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The Presentation
Marketing of Financial Services
(h) touched,
(i) tasted,
(j) handled, or
(k) purchased in bulk like tangible products.
Marketing of Financial Services
Intangibility
Marketing of financial services must necessarily stress the
Benefits because services cannot be touched, tasted or in
Any way experienced by the senses.
Perishability
Inseparability
Risk
Management
Plan
Marketing of Financial Services
1. Mission Statement
It states the overall purpose of bank or any organization.
2. Key Objectives
Objectives are cited for variables such as:
(a) financial return expected,
(b) degree of efficiency required,
© size of loans or credit on offer, and
(d) service quality
3. Market Assumptions
These contain explicit statements about future trends in strategic
market segments, which may affect the bank’s freedom to act.
5. Assessment of Opportunities
The plan should assess the threats and opportunities for each market
segment. This is important in order to achieve the mission & objectives
7. Strategic Changes
Objectives & goals for action plans stating changes in capabilities or
resources under the control of unit management and selected as most
likely for achieving the desired market results.
Mission
Statement
Key
Objectives
Market Portfolio
Strategy
Strategic Changes
Action Plans
For Implementation
Wholesale Banking
→Competition Intensified- banks continued to strive for
competitive advantage and in doing so cancel out one
another’s efforts,
→MNCs became stronger in their demands by negotiating
their own interest rates and cost of services from banks,
→Japanese banks took the first 5 top positions in the
international banking league,
→New development in I.T change the banks’ approach
to the consumer, wholesale and corporate markets,
→Increase competition from non-bank institutions
(General Motors, General Electric, American Express, Merrill
Lynch, and other major credit finance companies)
Banks portray themselves as a “One Stop Financial Services
Centre”.
Commercial Credits
Clean credits,
Documentary credits,
Import & Export credits.
Trust Services Consultancy Services
Executorships, Invoicing centres,
Share registrars, Treasury management,
Safe deposit services, Pension Fund advice,
Estate planning, Insurance Man advice,
Tax planning, Forex forecasting,
Life insurance, Training in finance, and
Trusteeships, Financial plan & money
Shares & Bonds purchases, management service.
Pension fund management,
Corporate trustee services,
Investment advice, and
Dividend payments.
Payroll management & accounting,
Factoring of commercial invoices,
Travel arrangements,
Life Insurance planning,
Economic & strategic studies,
Correspondent banking services,
Data processing services,
Non-life insurance planning, and
Consumer banking services
Marketing of Financial Services
Relative Market Share
High Low
STAR PROBLEM CHILD
H
i Strategy→ “Build” Strategy→ “Build” or
g
“Harvest” or
h
“Divest”
* Dog
Where the bank sells or
• Cash Cow phases out the BU &
Where the bank would reinvest resources.
invest just enough
money to hold the BU
share at the current level,
Marketing of Financial Services
(10) Diversification.
Marketing of Financial Services
MARKET
CURRENT MARKET NEW MARKET
C
U
R
P R Market Market
R E Penetration Development
O N
T
D
U
N
C E Product
Diversification
T W Development
• Market Penetration
This strategy is the least risky of the 4 strategies because
it involves increasing market share in existing markets.
(4) Diversification
With this strategy, the bank is moving into new market
with new products.
The McKinsey model argues that businesses should
develop their growth strategies based on:
• Operational skills,
• Privileged assets,
• Special relationships.
New Industry
McKinsey Growth Pyramid
Marketing
Existing Products
to new customers
Partnership
Existing Products
to existing customers Organic Invt
Privileged Assets
Those assets are held by the business that are
hard to replicate by competitors.
(e.g. in a direct marketing-based business these assets
might include a particularly large customer database, or a
well-established brand).
Growth Skills
These are the skills that businesses need if they are
to successfully “manage” a growth strategy.
Special Relationships
60 Strategic
Planning Gap
50
Revenue
Projected
40 Revenue
30
20
10
0
Time
Marketing of Financial Services
External Factors
(8) Le → Legal
(9) P → Political
(10) E → Economic
(11) S → Social
(12) T → Technological
(13) Co → Competition
Marketing of Financial Services
LEGAL
* Banking Regulations & Laws,
• Taxation Laws,
• Foreign Exchange Controls,
•POLITICAL
• Attitude of the Government towards the local banks,
• Attitude of the Government towards foreign banks &
non-bank financial institutions.
ECONOMIC CONDITIONS
• Industry Structure,
• Gross Domestic Product (GDP),
• National Rate of Inflation & Money Supply,
• Foreign Exchange Rates,
• Interest Rates, and
• Unemployment Levels.
Marketing of Financial Services
TECHNOLOGY
• Development in Integrated Technology,
• Changes in Technological Industry,
• Levels of Investment Required, and
• Customers’ attitudes towards new technology.
Marketing of Financial Services
COMPETITION
• Existing players in the Market,
• New Entrants penetrating the Market,
• Pricing of Financial Services/Products,
• Marketing Style, and
• Consolidation within the Banks.
Marketing of Financial Services
COMPETITOR ANALYSIS
• Market share,
• Financial position,
• Reputation among suppliers and creditors,
• Composition of the clientele,
• Menu of product/service range,
• Strategies for segmentation, key accounts,
• Pricing,
• Image & service quality standards & performance,
• Efficiency of service delivery,
• Promotion aspects (e.g. spending, timing & reach),
• Technology used for service delivery,
• Planning, information & control systems,
• Ability to attract qualified personnel,
• Training, morale, union relations,
• Commitment to research & development, and
• Plan to diversify within, and/or, outside the industry.
Marketing of Financial Services
(d) Employees,
(f) Premises,
Employees
Does the bank have adequate qualified employees to handle
the marketing campaign?
Premises
Where will the marketing campaign be executed - Head
Office, or Branch Level?
Systems
Are the present systems adequate or robust enough to
handle the marketing campaign?
Financial Resources
Demand
Time
Porter’s Five-Forces Model
Threats
of
New Entrants
Bargaining Bargaining
Power Competitive Power
of Lenders Rivalry of Customers
Threats of
Substitute
Services
The bank would normally select a target market (s) & tailors
its strategy to the specific need of the target market (s).
(e.g. select a quoted MNCs as its target market, and aim to serve them
to the virtual exclusion of other target markets).
Differentiation Focus
This approach can be described as “finding a niche in the
market place and developing services that matches the
niche market”.
If the target market is too small, the bank may be left with a
service menu that is not profitable.
Product
Promotion
Product/Service
This concerned with the features of the bank products, and
any option available to the customer.
(e.g. bank lending would include the term of loans – fixed or variable
rate and option to switch from variable to fixed rate or vice versa).
Place
Where the product or service is being made available to the
customer, or how can the customer obtain the service.
(e.g. branch network, ATMs, Internet banking).
Price
This refers to the interest rates offered to depositors and
borrowers, bank charges, commissions for services.
Promotion
It is concerned with advertising, direct sales, tele-marketing,
internet, personal visits to the customer.
People
In view of the heavy competition, banks expect their staff to
take a pro-active selling or customer service role.
In fact, bankers are more sales persons these days than two
decade ago.
Market Planning
General Screening
Prospecting
Needs Identification
Strategy Assessment
Advisors
Competitor Analysis o Accountants,
Existing lead bankers,
o Lawyers,
Other bankers.
o Consultants
Industry Background Information
Growth Rate (i.e. historic & projected),
Capital Intensity,
R & D investment,
Marketing intensity,
Profitability,
Industry economic trends, &
Industry competitiveness
Pricing decisions are not only made in relation to new
products, but also in relation to the existing products.
The factors can be divided into (a) internal & (b) external.
• Skimming Pricing,
Both the fixed and variable costs are taken into account
when such a price is determined by the management.