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Marketing financial services

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Introduction

MARKETING FINANCIAL SERVICES EC32037 BY CHRIS GREEN CONTENTS INTRODUCTION SECTION 1: Identify and review some of the strategies that the company uses to deal with the difficulties presented by the specific features of financial services marketing. SECTION 2: What market segmentation approaches does the company use and how effective do you think these are? SECTION 3: In what ways do the forces within the Macro OR the Micro marketing environment affect the company's ability to market its products successfully? SECTION 4: Select 2 components of the marketing mix and review the ways in which the company addresses these and incorporates them into its marketing approach. REFERENCES Note: I will be using the Bank of Scotland for examples in each section. INTRODUCTION The financial services sector is one of the most competitive markets in the UK. There are now many companies (providers) offering many similar products. This makes it difficult for the providers to distinguish their organisation and their products from the competition. If this is not done successfully then they will not attract and retain customers thus not generate profits. This also makes the market confusing from a consumer point of view. This is a big challenge for the providers to overcome. Firstly what do we mean when we mention financial services? "The meaning of the term financial services, as it is applied in the UK, is broadly understood to include banking, insurance, building societies, stockbroking and investment services" (Anderton, 1995) A market is a pool of potential customers sharing a particular need or want, and who may be willing to do business to satisfy that need or want. Each of these potential customers will be different so, can be divided into groups on the basis of their needs and wants, (market segmentation). ...read more.

Middle

Where the provider concentrates on one market segment and designs a marketing mix which matches the needs of the individuals in that segment. This allows providers to focus on an area they have some expertise. E.g. private banks concentrate there marketing on high net worth individuals. * Differentiated marketing is where providers develop different marketing approaches/mixes and targets them at each specific segment. To do this the provider has to have enough products and expertise that will enable them to differentiate between groups of consumers on a profitable basis. E.g. different type of accounts differences in financial needs across personal, corporate, small business etc. banking customers. Also Internet, telephone banking all of which bank of Scotland has. The bank can then take consumer characteristics into account. Demographic is a popular option. Where they assess consumer needs gauged on income, gender and family circumstances. As people will have different financial needs at different stages in there lives. Psychographic approach may be used to, this assess peoples lifestyles. When bank of Scotland restructured their data warehouse it gave them a better understanding of customers lifestyle patterns and behavior, which allowed them to market more successfully. For example students may be a market segment. Bank of Scotland offer interest free overdraft limits and credit card account for students. Parallel 56 provided strategic marketing consultancy services in the area of "Women into Business". The consultancy included consideration of channels and propositions for attracting new women business customers. This is an example of a market segment. By segmenting the market the bank can exploit their strengths. It allows them to have better more focused marketing campaigns at a cheaper cost, they can identify gaps in the market. ...read more.

Conclusion

An example of how competitive the market is may be interest free credit cards. Once a provider brings out a 6month interest free period for example, competitors match this. Bank of Scotland now offer a 9-month interest free period. Price is very important in the marketing mix, as this is what directly generates revenue for the bank. Price takes a variety of forms over the different sectors i.e. in banking, setting interest rate, fee structures, banks charges etc. insurance is mainly premium charges. Banks have a number of strategies to determine price. they must look at; * Competitors prices, * The products life cycle, i.e. begin or end of its life cycle. * Banks marketing positioning policy. I.e. are they offering "no frill" cheaper service or aiming at top end clients. * How the market is developing, saturated, declining. Overall cost must cover banks costs, make a profit and cater for risks to ensure long-term survival. This will all depend on the banks capability and capacity. The bank has to also respond quickly to market conditions. Which involves a lot of environmental factors i.e. suppliers, competition etc. Price is also important from a consumer point of view. The consumer has to be able to afford it, they may think price is an indication of quality. It is up to the bank to concinve the consumer that the price is worth paying, done through customer service and good marketing. Price is arguably one solution to the problem if product differentiation mentioned earlier. Allot of people will seek out the cheapest price, Especially in motor insurance, mortgages etc. However, other arguments suggest that ongoing high quality of products and service can persuade customers to stay with the bank and buy from it. So price is probably a temporary advantage over good, reliable products and service. ...read more.

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