solutions for the development of bank marketing towards individual customers in vietnam prosperity joint stock commercial bank vpbank

!"#$%#&'()*+, '.* * /#)0')1*23#$-45*
*
61%5en Thi Thu Hang ATCA – K12*
* STATE%BANK%OF%VIETNAM*
* BANKING%ACADEMY%OF%VIETNAM*
* FACULTY%OF%FOREIGN%LANGUAGE*
* *77777!"#!"77777*
* *
*
%% *
*
%
%
SOLUTIONS%FOR%THE%DEVELOPMENT%OF%BANK%MARKETING%
TOWARDS%INDIVIDUAL%CUSTOMERS%IN%%
VIETNAM%PROSPERITY%JOINT%STOCK%COMMERCIAL%BANK%–%VPBANK%
%
% %
%
%
%
%
%
% Supervisor:% NGUYEN%THI%HIEN%HANH,%M.A%
% Student:% NGUYEN%THI%THU%HANG%
% Class:%% ATCA%–%K12% %
% Student%ID:% 12A7511056%
% % % % %
)%
%
%

%
%
%
Hanoi,%May%2013%
%
%
%
%
!"#$%#&'()*+, '.* * /#)0')1*23#$-45*
61%5en Thi Thu Hang ATCA – K12
%
%
DEDICATION

I dedicate this graduation thesis
to my family,
my friends
and
to Banking Academy of Vietnam

!"#$%#&'()*+, '.* * /#)0')1*23#$-45*
61%5en Thi Thu Hang ATCA – K12
ACKNOWLEGEMENTS

First of all, I would like to express the profound gratitude to my supervisor NGUYEN
THI HIEN HANH, M.A. for giving me great support, encouragement and constructive
feedback to accomplish the study.
I deeply appreciated all banking staff at Giang Vo sub-branch, Vietnam Prosperity
Joint Stock Commercial Bank – VPBank for assisting and instructing me with work
and data collection. I would like to give my special thanks to Ms. Bui Thi Huong
Giang, Manager of Customer Service
Finally, I wish to extend my heartiest thanks to all Banking Academy’s lecturers, who
have equipped me with sufficient knowledge and my family, who has supported me
wholeheartedly.

!"#$%#&'()*+, '.* * /#)0')1*23#$-45*
61%5en Thi Thu Hang ATCA – K12

EXECUTIVE SUMMARY
This paper studies the solutions to improve the marketing activities in VPBank,
particularly towards individual customers. It goes adead to understand theoretical
framework related to marketing activities in banking sector before critically analyzing
the current situation of Vietnam economy and situation of marketing activities in
VPBank, primarily using four – year data from the VPBank Annual Report from 2007
to 2011.
The theory mentions five fundamental aspects of bank marketing, including concept,
roles, features of bank services, marketing strategy and tools used by bank marketers.
It suggests that marketing approach to banking services involves anticipating,
identifying, recipocating (through designing and delivering customer – oriented
services) and satisfying the customers’ needs and want effectively, efficiently and
profitably.
Particularly, the bank marketing proved to be a neccessary activity, which strongly

affect business performance of a bank. A study of its effects and problems was
conducted with an emphasis on the situation of VPBank operations. Indeed, the bank
has made continuous efforts in diversifing its products and services, adjusting price
policy, distribution channels, and particularly concentrating on human fators. The
impacts became apparent in recent years with the improvement in business reports and
the increase in customer satisfaction. Also, the limitation of public confidence together
with the modest performance compared to other banks were reported as the aftermath
of increasingly competitive environment, innovation in technology, customer focus
and awarenessm, suggesting that marketing activities in VPBank is still in need of
further improvements.
In an attempt to make VPBank more developed, some recommendations are proposed
to the banks, such as setting a dynamic competition strategy, effective branding and
image building; developing products policies, distribution channels and workforce
performance, as well as adjusting price strategy and improving promotion policy.
!"#$%#&'()*+, '.* * /#)0')1*23#$-45*
61%5en Thi Thu Hang ATCA – K12
LIST OF TABLES AND FIGURES
LIST OF TABLES
Table 1: Total assets and charter capial of some banks by 2012 (unit: billion dong) 21
Table 2: Interest rates and the savings deposits (interest paid at maturity) 19/05/2013 27
Table 3: Number of VPBank branches and Trading Offices & Savings by 2012 29
Table 4: Deposit mobilization structure in 2010 – 2011 in VPBank 34
Table 5: Interest applied for Phat Loc savings in Techcombank 39
Table 6: Number of ATMs and Branches &Trading Offices by 2011 40

LIST OF FIGURES
Figure 1: Structure of a bank product 8
Figure 2: Vietnam GDP growth rate from 2010 – I/2013 14
Figure 3 : VPBank’s organizational structure 18
Figure 4: Average measurement of Teller Service Quality in VPBank in 2011 32

Figure 5: Operating time before and after the project Service Level Agreements 32
Figure 6: Deposit mobilization from customers in VPBank from 2007 – 2011 34
Figure 7: Outstanding loans to customers in VPBank from 2007 – 2011 36
Figure 8: Some financial indicators in VPBank from 2007 – 2011 36

!"#$%#&'()*+, '.* * /#)0')1*23#$-45*
61%5en Thi Thu Hang ATCA – K12
LIST OF ABBREVIATIONS
ACB
Asia Commercial Bank
Agribank
Vietnam Bank for Agriculture and Rural Development
Eximbank
Vietnam Export Import Commercial Joint Stock Bank
ATM
Automated teller machine
BIDV
Joint Stock Commercial Bank for Investment and Development of
Vietnam
GDP
Gross Domestic Product
HCMC
Ho Chi Minh city
HDFC
The Housing Development Finance Corporation Bank iff Sri Lanka
HSBC
Hong Kong and Shanghai Banking Corporation
ICICI
Industrial Credit and Investment Corporation of India
OCBC

Oversea – Chinese Banking Corp
POS
Point of Sales
ROA
Return on Equity
ROE
Return on Assets
SBV
State Bank off Vietnam
SJC
Saigin Jewelry Company
SLAs
Service Level Agreements
SMEs
Small and Medium Enterprises
Techcombank
Vietnam Technological and Commercial Joint- stock Bank
USD
The United States dollar
VIB
Vietnam International Bank
Vietcombank
Joint Stock Commercial Bank for Foreign Trade of Vietnam
Vietinbank
Vietnam Joint Stock Commercial Bank for Industry and Trade
VNBC
Vietnam Bank Card
VND
Vietnam Dong
VPBank

Vietnam Prosperity Joint Stock Commercial Bank
VPBS
VPBank Securities Company

!"#$%#&'()*+, '.* * /#)0')1*23#$-45*
61%5en Thi Thu Hang ATCA – K12
TABLE OF CONTENTS

DEDICATION*
ACKNOWLEGEMENTS*
EXECUTIVE SUMMARY*
LIST OF TABLES AND FIGURES*
LIST OF ABBREVIATIONS*
CHAPTER 1. INTRODUCTION*8888888888888888888888888888888888888888888888888888888888888888 888888888888888888888888888888888*9*
1.1. Rationale of the research*88888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888*9*
1.2.The objectives of the study*888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888*:*
1.5 Methodology of the study*88888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888*:*
1.6. Scope of the study*8888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888*:*
1.7. Structure of the thesis*88888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888*;*
CHAPTER 2. THEORETICAL FRAMEWORK OF BANK MARKETING*888888888*<*
2.1. Concept of Bank Marketing*88888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888*<*
2.2. The necessity of Bank Marketing towards individual customers*8888888888888888888888*=*
2.2.1. Marketing is effective tool to attract individual customers.*888888888888888888888888*=*
2.2.2. Marketing connects activity of banks and individual customers*88888888888888*>*
2.2.3. Marketing towards individual customers contribute to the bank’s
competitive position*8888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888*>*
2.3. Marketing Mix in Banking - useful tool applied in Bank Marketing*88888888888888*?*
2.1.1.* PRODUCT*8888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888*?*
2.3.2. PRICE*8888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888*@*
2.3.3. PROMOTION*888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888*9A*

2.3.4. PLACE*88888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888*99*
2.3.5. PEOPLE*88888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888*99*
2.3.6. PROCESS*88888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888*9:*
2.3.7. PHYSICAL EVIDENCE*888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888*9:*
CHAPTER 3. THE CURRENT SITUATION VIETNAM ECONOMY AND
MARKETING ACTIVITIES IN VPBANK*88888888888888888888888888888888888888888888888888888888888888888888888888*9<*
3.1. The background of Vietnam current economy*8888888888888888888888888888888888888888888888888888888*9<*
!"#$%#&'()*+, '.* * /#)0')1*23#$-45*
61%5en Thi Thu Hang ATCA – K12
3.1.1. The stock market set a new bottom*888888888888888888888888888888888888888888888888888888888888888888888*9<*
3.1.2. The slump in real estate market*8888888888888888888888888888888888888888888888888888888888888888888888888888*9=*
3.1.3. Disorder in gold market*88888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888*9=*
3.1.4. Banking sector sinks into troubles*88888888888888888888888888888888888888888888888888888888888888888888888*9>*
3.2. Introduction of VPBank*888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888*9>*
3.3. The SWOT of VPBank*888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888*9?*
3.3.1. STRENGTHS*8888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888*9?*
3.3.2. OPPORTUNITIES*888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888*:A*
3.3.3. WEAKNESSES*888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888*:9*
3.3.4. THREATS*88888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888*::*
3.4. The marketing strategies of VPBank*8888888888888888888888888888888888888888888888888888888888888888 888888888*:;*
3.4.1. PRODUCT POLICY*888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888*:;*
3.4.2. PRICE POLICY*888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888*:>*
3.4.3. PLACE POLICY*888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888*:B*
3.4.4. PROMOTION POLICY*88888888888888888888888888888888 88888888888888888888888888888888888888888888888888888888888*:@*
3.4.5 PEOPLE POLICY*888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888*;9*
3.4.6 PROCCESS POLICY*888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888*;:*
3.4.7. PHYSICAL EVIDENCE*88888888888888888888888888888888888888888888888888888888888888888888888888888888888888888*;;*
3.5. The achievements of Marketing strategies in VPBank*888888888888888888888888888888888888888*;;*
3.5.1. Deposit mobilization activities*8888888888888888888888888888888888888888888888888888888888888888888888888888888*;;*
3.5.2 Credit activities*8888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888*;=*

3.5.3 Customer satisfaction*8888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888*;?*
3.5.4. Awards*888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888*;?*
3.6. The problems of Marketing activities in VBPank*8888888888888888888888888888888888888888888888888*;?*
3.6.1. PRODUCT*888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888*;B*
3.6.2. PRICE*8888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888*;B*
3.6.3. PLACE*8888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888*;@*
3.6.4. PROMOTION*888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888*<A*
3.6.5. PEOPLE*88888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888*<9*
CHAPTER 4. SUGGESTED SOLUTIONS TO IMPROVE BANK MARKETING*888*<:*
!"#$%#&'()*+, '.* * /#)0')1*23#$-45*
61%5en Thi Thu Hang ATCA – K12
IN VPBANK*888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888*<:*
4.1. Setting a dynamic and effective competition strategy*88888888888888888888888888888888888888888*<:*
4.2. Developing product policies towards diversification and modernization*888*<;*
4.3. Adjusting price strategy in line with market moves*888888888888888888888888888888888888888888888*<<*
4.4. Developing distribution channels*8888888888888888888888888888888888888888888888888888888888888888888888888888888888*<=*
4.5. Improving promote policy*88888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888*<>*
4.6.*Developing and improving workforce performance*88888888888888888888888888888888888888888888*<B*
CONCLUSION*8888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888*<@*
REFERENCES*8888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888888*=A*
!"#$%#&'()*+, '.* * /#)0')1*23#$-45*
61%5en Thi Thu Hang ATCA – K12
9*
CHAPTER 1. INTRODUCTION
1.1. Rationale of the research
The 21
st
century challenged banks to prosper financially and survive in the face of an
unforgiving economic environment. The banks, which are unable to keep pace with
changed times and respond quickly to fast changes would be left behind in the race or

vanished. In this context, marketing is playing a key role in addressing those
challenges. Moreover, in a competitive market mechanism today, individual customers
with their own characteristics are playing an increasing important role in the
development of a bank. The proper attention to these customers will bring
considerable income and steady growth for banks, particularly for a bank with the goal
of "becoming one of the top five commercial banks, and top three leading retail bank
in Vietnam" as VPBank.
When the role of financial services offered by banks has grown continuously, there
were mounting pressure on bankers for a more effective marketing management of
their financial services. However, because of the current socio-political and economic
situation in Vietnam, the banks seldom thought of the necessity of applying marketing
task in their day-to-day operations in the past. While Vietnamese banks were
accustomed to traditional business, the counter-parts in western countries are
becoming financial supermarkets providing a wide variety of services. Because of the
inefficiency of understanding about marketing activities under banking approach and
tools used to achieve its objectives, it is difficult to design or evaluate policies and
programs intended to address prevailing problems in Vietnam commercial banks in
general and VPBank in particular.
This calls for adoption of marketing approach towards promotion of banking services.
Hence, the issue promoted me to conduct a study on “Solutions for the development
of Bank Marketing towards individual customers in Vietnam Prosperity Joint
Stock Commercial Bank - VPBank " as my graduation thesis. This paper is expected
to provide the understanding about the theoretical framework of bank marketing
activities towards individual customers; as well as the real situation, then draw results
and limitations as a base to bring about the practical recommendations.
!"#$%#&'()*+, '.* * /#)0')1*23#$-45*
61%5en Thi Thu Hang ATCA – K12
:*
1.2.The objectives of the study
The thesis attempt to:

- Provide an insight into the marketing activities in banking sector, especially
useful tools applied by marketers.
- Critically analyze the current situations of marketing strategies in VPBank; as
well as its achievements and problems in marketing activities.
- Propose some recommendations to accelerate VPBank’s Marketing activities
towards individual customers; improve its business performance and bank’s image.
1.4. Research questions
The study is conducted to answer following questions:
- How are marketing strategies applied in VPBank? What are the limitations of its
marketing activities?
- How to enhance the efficiency of marketing activities in VPBank?
1.5 Methodology of the study
The research applies comparison and contrast methods based on quantitative method
which is a research focusing on the collection and analysis of numerical data and
statistics. To find an appropriate strategy for VPBank, the thesis will also analyze
competitive advantages using SWOT model.
Data is collected from secondary data source. They are extracted from the public
annual reports of some commercial banks, to name but a few, VPBank, Vietinbank,
Agribank, Techcombank, VPBank’s surveys, banking articles and legal documents
related to banking system.
1.6. Scope of the study
Customers play an extremely important position in the existence and development of a
bank. In the context of recession, banks tend to concentrate on individual customers
who bring more stable benefits to banks than corporate ones who are facing many
difficulties. The present study is an attempt in studying marketing activities focusing
on satisfying individual customers’ demand. However, the research concentrates only
!"#$%#&'()*+, '.* * /#)0')1*23#$-45*
61%5en Thi Thu Hang ATCA – K12
;*
on the situation of VPBank, then give appropriate recommendations to this bank

without mentioning to other banks.
1.7. Structure of the thesis
In addition to Executive Summary and Conclusion, the thesis consists of four chapters:
Chapter 1 gives an Introduction about the whole thesis including research rationale
and research questions, methodology as well as the scope of the study.
Chapter 2 explains some theoretical framework of Bank Marketing, focusing on
marketing tools applied in marketing activities.
Chapter 3 describes the current situation of Vietnam economy and marketing activities
towards individual customers in VPBank in terms of elements of Marketing mix.
Chapter 4 gives some solutions to promote marketing activities for individual
customers in VPBank based on improving some limitations stated in chapter 3.













!"#$%#&'()*+, '.* * /#)0')1*23#$-45*
61%5en Thi Thu Hang ATCA – K12
<*
CHAPTER 2. THEORETICAL FRAMEWORK OF BANK MARKETING
2.1. Concept of Bank Marketing
Selling in banking is that of marketing concerned with demonstrating to the customer

that the service is right for him or her. It is therefore, one aspect of the marketing
process of promotion. If other aspects like identification of customer needs, price, etc.
are conducted properly, then the final act of selling should follow quite naturally.
Thus, in a marketing oriented bank selling act is the culmination of many other
activities all designed to create the sales opportunities. For this reason one cannot say
that banking and selling do not mix especially when considering the enormous range
of profit structured services offered by commercial banks.
The fiduciary role of banks stems from the need for bankers to gain commitment from
customers to buy their services, which generally do not immediately appear to have
life or death connotations or affect the quality of life of the purchasers. Return
business comes from satisfied customers and this is important in banking. Unlike food
or customer durables, which one has to buy to keep alive or remain decent and less
persuasion is required, financial services have to be more actively sold. Fiduciary
responsibilities are also related to the image of the bankers as impartial advisors.
9
The concept of bank marketing has been generally viewed by various bank marketers
“as that part of the management activity, which seeks to direct the flow of banking
services profitably to selected customers”. From a strategic managerial perspective
“bank marketing is an integrated business activity directed at identifying, creating and
servicing demand”. Marketing activities must be integrated throughout the entire
planning process and should permeate every aspect of a bank’s activities, from
receiving deposits to corporate planning. Since the marketing focuses on the
customers, the success of the bank is depend in its capacity to satisfy consumer wants
and needs.
A comprehensive explanation of bank marketing is given by Deryk Weyner of
Barclay’s Bank. According to him, bank marketing is identifying the most profitable
!"#$%#&'()*+, '.* * /#)0')1*23#$-45*
61%5en Thi Thu Hang ATCA – K12
=*
markets now and in the future, assessing the present and future needs of customers,

setting the business developments goals and making plans to meet them and managing
the various services and promoting them to achieve the plans – all in the context of a
changing environment in the market.” Thus the adoption of marketing concept by
banks recognizes that customer’s needs are changing and banks must define these in
explicit terms to satisfy them at a profit to the bank.
The marketing concept basically requires that all activities that have any relation with
the customer should be entirely co-ordinated by the marketing element in the bank. In
other words, that a way of thinking along marketing lines is permeated into all areas of
banking so as to enable the establishment of a marketing – oriented operation.
2.2. The necessity of Bank Marketing towards individual customers
2.2.1. Marketing is effective tool to attract individual customers.
Customers play a vital role in banking activities. The demand of individual customers
is diverse, especially in the growing and constantly changing society. Therefore, the
use of marketing tools to uncover the needs of individual customers can be seen that
the initial success of the bank, then banks will conduct research to launch new
products to meet customers’ needs.
Moreover, individual customers tend to make a comment on the pros, cons and quality
of products and services. Therefore, the marketing of improved service will retain
customers, create better assessments and have a strong influence on the decision of the
group of potential customers. Because those who are satisfied by banking products
will become effective advertising tool, banks will pay no cost. At the same time, banks
also need to conduct marketing activities to "nourish" the satisfaction of individual
customers in order to prevent them from falling into the “marketing trap” of other
competitors.
On the other hand, a significant amount of individual clients works in corporate, once
they are met their needs, the bank have more chance to be introduced to their work,
which means increasing organizational customers (in addition to individual
customers).

!"#$%#&'()*+, '.* * /#)0')1*23#$-45*

61%5en Thi Thu Hang ATCA – K12
>*

2.2.2. Marketing connects activity of banks and individual customers
Personal customer service is both the object of both the banking market. Meanwhile
the bank's operations and market relationships and the impact of organic influence
each other directly. Therefore, to understand market needs to be closely linked with
the activities of the bank will make the market of banking operations with high
efficiency. This will be made possible through a bridge bank Marketing by Marketing
help identify market factors, changes varied needs of individual customers about
products and services.

On the other hand, marketing is a tool to lead the direction of capital flows, exploiting
the ability to mobilize capital, transfer the needs of the capital properly. Thanks to
marketing, banks can coordinate and orient the activities of all departments and all
employees to better meet customer needs. According to R.Brion and J.Staffort in the
article named "Myths of Marketing in banking activities", the two-side role of bank
marketing is stated: one is the determination of marketing mix methods on the basis of
market research to capture the business opportunities; the other is the combination of
all banking activities in the desire to satisfy the needs of customers (especially
individual customer with diverse desire) at the highest level, which also brings benefits
to the banks.

2.2.3. Marketing towards individual customers contribute to the bank’s
competitive position
One of the important tasks of marketing in banking sector is to create its competitive
position in the market. Due to the diverse and complex needs of individual clients, the
creation of the distinctive products and services with competitors is the fact that banks
have created its competitive position.
The process of creating the competitive position of banking is closely related to the

creation of distinct products and services and specification of these products and
services in target markets to make individual customers realize their benefits. Hence,
the creation of the competitive position relies heavily on the marketing ability of each
!"#$%#&'()*+, '.* * /#)0')1*23#$-45*
61%5en Thi Thu Hang ATCA – K12
?*
bank. It requires marketing department must be fully aware of the possibility of the
bank, the techniques used, as well as the specific needs of the target market.

2.3. Marketing Mix in Banking - useful tool applied in Bank Marketing
Marketing strategy is a plan for selecting and analyzing a target market and
developing and maintaining a marketing mix that will satisfy this target market. A
target market is a group of consumers at whom an organization directs its marketing
efforts.
The marketing mix consists of four basic variables: Product, Price, Promotion and
Place. A major task of marketing management is to blend together these elements of
the marketing mix in such a way that they fulfill the needs of selected target markets.
However as a service is not tangible the marketing mix for a service has three
additional elements: People, Process and Physical Evidence.
*
2.1.1. PRODUCT
The products of a bank are essentially services. Under the marketing concept services
offered by the banks have to be worked out after taking into account the customer
needs and preferences. In this perspective what the customers are buying from the
bank is security, convenience, prestige, freedom and a number of other want and need
satisfying extensions that are packaged in the form of basic banking services.
The product component of the financial services marketing mix is affected by the
problem of copying. It is difficult to use specific service attributes as the basic for
developing competitive advantage because distinctive attributes are easily duplicated
by competitors. By contrast, improvement in the quality of service provision in general

and customer care in particular, are recognized as being important strategies for
successful product differentiation.
!"#$%#&'()*+, '.* * /#)0')1*23#$-45*
61%5en Thi Thu Hang ATCA – K12
B*
Product development can serve bank marketing ends by attracting consumers from
outside the present market, increasing sales to the existing market and reducing the
cost of providing an identical or similar service. The product development strategies
include expansion strategy, differentiation strategy and satlelite product strategy.
The banking products will be set of different features and functions, which satisfy
diverse needs of customers. However, a banking product is usually composed of three
levels.
Figure 1: Structure of a bank product
(Source: Bank Marketing Textbook, Banking Academy, 2004, p.45)
Firstly, the core product
The core banking products usually meet urgent needs (main) of customers. In essence,
these are the main benefits that customers look for in a bank, the core values that
banks need to sell to customers.
Secondly, the tangible product
*
************************
*
*
Meet
essential
demands
Form
Symbol
Image
Terms

Promotion
Additional services
Core Products
Tangible Products
Additional Products
*
!"#$%#&'()*+, '.* * /#)0')1*23#$-45*
61%5en Thi Thu Hang ATCA – K12
@*
The tangible product is the specific part of banking products. This is a form of
expression outside of banking products and services such as its name, form,
characteristics, symbols, terms of use. It is the base for customers to identify,
distinguish, compare and select products and services between banks.
Thirdly, the additional product
The additional products are other benefits added to the existing products or services, in
addition to the primary benefit of the customers. They make banking products and
services more complete and satisfy the needs and desires of customers, differentiating
themselves from competitors. The additional products are also strong elements of
competing banks today because of its versatility.
The success of many banks around the world is for the fact that their marketing
department realizes the products and services suitable to each segment of customers.
When implementing services or products, the marketing department firstly should
define the core needs of its customers, create the specific image of the products and
services to stimulate customers’ demand. This is also the basis for customer to
distinguish the banks from the others. Then the bank should seek to increase the
additional characteristics to create a collection of utilities, the benefits that can better
satisfy diverse needs of customers than competitors.
2.3.2. PRICE
Pricing in banking relates to the interest rates paid by the bankers on deposits, interest
charged by the banker on loans and demand draft, charges for various types of

transactions and fees for certain services.
In the formulation of marketing mix, the pricing decisions occupy a place of
outstanding significance. The pricing decision includes the decisions related to interest
and fee or commission charged by bank. Keeping in view the level of satisfaction of a
particular segment, the bank has to frame the pricing strategies.
!"#$%#&'()*+, '.* * /#)0')1*23#$-45*
61%5en Thi Thu Hang ATCA – K12
9A*
The banks are required to frame two-fold strategies. Strategies concerned with interest
and commissions to be paid to the customer and interest and commissions to be paid by
the customers for different types of services.
2.3.3. PROMOTION
Banks promotional activities have several dimensions like building of image and
reputation, differentiate from competitors, generate interest and knowledge, attract
new customers and generate customer loyalty. To achieve these objectives the banks
develop promotional strategies and tactics, which utilize the usual mix of advertising,
sales promotion, public relations and personal selling.
Financial services are getting more and more complex and there are many of them to
choose. Banks can market current account, savings and fixed deposit accounts without
sales people. But in the case of complex financial services such as portfolio
management, mutual funds, factoring etc. requires interactive dialogue by sales
people. Thus there is a real need for developing an ongoing professional and proactive
sales program in banks.
The role of advertising in banks must be to complement personal selling and not to
substitute. Best financial service advertisers will attempt to pave the way for sales
people in three ways. It promotes the bank, bring more credibility and send messages
to market segments.
Public relation strategy will help to publicize a bank and its services so as to maintain
favorable images and credibility.
Of late banks are practicing relationship banking, where customers are viewed as

clients and emphasis is to retain than acquiring new customers. The rationale behind
relationship banking is to transform single-service users in to multi-service clients and
indifferent customers into loyal clients.


!"#$%#&'()*+, '.* * /#)0')1*23#$-45*
61%5en Thi Thu Hang ATCA – K12
99*
2.3.4. PLACE
The place decision mainly deals with selection of a suitable location for the branch.
Sound location decisions help in activating the business. The location should have
adequate availability of transportation, communication, electricity and other necessary
facilities for the smooth functioning of the banks. Technological development,
increased customer satisfaction, inadequacy of the traditional challenge to serve all
customer segments have brought about ATM, tele-banking, home banking, Internet
banking and now SMS Banking. Another significant development is a strategic alliance
set up by the private banks to overcome the handicap of limited branch network. In
such alliance the branch network of one branch will be used by the other for selected
transaction like bill collection, cheque collection, etc.
2.3.5. PEOPLE
Banking products cannot be separated from the person (banker) who markets them.
The product and the seller together constitute the banking product. Banks should adopt
internal marketing in order to make the whole business customer-oriented. The bank
products should be marketed to the employees first before they are marketed to
customer. The corporate mission should be communicated repeatedly and effectively to
all employees by the top management. The placement policy should emphasize that the
recruits should not only be conversant with all aspects of banking businesses but also
have the skill for social interaction and tolerance for interpersonal contact. The quality
for banking sector is an aggregation of all the properties, which are found essential for
generating the efficiency and projecting a fair image. Even efficiency essentially is

supported by ethical dimension, humanity and humanism.
The development of human resources makes the way for the formation of human
capital. Human resource can be developed through education, training and by
psychological tests. Even incentives can inject efficiency and can motivate people for
productive and qualitative work.

!"#$%#&'()*+, '.* * /#)0')1*23#$-45*
61%5en Thi Thu Hang ATCA – K12
9:*
2.3.6. PROCESS
It involves all activities right from the product conception stage, to product designing
and development down to its marketing at the branch level.
Flow of activities: There has to be adherence to certain rules and principles in the
banking operations. The activities have been segregated into various departments
accordingly.
a) Standardization: banks have got standardized procedures, got typical transactions.
In fact not only all the branches of a single-bank, but all the banks have some
standardization in them. This is because of the rules they are subject to. Besides this,
each of the banks has its standard forms, documentations etc. Standardization saves a
lot of time behind individual transaction.
b) Customization: There are specialty counters at each branch to deal with customers
of a particular scheme. Besides this the customers can select their deposit period among
the available alternatives.
2.3.7. PHYSICAL EVIDENCE
The physical evidences include signage, reports, punch lines, other tangibles,
employee’s dress code etc. The company’s financial reports are issued to the customers
to emphasis or credibility. Even some of the banks follow a dress code for their internal
customers. This helps the customers to feel the ease and comfort.
Signage: each and every bank has its logo by which a person can identify the company.
Thus such signages are significant for creating visualization and corporate identity.

Tangibles: banks give pens, writing pads to the internal customers. Even the
passbooks, cheque books, etc reduce the inherent intangibility of services.
Punch lines: punch lines or the corporate statement depict the philosophy and attitude
of the bank. Banks have influential punch lines to attract the customers.
!"#$%#&'()*+, '.* * /#)0')1*23#$-45*
61%5en Thi Thu Hang ATCA – K12
9;*
Most private and foreign banks like ICICI, Citibank and HDFC bank portray a new
look to the customers rather than drudgery banking counters. Attractive brand names,
logos, symbols, etc. add to the customer’s perception of service quality.
A bank with proper marketing policy will ensure to meet its objectives. After chapter II
- Bank Marketing for individual customers, we have gained a basic understanding of
the marketing in banking, which would be basis for further studying the situation of
Bank Marketing activities towards individual customers in VPBank mentioned in
chapter III.

!"#$%#&'()*+, '.* * /#)0')1*23#$-45*
61%5en Thi Thu Hang ATCA – K12
9<*
CHAPTER 3. THE CURRENT SITUATION OF VIETNAM ECONOMY AND
MARKETING ACTIVITIES IN VPBANK
3.1. The background of Vietnam current economy
2012 can be considered as a gloomy picture of economy for most countries in the
world. While USA is still struggling with the policies to deal with the financial crisis,
Europe crumbled with prolonged debt crisis. In Asia, China, the 2
nd
largest economy
in the world, is also slowing down with the decline in a series of growth target.
Obviously, Vietnam is not out of this spiral when facing many challenges to find a
solution for the problem of growth in 2013.

Figure 2: Vietnam GDP growth rate from 2010 – I/2013
Source: Tradingeconomics.com
3.1.1. The stock market set a new bottom
The unfavorable factors both in micro and macro economy made most listed
companies get into trouble during 2012 right from the beginning. On 6
th
November,
Vietnam's stock market set a dissapointed record when HNX-Index reached its lowest
level in 12 years of existence in the market (50.7 points).
In order to increase transaction values and stimulate the development of the market,
the State Securities Commission of Vietnam has agreed to lengthen the traded time
until daily 14.5 pm in HNX and HSX from 5
th
March. However, these efforts have not
brought any positive results yet: low-value transactions, poor performance of stock
!"#$%#&'()*+, '.* * /#)0')1*23#$-45*
61%5en Thi Thu Hang ATCA – K12
9=*
companies, layoffs and cut down on salary and bonus. Securities used to be one of the
sectors offering the highest bonus in its peak period of the years 2006 and 2007, but at
the present, many securities companies have to owe their staff salaries during the past
year.
3.1.2. The slump in real estate market
According to the statistics, the inventory of real estate market is up to 70,000
apartments in HCMC and Hanoi, not including a series of villas, land in many other
cities across the country with values approximately 300 trillion VND. These figures
reflect the slack status of the current real estate market. Investors have tried every way
in order to stimulate the demand, but they did not work.
The reason first stems from the rampant investment without practical and feasible

plans. Most businesses and organizations rush to “pour money” into real estate aiming
at middle and senior segment. At the same time, a huge amount of this type of goods
was produced, even in Hanoi was able to solve the housing problem by 2050.
However, as investors and speculators pushed prices up too high, inconsistent with the
actual affordability of the majority of the people, real estate has never got difficult as
in 2012.
Although the real estate market in Hanoi and HCMC have noted the strong decline in
all segments in 2012, then the price is still far from the affordability of those wishing
to make home-buying in, so in 2013 market likely to adjust downward until they reach
their real estate prices reasonable.
3.1.3. Disorder in gold market
The introduction of Decree 24 on the management of gold trading activities as a tool to
control the gold market, limit the difference between the world price and the home
price with the purpose of removing gold speculation and smuggling.
However, after officially taking effect on 25
th
May, the gold market goes against law-
makers’ expectations. Accordingly, SJC gold – the brand of state widened the gap with
!"#$%#&'()*+, '.* * /#)0')1*23#$-45*
61%5en Thi Thu Hang ATCA – K12
9>*
world prices, fluctuating at around 3 million per tael. But in the last days of 2012, this
gap has to be loosened up to 5 million VND per tael. Then, domestic prices became
more and more optimistic with the world price even as government took actions.
3.1.4. Banking sector sinks into troubles
“Interest group” still exists in Vietnamese banking system. Some commercial banks
are hold and controlled only by a few people in a family in many different forms.
Cross-ownership situation also exists as a major problem of the current commercial
banks. The owners of this bank may establish subsidiaries, make a contribution and
ownership participation in other bank’s operation. This creates a negative situation,

which the banks conceal together to circumvent the regulation of credit and banking
activities and gain illegal profit.
Besides, bad debts are also emerging as a potential danger of the economy. So far,
each of the organizations release different figures of bad debt. According to banks’
self-reports, the total bad debts fell to about 100 trillion VND; however, this figure by
the State Bank is approximately 202 trillion VND. The ambiguity of the figures makes
this situation becomes more complicated.
3.2. Introduction of VPBank
Vietnam Prosperity Joint-Stock Commercial Bank (formerly known as VIETNAM
JOINT-STOCK COMMERCIAL BANK FOR PRIVATE ENTERPRISES (VPBANK) was
established under the business license No. 0042/NH GP issued by the Governor of the State
Bank of Vietnam on 12 August 1993 with an operation period of 99 years. The initial
charter capital was VND 20 billion. Since then, VPBank has increased charter capital
several times in order to meet its growing demand. The current charter capital of
VPBank is VND 5,050 billion.
Aiming to optimize work effectiveness and solidarity among all members, VPBank is
coordinating with consultants to create its unique corporate culture to embody the six
following core values:
1. Customer focus