marketing financial services benjamin franklin may have discovered electricity but it was the man...
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Marketing Financial Services
Benjamin Franklin may have discovered electricity but it was the man who invented the meter who
made all the money
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Marketing revisited:The evolution of marketing
PRODUCTION CONSUMPTION
“PROSUMPTION”
“First, consumers have more money to lavish on their specialisedwants; second…. As technology becomes more sophisticated thecost of introducing variations declines.”Alvin Toffler 1970
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Oya yubi sedai (the thumb tribe): modern consumers demand modern methods
• Dell – configure and buy
• Lands End – custom denim jeans
• Proctor and Gamble – Community Corner
• Pearson – Pop Idol
• Fidelity – DIY Funds supermarket
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A new kind of consumer?
New consumer
Time
Experiential
ITDemanding
Educated
Complexity
Entitlements
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4Ps versus 4Cs
• Product
• Price
• Place
• Promotion
• Consumer needs and wants
• Consumer costs (time, money, effort)
• Convenience
• Communication“In today’s consumption led economy using the 4Ps as the basis for marketing strategy misses a fundamental point: consumption is enactedby consumers and therefore they – and not products – should be the starting point of marketing strategy orientation” (Baker 2004)
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Core concepts of marketing
Identify and definecustomer value
Marketing effort•Provide value•Communicate value•Deliver value
Customer satisfaction
Achieve organisational goals
Needs, wantsdemands
Products, servicesideas
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Understand value from the consumer’s perspective
Nike trainers
FEATURES BENEFITS PERSONALVALUES
DELIVER SATISFY
“Air pocketSole”
“Power bridge” “EnhancedPerformance”
GoodhealthWellbeingKeep fitBelongSelf image
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Marketing as integrative function…..
Competitive strategy
Product/marketSegments
Segment 1--Segment n
Focus on KEYsegments
Business system•Operations
•Distribution
•Sales
•Service
•Customer
Focus on KEYbusiness stages
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….delivering sustainable marketing advantage
• SOURCES• Reputation• Brands• Tangible assets• Knowledge• Customer service • People
• STRATEGY• Segment focus• Differentiation• Distribution• Process/quality/price
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Positioning the business for “value centric” marketing
Focus on consumer value•Identify and define value•Provide value•Communicate value•Deliver value
Competitiveanalysis
differentiationSelect features to deliver benefits
Marketpositioning
Targetmarket
CompanyAnalysis
Customeranalysis
Segmentation
(Based on Bradley 2003)
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Understand value creation
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Scope of strategic marketing
• Identify value to be provided by understanding the customer’s perception of value
• Provide the value expected by establishing a superior value position
• Communicate the value through a positioning and brand strategy
• Deliver the value through appropriate pricing and distribution choices
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Reflection
• Consider the concept of value in relation to tangible benefits
• Consider the concept of value in relation to intangible benefits such as money transmission, deferred payment or asset protection
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What do financial products do?
• Money transmission
• Credit facilities (long term secured, short term unsecured)
• Personal and family protection
• Asset protection
• Capital investment (risk differentiated)
• Regular savings (risk differentiated)
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Generic business types
• Market making activities• Wholesale investment services• Packaged investment manufacturing• Investment retailing• Wholesale lending services• Packaged loan manufacturing• Loan retailing• Back office services
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Who do we buy from?
• Post Office• Building Societies• Banks• Insurance companies• Investment trust
companies• Stockbrokers• Credit card companies
• Supermarkets• Financial advisers• Mortgage advisers• Double glazing salesmen• Garages• Vets• Doctors and dentists• Global industrial
conglomerates
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Complexities in distribution: how many ways can you buy a Halifax
mortgage?• Retail branch
• Mortgage adviser
• Mortgage wholesaler (via above)
• Direct response
• Etail
• Etail (Intelligent Finance branded)
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The changing face of financial services distribution – emergence of multi-channel
distributionHistoric position• Direct to customer
(retail channel)• Intermediation
Current position• Direct to customer
(retail, etail or direct response)
• Intermediation• Third party distributor
owned brand (retail, etail or direct response)
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Exploring generic product types: money transmission
Current accounts (retail and etail), credit transfer, DDM
• Savings hybrid
• Mortgage hybrid
• Interest paying CA
• Mortgage interest offset CA
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Generic product types: capital investment
Deposit based (loan)• Savings/deposit
account• Some national
savings• Retail, etail, direct
response• Risk free• Tax deducted at
source
Asset backed (own)• Collective equity
investments (UT/IT/ISA/Bonds
• Retail, etail, direct response, intermediaries
• Risk differentiated• Different tax
treatments
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Generic product types: credit facilities (non-cash payment)
Short term unsecured• Credit card (interest
bearing core debt or interest free)
• Personal loans (credit risk differentiated)
• HP (debtor/creditor supply agreements)
• Lease purchase• Overdraft
Long term secured• House purchase
(including FTB, movers, equity release)
• Credit risk differentiated• Investment (B2L)• Home
improvement/consolidation loan
• Business borrowings
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Generic product types: protection
Insurance • Home, contents, car• Health (private health
care, medical expenses, critical illness)
• Income (short term credit, long term phi)
• Warranties/extended warranties
• Breakdown
Assurance• Temporary (term)• Permanent (whole life)• Hybrid (with savings)-
endowment• Employment related
(DIS/DISWP)
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Generic product types: regular saving
Deposit based• Regular savings
account• Monthly cash ISA• Friendly Society
Asset backed• Monthly equity ISA• Regular premium
UT/IT plan• Endowment• Personal pension• AVC/FSAVC
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The marketing challenge: clarity from complexity
• Understand value from the consumers’ perspective• Review and evaluate distribution channels• Understand differential profitability of distribution channels• Develop distribution strategies that capitalise on strengths• Understand what influences customers’ channel buying
decisions• Understand what factors influence consumers’ product
buying/provider decisions• Develop a strategy enabling you to benefit from as many
transactional relationships with the customer as possible• Understand how customers view the relationship between
marketing mix elements