MARKETING OF FINANCIAL SERVICES

By : Rachana Rai

BANK MARKETING

Provides services Aimed to satisfy customer’s needs and wants Needs and wants may be non financial in nature Competitive element, efficiency and effectiveness Organizational objectives are still the driving force

Commercial objective to make profit

Social Objectives

•Banking marketing concept emerged in the west in 1950’s in the form of advt & promotion.

The evolution of bank marketing in india can be classified in 3 phases:

1.TRADITIONAL BANKING PERIOD:bankers were concerned with

maintenance of a/c’s & transaction of buss’ with customer in lines with the rules & regulations. In spite of this, a strong bond between banker-customer existed with some selected customers. It was also called “CLASS BANKING”

2. DEVELOPEMENT BANKING PERIOD:

14 major commercial banks in 1969 was nationalised. The socio-economic objective of nationalisation drove the public sector banks to expand banking activities & extend it to larger groups of customers. Thus called “MASS BANKING”.

Bankers adopted selling concept to mobalise deposits, they didn’t find the needs of the customers but offered what was available.

However, in 1972 SBI came out with market segmentation scheme & innovative loan plans.

3. BANK MARKETING PERIOD:

• What caused banking marketing?

a.Rising customer needs & expectation due to improvement in general standard of living.

b.Entry of foreign & private sector banks in India.

c.Economic liberalization of Indian economy. d.Phenomenal growth of competition due to

economic liberalisation.e.Rise in the Indian middle class with

considerable resources.f.Government intervention in protecting the

interest of consumers.

Blending of 7 p’s with financial services:PRODUCT:• convenience of paying dues.•Keeping records.•Transferring funds.•Various deposits.•Loans & advances.•Consultancy services.•International banking,•Safe deposits•Credit card.•So on…..

Bankers have to identify the core &supplementary product services as it has more market implications.

Core product: it’s the fundamental benefit that the customer buys from the bank. Customers donot buy product but buy benefit. A particular bank differentiates itself from other bank through augmented product.

Augmented product: a basic product with which some ancillary is attached to it. Eg: Suvidha a/c with CITIBANK, ATM card is free.

Bankers need to add more innovative services with their product in order to have competitive advantage.

Product related strategy include:i.Introduction of new schemes: DEMAT a/c.ii.Modification of product through technological

development: online banking.iii.Change in the product line or package: from

corporate banking to personal banking, or deleting an existing service line.

PRICE:•In India, banks adopt administered pricing

structure to some extent as the deposit & lending rates are prescribed by RBI.

PROMOTION:•All the promotional tools are essential right

from the stage of new product. The objective is to make the ppl aware of new product, to persuade customers, to remind customers, build image of the bank.

•An advertisement in banking is a promise. Eg: newspapers, radio, television, magazines & hoardings. Sales promotion: brochures , calenders, diaries, penstand.

•Publicity : customers tends to believe a news item rather than an advertisement. WOM an important promotional tool.

PLACE:

•Making the banking service available & accessible to the customer. Selection of suitable location for the branch. Should have sound availability of transportation, communication, electricity & other necessary facilities for the smooth functioning of the branch

PEOPLE:•Banking product cannot be separated from the

ppl who markets them.•Banks adopts internal marketing in order to

make the whole business customer- oriented.•The product is known to the employees before

they are effectively marked to the customers.

PROCESS:

•Accounting procedure for putting through a transaction. Through automation of transactions, accounting procedures & data handling. Eg: loan application , clearance of cheque.

PHYSICAL EVIDENCE:•Imaginative designs of bank brochures , flashy

cheque books.•Attractive brand names, logos, symbols.•Customers perception of service quality.

HOSPITAL SERVICES

•ISO 9002 certification: quality assurance is a structured & user friendly set of systems, which make the most complex tasks easy & efficient. Its makes the senior management free from evryday stress in observing & monitoring task which have to be completed on daily basis.

PRODUCT:

A. Emergency services.B. Ambulance services.C. Diagnostic services.D. Pharmacy services.E. Casualty services.

•Generally the service offering in a hospital comprises of the following levels:

a.Core level: basic treatment facility & services , like, diagnostic services, emergency services, casualty services.

b. Expected level: cleanliness & hygiene levels .

c.Augmented level: dress code of a staff, AC, renouned consultants.

PRICE:

•Usually depends on treatment & facilities offered to the patient.

•It doesnot believe in profit maximization but aims at providing quality service to the customers at a reasonable price.

PROMOTION:•Transmission of message to present, past &

future customers. Includes advertising, sales promotion, personal selling & publicity.

•Relies on favourable WOM & doesnot depend on extensive advertising.

•Conducts campaigns in rural areas.•Advertises in health & fitness magazines.

PLACE:•Refers to the contact point of between the

service provider & the customer.•Accessibility & availability are the 2 main

issues: Accessibility refers to the ease & convenience with which a service can be purchased, used or received. Availability: refers to the extend to which a service is obtainable or capable of being purchased , used & received.

Hospital must be ideally located.

PEOPLE The behavior & attitude of the personnel

providing services will influence the customers overall perception of the service.

Staff in the hospital must be trained to provide quality patient care with human touch using state of art technology.

Warm ambiences with cheerful & efficient staff help make the experience of the public a memorable one.

•The objective of providing quality service to the patients can be achieved by:

a.Motivating employees to be efficient, dedicated & loyal to the organisation.

b.Provide on-the job training to ensure continuous improvement in health care.

c.Utilizing services of professionally competent medical consultants.

d.Use of latest technology.

PROCESS•Its a set of activities that take an input, convert

it & add value to the input & finally create an output. Processes are designed by blue prints, which sets a standard for action to take place & to implement the service.

•In a hospital the process is divided into 4 phases:

JOINING PHASE

INTENSIVE CONSUMPTION PHASE

DETACHMENT PHASE

FEEDBACK

JOINING PHASE-•Arrival of patient.•Registration.INTENSIVE CONSUMPTION PHASE-•Diagnosis.•Treatment.•Information about further action.DETACHED PHASE-•Discharge of the patient.•Payment.FEEDBACK-•Fill an evaluation form, get patients

suggestions, & make improvements.

PHYSICAL EVIDENCE•Is the environment in which the service is

delivered with tangible commodities & where the firm & the customer interact.

•The dress code of the staff, trained to be understanding, warm & comforting because the customers are usually disturbed or unhappy.

•Should be well organised, segregated into different departments, air conditioned with good lighting, well ventilated.

•A good atmosphere will make the customers feel the difference.

TOURISM MARKETING

PRODUCT:•Panoramic view of the location.•Travel to the destination .•Accommodation & facility.•Entertainment.

It’s a composite product- combination of attraction, facilities & transportation. Each of the components has its own significance in the product mix.

ATTRACTION OF THE DESTINATION:i.Natural sites- hill stations, beach so on.ii.Places of historic interest- monuments,

archaeological sites, museums.iii.Events- trade fairs, music festivals, traditional

festivals.iv.Cultural attraction- folklore, art, theater.

FACILITIES: make tourist stay & enjoy the attraction

i.Accomodation.ii.Food.iii.Local transport.iv.Recreational facilities.

ACCESSIBILITY: tourist arrives at the location-i.Infrastructure- roads, airport & railways.ii.Equipment- size & speed of vehicle.

The three levels of service package for tourism products are:

CORE PRODUCT: comprises of essential need or benefit sought by the customer. Eg: relaxation, fun or entertainment.

TANGIBLE PRODUCT: comprises of formal offer of the product as given in the brochure stating what will be provided . Eg: breakfast, television, telephone, swimming pool, Gym so on.

AUGMENTED PRODUCT: provides vital opportunity to the service providers to differentiate their own products from competitors. Augmented product must be designed & developed around the core product. Eg:

Complimentary wine, free entrance ticket so on.

PRICE•Pricing of tourist product is a complex matter

because of its composite nature. Geographical location of the destination affects the pricing decision.

•An important way in which the travel & tourism business responds to their highly complex pricing circumstances, is to operate prices at 2 levels.

1.1st level corresponds with the marketing strategy, which concerns with product positioning, value for money & long run return on investment.

2.Corresponds to the marketing operation or tactics where the prices are manipulated to match the current demand & competition.

COST BASED PRICING:

for a buss’ to survive in the long run, the

average prices charged must be sufficient to

cover fixed & variable cost & assure a

reasonable ROI. There exist a high level of

fixed cost in tourism pdts & services, the org’

thus resorts to price fixation at marginal cost

to attract more visitors when the capacity is

underutilized.

DEMAND BASED PRICING:Tourism is greatly affected by seasonal

characteristics. High dd=high pricing & vice versa.

COMPETITION BASED PRICING:fear of customers switching the

product.

Travel & Tourism prices are often subject to government regulation. For reasons of public health & safety, to ensure consumer protection, Governments in all countries frequently intervene or influence pricing decisions.

PROMOTION:Advertising & sales promotion activities in tourism

can be very effective when supplemented by

publicity, personal selling & Public relation. PR &

publicity include regular articles & photographs

of the tour attraction, use of TV, radio holiday

programme & travel journalists for promotion.

WOM promotion is important tool in tourism

marketing.

Giving incentives to customers- •Price cuts.•Discount voucher.•Free gifts.•Price draw. They are used for a short period of

time during off season.

Brochures: includes picture & words & positioning of the product & the organisation.

PLACE•Infrastructural facilities, transportation,

communication are important for the development of the tourist center.

•The uniqueness of tourism industry is the predominant position of intermediaries.

•2 major functions performed by the distribution system :

i.To extend the no. of points of sale, away from the location at which services are performed or delivered.

ii.To facilitate the purchase of service in advance.

•The middlemen may be tour operators, who are whole sellers, buys tourism products in bulk & makes them available to travel agents who are the retailer.

•The range of tourist products which are bought by the tour operators are airline seat, hotel accomodation, bus for local sight seeing, they may sell it directly to the customers.

PEOPLE•The sales personnel are responsible for dealing

with the customers behind the counter.

•The airline & transportation crew, Resort or Hotel representative, Tourist guide- elements of tourism marketing.

•Contact personnel must be trained on interpersonal skills as well as product knowledge.

•The IATA( International Air Travel Association) & non IATA agents provide self assessment of their staff.

•The assessment is made on 6 selective functional areas:

i.Customer service.ii.Liaison with customers.iii.Counter sales.iv.Product knowledge.v.Market intelligence.vi.Development of new customers.

PROCESSThe operation process of tourism firm will depend on the size of the firm. The steps involved in the delivery of tourist product are:1.Provision of travel information- information should be provided at a convenient location where the potential tourist seeks clarification about his proposed tour.2.Preparation of itineraries- a series of operation that are required to plan a tour.3.Liaison with providers of services-contracts have to be entered with the providers of various services including transportation companies, hotel accommodation so on.

4. Planning & Costing tours- this will depend on the tour selected as well as individual requirements.

5. Ticketing- the computerized reservation system.

6. Provision of foreign currency & insurance.

PHYSICAL EVIDENCE•Tourist attraction is an experience which can

be tangibilised with the help of tangible items, like, comfortable seats while travelling, layout & design of the resort/ hotel, the sign posts that indicate directions, route maps, rules & regulations, sign regarding the public utilities.

•Provide an elaborate brochures.

MARKETING OF

EDUCATIONAL SERVICES

•Education is a service that is geared primarily to the consumer market, therefore, it can be classified as a consumer service rather than an industrial service.

INTANGIBLE

•It can be monitored by judging service content (curriculum, course material, student workload, faculty members).

• EDUCATION CANNOT BE SEEN OR TOUCHED & IS OFTEN DIFFICULT TO EVALUATE: marketer has to build “service differentiation” in the basic product to enable competitive positioning.

PERISHABILITY• PRODUCTION & CONSUMPTION ARE

SIMULTANEOUS ACTIVITIES:

face to face teaching necessitates simultaneous production

& consumption. However, the open & distance learning systems

which makes use of technology have made it possible for the

production & consumption of the service to be carried out at

different times, designed to meet the challenge posed by the

perishable character of services.

• NO INVENTORIES CAN BE BUILD UP: unutilized

services cannot be stored if there are no students. Better match

between supply & demand would need to be made. Course design

& course offered needs to be preceded by a need analysis of the

target population before the decision to launch them is made.

INSEPARABILITY•Transfer of knowledge is directly from the

provider to the learner. However, open learning systems have overcome the characteristics of inseparability.

HETEROGENEITY•The course can be of same standards but

different institutions faculty performance differs. The heterogeneous characteristic necessitates carefull personnel selection, planning, constant & careful monitoring of standards which can provide cues to the prospective customers to aid choice of institutions.