Marketing of Financial Products Ch 1

7/27/2019 Marketing of Financial Products Ch 1

1/51

Marketing of Financial Products

Dr. Karim KobeissiDr. Karim Kobeissi


2/51

Course ObjectiveCourse Ob

jective

The basic objective of this course is to

exlain for the students about the

various t!es of financial roducts

and ho" these are to be marketed.


3/51

Chater #$ Develoment of %anking &ervices Marketing


4/51

'hat is Marketing(

There are man! definitions of the marketing

concet and most of them are focused on

meeting the customer needs. )ere is onethat has been roosed b! Kotler$

**Marketing is the science and art of

exloring+ creating+ and delivering value,to

satisf! the needs of a target market at a

rofit- Kotler+ //0.


5/51

1ole of Marketing

Marketing identifies unfulfilled needs and

desires. #t defines+ measures and 2uantifies

the si3e of the identified market and therofit otential. #t inoints "hich

segments the coman! is caable of

serving best and it designs and romotes

the aroriate roducts and services.


6/51

4oods+ &ervices 5 Products(

6 good is something !ou can oint at+ "hereas a

service is something"hich canbe bought and sold but"hich

!ou cannot droon !our7foot 84ummesson+ ,9:;


7/51

4oods

oods

&ervices

ervices

,, TangibleTangible outut .outut . #ntangible rocess.#ntangible rocess.

)omogeneous 8)omogeneous 8essentiall! 3eroessentiall! 3ero

variabilit!variabilit!


8/51


9/51

The Concet of 4lobal Offer

#t is ver! rare+ in fact+ that an offer is limited to a single good orservice. #n ractice+ comanies offer a more or less combinations ofgoods and services to better meet their demands and differentiatethemselves from the cometition.

The global offer then includes$

A The core roduct 8either a good or service


10/51

&ection,$ Develoment of &ervices Marketing


11/51

,., The Marketing Mix of &ervices,., The Marketing Mix of &ervices

One of the most basic ideas in marketing is themarketing mix. The marketing mix reresents the

elements that the organi3ation controls and that

can be used to influence consumers choice as "ellas their evaluation of service satisfaction.

The first four elements in the services marketing mix

are the same as those in the traditional marketing

mix of goods 8@Ps


12/51


13/51

HHProduct-Product-

#n case of services+ the *roduct is

e2uivalent to the offer "hich is

heterogeneous. )ence+ there is scoe for

customi3ing the offering as er customerre2uirements. Therefore+ managers must be

attentive to all asects of the service

erformance that have the otential to

create value for customers,.


14/51

Price and Other Eser CostsPrice and Other Eser Costs

Pricing services is more difficult than ricing roducts because !ou can

often inoint the cost of making a h!sical roduct but itIs more

subjective to calculate the "orth of !our exertise or the value of !our

time.

The factors that "e should consider "hen tr!ing to determine "hat rice

to charge for a service$

J Costs 8direct and indirect costs


15/51

PlacePlace

&ince service deliver! is concurrent"ith its roduction and cannot be

stored or transorted+ the location of

the service roduction assumes

imortance. &ervice roviders have to

give secial thought to "here the

service "ould be rovided,.


16/51


17/51


18/51

PromotionPromotion

&ince a service offering can be easil!

relicated+ romotion becomes

critical in differentiating a service

offering in the mind of the consumer.


19/51


20/51

PeolePeole

Peole are a crucial factor in a service

deliver! rocess+ since a service is

insearable from the erson roviding

it.


21/51


22/51


23/51


24/51


25/51

Ph!sical videncePh!sical vidence

&ince services are intangible in nature

most service roviders strive to

incororate certain tangible

elements into their offering to

enhance customer exerience.


26/51


27/51


28/51

Productivit! 5 Gualit!Productivit! 5 Gualit!,,

Productivit! relates to ho" inuts aretransformed into oututs that are valued b!

customers+ "hereas 2ualit! refers to the

degree to "hich a service satisfies

customers b! meeting their needs+ "ants+

and exectations. #nvesting in 2ualit!

imrovement "ithout understanding the

tradeoff bet"een incremental costs and

incremental revenues ma! hurt rofitabilit!.


29/51

, Ch ll 5 & l ti, Ch ll

5 & l ti


30/51

,.$ Challenges 5 &olutions,.$ Challenges 5 &olutions

6s a result of the intangibilit!+ insearabilit! of

roduction and consumtion+ heterogeneit!+ and

erishabilit! of services+ a number of

marketing challenges arise that are not

usuall! faced "hen marketing goods

.


31/51

arketing Challenges and &olutions Pertaining to

#ntangibilit!

Characteristic 1esulting Marketing Challenges Possible &olutions

#ntangibilit!

&ervices are difficult to disla!

and K or exlain to customers.

Develo a strong

organi3ational image 8a

o"erful and honest

bank< to reduce the

customers level of

erceived risk.

&ervices are difficult to rice. Etili3e an activit!

based ricing

aroach.

&ervices lack atent rotection. Ese ersonnel sources of

information to marketservices.

&ervices can not be stocked or

inventoried.

Ese of tangible clues to

hel Htangibili3e- the

service.


32/51


33/51


34/51

arketing Challenges and &olutions Pertaining to #nsearabilit!


#nsearabilit!

The service rovider is h!sicall!

connected to the service.

&trategic collection and

training of ublic contactersonnel to ensure that the

right t!e of emlo!ees are

in the right jobs. #n fact+ a

bright+ highl! motivated

emlo!ee can create a more

leasant service exerience

for ever!one "ho comes into

contact "ith that erson.

The customer is involved in the

roduction rocess.

ffectivel! managing

customers.

HOther customers- are involved in theroduction rocess.

Ese of mutiAsite locations+each of "hom can roduce

their o"n sul! of services

to serve their local market.The mass roduction of services is

eseciall! challenging.

Ese of mutiAsite locations to

limit the distance the

customer must travel to

urchase the service.


35/51


)eterogeneit!


)eterogeneit!

&tandardi3ation and 2ualit!

control are difficult for the

service firm to rovide on a

regular basis.

6utomation 8"hich ma!

achieve

standardi3ation


36/51


Perishabilit!

Characteris

tic

1esulting Marketing

Challenges

Possible &olutions to

Manage Demand

Possible &olutions

to Manage &ul!

Perishabili!

Demand exceed sul!of service available.

Etili3e creative ricingstrategies to shift

demand.

Ese art timeemlo!ees to

increase sul! of

service.

Demand exceed

otimal level of sul!.

#mlement a

reservation s!stem.

&hare caacit!

"ith other

roviders.

Lo"er demand than

otimal sul! level.

&hift demand to

comlementar!

services.

Preare for

exansion in

advance.

Etili3e non eak

demand eriods to

reare for eakeriods of demand.

Etili3e third

arties to

increase sources

of sul!.

#ncrease

customer

articiation.


37/51

&ection $ The Marketing for the %ank


38/51

., The >ature of %ank Marketing., The >ature of %ank Marketing

'hat is a bank(

H6 bank is a commercial business+ that bu!s

chea and sold at high rices. 'hat

differentiates a bank from other trading houses

is that it bu!s and sells mone! against

romises- 6rnold+,9;@.


39/51

Defining %ank MarketingDefining %ank Marketing

'hat is %ank Marketing(

H%ank marketing is ever!thing that

allo"s us to attract+ reserve and

satisf! the banks customers-

%adoc+//@.


40/51


41/51


42/51

The Characteristics of %anks MarketingThe Characteristics of %anks Marketing

#n addition to the four major characteristics that are common

for all service activities+ there are seven additional

characteristics that are secific for the banking services$

,< #ntangibilit!.

< #nsearabilit!.

?< )eterogeneit!.

@< Perishabilit!.

B< 6 strongl! individual marketing s!stem.

0< 6bsence of secific identit!.

;< 4eograhic disersion of the activit! 8national 5

international


43/51

The Characteristics of %anks MarketingThe Characteristics of %anks Marketing

:< &trict e2uilibrium bet"een gro"th 5 risk

9< Fluctuation of the demand

,

,/< The fiduciar! resonsibilit!

,,< Po"erful imact of eole in the "orking rocess

8standardi3ation vs. customi3ation adotion of

technolog! for some activit!+ e.g.+ cash "ithdra"+

check deosit M


44/51

#mact of #T on %anks &ervice Procedure#mact of #T on %anks &ervice Procedure

Technologies bring information increasingl! varied

and bulk! on the customers. Correctl! exloited+

these data make it ossible to better kno"

the customer in all the services and channels of

the banks. #f the marketing teams manage to

give direction to this information+ the! can benefit

from it to offer interesting roducts and services

for the customers in a traditional

"a! 8C1M actions< or in more original "a!+ for

examle the roosal of a customi3ed

offer "hich is instantl! disla!ed on the station of

the advisor to hel him in his conversation "ith the

client,.


45/51

Customer 1elationshi Management

Customer relationshi management8C1 < is a business

strateg! for managing a coman!s interactions "ith current

and future customers.

C1M involves using technolog! to organi3e+ automate+ and

s!nchroni3e sales+ marketing+ customer service+

and technical suort.


46/51


47/51

Princiles of C1M

J &electing customers according to their rofiles and exected

rofitabilit!.

J 1etaining valuable customers b! develoing ersonal

relationshis "ith them.

J Treating each customer individuall! b! adating the roducts

and servicesto meet his ersonal needs and riorities$ Mass

consumtion 8standardi3ed roducts and services<

#ndividual consumtion 8individuali3ed roducts and

services


48/51

The ,/ lements of Customer 1elationshi Management 8,/ #

Documents

Marketing of Financial Products Ch 1