MOUDLUE 8

Marketing Of Financial Services

Contents

Attracting and retaining customers Segmentation Positioning Development and launching of new products. Behavioural profile of customers.

Attracting and retaining customers

Attracting Customers: Customer acquisition: Lead generation Lead qualification Account conversion Cost of lost customers: Surveys: AT&T, MCI Lifetime value: Present value of the lost customer Customer retention: High switching barrier High customer satisfaction Relationship Marketing: Looking for suspects to find prospects Disqualified prospect: Poor credit rating

Contd

Relationship marketing (cont.) qualified prospects into first time customer first time customers into repeat customers repeat customers into clients clients into advocates advocates into partnership. Levels of relationship: Basic, Reactive Accountable Proactive Partnership. adding financial benefits: frequency marketing program, affinity groups. adding social benefits: personalizing customer relations. adding structural ties: computer connection .

Segmentation

Segmentation is a concept in economics and marketing. A market segment is a sub-set of a market made up of people or organizations with one or more characteristics that cause them to demand similar product and/or services based on qualities of those products such as price or function. Segmentation can help firms understand customers needs, preferences, channel behavior and choices of company or services.

Segmentation helps to answer the most important questions

Who are my best customers? What products and services do they need? When will they need them? How do they want to interact with us? Why do they behave the way they do?

Consumers can be segmented in four main ways

Demographics age, income, gender, geography Contribution revenues, costs, profit and lifetime value Behaviour product ownership, spend, transaction frequency, channel use Attitudes technology optimism, brand loyalty, trust, financial self-direction

No single way of segmenting consumers is perfect

Demographics are easy to gather but are rarely the best predictors of behaviour Contribution tells you who matters, but can only be measured for existing customers and doesnt explain motivation Behaviour is relatively easy to gather, but changes quickly and is often the very thing that you are trying to influence Attitudes are the hardest to measure but change slowly and explain consumers behaviour and how to influence it

Segmenting financial consumers

Ignore advisors Gather information Dont gather information
Self-Directed

Rely on advisors
Validators

Avoiders

Delegators

Each group has different needs

Group Self-Directed Description Take financial decisions on their own; seek best products and prices Interested in finances; seek advice on complex decisions Bored or confused by finance; want others to take decisions for them Neglect their finances; distrust firms and advisors; risk averse Financial needs Information, value, speed, and control Information, value, advice, reassurance, and a trusted relationship Advice, good service, and a trusted relationship Simplicity

Validators

Delegators

Avoiders

Positioning
The battle for the customers mind The position that the product/brand has in the mind of the customer. How the product/brand is perceived. The products/brands personality.

Positioning strategies

By attribute: Our current account offers you extra interest By benefit: Bank of Baroda India's International bank By price/quality: You enjoy maximum privileges with the minimum subscription fee By competitor: No other bank offers so much By user: American Express: The businessmans passport By application: Some things are priceless. For all the rest, there is Mastercard Hybrid strategy: combination of two strategies

1. How can we apply 4 Ps of marketing in financial services to market?

2. Explain the market mix for financial service, with an example. How do you segment the market and position the product?
3. Difference between fund based and fee based service. 4. Scope, advantages and disadvantages of consumer finance. 5. Explain the behavioural profile of customers while valuating financial service offering. 6. What is the consumer behaviour pertaining to financial services? How do bank launch technology driven financial product? 7. Different source of consumer finance.

Marketing Mix