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Marketing of Financial Products
Dr. Karim KobeissiDr. Karim Kobeissi
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Course ObjectiveCourse Ob
jective
The basic objective of this course is to
exlain for the students about the
various t!es of financial roducts
and ho" these are to be marketed.
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Chater #$ Develoment of %anking &ervices Marketing
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'hat is Marketing(
There are man! definitions of the marketing
concet and most of them are focused on
meeting the customer needs. )ere is onethat has been roosed b! Kotler$
**Marketing is the science and art of
exloring+ creating+ and delivering value,to
satisf! the needs of a target market at a
rofit- Kotler+ //0.
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1ole of Marketing
Marketing identifies unfulfilled needs and
desires. #t defines+ measures and 2uantifies
the si3e of the identified market and therofit otential. #t inoints "hich
segments the coman! is caable of
serving best and it designs and romotes
the aroriate roducts and services.
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4oods+ &ervices 5 Products(
6 good is something !ou can oint at+ "hereas a
service is something"hich canbe bought and sold but"hich
!ou cannot droon !our7foot 84ummesson+ ,9:;
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4oods
oods
&ervices
ervices
,, TangibleTangible outut .outut . #ntangible rocess.#ntangible rocess.
)omogeneous 8)omogeneous 8essentiall! 3eroessentiall! 3ero
variabilit!variabilit!
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The Concet of 4lobal Offer
#t is ver! rare+ in fact+ that an offer is limited to a single good orservice. #n ractice+ comanies offer a more or less combinations ofgoods and services to better meet their demands and differentiatethemselves from the cometition.
The global offer then includes$
A The core roduct 8either a good or service
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&ection,$ Develoment of &ervices Marketing
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,., The Marketing Mix of &ervices,., The Marketing Mix of &ervices
One of the most basic ideas in marketing is themarketing mix. The marketing mix reresents the
elements that the organi3ation controls and that
can be used to influence consumers choice as "ellas their evaluation of service satisfaction.
The first four elements in the services marketing mix
are the same as those in the traditional marketing
mix of goods 8@Ps
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HHProduct-Product-
#n case of services+ the *roduct is
e2uivalent to the offer "hich is
heterogeneous. )ence+ there is scoe for
customi3ing the offering as er customerre2uirements. Therefore+ managers must be
attentive to all asects of the service
erformance that have the otential to
create value for customers,.
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Price and Other Eser CostsPrice and Other Eser Costs
Pricing services is more difficult than ricing roducts because !ou can
often inoint the cost of making a h!sical roduct but itIs more
subjective to calculate the "orth of !our exertise or the value of !our
time.
The factors that "e should consider "hen tr!ing to determine "hat rice
to charge for a service$
J Costs 8direct and indirect costs
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PlacePlace
&ince service deliver! is concurrent"ith its roduction and cannot be
stored or transorted+ the location of
the service roduction assumes
imortance. &ervice roviders have to
give secial thought to "here the
service "ould be rovided,.
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PromotionPromotion
&ince a service offering can be easil!
relicated+ romotion becomes
critical in differentiating a service
offering in the mind of the consumer.
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PeolePeole
Peole are a crucial factor in a service
deliver! rocess+ since a service is
insearable from the erson roviding
it.
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Ph!sical videncePh!sical vidence
&ince services are intangible in nature
most service roviders strive to
incororate certain tangible
elements into their offering to
enhance customer exerience.
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Productivit! 5 Gualit!Productivit! 5 Gualit!,,
Productivit! relates to ho" inuts aretransformed into oututs that are valued b!
customers+ "hereas 2ualit! refers to the
degree to "hich a service satisfies
customers b! meeting their needs+ "ants+
and exectations. #nvesting in 2ualit!
imrovement "ithout understanding the
tradeoff bet"een incremental costs and
incremental revenues ma! hurt rofitabilit!.
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, Ch ll 5 & l ti, Ch ll
5 & l ti
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,.$ Challenges 5 &olutions,.$ Challenges 5 &olutions
6s a result of the intangibilit!+ insearabilit! of
roduction and consumtion+ heterogeneit!+ and
erishabilit! of services+ a number of
marketing challenges arise that are not
usuall! faced "hen marketing goods
.
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arketing Challenges and &olutions Pertaining to
#ntangibilit!
Characteristic 1esulting Marketing Challenges Possible &olutions
#ntangibilit!
&ervices are difficult to disla!
and K or exlain to customers.
Develo a strong
organi3ational image 8a
o"erful and honest
bank< to reduce the
customers level of
erceived risk.
&ervices are difficult to rice. Etili3e an activit!
based ricing
aroach.
&ervices lack atent rotection. Ese ersonnel sources of
information to marketservices.
&ervices can not be stocked or
inventoried.
Ese of tangible clues to
hel Htangibili3e- the
service.
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arketing Challenges and &olutions Pertaining to #nsearabilit!
Characteristic 1esulting Marketing Challenges Possible &olutions
#nsearabilit!
The service rovider is h!sicall!
connected to the service.
&trategic collection and
training of ublic contactersonnel to ensure that the
right t!e of emlo!ees are
in the right jobs. #n fact+ a
bright+ highl! motivated
emlo!ee can create a more
leasant service exerience
for ever!one "ho comes into
contact "ith that erson.
The customer is involved in the
roduction rocess.
ffectivel! managing
customers.
HOther customers- are involved in theroduction rocess.
Ese of mutiAsite locations+each of "hom can roduce
their o"n sul! of services
to serve their local market.The mass roduction of services is
eseciall! challenging.
Ese of mutiAsite locations to
limit the distance the
customer must travel to
urchase the service.
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arketing Challenges and &olutions Pertaining to
)eterogeneit!
Characteristic 1esulting Marketing Challenges Possible &olutions
)eterogeneit!
&tandardi3ation and 2ualit!
control are difficult for the
service firm to rovide on a
regular basis.
6utomation 8"hich ma!
achieve
standardi3ation
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arketing Challenges and &olutions Pertaining to
Perishabilit!
Characteris
tic
1esulting Marketing
Challenges
Possible &olutions to
Manage Demand
Possible &olutions
to Manage &ul!
Perishabili!
Demand exceed sul!of service available.
Etili3e creative ricingstrategies to shift
demand.
Ese art timeemlo!ees to
increase sul! of
service.
Demand exceed
otimal level of sul!.
#mlement a
reservation s!stem.
&hare caacit!
"ith other
roviders.
Lo"er demand than
otimal sul! level.
&hift demand to
comlementar!
services.
Preare for
exansion in
advance.
Etili3e non eak
demand eriods to
reare for eakeriods of demand.
Etili3e third
arties to
increase sources
of sul!.
#ncrease
customer
articiation.
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&ection $ The Marketing for the %ank
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., The >ature of %ank Marketing., The >ature of %ank Marketing
'hat is a bank(
H6 bank is a commercial business+ that bu!s
chea and sold at high rices. 'hat
differentiates a bank from other trading houses
is that it bu!s and sells mone! against
romises- 6rnold+,9;@.
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Defining %ank MarketingDefining %ank Marketing
'hat is %ank Marketing(
H%ank marketing is ever!thing that
allo"s us to attract+ reserve and
satisf! the banks customers-
%adoc+//@.
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The Characteristics of %anks MarketingThe Characteristics of %anks Marketing
#n addition to the four major characteristics that are common
for all service activities+ there are seven additional
characteristics that are secific for the banking services$
,< #ntangibilit!.
< #nsearabilit!.
?< )eterogeneit!.
@< Perishabilit!.
B< 6 strongl! individual marketing s!stem.
0< 6bsence of secific identit!.
;< 4eograhic disersion of the activit! 8national 5
international
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The Characteristics of %anks MarketingThe Characteristics of %anks Marketing
:< &trict e2uilibrium bet"een gro"th 5 risk
9< Fluctuation of the demand
,
,/< The fiduciar! resonsibilit!
,,< Po"erful imact of eole in the "orking rocess
8standardi3ation vs. customi3ation adotion of
technolog! for some activit!+ e.g.+ cash "ithdra"+
check deosit M
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#mact of #T on %anks &ervice Procedure#mact of #T on %anks &ervice Procedure
Technologies bring information increasingl! varied
and bulk! on the customers. Correctl! exloited+
these data make it ossible to better kno"
the customer in all the services and channels of
the banks. #f the marketing teams manage to
give direction to this information+ the! can benefit
from it to offer interesting roducts and services
for the customers in a traditional
"a! 8C1M actions< or in more original "a!+ for
examle the roosal of a customi3ed
offer "hich is instantl! disla!ed on the station of
the advisor to hel him in his conversation "ith the
client,.
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Customer 1elationshi Management
Customer relationshi management8C1 < is a business
strateg! for managing a coman!s interactions "ith current
and future customers.
C1M involves using technolog! to organi3e+ automate+ and
s!nchroni3e sales+ marketing+ customer service+
and technical suort.
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Princiles of C1M
J &electing customers according to their rofiles and exected
rofitabilit!.
J 1etaining valuable customers b! develoing ersonal
relationshis "ith them.
J Treating each customer individuall! b! adating the roducts
and servicesto meet his ersonal needs and riorities$ Mass
consumtion 8standardi3ed roducts and services<
#ndividual consumtion 8individuali3ed roducts and
services
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The ,/ lements of Customer 1elationshi Management 8,/ #