Download Marketing Financial Services

Marketing Financial Services
Benjamin Franklin may have
discovered electricity but it was the
man who invented the meter who
made all the money
Marketing revisited:
The evolution of marketing
“PROSUMPTION”
PRODUCTION
CONSUMPTION
“First, consumers have more money to lavish on their specialised
wants; second…. As technology becomes more sophisticated the
cost of introducing variations declines.”
Alvin Toffler 1970
Oya yubi sedai (the thumb tribe): modern
consumers demand modern methods
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Dell – configure and buy
Lands End – custom denim jeans
Proctor and Gamble – Community Corner
Pearson – Pop Idol
Fidelity – DIY Funds supermarket
A new kind of consumer?
Entitlements
Time
Experiential
New consumer
Complexity
Educated
IT
Demanding
4Ps versus 4Cs
• Product
• Place
• Consumer needs and
wants
• Consumer costs
(time, money, effort)
• Convenience
• Promotion
• Communication
• Price
“In today’s consumption led economy using the 4Ps as the basis for
marketing strategy misses a fundamental point: consumption is enacted
by consumers and therefore they – and not products – should be the
starting point of marketing strategy orientation” (Baker 2004)
Core concepts of marketing
Identify and define
customer value
Marketing effort
•Provide value
•Communicate value
•Deliver value
Customer satisfaction
Achieve organisational goals
Needs, wants
demands
Products, services
ideas
Understand value from the
consumer’s perspective
Nike
trainers
BENEFITS
FEATURES
DELIVER
“Air pocket
Sole”
“Power bridge”
SATISFY
PERSONAL
VALUES
“Enhanced
Performance”
Good
health
Well
being
Keep fit
Belong
Self image
Marketing as integrative
function…..
Competitive strategy
Product/market
Segments
Segment 1
Segment n
Business system
•Operations
Focus on KEY
segments
•Distribution
•Sales
Focus on KEY
business stages
•Service
•Customer
….delivering sustainable marketing
advantage
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SOURCES
Reputation
Brands
Tangible assets
Knowledge
Customer service
People
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STRATEGY
Segment focus
Differentiation
Distribution
Process/quality/price
Positioning the business for “value
centric” marketing
(Based on Bradley 2003)
Customer
analysis
Company
Analysis
Competitive
analysis
Segmentation
Focus on consumer value
•Identify and define value
•Provide value
•Communicate value
•Deliver value
differentiation
Target
market
Market
positioning
Select features
to deliver benefits
Understand value creation
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
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
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)
Generic business types
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Market making activities
Wholesale investment services
Packaged investment manufacturing
Investment retailing
Wholesale lending services
Packaged loan manufacturing
Loan retailing
Back office services
Who do we buy from?
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Post Office
Building Societies
Banks
Insurance companies
Investment trust
companies
• Stockbrokers
• Credit card companies
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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)
The changing face of financial services
distribution – emergence of multi-channel
distribution
Historic 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)
Exploring generic product types:
money transmission
Current accounts (retail and
etail), credit transfer,
DDM
• Savings hybrid
• Interest paying CA
• Mortgage hybrid
• Mortgage interest offset
CA
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
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
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)
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
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