27-08-2013, 03:42 PM
A STUDY OF MARKETING STRATEGIES IN HOME LOAN FINANCE MARKET
MARKETING STRATEGIES.doc (Size: 302.5 KB / Downloads: 30)
ABSTRACT
The era of consumerism has arrived as an immediate benefit of liberalization in India. The Home loan Industry has developed immensely and with its growth came superior schemes coupled with higher competition as an implication to manage the service oriented marketing strategies for serving the customers better.
Research is necessary for the survival in any field in this era of competition. The world, in which it thrives, changes at miraculous pace. , the opponents are waiting for us to take an erroneous decision and take advantage of the situations. We can sounder their move only through developing dynamic and effective tools of marketing as done in the this research work for ICICI HOUSING FINANCE LTD.
The profile of consumer is most important for any organization to be successful which is possible through learning the attitude of customer towards company’s products. It can provide a proper feedback to the company about the product as well as those customers (intended buyers) who are going to use the product, what are their expectations from the product & what modifications are needed to be carried out to get them and feel the pulse of the market.
OVERVIEW OF THE INDUSTRY AS A WHOLE
In this age of insta-buys, the best deals come knocking at your doorsteps. These are great times for taking a home loan. Property prices are stable, interest rates are down, and the tax breaks have acted as a further sweetener. A dozen big time lenders are battling it out with each other to offer loans at the best possible rates.
The battle is not only for offering competitive interest rates (which are determined by your job profile) but also for approving the loan in fifteen days flat provided you have all the documents in place.
People first, locate a property, then begin looking for a suitable loan scheme. Next it is time to do the homework on the costlier home loans versus the cheaper ones available in the market. By costlier loans, is meant the firms whose upfront rate of interest is high, and which also charge additional service charges, Which are waived by firms providing cheap loans. Cheap here doesn’t refer to the quality of service, because you pay a competitive interest rate to the lenders.
Even if you have the money to buy a home, it is still advisable to go for a loan. For the salaried employee, that’s the best way to avail tax benefits. Interest payments up to Rs. 1.5 lakh on housing loans are deductible from your taxable income. Besides, you are entitled to a tax deduction of Rs. 4,000 against repayment of principal.
MODUS OPERANDI
The Modus operandi is quite simple. A person gets a loan equal to 40 months of his income or 80 per cent of the value of the house property, which ever is less. But the basic criterion is repayment capacity. Hence, the loan given must not have a monthly EMI exceeding one third of the monthly income of the borrower.
In case a person wants to borrow an amount greater than his borrowing capacity, he can have a co-applicant to enhance his loan-borrowing limit. The income of both the applicants is clubbed together to compute the borrowing limits of the borrower.
PROFILE OF THE ORGANISATION
ICICI Bank is India's second-largest bank with total assets of about Rs.112,024 crore and a network of about 450 branches and offices and about 1750 ATMs. ICICI Bank offers a wide range of banking products and financial services to corporate and retail customers through a variety of delivery channels and through its specialized subsidiaries and affiliates in the areas of investment banking, life and non-life insurance, venture capital, asset management and information technology. ICICI Bank's equity shares are listed in India on stock exchanges at Chennai, Delhi, Kolkata and Vadodara, the Stock Exchange, Mumbai and the National Stock Exchange of India Limited and its American Depositary Receipts (ADRs) are listed on the New York Stock Exchange (NYSE).
ICICI Bank was originally promoted in 1994 by ICICI Limited, an Indian financial institution, and was its wholly-owned subsidiary. ICICI's shareholding in ICICI Bank was reduced to 46% through a public offering of shares in India in fiscal 1998, an equity offering in the form of ADRs listed on the NYSE in fiscal 2000, ICICI Bank's acquisition of Bank of Madura Limited in an all-stock amalgamation in fiscal 2001, and secondary market sales by ICICI to institutional investors in fiscal 2001 and fiscal 2002.
INTEREST RATES
The government has given very liberal tax benefits on the interest and principal repayments made on a Home Loan. By filling in the form below you can determine your tax savings each year. You can also check the after tax cost of your loan on a monthly rest basis, after including all "hidden costs" like processing fee, administrative fee etc. The Post Tax Effective Interest Rate (PTEIR) so calculated is the actual cost of your loan that needs to be compared across different companies. Remember that the tax savings will vary from individual to individual depending on his tax bracket.
COMPETITORS INFORMATION
In today’s real estate market, the buyer rules. Lenders are becoming lenient and borrowing rates are falling. Here is a fine print in lender’s offering the competitive pricing and services. Here are some of the key players in the market ready to fund the roof over your head. I have chosen these companies basically due to the reason that these are being known to be the major and key players. The whole of the survey whorls around these companies.
HDFC
The Housing Development Financial Cooperation has a friendly image and ranks among the top lenders. HDFC offers home loans for constructing or buying a home, or even for adding to, or renovating your existing home. It offers a maximum loan of up to 85 per cent of the cost of the property.
HDFC lends a maximum of Rs 1 crore. The maximum period of repayment is 15 years or retirement age, whichever is earlier. It’s interest rate ranges from 10.75 per cent to 12.50 per cent, based on the quantum of the loan. The processing fee is 0.8 per cent of the loan amount on submission of application, and administrative fee if 1 per cent, which is charged once the loan is sanctioned.
PNB HFL
Punjab National Bank’s Apna Ghar Yojna disburse loans to individuals who are in permanent service of self employed or engaged in business activities. The loan is disbursed either in lump sum or in installments, depending on requirement.
If you agree to repay a Rs 10 lakh loan in 7 years, they levy an interest rate of just 12.25 per cent. For the same amount to be repaid in 15 years they charge 12.75 per cent, and for 20 years, they charge 12.75 per cent. Above Rs 15 lakh if you want to repay in 20 years, PNB’s interest stands at 13.5 per cent. The bank has no upper limit on the loan amount and it depends on the cost of the property and repayment.
HOUSE-FED
These Co-operative societies are also big players in the housing finance segment. They mostly have a fixed rate of interest of starting from 12.25 per cent to 13.50 percent depending upon members of the society .Irrespective of the amount of loan amount varying from 50,000 Rs to 50 Lacs the security deposit is mortgage, guarantee and even agricultural land with EMI paid through Quarterly /half yearly or Yearly modes.
RESEARCH DESIGN :
The universe of the study consists of the main institutions providing Home Loans in Delhi NCR. For this ,five main Institutions are selected, each from different sectors, that is ICICI and HDFC are Private Limited companies, LICHF & PNBHF both public ltd. Companies and House–fed being Co-operative society institutions for this study.
Research methodology will be based on comparative evaluation of existing Market Share and Marketing strategies, estimation of customer satisfaction level and developing tools for tracking it so that flaws in existing strategies of ICICI HFL can be minimized with suggestions for retention of customer relations .
Sampling Plan : Random Sampling because information will be collected from four different regions at Delhi.
Sampling Size : The sample includes 250 respondents ,which have been equally selected from each of the four areas including N.Delhi, Noida, Faridabad and Gurgaon and State capital Delhi .Hence the final sample included 50 respondents from each NCR and rest from state capital for the purpose to survey atleast 50 customers of each institution under study with the given time constraint for project work.
BUYING BEHAVIOUR:
Buyer behavior is a comparatively new field of study. It is the attempt to understand and predict human actions in the buying role. It has assumed growing importance under market oriented or customer oriented marketing planning and management.
Buyer behavior is defined as “all psychological, social, and physical behavior of potential customers as they become aware of, evaluate, purchase, consume, and tell others about products and services”. Each element of its definition is important:
1. Buyer behavior involves both individual processes and group processes.
2. Buyer behavior is reflected from awareness right through post-purchase evaluation indicating satisfaction or non-satisfaction, from purchases.
3. Buyer behavior includes communication, purchasing and consumption behavior.
CONCLUSION
It can be concluded that maximum persons in Delhi NCR have taken the loan for Construction purpose from various institutions with the biggest market share to House-fed Co-operative societies.
The maximum proportion of customers of all the institutions have taken loan on flexible rate but House-fed offers only fixed rate of interest. Despite in the falling regime, the customers of all institutions were of the view that all the institutions charge high rate of interest leading to a large number of indifferent customers regarding satisfactory services from their Housing Finance companies.
HDFC has come out as the fastest finance service in sanctioning loans with print & electronic media as its favorable sources to cater information .
House-fed is the only institution that grants loan with security of even agricultural land with quarterly and half yearly EMI.