship quality with their vendors. At
the program level, key account management programs and strategic partnering have been
examined in several research studies (Aulakh, Kotabe, and Sahay 1997; Nason, Melnyk,
Wolter, and Olsen 1997; Wong 1998). Similarly within the context of channel relationships
and buyer seller relationships several studies have been conducted on relationship governance
process (Biong and Selnes 1995; Heide 1994; Lusch and Brown 1996). Also, research on
relationship performance is beginning to appear in the literature. Kalwani and Narayandas
(1995) examined the impact of long-term relationships among small firms on their financial
performance. Similarly, in a forthcoming paper, Naidu et. al. (1998) examines the impact of
relationship marketing programs on the performance of hospitals. Srivastava, et. al. (1998)
examines the economic value of relationship marketing assets. However, not much research
is reported on relationship enhancement processes and relationship evolution. Although,
studies relating to the development of relationship marketing objectives are still lacking, the
conceptual model on customer expectations presented by Sheth and Mittal (1996) could

provide the foundation for research in this area. Overall, we expect future research efforts to
be directed towards the process aspects of relationship marketing.

The Domain of Relationship Marketing Research

Several areas and sub-disciplines of marketing have been the focus of relationship marketing
research in recent years. These include issues related to channel relationships (Robicheaux
and Coleman 1994; El-Ansary 1997; Weitz and Jap 1995); business-to-business marketing
(Dwyer, Schurr and Oh 1987; Hallen, Johanson, and Seyed-Mohamed 1991; Keep, Hollander
and Dickinson 1998; Wilson 1995); sales management (Boorom, Goolsby, ad Ramsey 1998;
Smith and Barclay 1997); services marketing (Berry 1983 &1995; Crosby and Stephens
1987; Crosby, Evans and Cowles 1990; Gronroos 1995; Gwinner, Gremler and Bitner 1998);
and consumer marketing (Gruen 1995; Kahn 1998; Sheth and Parvatiyar 1995a; Simonin and
Ruth 1998). Marketing scholars interested in strategic marketing have studied the alliance
and strategic partnering aspects of relationship marketing (Bucklin and Sengupta 1993; Sheth
and Parvatiyar 1992; Vardarajan and Cunningham 1995). Gundlach and Murphy (1993)
provided us a framework on public policy implications of relationship marketing. In the
context of international marketing, relationship marketing concepts and models are used in
the study of global account management programs (Yip and Madsen 1996), export channel
cooperation (Bello and Gilliland 1997), and international alliances (Yigang and Tse 1996).
Convergence of relationship marketing with some other paradigms in marketing is also taking
place. These include database marketing (Shani and Chalasani 1992; Schijns and Schroder
1996), integrated marketing communications (Duncan and Moriarty 1998; Schultz et. al.
1993; Zhinkan, et. al. 1996), logistics, and supply-chain integration (Fawcett, et. al. 1997;
Christopher 1994). Some of these are applied as tools and work processes in relationship
marketing practice. Figure 3 illustrate the tools and work processes applied in relationship
marketing. As more and more companies use these processes and other practical aspects such
as total quality management, process reengineering, mass customization, electronic data
interchange (EDI), value enhancement, activity based costing, cross-functional teams, etc. we
are likely to see more and more convergence of these and related paradigm with relationship
marketing.
A number of theoretical perspectives developed in economics, law, and social psychology is
being applied in relationship marketing. These include transactions cost analysis (Mudambi
and Mudambi 1995; Noordeweir, John and Nevin 1990; Stump and Heide 1996), agency
theory (Mishra, Heide and Cort 1998), relational contracting (Dwyer, Schurr and Oh 1987;
Lusch and Brown 1996), social exchange theory (Hallen, Johanson and Seyed-Mohamed
1991; Heide 1994), network theory (Achrol 1997; Walker 1997), game theory (Rao and
Reddy 1995), interorganizational exchange behavior (Rinehart and Page 1992), power
dependency (Gundlach and Cadotte 1994; Kumar, Scheer, and Steenkamp 1995), and
interpersonal relations (Iacobucci and Ostrom 1996). More recently resource allocation and
resource dependency perspectives (Lohtia 1997; Vardarajan and Cunningham 1995), and
classical psychological and consumer behavior theories have been used to explain why
companies and consumers engage in relationship marketing (Iacobucci and Zerillo 1997;
Kahn 1998; Sheth and Parvatiyar 1995a; Simonin and Ruth 1998). Each of these studies has
enriched the field of relationship marketing. As we move forward, we expect to see more
integrative approaches to studying relationship marketing, as well as a greater degree of

involvement of scholars from almost all sub-disciplines of marketing into it. Its appeal is
global, as marketing scholars from around the world are interested in the study of the
phenomenon, particularly in Europe, Australia, and Asia in addition to North America.

Conclusion
The domain of relationship marketing extends into many areas of marketing and strategic
decisions. Its recent prominence is facilitated by the convergence of several other paradigms
of marketing and by corporate initiatives that are developed around the theme of cooperation
and collaboration of organizational units and its stakeholders, including customers.
Relationship marketing refers to a conceptually narrow phenomenon of marketing; however
if the phenomenon of cooperation and collaboration with customers become the dominant
paradigm of marketing practice and research, relationship marketing has the potential to
emerge as the predominant perspective of marketing

INTRODUCTION ABOUT BANKING SECTOR IN INDIA

A bank is a financial institution that provides banking and other financial services to their
customers. A bank is generally understood as an institution which provides fundamental
banking services such as accepting deposits and providing loans. There are also nonbanking
institutions that provide certain banking services without meeting the legal definition of a
bank. Banks are a subset of the financial services industry. A banking system also referred as
a system provided by the bank which offers cash management services for customers,
reporting the transactions of their accounts and portfolios, through out the day. The banking
system in India, should not only be hassle free but it should be able to meet the new
challenges posed by the technology and any other external and internal factors. For the past
three decades, Indias banking system has several outstanding achievements to its credit. The
Banks are the main participants of the financial system in India. The Banking sector offers
several facilities and opportunities to their customers. All the banks safeguards the money and
valuables and provide loans, credit, and payment services, such as checking accounts, money
orders, and cashiers cheques. The banks also offer investment and insurance products. As a
variety of models for cooperation and integration among finance industries have emerged,
some of the traditional distinctions between banks, insurance companies, and securities firms
have diminished. In spite of these changes, banks continue to maintain and perform their
primary roleaccepting deposits and lending funds from these deposits.
Need of the Banks
Before the establishment of banks, the financial activities were handled by money lenders and
individuals. At that time the interest rates were very high. Again there were no security of
public savings and no uniformity regarding loans. So as to overcome such problems the
organized banking sector was established, which was fully regulated by the government. The
organized banking sector works within the financial system to provide loans, accept deposits
and provide other services to their customers. The following functions of the bank explain the
need of the bank and its importance:
To provide the security to the savings of customers.
To control the supply of money and credit
To encourage public confidence in the working of the financial system, increase savings
speedily and efficiently.
To avoid focus of financial powers in the hands of a few individuals and institutions.
To set equal norms and conditions (i.e. rate of interest, period of lending etc) to all types of
customers
History of Indian Banking System
The first bank in India, called The General Bank of India was established in the year 1786.
The East India Company established The Bank of Bengal/Calcutta (1809), Bank of Bombay
(1840) and Bank of Madras (1843). The next bank was Bank of Hindustan which was

established in 1870. These three individual units (Bank of Calcutta, Bank of Bombay, and
Bank of Madras) were called as Presidency Banks. Allahabad Bank which was established in
1865, was for the first time completely run by Indians. Punjab National Bank Ltd. was set up
in 1894 with head quarters at Lahore. Between 1906 and 1913, Bank of India, Central Bank
of India, Bank of Baroda, Canara Bank, Indian Bank, and Bank of Mysore were set up. In
1921, all presidency banks were amalgamated to form the Imperial Bank of India which was
run by European Shareholders. After that the Reserve Bank of India was established in April
1935. At the time of first phase the growth of banking sector was very slow. Between 1913
and 1948 there were approximately 1100 small banks in India. To streamline the functioning
and activities of commercial banks, the Government of India came up with the Banking
Companies Act, 1949 which was later changed to Banking Regulation Act 1949 as per
amending Act of 1965 (Act No.23 of 1965). Reserve Bank of India was vested with extensive
powers for the supervision of banking in India as a Central Banking Authority. After
independence, Government has taken most important steps in regard of Indian Banking
Sector reforms. In 1955, the Imperial Bank of India was nationalized and was given the name
"State Bank of India", to act as the principal agent of RBI and to handle banking transactions
all over the country. It was established under State Bank of India Act, 1955. Seven banks
forming subsidiary of State Bank of India was nationalized in 1960. On 19 th July, 1969, major
process of nationalization was carried out. At the same time 14 major Indian commercial
banks of the country were nationalized. In 1980, another six banks were nationalized, and
thus raising the number of nationalized banks to Seven more banks were nationalized with
deposits over 200 Crores. Till the year 1980 approximately 80% of the banking segment in
India was under governments ownership. On the suggestions of Narsimhan Committee, the
Banking Regulation Act was amended in 1993 and thus the gates for the new private sector
banks were opened.
The following are the major steps taken by the Government of India to Regulate Banking
institutions in the country:1949 : Enactment of Banking Regulation Act.
1955 : Nationalisation of State Bank of India.
1959 : Nationalization of SBI subsidiaries.
1961 : Insurance cover extended to deposits.
1969 : Nationalisation of 14 major Banks.
1971 : Creation of credit guarantee corporation.
1975 : Creation of regional rural banks.
1980 : Nationalisation of seven banks with deposits over 200 Crores.
Nationalisation
By the 1960s, the Indian banking industry has become an important tool to facilitate the
development of the Indian economy. At the same time, it has emerged as a large employer,
and a debate has ensured about the possibility to nationalise the banking industry. Indira
Gandhi, the-then Prime Minister of India expressed the intention of the Government of India
(GOI) in the annual conference of the All India Congress Meeting in a paper entitled "Stray
thoughts on Bank Nationalisation". The paper was received with positive enthusiasm.
Thereafter, her move was swift and sudden, and the GOI issued an ordinance and nationalised
the 14 largest commercial banks with effect from the midnight of July 19, 1969. Jayaprakash
Narayan, a national leader of India, described the step as a "Masterstroke of political
sagacity" Within two weeks of the issue of the ordinance, the Parliament passed the Banking
Companies (Acquisition and Transfer of Undertaking) Bill, and it received the presidential
approval on 9 August, 1969. A second step of nationalisation of 6 more commercial banks

followed in 1980. The stated reason for the nationalisation was to give the government more
control of credit delivery. With the second step of nationalisation, the GOI controlled around
91% of the banking business in India. Later on, in the year 1993, the government merged
New Bank of India with Punjab National Bank. It was the only merger between nationalised
banks and resulted in the reduction of the number of nationalised banks from 20 to 19. After
this, until the 1990s, the nationalised banks grew at a pace of around 4%, closer to the
average growth rate of the Indian economy. The nationalised banks were credited by some;
including Home minister P. Chidambaram, to have helped the Indian economy withstand the
global financial crisis of 2007-2009.
Liberalization
In the early 1990s, the then Narsimha Rao government embarked on a policy of
liberalization, licensing a small number of private banks. These came to be known as New
Generation tech-savvy banks, and included Global Trust Bank (the first of such new
generation banks to be set up), which later amalgamated with Oriental Bank of Commerce,
Axis Bank(earlier as UTI Bank), ICICI Bank and HDFC Bank. This move along with the
rapid growth in the economy of India revolutionized the banking sector in India which has
seen rapid growth with strong contribution from all the three sectors of banks, namely,
government banks, private banks and foreign banks. The next stage for the Indian banking
has been setup with the proposed relaxation in the norms for Foreign Direct Investment,
where all Foreign Investors in banks may be given voting rights which could exceed the
present cap of 10%, at present it has gone up to 49% with some restrictions.
The new policy shook the banking sector in India completely. Bankers, till this time, were
used to the 4-6-4 method (Borrow at 4%; Lend at 6%; Go home at 4) of functioning. The new
wave ushered in a modern outlook and tech-savvy methods of working for the traditional
banks. All this led to the retail boom in India. People not just demanded more from their
banks but also received more. Currently (2007), banking in India is generally fairly mature in
terms of supply, product range and reach-even though reach in rural India still remains a
challenge for the private sector and foreign banks. In terms of quality of assets and capital
adequacy, Indian banks are considered to have clean, strong and transparent balance sheets as
compared to other banks in comparable economies in its region. The Reserve Bank of India is
an autonomous body, with minimal pressure from the government. The stated policy of the
Bank on the Indian Rupee is to manage volatility but without any fixed exchange rate-and
this has mostly been true. With the growth in the Indian economy expected to be strong for
quite some time-especially in its services sector-the demand for banking services, especially
retail banking, mortgages and investment services are expected to be strong.
In March 2006, the Reserve Bank of India allowed Warburg Pincus to increase its stake in
Kotak Mahindra Bank (a private sector bank) to 10%. This is the first time an investor has
been allowed to hold more than 5% in a private sector bank since the RBI announced norms
in 2005 that any stake exceeding 5% in the private sector banks would need to be voted by
them. In recent years critics have charged that the non-government owned banks are too
aggressive in their loan recovery efforts in connection with housing, vehicle and personal
loans. There are press reports that the banks' loan recovery efforts have driven defaulting
borrowers to suicide.
Government policy on banking industry (Source:-The federal Reserve Act 1913 and
The Banking Act 1933)

Banks operating in most of the countries must contend with heavy regulations, rules enforced
by Federal and State agencies to govern their operations, service offerings, and the manner in
which they grow and expand their facilities to better serve the public. A banker works within
the financial system to provide loans, accept deposits, and provide other services to their
customers. They must do so within a climate of extensive regulation, designed primarily to
protect the public interests. The main reasons why the banks are heavily regulated are as
follows:
To protect the safety of the publics savings.
To control the supply of money and credit in order to achieve a nations broad economic
goal.
To ensure equal opportunity and fairness in the publics access to credit and other vital
financial services.
To promote public confidence in the financial system, so that savings are made speedily
and efficiently.
To avoid concentrations of financial power in the hands of a few individuals and
institutions.
Provide the Government with credit, tax revenues and other services.
To help sectors of the economy that they have special credit needs for eg. Housing, small
business and agricultural loans etc.
Law of banking
Banking law is based on a contractual analysis of the relationship between the bank and
customerdefined as any entity for which the bank agrees to conduct an account.
The law implies rights and obligations into this relationship as follows:
The bank account balance is the financial position between the bank and the customer:
when the account is in credit, the bank owes the balance to the customer; when the account is
overdrawn, the customer owes the balance to the bank.
The bank agrees to pay the customer's cheques up to the amount standing to the credit of
the customer's account, plus any agreed overdraft limit.
The bank may not pay from the customer's account without a mandate from the customer,
e.g. cheques drawn by the customer.
The bank agrees to promptly collect the cheques deposited to the customer's account as the
customer's agent, and to credit the proceeds to the customer's account.
The bank has a right to combine the customer's accounts, since each account is just an
aspect of the same credit relationship.
The bank has a lien on cheques deposited to the customer's account, to the extent that the
customer is indebted to the bank.
The bank must not disclose details of transactions through the customer's accountunless
the customer consents, there is a public duty to disclose, the bank's interests require it, or the
law demands it.
The bank must not close a customer's account without reasonable notice, since cheques are
outstanding in the ordinary course of business for several days. These implied contractual
terms may be modified by express agreement between the customer and the bank. The
statutes and regulations in force within a particular jurisdiction may also modify the above
terms and/or create new rights, obligations or limitations relevant to the bank-customer
relationship.
Regulations for Indian banks

Currently in most jurisdictions commercial banks are regulated by government entities and
require a special bank license to operate. Usually the definition of the business of banking for
the purposes of regulation is extended to include acceptance of deposits, even if they are not
repayable to the customer's orderalthough money lending, by itself, is generally not
included in the definition. Unlike most other regulated industries, the regulator is typically
also a participant in the market, i.e. a government-owned (central) bank. Central banks also
typically have a monopoly on the business of issuing banknotes. However, in some countries
this is not the case. In UK, for example, the Financial Services Authority licenses banks, and
some commercial banks (such as the Bank of Scotland) issue their own banknotes in addition
to those issued by the Bank of England, the UK government's central bank. Some types of
financial institutions, such as building societies and credit unions, may be partly or wholly
exempted from bank license requirements, and therefore regulated under separate rules. The
requirements for the issue of a bank license vary between jurisdictions but typically include:
Minimum capital
Minimum capital ratio
'Fit and Proper' requirements for the bank's controllers, owners, directors, and/or senior
officers
Approval of the bank's business plan as being sufficiently prudent and plausible.
Classification of Banking Industry in India
Indian banking industry has been divided into two parts, organized and unorganized sectors.
The organized sector consists of Reserve Bank of India, Commercial Banks and Co-operative
Banks, and Specialized Financial Institutions (IDBI, ICICI, IFC etc). The unorganized sector,
which is not homogeneous, is largely made up of money lenders and indigenous bankers.
An outline of the Indian Banking structure may be presented as follows:1. Reserve banks of India.
2. Indian Scheduled Commercial Banks.
a) State Bank of India and its associate banks.
b) Twenty nationalized banks.
c) Regional rural banks.
d) Other scheduled commercial banks.
3. Foreign Banks
4. Non-scheduled banks.
5. Co-operative banks.
Reserve bank of India
The reserve bank of India is a central bank and was established in April 1, 1935 in accordance
with the provisions of reserve bank of India act 1934. The central office of
RBI is located at Mumbai since inception. Though originally the reserve bank of India was
privately owned, since nationalization in 1949, RBI is fully owned by the Government of
India. It was inaugurated with share capital of Rs. 5 Crores divided into shares of Rs. 100
each fully paid up.
RBI is governed by a central board (headed by a governor) appointed by the central
government of India. RBI has 22 regional offices across India. The reserve bank of India was
nationalized in the year 1949. The general superintendence and direction of the bank is
entrusted to central board of directors of 20 members, the Governor and four deputy
Governors, one Governmental official from the ministry of Finance, ten nominated directors
by the government to give representation to important elements in the economic life of the

country, and the four nominated director by the Central Government to represent the four
local boards with the headquarters at Mumbai, Kolkata, Chennai and New Delhi. Local Board
consists of five members each central government appointed for a term of four years to
represent territorial and economic interests and the interests of cooperative and indigenous
banks.
The RBI Act 1934 was commenced on April 1, 1935. The Act, 1934 provides the statutory
basis of the functioning of the bank. The bank was constituted for the need of following:
- To regulate the issues of banknotes.
- To maintain reserves with a view to securing monetary stability
- To operate the credit and currency system of the country to its advantage.
Functions of RBI as a central bank of India are explained briefly as follows:
Bank of Issue: The RBI formulates, implements, and monitors the monitory policy. Its main
objective is maintaining price stability and ensuring adequate flow of credit to productive
sector.
Regulator-Supervisor of the financial system: RBI prescribes broad parameters of banking
operations within which the countrys banking and financial system functions. Their main
objective is to maintain public confidence in the system, protect depositors interest and
provide cost effective banking services to the public.
Manager of exchange control: The manager of exchange control department manages the
foreign exchange, according to the foreign exchange management act, 1999. The managers
main objective is to facilitate external trade and payment and promote orderly development
and maintenance of foreign exchange market in India.
Issuer of currency: A person who works as an issuer, issues and exchanges or destroys the
currency and coins that are not fit for circulation. His main objective is to give the public
adequate quantity of supplies of currency notes and coins and in good quality.
Developmental role: The RBI performs the wide range of promotional functions to support
national objectives such as contests, coupons maintaining good public relations and many
more.
Related functions: There are also some of the related functions to the above mentioned main
functions. They are such as, banker to the government, banker to banks etc.
Banker to government performs merchant banking function for the central and the state
governments; also acts as their banker.
Banker to banks maintains banking accounts to all scheduled banks.
Controller of Credit: RBI performs the following tasks:
It holds the cash reserves of all the scheduled banks.
It controls the credit operations of banks through quantitative and qualitative controls.
It controls the banking system through the system of licensing, inspection and calling for
information.
It acts as the lender of the last resort by providing rediscount facilities to scheduled banks.
Supervisory Functions: In addition to its traditional central banking functions, the Reserve
Bank performs certain non-monetary functions of the nature of supervision of banks and
promotion of sound banking in India. The Reserve Bank Act 1934 and the banking regulation

act 1949 have given the RBI wide powers of supervision and control over commercial and
co-operative banks, relating to licensing and establishments, branch expansion, liquidity of
their assets, management and methods of working, amalgamation, reconstruction and
liquidation. The RBI is authorized to carry out periodical inspections of the banks and to call
for returns and necessary information from them. The nationalisation of 14 major Indian
scheduled banks in July 1969 has imposed new responsibilities on the RBI for directing the
growth of banking and credit policies towards more rapid development of the economy and
realisation of certain desired social objectives. The supervisory functions of the RBI have
helped a great deal in improving the standard of banking in India to develop on sound lines
and to improve the methods of their operation.
Promotional Functions: With economic growth assuming a new urgency since
independence, the range of the Reserve Banks functions has steadily widened. The bank now
performs a variety of developmental and promotional functions, which, at one time, were
regarded as outside the normal scope of central banking. The Reserve bank was asked to
promote banking habit, extend banking facilities to rural and semi-urban areas, and establish
and promote new specialized financing agencies.
Indian Scheduled Commercial Banks
The commercial banking structure in India consists of scheduled commercial banks, and
unscheduled banks.
Scheduled Banks: Scheduled Banks in India constitute those banks which have been
included in the second schedule of RBI act 1934. RBI in turn includes only those banks in
this schedule which satisfy the criteria laid down vide section 42(6a) of the Act. Scheduled
banks in India means the State Bank of India constituted under the State Bank of India Act,
1955 (23 of 1955), a subsidiary bank as defined in the s State Bank of India (subsidiary
banks) Act, 1959 (38 of 1959), a corresponding new bank constituted under section 3 of the
Banking companies (Acquisition and Transfer of Undertakings) Act, 1980 (40 of 1980), or
any other bank being a bank included in the Second Schedule to the Reserve bank of India
Act, 1934 (2 of 1934), but does not include a co-operative bank. For the purpose of
assessment of performance of banks, the Reserve Bank of India categories those banks as
public sector banks, old private sector banks, new private sector banks and foreign banks, i.e.
private sector, public sector, and foreign banks come under the umbrella of scheduled
commercial banks.
Regional Rural Bank: The government of India set up Regional Rural Banks (RRBs) on
October 2, 1975 [10]. The banks provide credit to the weaker sections of the rural areas,
particularly the small and marginal farmers, agricultural labourers, and small enterpreneurs.
Initially, five RRBs were set up on October 2, 1975 which was sponsored by Syndicate Bank,
State Bank of India, Punjab National Bank, United Commercial Bank and United Bank of
India. The total authorized capital was fixed at Rs. 1 Crore which has since been raised to Rs.
5 Crores. There are several concessions enjoyed by the RRBs by Reserve Bank of India such
as lower interest rates and refinancing facilities from NABARD like lower cash ratio, lower
statutory liquidity ratio, lower rate of interest on loans taken from sponsoring banks,
managerial and staff assistance from the sponsoring bank and reimbursement of the expenses
on staff training. The RRBs are under the control of NABARD. NABARD has the
responsibility of laying down the policies for the RRBs, to oversee their operations, provide
refinance facilities, to monitor their performance and to attend their problems.

Unscheduled Banks: Unscheduled Bank in India means a banking company as defined in

clause (c) of section 5 of the Banking Regulation Act, 1949 (10 of 1949), which is not a
scheduled bank.
NABARD
NABARD is an apex development bank with an authorization for facilitating credit flow for
promotion and development of agriculture, small-scale industries, cottage and village
industries, handicrafts and other rural crafts. It also has the mandate to support all other allied
economic activities in rural areas, promote integrated and sustainable rural development and
secure prosperity of rural areas. In discharging its role as a facilitator for rural prosperity,
NABARD is entrusted with:
1. Providing refinance to lending institutions in rural areas
2. Bringing about or promoting institutions development and
3. Evaluating, monitoring and inspecting the client banks
33
Besides this fundamental role, NABARD also:
Act as a coordinator in the operations of rural credit institutions
To help sectors of the economy that they have special credit needs for eg. Housing, small
business and agricultural loans etc.
Co-operative Banks
Co-operative banks are explained.
Services provided by banking organizations [2]
Banking Regulation Act in India, 1949 defines banking as Accepting for the purpose of
lending or investment of deposits of money from the public, repayable on demand and
withdrawable by cheques, drafts, orders etc. as per the above definition a bank essentially
performs the following functions: Accepting Deposits or savings functions from customers or public by providing bank
account, current account, fixed deposit account, recurring accounts etc.
The payment transactions like lending money to the public. Bank provides an effective
credit delivery system for loanable transactions.
Provide the facility of transferring of money from one place to another place. For
performing this operation, bank issues demand drafts, bankers cheques, money orders etc.
for transferring the money. Bank also provides the facility of
Telegraphic transfer or tele- cash orders for quick transfer of money.
A bank performs a trustworthy business for various purposes.
A bank also provides the safe custody facility to the money and valuables of the general
public. Bank offers various types of deposit schemes for security of money. For keeping
valuables bank provides locker facility. The lockers are small compartments with dual
locking system built into strong cupboards. These are stored in the banks strong room and
are fully secured.
Banks act on behalf of the Govt. to accept its tax and non-tax receipt. Most of the
government disbursements like pension payments and tax refunds also take place through
banks. There are several types of banks, which differ in the number of services they provide
and the clientele (Customers) they serve. Although some of the differences between these
types of banks have lessened as they have begun to expand the range of products and services
they offer, there are still key distinguishing traits. These banks are as follows:

Commercial banks, which dominate this industry, offer a full range of services for
individuals, businesses, and governments. These banks come in a wide range of sizes, from
large global banks to regional and community banks.
Global banks are involved in international lending and foreign currency trading, in addition
to the more typical banking services.
Regional banks have numerous branches and automated teller machine (ATM) locations
throughout a multi-state area that provide banking services to individuals. Banks have
become more oriented toward marketing and sales. As a result, employees need to know
about all types of products and services offered by banks.
Community banks are based locally and offer more personal attention, which many
individuals and small businesses prefer. In recent years, online bankswhich provide all
services entirely over the Internethave entered the market, with some success. However,
many traditional banks have also expanded to offer online banking, and some formerly
Internet-only banks are opting to open branches.
Savings banks and savings and loan associations, sometimes called thrift institutions, are the
second largest group of depository institutions. They were first established as communitybased institutions to finance mortgages for people to buy homes and still cater mostly to the
savings and lending needs of individuals.
Credit unions are another kind of depository institution. Most credit unions are formed by
people with a common bond, such as those who work for the same company or belong to the
same labor union or church. Members pool their savings and, when they need money, they
may borrow from the credit union, often at a lower interest rate than that demanded by other
financial institutions.
Federal Reserve banks are Government agencies that perform many financial services for the
Government. Their chief responsibilities are to regulate the banking industry and to help
implement our Nations monetary policy so our economy can run more efficiently by
controlling the Nations money supplythe total quantity of money in the country, including
cash and bank deposits. For example, during slower periods of economic activity, the Federal
Reserve may purchase government securities from commercial banks, giving them more
money to lend, thus expanding the economy. Federal Reserve banks also perform a variety of
services for other banks. For example, they may make emergency loans to banks that are
short of cash, and clear checks that are drawn and paid out by different banks.
The money banks lend, comes primarily from deposits in checking and savings accounts,
certificates of deposit, money market accounts, and other deposit accounts that consumers
and businesses set up with the bank. These deposits often earn interest for their owners, and
accounts that offer checking, provide owners with an easy method for making payments
safely without using cash. Deposits in many banks are insured by the Federal Deposit
Insurance Corporation, which guarantees that depositors will get their money back, up to a
stated limit, if a bank should fail.

Customer Relationship Management in Banking Sector and A Model

Design for Banking Performance Enhancement
Customer Relationship Management
In literature, many definitions were given to describe CRM. The main difference among these
definitions is technological and relationship aspects of CRM. Some authors from marketing
background emphasize technological side of CRM while the others consider IT perspective of
CRM. From marketing aspect, CRM is defined by [Couldwell 1998] as .. a combination of
business process and technology that seeks to understand a companys customers from the
perspective of who they are, what they do, and what they are like. Technological definition
of CRM was given as .. the market place of the future is undergoing a technology-driven
metamorphosis [Peppers and Rogers 1995]. Consequently, IT and marketing departments
must work closely to implement CRM efficiently. Meanwhile, implementation of CRM in
banking sector was considered by [Mihelis et al. 2001]. They focused on the evaluation of the
critical satisfaction dimensions and the determination of customer groups with distinctive
preferences and expectations in the private bank sector. The methodological approach is
based on the principles of multi-criteria modelling and preference disaggregation modelling
used for data analysis and interpretation. [Yli- Renko et al. 2001] have focused on the
management of the exchange relationships and the implications of such management for the
performance and development of technology-based firms and their customers. Specifically
the customer relationships of new technology-based firms has been studied. [Cook and
Hababou, 2001] was interested in total sales activities, both volume-related and non-volume
related. They also developed a modification of the standard data envelope analysis (DEA)
structure using goal programming concepts that yields both a sales and service measures.
[Beckett-Camarata et al. 1998] have noted that managing relationships with their customers
(especially with employees, channel partners and strategic alliance partners) was critical to
the firms long-term success. It was also emphasized that customer relationship management
based on social exchange and equity significantly assists the firm in developing collaborative,
cooperative and profitable long-term relationships. [Yuan and Chang 2001] have presented a
mixed-initiative synthesized learning approach for better understanding of customers and the
provision of clues for improving customer relationships based on different sources of web
customer data. They have also hierarchically segmented data sources into clusters,
automatically labelled the features of the clusters, discovered the characteristics of normal,
defected and possibly defected clusters of customers, and provided clues for gaining
customer retention. [Peppers 2000] has also presented a framework, which is based on
incorporating e-business activities, channel management, relationship management and backoffice/front-office integration within a customer centric strategy. He has developed four
concepts, namely Enterprise, Channel management, Relationships and Management of the

total enterprise, in the context of a CRM initiative. [Ryals and Knox 2001] have identified the
three main issues that can enable the development of Customer Relationship Management in
the service sector; the organizational issues of culture and communication, management
metrics and cross-functional integration especially between marketing and information
technology.

CRM Objectives in Banking Sector

The idea of CRM is that it helps businesses use technology and human resources gain insight
into the behaviour of customers and the value of those customers. If it works as hoped, a
business can: provide better customer service, make call centres more efficient, cross sell
products more effectively, help sales staff close deals faster, simplify marketing and sales
processes, discover new customers, and increase customer revenues. It doesn't happen by
simply buying software and installing it. For CRM to be truly effective an organization must
first decide what kind of customer information it is looking for and it must decide what it
intends to do with that information. For example, many financial institutions keep track of
customers' life stages in order to market appropriate banking products like mortgages or IRAs
to them at the right time to fit their needs. Next, the organization must look into all of the
different ways information about customers comes into a business, where and how this data is
stored and how it is currently used. One company, for instance, may interact with customers
in a myriad of different ways including mail campaigns, Web sites, brick-and-mortar stores,
call centres, mobile sales force staff and marketing and advertising efforts. Solid CRM
systems link up each of these points. This collected data flows between operational systems
(like sales and inventory systems) and analytical systems that can help sort through these
records for patterns. Company analysts can then comb through the data to obtain a holistic
view of each customer and pinpoint areas where better services are needed. In CRM projects,
following data should be collected to run process engine: 1) Responses to campaigns, 2)
Shipping and fulfilment dates, 3)Sales and purchase data, 4) Account information, 5) Web
registration data, 6) Service and support records, 7) Demographic data, 8) Web sales data.
A Model Design for CRM At Garanti Bank
Garanti Bank, one of the leading banks in Turkey were looking at new ways to enhance its
customer potential and service quality. Electronic means of banking have proved a success in
acquiring new customer groups until the end of 2001. After then, a strategic decision was
made to re-engineer their core business process in order to enhance the banks performance
by developing strategic lines. Strategic lines were given in order to meet the needs of large
Turkish and multinational corporate customers, to expand commercial banking business, to
focus expansion in retail banking and small business banking, to use different delivery
channels while growing, and to enhance operating efficiency though investments in
technology and human resources To support this strategy Garanti Bank has implemented a
number of projects since 1992 regarding branch organization, processes and information
systems. The administration burden in the branches has been greatly reduced and centralized
as much as possible in order to leave a larger room to marketing and sales. The BPR projects
have been followed by rationalizing and modernizing the operational systems and
subsequently by the introduction of innovative channels: internet banking, call center and

self-servicing. In parallel, usage of technology for internal communication: intranet, e-mail,

workflow and management reporting have become widespread.

CRM Development
To be prepared to the changing economic conditions and, in particular, to a rapidly decreasing
inflation rate scenario Garanti Bank has started timely to focus on developing a customer
relationship management (CRM) system. The total number of customers is presently around
two millions, but an increase to roughly three millions is foreseen as merging with Osmanli
Bank and Koferzbank are achieved and the present growth targets are reached. The
importance for the bank of managing the relationships with their customers has been the drive
of the joint projects that have been developed with IBM in the last three years. During the
projects a number of crucial technological and architecture choices have been made to
implement the entire process. Realizing the importance of customer information availability
the first of these projects has focussed on the problem of routinely collecting and cleansing
data. The project has been undertaken by the bank with the spirit that has characterized the
whole CRM development. The project has promoted a massive involvement of the branches,
namely of the portfolio managers and campaigns have been launched for popularizing among
branch staff the importance of gathering and maintaining reliable customer data. Another set
of methods have been tested for customer not included in portfolios (pool customers), such as
mailing or distributing questionnaires in the branches or using automatic teller machines
(ATM) and the call centre.

OBJECTIVE OF THE STUDY

To analyze the relevance of relationship marketing in banking.

To find out the customer preference for relationship orientation in government bank.
To analyze the extent of relationship orientation in government banks for customer
orientate.
To study the customer satisfaction in banking sector in Haryana.
To check the relationship between customer satisfaction & customer loyalty.
To check the relationship between customer satisfaction and their behavior.
To check the relationship between satisfaction and experience of the customer.
To bridge the gap between theory of practice marketing of banking services.

SCOPE OF THE STUDY

This study is conducted in Haryana The scope of study is limited to Haryana. This project
is very significant for banking sector as well as customers. It is a study about the
Relationship orientation practices done by local government banks in Haryana . This study
done only on Haryanas customer to check the impact of customer satisfaction on customer
loyalty in Banking sector we can further expand in other states also in India.

REVIEW OF THE LITERATURE

1. Customer Relationship Management in Banking Sector and A Model Design for
Banking Performance Enhancement
Semih Onut
Ibrahim Erdem
Yildiz Technical University
Dept. Of Industrial Engineering
Yildiz, 80750, Istanbul,Turkey
onut@yildiz.edu.tr, erdem@yildiz.edu.tr
Bora Hosver
Garanti Bank
Customer Relationship& Marketing Dept.
No :63, Maslak, 80670,Istanbul,Turkey
borah@garanti.com.tr
Introduction
Today, many businesses such as banks, insurance companies, and other service providers realize the
importance of Customer Relationship Management (CRM) and its potential to help them acquire new
customers, retain existing ones and maximize their lifetime value. At this point, close relationship
with customers will require a strong coordination between IT and marketing departments to provide a
long-term retention of selected customers. This paper deals with the role of Customer Relationship
Management in banking sector and the need for Customer Relationship Management to increase
customer value by using some analitycal methods in CRM applications.
CRM is a sound business strategy to identify the banks most profitable customers and prospects, and
devotes time and attention to expanding account relationships with those customers through
individualized marketing, repricing, discretionary decision making, and customized service-all
delivered through the various sales channels that the bank uses. Under this case study, a campaign
management in a bank is conducted using data mining tasks such as dependency analysis, cluster
profile analysis, concept description, deviation detection, and data visualization. Crucial business
decisions with this campaign are made by extracting valid, previously unknown and ultimately
comprehensible and actionable knowledge from large databases. The model developed here answers
what the different customer segments are, who more likely to respond to a given offer is, which
customers are the bank likely to lose, who most likely to default on credit cards is, what the risk
associated with this loan applicant is. Finally, a cluster profile analysis is used for revealing the
distinct characteristics of each cluster, and for modeling product propensity, which should be
implemented in order to increase the sales.

2.

RELATIONSHIP MARKETING IN MASS MARKETS

C. B. Bhattacharya, Emory University

Ruth N. Bolton, University of Maryland

Bolton, Ruth N. and C. B. Bhattacharya, Relationship Marketing in Mass Markets,

Handbook of
Relationship Marketing, Jagdish N. Sheth and Atul Parvatiyar (Eds.), 2000, Sage
Publications:
Thousand Oaks, CA, 327-54.
3. Journal of Economic and Social Research 3(2) 2001, 2002 Preliminary Issue, 1-34
Customer Relationship Management:
Emerging Practice, Process, and Discipline
Atul Parvatiyar1 & Jagdish N. Sheth2
Abstract. Customer relationship management (CRM) has once again gained prominence
amongst academics and practitioners. However, there is a tremendous amount of confusion
regarding its domain and meaning. In this paper, the authors explore the conceptual
foundations of CRM by examining the literature on relationship marketing and other
disciplines that contribute to the knowledge of CRM. A CRM process framework is proposed
that builds on other relationship development process models. CRM implementation
challenges as well as CRM's potential to become a distinct discipline of marketing are also
discussed in this paper.
JEL Classification Codes: M31.
Key Words: Customer Relationship Management; Relationship Marketing; CRM
Process; CRM Definition; CRM Strategy; CRM Programs; CRM Implementation; CRM and
Relationship Marketing Discipline.
4. The Evolution of Relationship Marketing
Jagdish N. Sheth* and Atul Parvatiyar*
Goizueta Business School, Emory University,
Atlanta, GA 30322, USA
The Evolution of Relationship Marketing
Abstract -- Relationship Marketing is emerging as a new phenomenon. However, relationship
oriented marketing practices date back to the pre-Industrial era. In this article, we trace the
history of marketing practices and illustrate how the advent of mass production, the
emergence of middlemen, and the separation of the producer from the consumer in the
Industrial era led to a transactional focus of marketing. Now, due to technological advances,
direct marketing is staging a comeback, leading to a relationship orientation. The authors
contend that with the evolution of Relationship Marketing, the hitherto prominent exchange
paradigm of marketing will be insufficient to explain the growing marketing phenomena of
collaborative involvement of customers in the production process. An alternate paradigm of
marketing needs to be developed that is more process rather than outcome oriented, and
emphasizes value creation rather than value distribution.
Key Words -- Relationship Marketing, Relational Orientation, Transaction Orientation.

RESEARCH METHODOLOGY
Research Methodology is a way to systematically solve the research. It may be understood as
a science of studying how research is done scientifically. When we talk of research
methodology, we not only Talk of it but also consider the logic behind the methods, which
use in Conducting research study and explain why we are using a particular Technique and
not the other one. Research means research for Knowledge.
Types of Research
EXPLORATORY RESEARCH
Exploratory research aims to develop initial hunches and provide directions for any future
research needed. The primary purpose is to through light on nature of a situation and
identifies any specific objectives through additional research. It is most useful when a
decision maker wishes to better understand the situation or to identify decision alternatives.
A general objective in exploratory research, also known as qualitative research, is to gain
insights and ideas. The exploratory study is particularly helpful in breaking large, vague
problem statements in to smaller, more precise sub-problem statements, ideally in the form of
specific hypotheses.
A hypothesis is a statement that specifies how two or more measurable variables are related.
A good hypothesis also carries clear implications for testing stated relationship. In the early
stage of research, usually there is a lack of sufficient understanding of the problem to
formulate a specific hypothesis.

Descriptive Research:
Descriptive research is typically concerned with determining the frequency with which
something occurs or the relationship between two variables. The descriptive study is typically
guided by an initial hypothesis. An investigation of trends in the consumption of soft drinks
with respect to characteristics such as age, gender, and geographic location would be
descriptive study.

Descriptive Research

Exploratory Research

Causal Research

Causal Research:
Causal research design is concerned with determining cause-and effect relationship, and
these are studied via experiments. For instance a typical advertising experiments would be
one designed to ascertain the effectiveness of differential advertising, whereby the different
ads would be used in different geographic areas to investigate which ad generated the highest
sales. If the experiment is designed properly, the company would be in position to conclude
that one specific appeal yielded higher rate of sales. An electronics firm might introduce a
new product to the market at different price points in different test markets to assess price
sensitivity.
Exploratory research technique includes the following
Focus Group Interview.
Observation
CONCLUSIVE RESEARCH- Conclusive research is intended to verify insight and aid
decision maker in selecting a specific course of action. Its primary purpose is to help decision
maker to choose the best course of action in a situation.
TYPES OF CONCLUSIVE RESEARCH
Descriptive research - Descriptive research aims at describing something. Data collected
through descriptive research provides valuable information about the unit under study.
Descriptive research is further classified into:
Cross sectional research- It is one time study involving data collection at a single period of
time. Here the sample is not repeated for again and again for the data collection.
Longitudinal research- Longitudinal research involves the repetition of the same sample for
the data collection over a period of time.
Experimental research - Experimental research is also known as causal research and it allows
one to make causal inferences about relationships among variables.
The Value Of Information
Information can be useful, but what determines its real value to the Organization. In general,
the value of information is determined by: The ability and willingness to act on the information. The accuracy of the information.

The level of indecisiveness the world exists without the Information.

The amount of variation in the possible results.
The level of risk aversion.
The reduction of competitors to any decision improved by the Information.
The cost of information in terms of time and money.

DATA Collection Methods

Primary data: - Primary data are to be collected by the researcher , they are not present in
reports or journals etc and can be collected through a number of method which can be
classified as follow
Personal interview of sample.
Telephonic interview.
E- Mails.
Observations.
Questionnaires.
Interviews.
Secondary data: - Secondary data are the data collected for some purpose other than the
research situation; such data are available from the sources such as books, company reports,
journals, rating organization, census department e.t.c . The secondary data are readily
available and therefore they are less costly and less time consuming. Sources of secondary
data are
Internets.
Book and Journals.
Company reports.
Census department.
Research work of others.
Methodology used for the study
The methodology used in the study is descriptive. A survey was done in different parts of
Telecom Sector in Haryana to ascertain the facts about the soft drink brand under banks and
its sale process, promotion as well as its availability in the market. This project is mainly
based on the primary data and information beside this secondary data is also used.
Sampling method adopted - Sampling method adopted for the study was Non Probability
sampling. Non Probability sampling is a subjective procedure in which the probability of
selection for the population units cannot be determined Both convenience and judgment
sampling is used for the study purpose.

Convenience sampling: - Here the researcher convenience forms the basis for selecting a
sample unit. During my project I had collected data from the respondents present near by the
banks.

Judgment sampling: - Judgment sampling is a procedure in which a researcher exerts some

efforts in selecting a sample that he or she believes is most appropriate for the study. During
the project study the required data is also collected from the officials of Professional students
e.t.c which may provide a clear picture
SAMPLE SIZE-

105

Interview
The information has been collected from Personal interview of sample, which includes face
to face interview and telephonic interview also.

DATA INTERPRETATION AND ANALYSIS

PART 1:

1. This graph shows that, in the case of government banks majority of the respondents
gave highest rating to the satisfaction and trust because majority of the population in
India have a perceived perception that they can easily and blindly trust the
government banks. e.g. in the case of hdfc banks people think that they would charge
more interest than sbi ,so they prefer to take the services of government banks than
that of the private banks.

2. Consumers attached equal importance to variables like communication, conflict

handling, bank commitment and relationship quality.

3. Special treatment and competence are the least important factors in regards of
government banks, as per the responses given by the respondents.

PART 2:
1. I get calls/messages from my bank regularly with regards to my account and feedback
for services.
-the calculated mean is 3.19 as per the responses, which is more than 3. It means the
result is positive because many of the government back like SBI provides a good
service of providing feedback to their services.
2. My bank offers superior products compared to other banks.
-the calculated mean is 3.40 as per the responses, which is more than 3. It means the
result is positive because consumers feels that they get superior products than other
bank provides. For e.g. SBI provide housing loan and education loan at lowest interest
rate.
3. My bank offers useful information by means of social networks.
-the calculated mean is 3.02 as per the responses, which is more than 3. It means the
result is positive because they provide necessary information to their customers by
sending necessary mails or messages.
4. The bank staff is friendly and courteous to me.
-the calculated mean is 3.50 as per the responses, which is more than. It means the
result is positive because in the current scenario when competition is very tough,
government banks also start looking forward to their staff behavior so that they can
satisfy their customers and to retain them.
5. My bank offers products and services that suit my usage.
-the calculated mean is 3.46 as per the responses, which is more than 3. It means the
result is positive because government banks always try to offer such products which
are suitable for maximum population of India.
6. I get regular calls/messages from the bank to notify me about new products and
services.
-the calculated mean is 3.06 as per the responses, which is more than 3. It means the
result is positive because now government banks also start performing such activities
to retain their customers.

7. The bank`s call centre is helpful whenever I have complaints.

-the calculated mean is 3.41 as per the responses, which is more than 3. It means the
result is positive because now government banks also start taking care of the problems
of their customer by providing them necessary details on call.
8. I feel that I have a personal relationship with my bank.
-the calculated mean is 3.09 as per the responses, which is more than 3. It means the
result is positive because government bank provide sense of protection to their
customers.
9. The turnaround time for addressing/solving customer problems is less than 24hours.
-the calculated mean is 3.30 as per the responses, which is more than 3. It means the
result is positive because now government banks also take less than 24 hours e.g. in
case of ATM problems SBI takes less than 24 hours to solve their problem
10. I am satisfied with the services offered by my bank.
-the calculated mean is 3.56 as per the responses, which is more than 3. It means the
result is positive because of technology advancement, efficient and new modes of
services are provided.e.g. mobile banking, e-banking,etc.
11. The bank staff is very quick and efficient.
-the calculated mean is 3.19 as per the responses, which is more than 3. It means the
result is positive because now government banks appoint new and more qualified
staff.
12. In my view, my bank performs better than other banks.
-the calculated mean is 3.5 as per the responses, which is more than 3. It means the
result is positive because they provide better interest rates and are directly linked with
the government.
13. In my view, my bank has good credit facilities.
-the calculated mean is 3.40 as per the responses, which is more than 3. It means the
result is positive because of better interest rates than other private sector banks.
14. My bank consultant is honest and trustworthy.
-the calculated mean is 3.69 as per the responses, which is more than 3. It means the
result is positive because they are under government contract as per the rules of the
RBI.
15. The bank values relationships with its customers through its promotional activities

-the calculated mean is 3.44 as per the responses, which is more than 3. It means the
result is positive because of technology advancement.
16. The bank staff is very professional and eager to help.
-the calculated mean is 3.36 as per the responses, which is more than 3. It means the
result is positive because of better qualification and experience.
17. The bank uses up-to-date technology.
-the calculated mean is 3.61 as per the responses, which is more than 3. It means the
result is positive because of development of society leads to advancement in all the
fields of technology. So banks have to be hand in hand with technology. E.g. echeques, upcoming technology by SBI bank.
18. I often refer my bank to others.
-the calculated mean is 3.58 as per the responses, which is more than 3. It means the
result is positive because it is efficient and trustworthy.
19. My bank has a good reputation compared to other banks.
-the calculated mean is 3.62 as per the responses, which is more than 3. It means the
result is positive because government banks are highly regulated by the Reserve Bnak
of India.
20. The bank responds to my requests in time.
-the calculated mean is 3.38 as per the responses, which is more than 3. It means the
result is positive because of efficient staff and technology advancement.
21. The bank creates a good image via media communication.
-the calculated mean is 3.34 as per the responses, which is more than 3. It means the
result is positive because people get influenced and can easily make choice among
different bank services.
22. My bank consultant is very reliable.
-the calculated mean is 3.43 as per the responses, which is more than 3. It means the
result is positive because he is highly qualified and trained.
23. I feel I get a special treatment from my bank.
-the calculated mean is 3.18 as per the responses, which is more than 3. It means the
result is positive because all the customers of bank are treated as family.
24. I get what I am committed.

-the calculated mean is 3.38 as per the responses, which is more than 3. It means the
result is positive because of banking regulation act 1956.
25. I always feel as a part of the family whenever I visit the bank.
-the calculated mean is 3.27 as per the responses, which is more than 3. It means the
result is positive because all the customers are same and special for them.
26. Customers have always been a first priority for my bank.
-the calculated mean is 3.49 as per the responses, which is more than 3. It means the
result is positive because they are root of the existence of bank.
27. My personal information is always protected.
-the calculated mean is 3.65 as per the responses, which is more than 3. It means the
result is positive because of privacy policy of bank.
28. I have never faced the same problem twice.
-the calculated mean is 3.56 as per the responses, which is more than 3. It means the
result is positive because the bank effectively and efficient solve the problem.
29. I trust the information provided by my bank.
-the calculated mean is 3.85 as per the responses, which is more than 3. It means the
result is positive because it is reputed and reliable bank.
30. I easily acquire information whenever required.
-the calculated mean is 3.64 as per the responses, which is more than 3. It means the
result is positive because of quality and trained staff.
31. My bank suggests products and services tailored to meet my financial needs.
-the calculated mean is 3.5 as per the responses, which is more than 3. It means the
result is positive because every customer has different needs and all banks make
tailored services for its customers.
32. I always hear positive word of mouth about my bank from others.
-the calculated mean is 3.61 as per the responses, which is more than 3. It means the
result is positive because it is highly reputed bank of the city.
33. I plan to continue my relationship with the bank for a long time.
-the calculated mean is 3.64 as per the responses, which is more than 3. It means the
result is positive because it meets my needs and requirements.
34. I will recommend my bank to my friends and family members.

-the calculated mean is 3.68 as per the responses, which is more than 3. It means the
result is positive because it has best interest rates , best staff and reputation.
35. My bank offers me the best of services and I feel I am served in the best possible
ways.
-the calculated mean is 3.62 as per the responses, which is more than 3. It means the
result is positive because they treat me like family and give me best possible advice
for my finance related problems.

CONCLUSION
The conclusion of my study is that private banks and government banks provide equally
good services to its customer but being 75% of Indian population is agricultural based
their main faith lies on the government owned banks as government banks provide its
customer tailor made service. Government banks also provide low rate of interest to its
Customers. E.g. SBI provides lowest rate of interest on loans. After banking regulation
act 1956 all the rates of public sector banks

Questionnaire
Dear Respondent
Greetings!! Relationship Marketing has become a new paradigm in the field of marketing.
Banks are trying their best to shift from a transaction orientation to a relationship orientation
with their customers. As retaining customers is more of a challenge today than acquiring
them. The purpose of the questionnaire is to know the importance you attach to the variables
of Relationship marketing in context of your relationship with a bank and to know the level
of your relationship with the bank on the basis of these variables.
Part 1: Personal Information
1. Gender:( ) Male ( ) Female
2. Age:( ) Under 18 years old ( ) 18-20 years old
( ) 21-23 years old
( ) Over
24 years old
3. Monthly income: ( ) Less than 15,000 ( ) 15,000 to 30, 0000 ( ) 30,000 t0 45,000
()
45,000 and above
Part 2: In this section, we would like your opinion on the level of importance of each of
the variables mentioned below to be successful in a healthy relationship.
1- Least Important 2 Of Little importance
3 Indifferent
4 - Important
5
Most Important
Tick mark in the box where you would prefer rating the variables mentioned below.
Level of
Importance
1
2
3
4

Variable
TRUST
BANK COMMITTMENT
COMMUNICATION
CONFLICT HANDLING
COMPETENCE
SATISAFACTION
RELATIONSHIP
QUALITY

SPECIAL TREATMENT

Part 2: This part consists of statements regarding various aspects of relationship

marketing with your
bank. Kindly tick on the option you most identify with in
context with the statements mentioned below. The statements have been framed on the
basis of various variables mentioned above.
S.D Strongly Disagree
D Disagree
N- Neutral
A Agree
S.A
Strongly Agree
S.n
o

Statements on the variables of relationship

marketing,

1.

I get calls/messages from my bank regularly with

regards to my account and feedback for services.
My bank offers superior products compared to other
banks.
My bank offers useful information by means of
social networks.
The bank staff is friendly and courteous to me.
My bank offers products and services that suit my
usage.
I get regular calls/messages from the bank to notify
me about new products and services.
The bank`s call centre is helpful whenever I have
complaints.
I feel that I have a personal relationship with my
bank.
The turnaround time for addressing/solving
customer problems is less than 24hours.
I am satisfied with the services offered by my bank.
The bank staff is very quick and efficient.
In my view, my bank performs better than other
banks.
In my view, my bank has good credit facilities.
My bank consultant is honest and trustworthy.
The bank values relationships with its customers
through its promotional activities
The bank staff is very professional and eager to
help.
The bank uses up-to-date technology.
I often refer my bank to others.
My bank has a good reputation compared to other
banks.
The bank responds to my requests in time.
The bank creates a good image via media

2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
18.
19.
20.
21.

S.
D

S.A

communication.
22. My bank consultant is very reliable.
23. I feel I get a special treatment from my bank.
24. I get what I am committed.
25. I always feel as a part of the family whenever I visit
the bank.
26.. Customers have always been a first priority for my
bank.
27. My personal information is always protected.
28. I have never faced the same problem twice.
29. I trust the information provided by my bank.
30. I easily acquire information whenever required.
31. My bank suggests products and services tailored to
meet my financial needs.
32. I always hear positive word of mouth about my
bank from others.
33. I plan to continue my relationship with the bank for
a long time.
34. I will recommend my bank to my friends and family
members.
35. My bank offers me the best of services and I feel I
am served in the best possible ways.