Craig Tapper July 25

Marketing of Financial Services Introduction: The role of

Marketing in Modern Financial Services Organizations
Marketing is just trying to persuade people to buy things.
Firms only do it because otherwise people wouldnt know
about them and they might go to the competitors!!!
What is marketing?
Why is it important to an organisation?
Why is it important to customers?
O Marketing is so basic that it cannot be considered a separate function.
It is the whole business seen from the point of view of its final result,
that is, from the customers point of view Business success is not
determined by the producer but by the consumer
Peter Drucker (1973)
O Marketing is the delivery of customer value and satisfaction at a profit.
The goal of marketing is to attract new customers by promising
superior value, and to keep customers by delivering satisfaction
Kotler, Keller & Burton (2009)
Although selling and advertising are highly visible aspects of marketing
practice, they are only part of a larger marketing mix a set of
marketing tools that work together to affect the marketplace. We define
marketing as a social and managerial process by which individuals and
groups obtain what they need and want through creating and exchanging
products and value with others.
Kotler et al (2008 p.5)

the process of creating and delivering value to key stakeholders..
The American Marketing Association (2004)
Products and services (the things that are traded)
Value (the thing that the product or service adds for
the customer and that they exchange with the firm -
both parties need to get Value)
Value changes over time and is different for different
customers
Key Concepts from these definitions
ENeeds = felt deprivation
EWants = specific individual
shape of the need
EDemand - wants backed by
purchasing power
EProducts = anything offered to
satisfy wants
EExchange = value given &
received by customer &
organisation
EResults in a transaction
EMarkets = a set of existing and
potential buyers for a
product.
Key definitions in Marketing
Any act, performance or experience offered by one party to another
Essentially intangible and not involving ownership of anything
Production may or may not be tied to a physical product
Processes (economic activities) providing time, place, form, problem
solving or experiential value to the recipient
Something that can be bought or sold but cannot be dropped on your
foot!
What is a service?
^ 72% of Australias GDP comes from services (Economist Intelligence
Unit Feb 2007)
^ 80-90% of all new jobs will come in services (RBA June 2006)
^ They come about in the later development stages of a
nations economy
Sector
1950 1960 1970 1980 1995 2010
Agricultural products 42 29 17 10 9 7
Minerals 14 17 13 20 13 11
Manufactures 34 42 47 39 38 28
Services 10 12 23 31 40 54
Source: IBIS Information Services
Horizon 1
Physical Goods
Agriculture
Mining
Manufacturing
Metals
Chemicals etc
Horizon 2 Services
Communications
Retail
Tourism
Finance
Transport
Hospitality
Business Services etc
Horizon 3 Information &
knowledge based
Biotechnology and health
New information economy
Time
Economic Development (GDP per capita)
Source: McKinsey & Company
1900 2000
Waves of Economic Development
Source: Stace & Dunphy (2007 p.38)
Industrial economy Service economy Knowledge economy
First Curve
Second Curve
Capital & resources
Production
Offshore markets
Trade
Marketing
Knowledge
Consumers
Global markets
E-commerce
Relationships
Source: Stace & Dunphy (2007 p.38)
Industrial economy Service economy Knowledge economy
First Curve
Second Curve
Specialist functions
Corporateness
Horizontal & vertical
integration
Business processes
Tangible assets
Flexibility
& competence
Individuals &
networks
Virtual
integration
Culture
Intangible
assets
2003 2004 2005 00-05
World GDP % growth 2.5 4.0 3.5 2.5
World merchandise production growth % 4.5 4.0 2.5 2.0
Agriculture 2.5 4.0 0.5 2.0
Mining 3.5 4.0 1.0 2.0
Manufacturing 5.0 4.0 3.5 2.5
World merchandise export growth % 5.0 9.5 6.0 4.5
Agriculture 3.5 3.5 5.0 3.5
Mining 6.0 5.5 2.5 2.5
Manufacturing 5.0 11.0 7.0 5.0
Value 2005
$USD Bn
% change
00-05 p.a
World 2,415 10
North America 422 5
South & Central America 68 8
Europe 1,245 12
European Union (25) 1,121 12
Commonwealth of Independent States 42 20
Africa 57 13
Middle East 55 11
Asia 525 11
Japan 108 8
China 74 20
Balanced
Tangible
dominant
Intangible
dominant
Salt
House
Car
Tailored
Suit
Fast-food
Restaurant
Hotel
Air
Travel
Theatre
Teaching
Balanced item = 50:50
Financial
Services
C The hollowing out effect - internationalisation and globalisation (low-
technology labour intensive activities move to low labour cost countries)
C Deregulation and privatisation (government services sold off, international
and national consolidation of services to achieve scale and scope)
C Social change (rise of global middle class and emerging middle class; two
income households)
C Professional services & franchises (increased competition, growth in demand
and lower regulation on marketing)
C Technology (access to information; driving service innovation)
C Global wealth & investment market (decline in state pension as source of
retirement, growth of personal investment industry)
Intensifying competition is
driving marketing investment
and innovation
Increasing marketing
orientation
Service quality philosophy
becoming increasingly
important
Increasing numbers and
sophistication of financial
service value chains and use of
franchising
Technology driving:
More innovative and
sophisticated delivery systems
Increased customer self-service
and DIY
Increase capacity and reliance
on data mining, manipulation
and CRM strategies
C Customers dont obtain ownership
C Services are intangible
C Services are inseparable (customers are involved)
C Services perish and cannot be stored
C Services are variable (quality is hard to maintain)
C Services are harder for customers to evaluate
O Most service products cannot
be inventoried
O Intangible elements usually
dominate value creation
O Often difficult to visualize
O Customers may be involved in
production
O Other people are often part of
the product
O Operational inputs and outputs
tend to vary more widely
O Time frequently assumes
greater importance
O Distribution may be via non-
physical channels
Narrow definitions of what marketing means by financial
services managers and poor appreciation of marketing
Differentiation is harder
Limited data on competitive performance
Costing is harder
E Understand and identify surrogate cues (things that dont
relate to the service performance)
E Ensure that the cues are in line with customer expectations
E Differentiate the offer and signal it using the cues
OProduct
OPrice
OPromotion
OPlace
OPeople
OProcess
OPhysical evidence
Human
Resource
Management
Customers
Marketing
management
Operations & info tech
management
Financial Service benefits are harder to establish
Customer behaviour and experience are more important
Managing the service encounter is vital
Design of the service factory and delivery system is
central to creating the encounter
Use of channels needs more thought
Technical
Core
Equip
ment
Service
people
Interior &
exterior
facilities
The
customer
Other
customers
Other
customers
Advertising
Sales calls
Billing/statements
Miscellaneous mail,
phone calls, faxes etc.
Websites and emails
Random exposures to
facilities/vehicles
Chance encounters with
service personnel
Word of mouth
Backstage
(Invisible)
Front-stage
(visible)
Other contact points
Service operations system
Service delivery system
Satisfaction; Quality;
Brand loyalty
Organisation
Employees
Customers
Internal
marketing
Traditional
marketing
Relationship
management










Cultural Values and Norms
Cultural Values and Norms
Service encounter:
Understanding
customers intrinsic
needs & values
Mood states
Role theory
Script theory
Communication style
Attribution theory

Post-purchase stage:
Customer satisfaction
Perceived quality
Customer complaint
behaviour
Service recovery
Pre-purchase stage:
Recognition of needs
Information search
Evaluation of
alternatives

Role of women; gender relations
Role of the family
Attitudes to age and authority
Collective vs. individual focus
Religious observances
Cognitive styles
Hours of work
Communication protocols
Importance placed on loyalty; conspicuous consumption
SOCIAL CONVENTIONS
AESTHETICS
Symbolic meaning of art, architecture, dance, folklore, drama
Importance of symbols such as employment, title dress,
hairstyle, jewellery, brands, etc.
LEVELS OF CULTURE
National
Regional
Industrial
Organisational
Financial Services Marketing Cultural
Considerations
DEMONSTRATIONS OF CULTURAL DIFFERENCE
Time
Space
Language (what is meant)
Familiarity
Consumption
Business customs
Non-verbal communication
LANGUAGE
Financial Services Marketing Cultural
Considerations
1. Power distance (equality or hierarchy in interpersonal relations)
2. Uncertainty avoidance (societys risk attitude)
3. Individualism/collectivism (reliance on self or others)
4. Masculinity/femininity (extent and source of caring for weaker
members of society)
5. Long versus short-term orientation
Power Distance Scores
Australia, Great Britain & Germany 36
Netherlands 38
USA 40
Japan 54
South Korea 60
Singapore 74
India 78
China 77
Uncertainty Avoidance Scores
Singapore 8
Sweden and Hong Kong 29
China 40
USA 46
India 48
Australia 51
Germany 65
Japan 92
Masculinity vs. Femininity Scores
Sweden 5
Netherlands 14
China 46
Singapore 48
China 55
Australia 61
USA 62
Germany & Great Britain 66
Japan 95
Individualism vs. Collectivism
India 14
China 15
Singapore 20
Japan 46
Germany 67
Netherlands 80
Great Britain 89
Australia 90
U.S.A 91
Long term vs. Short term orientation
U.S.A 25
Great Britain 29
Australia; Germany 31
Singapore 48
India 61
Japan 80
China 114
1. Functional risk (Will it work?)
2. Financial risk (Is it worth it?)
3. Temporal risk (Will it be a waste of time and effort?)
4. Psychological risk (How will I be treated?)
5. Social risk (What will they think of me?)
6. Sensory risk (What problems will there be?)
^ Seek information from trusted sources
^ Rely on reputation
^ Seek warranties & guarantees
^ Seek guidance about alternatives
^ Look for trial
^ Use of the internet
^ Loyalty to existing providers
^ Look for tangible quality signals
+ The importance of the service encounter itself
+ The separation of the purchase and consumption phases
+ The impact of mood and emotion (affect) on service
consumption and evaluation
Expectations
(E)
Confirmation
Perceived
Performance
(P)
Comparison
Process
Dissatisfaction Delight
Mere
satisfaction
Negative
dis-confirmation
Experience
Word of mouth
Marketing
communications
Awareness of
competing brands
Positive
dis-confirmation
P = E
P > E
P < E
The 5 Cs
OCustomers
OCompany
OCompetitors
OCollaborators
OContext
Context looks at key external
environments including:
CPolitical
CEconomic
CSocio-Cultural
CTechnological
CLegal & regulatory
CEnvironmental (nature)
Corporate strategic plan(s)
Business Unit Plans
Functional Plans to support these...
(eg Marketing, Production, Operations, Finance, IT, HR, etc)
Shareholder or stakeholder value
Segmenting the market (to understand what drives
the different customer needs and behaviours)
Targeting attractive segments where a competitive
advantage exists
Positioning an offer through use of the marketing mix
Production Orientation =
consumers favour products that are
affordable and available so improve
productive efficiency!
Product Orientation = consumers
favour products that are high
quality, performance and features,
so improve the product!
Sales Orientation = consumers need
to be persuaded to buy, so sell!!!
Marketing orientation = understand
customer wants and needs and deliver
satisfaction better than alternatives!!
Societal Orientation = deliver
satisfaction and meet wants & needs
in a socially responsible and
sustainable fashion!
_Customer centric or strongly customer oriented
_Involved in continuous customer research and gaining
customer insight
_Integrate all activities with the customer as the focus

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