Axis Bank

Business Strategy assignment

Submitted By- Daisy Biswal 10BSP0093

ABOUT AXIS BANK Axis Bank was the first of the new private banks to have begun operations in 1994, after the Government of India allowed new private banks to be established. The Bank was promoted jointly by the Administrator of the specified undertaking of the Unit Trust of India (UTI - I), Life Insurance Corporation of India (LIC) and General Insurance Corporation of India (GIC) and other four PSU insurance companies, i.e. National Insurance Company Ltd., The New India Assurance Company Ltd., The Oriental Insurance Company Ltd. and United India Insurance Company Ltd. The Bank as on 30th June, 2011 is capitalized to the extent of Rs. 411.88 crores with the public holding (other than promoters and GDRs) at 52.87%. The Bank's Registered Office is at Ahmedabad and its Central Office is located at Mumbai. The Bank has a very wide network of more than 1281 branches (including 169 Service Branches/CPCs as on 31st March, 2011). The Bank has a network of over 6270 ATMs (as on 31st March, 2011) providing 24 hrs a day banking convenience to its customers. This is one of the largest ATM networks in the country. The Bank has strengths in both retail and corporate banking and is committed to adopting the best industry practices internationally in order to achieve excellence. Promoters Axis Bank Ltd. has been promoted by the largest and the best Financial Institution of the country, UTI. The Bank was set up with a capital of Rs. 115 crore, with UTI contributing Rs. 100 crore, LIC - Rs. 7.5 crore and GIC and its four subsidiaries contributing Rs. 1.5 crore each.

SUUTI - Shareholding 23.60% Erstwhile Unit Trust of India was set up as a body corporate under the UTI Act, 1963, with a view to encourage savings and investment. In December 2002, the UTI Act, 1963 was repealed with the passage of Unit Trust of India (Transfer of Undertaking and Repeal) Act, 2002 by the Parliament, paving the way for the bifurcation of UTI into 2 entities, UTI-I and UTI-II with effect from 1st February 2003. In accordance with the Act, the Undertaking specified as UTI I has been transferred and vested in the Administrator of the Specified Undertaking of the Unit Trust of India (SUUTI), who manages assured return schemes along with 6.75% US-64 Bonds, 6.60% ARS Bonds with a Unit Capital of over Rs. 14167.59 crores. The Government of India has appointed Shri K. N. Prithviraj as the Administrator of the Specified undertaking of UTI, to look after and administer the schemes under UTI - I, where Government has continuing obligations and commitments to the investors, which it will uphold.

Vision 2015 and Core Values VISION 2015: To be the preferred financial solutions provider excelling in customer delivery through insight, empowered employees and smart use of technology Core Values Customer Centricity Ethics Transparency Teamwork Ownership

ORGANISATIONAL STRUCTURE

REPOSITIONING OF AXIS BANK UTI bank is a well-known brand name that quickly comes to our mind. But on July3 0 , 2 0 0 7 t h e b a n k h a s c h a n g e d i t s n a m e t o A X I S B A N K . M a n y wondered why its name has been changed and some did not like the change of a wellestablished name. The initial reaction was usual many couldnt link with it. S i m i l a r thing happened when BOMBAY became MUMBAI. But after a few months people got accustomed to MUMBAI only. UTI was a government institution, its subsidiary UTI Bank has been categorized as a private sector bank, according to RBI guidelines. UTI brand was given in 1994 by its promoters and UTI Bank could use the brand only till January 2008 as per Government directives. After the split of UTI, entities like UTI Securities, UTI MF and UTI Bank were all allowed to retain the UTI brand name for a while. UTI Bank shed the brand name, it opted to go for the more modern sounding Axis Bank. Change is good, especially when it comes with an image makeover to a better and upmarket product positioning. In the Indian context at present, a bank, mobile phone operator and an airline are hoping that their re-branding exercise will help them achieve that. For UTI Bank, the re-branding story was slightly different. Making a clean break f r o m i t s U T I h e r i t a g e , A x i s w a s t h e n a m e c h o s e n t o r e p r e s e n t i t s n e w g l o b a l identity. Bringing in a set of twins to build an emotional connect with the new brand, for UTI Bank it was an attempt to build its image of being a professionally-run private bank with everything else remaining the same. Sumanto Chattopadhyay, Executive Creative Director, Ogilvy & Mather, South Asia, says, The change of name from UTI Bank to Axis Bank is precisely that: Only a name change. Everything else about the brand remains the same. Axis is a strong name with an international aura to it. It is very much in keeping with UTIs success story in the private banking arena. Rolling out a multimedia campaign to announce the change of name from UTI Bank to Axis Bank, it simultaneously reassured customers that the change of name w i l l i n n o w a y a f f e c t t h e s e r v i c e s o f f e r e d b y t h e b a n k . T h e c r e a t i v e p l a t f o r m adopted for the name change campaign was based primarily on twins: siblings whose names are different, but are identical in every other way. Television was given a priority as it gives the maximum reach amongst the mass media channels. Besides the mass media channels, the 2,500-odd ATM locations were also used to convey the name change message. Hemant Kaul, President - Retail, Axis Bank, explains that the name Axis is sharp, short, simple and acceptable in any geography or language. This is in line with our global expansion aspiration. Axis Bank now has a pan-Asia presence in Hong Kong, Singapore, Shanghai and Dubai. UTI has a connotation of being a PSU. The name Axis reflects a more private sector identity, it reflects what the b a n k i s m o r e c l o s e l y than UTI Bank did. Axis reflects new thinking. Also, as Kaul elaborates, banking is a high-involvement product and involves p r o d u c t safety and security. Therefore people had to be assured that nothing would change with the re-branding from UTI Bank to Axis Bank.

THERE ARE 3 MAIN REASONS 1. They had to give up the UTI name after using it for 13 years as the bank was not prepared to accept terms and conditions (including royalty) from UTI AMC The decision to rebrand itself was taken by the bank as it was allowed to use the 'UTI' brand name for free till January 31, 2008, beyond which it had to pay royalty for using the name. 2. T h e r e c o m m e n d a t i o n f o r n a m e c h a n g e t o A x i s B a n k h a s a r i s e n f r o m t h e existence of several shareholder-unrelated entities using the UTI brand, and the consequent brand confusion that this generates 3. T h e n a m e U T I b a n k w a s c h a n g e d t o A X I S b a n k a s U T I g a v e a l o o k o f government sector bank. They had to change name to have b r a n d a n d i d e n t i t y. " T h e n a m e w a s t a k e n i n t o e f f e c t c o n s e q u e n t t o t h e approval of shareholders, Reserve Bank of India and the central government(Registrar of Companies). The UTI brand is owned by UTI Asset Management Company The bank to change logo and colour of logo the bank likely s p e n t around Rs 50 crore in the re-branding exercise. The bank acquired the services of Ogilvy & Mather (O&M) to design and implement the rebranding campaign. The new name was chosen considering the banks pan- Indian as well as international presence. The first time that a bank has dropped an established brand for an unknown name. The name Axis is chosen as it is simple and it conveys a sense of solidity anda sense of maturity. It also has a universal appeal.

MARKETING OBJECTIVES Banks wants to achieve following marketing objectives by the end of year 2011: To get the market capitalization 500 crores. To get the 200 crore retail investment. To get 125 crore corporate investments. To get the 175 core capital investments. At present Axis bank is ranked at the 6th position (overall) by its market share and capitalization and 3rdin the private banks category. It wants to get the 3 rd positioning overall Indian banking market.

AXIS Bank Five Force Model (Porter)

CORE COMPETENCESTRATEGY For the private sector banks: Differentiation on the basis of area coverage. R e s t r i c t e d r e a c h . L e v e l o f s e r v i c e i s t h e s a m e . Axis got advantage because of Product Innovation.

For the government sector banks : High level of service quality and through product Innovation. AXIS not an ywhere near, but has created a different set of segment. People who believe in the higher set of services.

For the International Banks : Differentiated itself on the base of the reach and coverage to the people. Service level is somewhat same. In the future these banks may create a problem.

SERVICES Retail banking Deposit schemes Loans and advances- Personal Loans- Housing Loans- Cards- Consumer durablesAuto Loans Personal banking Accounts- Terms deposits- Fixed deposits- Recurring deposits Cards- Different variants like: Gold plus cards, silver and silver plus cards Corporate banking Accounts- Normal current a/c- Trust/NGO savings a/c Services- Private equity, mergers and acquisitions- Advisory services- Capital market funding- E- broking

SWOT ANALYSIS OF AXIS BANK

STRATEGIES FOLLOWED BY AXIS BANK Segmentation Strategy The market segmentation strategy can give a firm a commercial competitive advantage. Axis bank considers the customer as the base for segmentation. This strategy crosses over traditional boundaries set within the company. It takes into account important issues such as market demographic and Psychographic Variables of niche markets currently being served or targeted. Demographic Variables Demographic segmentation variables are amongst the most popular bases for segmenting customer groups. Location-Metros Occupation-Business persons Salaried class(both govt and private) Working woman Age-Senior citizens Minors . Psychographic Variables Lifestyle-The people who believes in modern banking i.e. internet banking (icontact, mobile recharge, e-payment, travel currency card etc.) Social class-Many Marketers believe that a consumers "perceived" social class influences their preferences for products & services. Targeting strategy - The targeting strategy involves segmenting the market, choosing which segments of the market are appropriate, and determining the products that will be offered in each segment. Target market A 'target market or target Audience is the market segment which a particular product is marketed to. Market Targeting is the process in which intended actual markets are defined, analyzed and evaluated just before the final decision to enter is made. Corporate banking market: this market target the industries Capital market: this segmented is targeted on the long term needs of theindividual as well as of industries Retail banking market: this segment is for the retail investor and providethem short term financial credit for their personal, household needs Selective specialization strategy This is a multiple-segment strategy, also known as a differentiated strategy. Different marketing mixes are offered to different segments. The product itself may or may not be different - in many cases only the promotional message or distribution channels vary. The bank selects a number of segments, each objectively attractive and appropriate. There may be little or low synergy among the segment but each segment proves to be worth full of it. Axis bank have different set of credit cards, each targeted at different set of people i.e. segment and each one has its own importance in bank.

Positioning Strategy Positioning has come to mean the process by which marketers try to create an image or identity in the minds of their target market for its product, brand,or organization. Axis bank has positioned itself as a bank which gives higher standard of services through product innovation for diverse need of individual and corporate clients. Axis banks are positioned as the technically advanced They highlight following points in their positioning statement: Customer centric. Service oriented. Product innovation. These are the main strategies followed by axis bank so as to achieve competitiveadvantage over others. Conclusion The Bank has strengths in both retail and corporate banking and is committed to adopting the best industry practices internationally in order to achieve excellence. Axis Bank currently has global footprints in four countries by way of 3 branches in Singapore, Hong Kong, Dubai and 2 representative offices in Shanghai and Dubai. It has also sought permission from the Sri Lankan Government to open a branch in Sri Lanka in the current fiscal. In these locations it offers corporate credit and trade f i n a n c e s o l u t i o n s , d e b t s yn d i c a t i o n a n d w e a l t h m a n a g e m e n t s e r v i c e s t o N R I population settled in these cities. Over the last 5 years, the CAGR for loan growth for the banking industry has been 25-26 percent for Axis Bank it has been over 40 percent. Nonetheless the bank is still expected to grow its loan portfolio at 1.5 times the industry average. In the financial year the advances grew at the rate of 37.5 percent. Axis Banks fast pace of growth is expected to sustain over the next few years. Axis bank has differentiated itself very well on the basis of high level service and product quality. They have successfully implemented the change and due to this their market share has increased only despite of prevailing tough competition.