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Marketing of Financial Products & Services - Distribution & Marketing Places
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Marketing of
Financial
Products Lecture – 5 Parveen Sharma
1 MoFP for
TKW’s
2 MoFP for
TKW’s
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Contents
Distribution
Distribution channel - Banks & FI’s
Distribution channel – Functions
Distribution of Insurance Products
New Marketing Places
Factor influencing channel section
Distribution Channel Selection
Concerns with distribution in rural market
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Distribution of Financial Products
MoFP for
TKW’s
This sub-mix draws our attention on the channelization of services
to the ultimate customers.
Companies can change their Products, Advertising and Pricing easily
but not their distribution channels. Its not an easy task to change
distribution cannel, franchisees, dealers and retailers.
Distribution in financial services marketing is concerned with how
the service is delivered to the consumer, making sure that it is
available in a place, at a time and in a format that is appropriate and
convenient for the customer.
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MoFP for
TKW’s
Consumer convenience
HDFC Bank ‘Lost Boy’ advertisement
emphasizing huge branch network
Distribution of Financial Products
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Distribution Channel: FI’s
MoFP for
TKW’s
Financial Service Organization
Direct
Own sales force
Telephone
Internet
Direct mail
Indirect Joint venture
Intermediaries
Own retail
Outlets
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Distribution Channel: Banks
MoFP for
TKW’s
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Distribution Channel
MoFP for
TKW’s
Direct Distribution
• Direct contact between producer and customer.
• Most common in B2B markets.
• Often found in the marketing of relatively expensive, complex products
that may require demonstrations.
• Internet is helping companies distribute directly to consumer market.
Distribution Channels Using Marketing Intermediaries
• Producers distribute products through intermediaries.
• Financial products sold to thousands of consumers in widely scattered
locations.
Multi-channelling is increasingly seen as a means of addressing a range of customer
needs & expectations (security, privacy, convenience, accessibility, reliability, speed)
enabling a FI’s to more effectively and efficiently serve a diversity of target markets
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Distribution Channel Importance
MoFP for
TKW’s
Functions of distribution channels
Market information & customer education
Promotion
Contact
Servicing
Product information
Physical distribution
Financing
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Distribution Channel Importance
MoFP for
TKW’s
Setting standards for customers service
Speed: Fast servicing, transaction & response rates
Accuracy: in debiting, crediting, posting,
calculating, filing, reporting or so
Safety: in branch, online and mobile
Service without gap: delivering
what is promised
The Citibank Express ATM is equipped with an
online banking connection, video conferencing
& biometric identity authentication
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10 MoFP for
TKW’s
Marketing Mix - Place
A look at distribution channels of insurance companies
Traditional
Agents: Most companies in India use,
also called insurance advisors/ planners
Brokers: Assistance in risk assessment,
administration & performance of contracts
New Competition
Direct marketing
Corporate agents
IFA’s
Telemarketing
Worksite marketing
Internet marketing
Bancassurance
LIC had
12,78,234
agents as on 31
March 2012, out
of which the
number of active
agents was
12,14,111
(95%)*
*Annual Report 2011-12
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Social & Mobile ‘ready to access’ customer service
MoFP for
TKW’s
New Marketing Places
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Evolving Models of Retail Banking Distribution
MoFP for
TKW’s
New Marketing Places
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Some Global Trends Observations
MoFP for
TKW’s
New Marketing Places
Decline in the size of branch networks as technology based distribution
became more widespread and cheaper
Signs of a possible reversal of this trend with an increase in branch
networks in some areas as a mean of reaching HNI or un-bankable
Consumer preferences for face to face interaction remains strong
Emergence of a new model of mini branches and use of more
imaginative design & layout and greater use of the one-stop shop concept
Greater emphasis on relationship building
www.nottingham.ac.uk/business/businesscentres/crbfs/documents/researchreports/paper51.pdf
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Distribution Channel Selection
MoFP for
TKW’s
Factor influencing channel section
Product characteristics
Market characteristics
Customer characteristics
Company resources
Competition
Product lines
Regulatory and legal aspects
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MoFP for
TKW’s
Example of Nature of Product influencing channel section
Example of Regulatory changes impacting channel selection
•Simple to understand
•High penetration
•Retail & Institutional
customer focus
•(Retail, Banking &
Institutional all channel
focus)
•Not so simple to understand
•Low penetration
•Educated customer &
Institutional customer focus
•(Banking & Institutional
channel focus)
Distribution Channel Selection
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Concerns with Distribution in Rural Market
MoFP for
TKW’s
Lack of Awareness: Low awareness of financial products
Competition: leading to more focus on urban area than rural & semi urban
Scale of Investments: small ticket size & risk averse
Customers scattered over wide areas: accessibility problems for FI’s
Rural infrastructure: lack infrastructural facilities like roads, electricity,
telecommunications & Internet networks
Irregularity in payments: irregular incomes leading to lapsing of policies/
discontinuing SIP
Operational challenges: documentation & verification problems
Cultural diversity: promotional & marketing challenge
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Thank
You MoFP for
TKW’s
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