Academic journal article ASBM Journal of Management

Information Search and Personality Segment: A Study among Retail Banking Customers in India

Academic journal article ASBM Journal of Management

Information Search and Personality Segment: A Study among Retail Banking Customers in India

Article excerpt

Introduction

Indian retail banking has witnessed phenomenal growth ever since the economic reforms started in 1991. There are many reasons cited by many authors for this growth which includes demographic changes, flexible interest rates, competition among banks, and profitability in retail banking business, less demand for credit from industry, technological development and so on. Though the economy encounters some challenges on account of global financial crisis and recent European debt crisis, retail banking business appears to have consistent growth. Hence, banks in India are applying strategies to sustain and improve their share in this business. The basic of devising and implementing strategy is to understand the borrowing behavior of Indian retail consumers. Information search is one among stages of borrowing behavior that is playing the vital role in evaluation and selection of a bank for borrowing credit.

The buying behavior models developed by Howard and Sheth (1969) and Engel, Blackwell and Miniard (1994) show that buying process of a consumer consists of five stages Starting with problem recognition, the consumer passes through the stages of information search, evaluation of alternatives, purchase decision, and post purchase behavior. As this model explains, the consumer borrowing process begins long b ef o r e t h e a ct u al b o r row ing a n d ha s consequences long afterward.

An interested borrower who recognizes a need for retail credit will be inclined to search for more information. The arousal would be distinguished between two levels of arousal. At the milder search state of heightened attention, a person simply becomes more receptive to information about a bank. At the active information search level, a person surfs the Internet, talks with friends, and visits banks to learn more about the product. Consumer information sources include personal sources (family, friends, neighbors, acqu ainta nc e s ), c om me rc i al sou rc es (advertising, Web sites, salespersons, dealers, packaging, displays), public sources (mass media, consumer-rating organizations), and experiential sources (handling, examining, using the product). The borrower usually receives the most information from commercial (marketerdominated) sources, although the most influential information comes from personal sources. Through gathering information, the consumer learns more and more about competing banks. The individual borrower will come to know only a subset of these banks ( awareness set ). Some of these banks will meet initial borrowing criteria (consideration set). As the person gathers more information, only a few banks will remain as strong contenders (choice set). The person makes a final choice from this set (Narayana and Marking, 1975; Desarbo and Jedidi, 1995).

It makes it clear that a bank must strategize to get itself into the prospect's awareness set, consideration set, and choice set. The bank must also identify the other banks in the borrower's choice set so that it can plan competitive appeals. In addition, the bank should identify the consumer's information sources and evaluate their relative importance so it can prepare a range of effective communications for the target market.

Review of literature

Most of the previous researchers defined information search either explicitly or implicitly r e la t ed to t h e s p e ci fic pur ch ase un d e r consideration (Beatty and Smith, 1987). Information search behavior can be also classified as internal or external (Beales et al., 1981). Internal information search consists of consumers' retrieval of memory or knowledge from previous search, experience with products or passively acquired information during normal regular activities. External information search behavior comprises of consulting with friends, family members, experts, sellers, reading books, magazines articles, consumer ratings, advertising and direct inspection. The other way of categorization of sources of information includes direct experience, seller provided, personal including family and friends and third party. …

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