Marketing Financial Services

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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 revisitedThe 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
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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?
Entitlements
Time
Experiential
New consumer
Complexity
Educated
IT
Demanding
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4Ps versus 4Cs

• Product
• Price
• Place
• Promotion

• Consumer needs and wants
• Consumer costs (time, money, effort)
• Convenience
• Communication

In todays 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)
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Core concepts of marketing
Identify and define customer value
Needs, wants demands

• Marketing effort
• Provide value
• Communicate value
• Deliver value

Products, services ideas
Customer satisfaction
Achieve organisational goals
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Understand value from the consumers perspective
Nike trainers
BENEFITS
FEATURES
PERSONAL VALUES
DELIVER SATISFY
Good health Well being Keep fit Belong Self
image
Air pocket Sole
Power bridge
Enhanced Performance
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Marketing as integrative function..
Competitive strategy

• Business system
• Operations
• Distribution
• Sales
• Service
• Customer

Product/market Segments Segment 1 - - Segment n
Focus on KEY segments
Focus on KEY business 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
(Based on Bradley 2003)
Customer analysis
Segmentation
Target market

• Focus on consumer value
• Identify and define value
• Provide value
• Communicate value
• Deliver value

Company Analysis
Market positioning
Select features to deliver benefits
Competitive analysis
differentiation
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Understand value creation
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Scope of strategic marketing

• Identify value to be provided by understanding
  the customers 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
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)

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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