Rising competition in New York has put bank marketing directors on the hot seat.

Over the past 18 months, five large New York banks and thrifts have replaced their top marketing executive or undertaken a major reorganization of their marketing department.

"Marketers are in a very difficult position these days," said George M. Morvis, president of Financial Shares Corp., a bank marketing consultancy in Chicago.

Job Profile Raised

For years, most banks relegated their marketing experts to quiet backwaters, viewing their work as a mere staff function. But as they face intense competition from savvy financial service rivals, banks have high expectations of their marketing managers.

"Now," Mr. Morvis said, "they're looked at as the person who'd better make the bank more market driven."

A few weeks ago Chemical Banking Corp., now the largest consumer bank in the New York region, restructured its entire retail banking group around marketing and named new marketing and product-management executives.

Citicorp, often regarded as the master of bank marketing, lost its top retail marketing executive a few months ago after his job was narrowed.

Experts said the trends at the major banks reflect an industry-wide effort to build a marketing culture throughout all business units. Such a culture requires bankers to dramatically alter their traditional arm's-length demeanor and recruit experts who understand market surveillance techniques.

A Business Philosophy

"Marketing has ceased to be a department - it's a way of doing business," said Paul M. Diesel, president of the Bank Marketing Association. "Banks had taken a page out of consumer products companies and hired marketing directors, but then stuck them in a corner."

Chemical is a prime example. Marketing had been a stand-alone division in the retail organizations, while some product divisions had their own marketing staffs. Two weeks ago, Chemical reorganized its vast retail army according to marketing function.

The nation's third-largest bank company dissolved two of its three business line organizations - consumer banking and small-business banking - grouping them into two new organizations. (A third, credit cards, continues as an autonomous product unit.)

Strategic Thrust

One of Chemical's new groups is called market development. Its function is to provide tactical planning, profit targeting, market research, advertising, and new product development to product managers in consumer, commercial, and small-business areas. - But it also includes all retail insurance and retail investment products, which are heavily dependent on marketing.

Product management, the other group, includes consumer lending and commercial and consumer deposit and fee-based products.

"We believe that market management needed to be a separate division with its own identity," said William Jordan, a former regional banking executive at Manufacturers Hanover Trust Co., which merged with Chemical last year. "Prior to the restructuring, marketing was buried within each line of business."

Mr. Jordan runs the marketing development group while Thomas Jacob, a longtime Chemical executive, is in charge of product.management.

New Posts at Chase

Chase Manhattan Corp. also recently created new senior marketing posts in both its retail and wholesale units, in an attempt to focus more on customer needs and build consistency across various business lines.

"You read all the time about becoming |market driven,' but banks have been slow in picking that up," said William Balderston 3d, a former president and chief executive of Chase Lincoln First, who is the new retail marketing executive.

"We felt it was important to have someone focusing on marketing who did not have to pay attention to the day-to-day operations," Mr. Balderston said.

The creation of the new posts is the latest in a series of changes in marketing management at Chase. Chase hired Drew J. Otocka from Citibank last February as its marketing director. Mr. Otocka had run point-of-sale marketing at Citi, and before that was a marketing and product management specialist at Colgate-Palmolive Co. and Avon Products Inc.

Lesser Role Rejected

Citicorp, once known as the consummate marketing machine, saw Loren Smith, its retail marketing director, step down in September. Mr. Smith, a former General Foods executive was credited with designing Citi's high-profile "Wall Street Comes to Citicorp" campaign.

Mr. Smith's job was narrowed from national to regional marketing as a result of internal consolidation. He was replaced by Bert Einloth, former head of Citicorp's merchant processing division.

Large savings banks are also bringing in new marketing executives. Earlier this year, Anchor Savings Bank hired Geraldine Telchin, a former deposit products manager at Manufacturers Hanover, as its marketing chief.

Ms. Telchin also did a marketing stint at Citibank, and was director of marketing for Swing-line Inc., a consumer product company. It was her experience in product management and consumer goods that attracted management at the Long Island-based savings bank.

"I asked her to come in and not operate along functional lines," said Richard W. Dalrymple, president and chief operating officer at Anchor. "She developed a product management philosophy."

New Approach Wanted

Anchor, he said, sought a fresh approach to marketing as it maneuvered through a turnaround and faced increased competition after the Chemical merger.

Ms. Telchin took quick action. Almost immediately, she recruited the manager of Anchor's top-producing branch to become a product manager. She also recruited marketers from Dollar Dry Dock, which later merged with Emigrant Savings, to fill other product management slots. And she changed the bank's advertising agency.

When you've had experience at consumer product companies, "you can bring a new dimension" to bank marketing, Ms. Telchin said.

An Ambitious Program

Dollar Dry Dock, meanwhile, illustrates the impact that acquisitions can have on even the most dramatic marketing efforts. The savings bank embarked on an ambitious program in the mid-1980s to redesign its 20 branches into high-tech "financial centers."

Its flagship branch in midtown Manhattan, across the street from Bloomingdale's own flagship store, was outfitted with large banners and neon. The bank's marketing director, Linda Lockhart, a former buyer at Bloomingdale's, even gave classes to bankers from around the nation on adopting Dollar's marketing techniques.

Today, the banners are gone and the windows papered over. Dollar Dry Dock was acquired with government assistance by Emigrant Savings Bank earlier this year. Emigrant closed Dollar's flagship branch and is converting most of its high-tech branches to traditional branch decor.

Ms. Lockhart left Dollar last fall. She is now a consultant in branch design for John Ryan Co., Minneapolis.

Retail-store Idea Rejected

"Their focus was on merchandising and making the branches look like retail stores," said Ted Morehouse, senior vice president and head of marketing at Emigrant. "Our position is that a typical savings bank customer prefers a more traditional environment."

Whether the current push to become more customer-driven will lead to increased market share and higher profits is not clear. Experts say that the banks have beer down this road before, and that some of the changes are reactions to the events of the few years.

"They're changing because it's a tough world," said Mr. Morvis of Financial Shares. "In the past, bankers were shooting arrows at a target - the customer - without knowing what the customer wanted. Now they're focusing on the target more. The easy part is to change your focus. Now they have to make it work."

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