MARKETING OF FINANCIAL SERVICES

Marketing is concerned with Identifying customer needs and determining ways in

which the organization is able to meet the needs in a profitable manner (both goods and
service) are matched with market and through which the customers are able to enjoy the
products.
Marketing of financial services means marketing of something of a promise. The
most important fact in marketing of the financial service is that, setting of a promise,
complicate the task of a marketer since the marketer find it difficult to identify the time
where the service states degenerating or where the service falls. So thus marketing of
financial services is considered as customer satisfaction engineering.
The following are some of the important steps which an organization providing the
financial services should take to embrace marketing.
This first step is to define objective in clear and specific terms which could be
achieved during a defined period of time. For eg in the banking sector the bank should set up
goals for the growth of deposits.
The next step is to collect information about present and potential customers in order
to identify their specific needs. Marketing is undertaken for this purpose and on the basis of
market research appropriate financial products should be developed to satisfy the needs of
different segment of customers.
For each segment identified the likely volume of business likely cost of reaching the
business, likely long term prospects of profitability and likely parameters of marketing
strategy have been determined.
The following model has been developed by Arthur Median is show the marketing
approaches to a banking service.

Identify the customers financial needs and wants.

Develop appropriate banking products and services to meet the needs of the
customers.

Determine the prices for the products, and services developed.

Advertise and promote the products to the Existing and potential customer of
financial services.

Set up a suitable distribution channel and banking Branches.

Forecasting and researching of future market needs.

Nature of financial service Marketing

The marketing of financial services require a separate approach from the marketing of
goods. Service are typically distinguished from goods, on the grounds of

Intangibility

Inseparability

Heterogeneity

Perishability

Simultaneity

Fiduciary responsibility

Intangibility
This is the main distinguishing feature, since services are processes on experience rather than
physical objects and therefore cannot be processed. A customer may purchase a particular
service that typically has nothing to display as a result of the purchase. It is important to
remember that intangibility has essentially two meanings. At one level it is concerned with
the fact of service are impalpable in the sense it has no physical form. On the other sense
intangibility cannot be defined and may be difficult to understand.
Inseparability:- The second factor distinguishing financial services from goods is
inseparability. Services are essentially acts and experiences means that they must be produced
and consumed simultaneously.
Heterogeneity:- The interaction between the consumer and service namely heterogeneity.
The quality of services typically depends on personal interaction as the consequences the
chance of variability in service is very high. The characterization of service as an act rather
than an object leads to the emphasis on the individuals providing the service and their
interaction with the customer.

Perishability:- This is another

distinctive feature namely perishability. Services are

produced on demand and cannot be inventoried so it needs a short distribution channel than
goods.
Simultaneity:- Another distinguish feature of services is simultaneity. Services cannot be
delivered to the customer or user. For availing the services it is essential that the user are
brought to the provider or the provider go to the users.
Fiduciary responsibility:- This is an additional feature of financial service marketing. In
marketing of financial services fiduciary responsibility refers to the implicit responsibility of
financial services organization for the management of the customers funds and the nature of
financial advices supplied to the customers in terms of quality reliability and safety of the
products it supplies. The responsibility is much in case of financial organizations. In case of a
bank the raw materials used to produce financial services are deposits of customers. In case
of selling a loan product the bank as the responsibility to the person who are taking loan at
the same time it has the responsibility to the person who had invested their money in the
bank.

Marketing strategy: - Marketing strategy encompasses the 4ps of the marketing mix product, price, promotion and place and seeks 10 attract the target audience. The design of a
particular marketing mix that will be used in based on the distinctive needs of the targeted
market segment.
The marketing mix product strategy
The success of a product is contingent on how will it compares with the competitor
products in satisfying the target market needs or wants.
Pricing strategy
Selling a product at a price the target market seeks as same with the products
previewed benefits is the key is the marketing success.
Promotion strategy
This focus on communicating the availability of products or service to the target
market. Advertising campaigns point of purchase materials and products publicity are the
main elements of promotion. The development and the implementation of attention getting
informative and persuasive communication techniques is vital to creating market awareness
for the bank products. Banks typically communicate with the customer through print
advertising in the newspapers and magazines. Direct marketing through direct mark and
statements inserts and point of purchase advertising through Brokers and posters in the banks.
Now the banking programmes and Internet are normally been used to communicate to the
customers in the modern era of growth.
Place or distribution strategy
This refers namely concerned with making the products available at the desired time
and place the two important elements of the distribution strategy for the banks are site
location and case of access. As the result, many banks have joined nation wide automatedteller-machine (ATM) networks to maximize the number of locations where the customers
can access their banking need. Many banks now a days are providing telephone banking
service and the banking services that enable the customers to perform the transactions and
make the accounts enquires 24 hrs a days and 7-days a week.

Basic bricks for marketing strategy

Some of the key elements which are the basis for formulating the strategies are as
follows.
1. Customer focus:- The customer focus is to be incorporated in marketing management
and back office operations that has immediate access to the customers.
2. Capturing the growth opportunities:- In competitive world information technology
is available to note what the competition offer. To gain upper hand any smart business
unit should identify the new business opportunities and identically anticipate the new
business opportunities and acute demand which are easily sale able to the customers
and also evaluate the risk return scenario of the project.
3. Successful differentiation:- Success in competitive world information demands a
unit ability to create a different product image in the minds of the targeted customer.
The product offered by the company must be rated as different and superior to others
in the line and should be priced competitively.
4. Innovation and management ability:- Ultimately the success of the firms marketing
strategy depend on whether it is an innovative and the extend of its innovators.
Expertise management is the ability to operate with new and information customers
and the market place.
5. Quality and professionalism:- Much more than in product markets service markets
are prons on subject factors of image, reputation quality of services and the
professions in the management.
Service quality, delivery system and process and time liners and conformity with the
specification are the pre-requisite for a successful marketing strategy.
Segmentation
Market segmentation is an element of the marketing strategy recognizer the wisdom
of specializing to suit the needs of a segment of market rather than trying to be all things to
all people.
Market segmentation is the process of subdividing a market into groups of customers
who have similar products or customer needs. Through segmentation it allows any subset of
the market to be targeted with a distinct marketing max.

Marketing customer Informative (MCIFs) system is a software programme that organizes

the information of the household and individual and sort or summarizes the information
similarity and differences among the groups of customers. Because of this focus it also
referred to as relationship management systems.
The importance of MIFs:

MCIFs can greatly assist clear-customer focused marketing efforts.

Banks use the information generated by MCIFs to identify profitable customers and
single service customer as well as markets with potentials for cross sales activities.

MCIFs system allows banks to identify the most and the least profitable products and
branches as well.

MCIFs system offers modeling capabilities that permit bankers to run test scenario
that predict the effect that such changes as new fees, increases in minimum balance
requirement and declining cost will have on profitability.

The data generated by an MCIFs are critical in preparing strategic reports too and are
used to support strategic marketing Initiatives.

Four Conditions for an Effective Segmentation

Firstly the characteristics of a segment must be Identifiable and measurable.
Secondly it should be accessible that means it must be possible to reach the segment
effectively with proper marketing strategies.
Thirdly the segment must have the potential to generate profile.
Fourthly each segment should react uniquely to different marketing efforts. Which means
each segment should have potential customers who are responding quickly
Strategies for Market segmentation
Market can be segmented in a number of different ways. A bank should choose an
approach that subdivides the market into groups that differ in some distinct way from one
another in respect of their preferences.
Some principal Segmentation alternative are:

Geographic Segmentation

Demographic Segmentation

Psychographic Segmentation

Volume Segmentation

Benefits Segmentation

Geographic Segmentation:- This divides the market according to the geographic

units. A firm might decide to market different products in different areas or to market
their products in certain areas since a bank cannot have location everywhere .It must
be carefully allocate its limited resources to meet its business goals. It may locate its
new branch offices in most promising geographic market area.

Demographic Segmentation: - This categorizes the manner in terms of population

characteristics. Such as age, sex, income, occupation and position in the life cycle. For
example the banks establish an executive banking group specifically for accountants
and doctors has taught an occupational segment. The bank also develop an equity
credit line aimed at homeowners with income in excess of 30,000 is targeting another
specific demographic segment

Psychographic Segmentation:- This enacts classifying the markets in behavioral

terms according to life style, socialism or personality profits. For eg. A bank might
identify the young, professional on the fast react as the premier market segment for
credit card sales.

Volume Segmentation:- This refers to the market attempt to distinguish heavy,

medium and users of a product. In much business a small proportion of the users
generate a large portion of the sales. This is called pareto principle.

Benefit Segmentation:- This is the process of categorizing the market in terms of the
man

produce. Related benefit sought by different groups for example. A bank

practices geographic segment the same bank may also practices industrial
segmentation.
Once an organisation has identified the markets segment the next slip is to select the
target markets.

Financial service Product design

Product
A product is anything that can be offered to market for attention, acquisition, use or
consumption that might satisfy, a want or need.
In a banking context all banking service (checking of savings a/c COD, Safe keeping service,
lock box operation cash management service are also products.
Form a marketing point of view a product has 5 different aspects.
1.

the core product

2.

the generic product

3.

the expected product

4.

the augmented product

5.

the potential products

The core product: it is the essential benefit that the customer is buying
eg. The conveniences of being able to pay for goods and services with cheques

The generic product: It provides that benefit

eg: the basic product - cheque
The expected product: - It includes the product features that customers assume will be
part of the product
Eg:- Prompt and accurate clearance of cheques, accurate monthly statement and ability to
access the amount through ATMS
The augmented product It includes all specific features and benefits that help the
marketer differentiate the product from the comptetions
Eg: Package product unit accounts and can provide a number of customer benefits such as
no annual fee, credit cards, loan discounts and bonus rates on CDs

Banking products are augumented by the level and quality of service provided to the
customer, the reputation of the bank, physical environment of the bank, the brochures and
other printed materials provides to the customer, and any specific brand names given to
the products.
The potential product
It includes all the modification that the product might undergo over time.
Eg; Access through a special display telephone or an ATM that dispense a snap shot
checking statement.

Development and test marketing in financial sector

Some bank develop banking product or service delivery system that are new to the
market.
The following are the various stage in new pdt development
1. exploration and idea generation
2. product screening
3. concept of testing
4. business analysis
5. product development
6. Test marketing
7. Implementation and commercialization
8. evaluation
Exploration and idea generation

In a bank, new product ideas might come from ongoing research to help identify
consumer banking needs that are not being met.
o They might come from management or other employees
o Some firms offer cash incentives to employees for generation new product
ideas. Ideas might also come from customers, banks in other parts of the

country, or from competing banks. Also, an idea for a new product

occasionally comes from banking regulators
o Idea generation is to find, in a structured, goal oriented manner, new ways to
serve the banks customers in a meaningful way
Product screening

Ideas for new products, must be screened against product objectives product policy
and company resources

A preliminary judgment must be made as to whether an idea deserves further study.

Each idea for a new product must also be evaluated to ensure that it does to take
business away from existing products.

Concept testing

It is the function of consumer marketing research, but it does not simply entail asking
a large No. of consumers what they think of a new pdt idea

It is best to first assemble small focus groups to explore reaction to a new pdt concept.
This type of research is called qualitative research. It can provide insight into how the
product might be positioned or promoted.

Business Analysis
This stage in the development of a new pdt involves developing a written business case
and recommendation based on the results of market analysis, Production feasibility
analysis, marketing strategy development and cost and revenue projections. The business
analysis includes supporting materials that indicate there is sufficient demand for the
product and show that the product fits in with the banks over all goals and objective
Product development
During this stage, the bank determines whether it is feasible to produce or provide the
product / service at a cost and quantity that will make the products retail price attractive
to customers.
The elements of the product that will be particularly important to customers must be
identified at this point and clearly highlighted as the product is designed.

This is also the stage at which the promotion, distribution and pricing strategies are
developed. The development stage involves production of the prototypes / samples of the
new product
In banking the development phase for a new savings product would require modification
of the savings computer system by the programming staff, the design of forms and
documents to be used in setting up the a/cs and the writing of procedures for the branch
staff to follow in completing the forms and processing them.
Test marketing
Consumer goods manufacturers usually test market new products. If a company to try out
a new product in one / two geographic Markets , Perhaps using a different promotional
approach in each market to test their relative effectiveness.
Test marketing is increasing in banking too. The benefits of test marketing are that the
banks can assess customer response as well as familiarise employees with the planned
new products.
Test marketing can be expensive and time consuming however, and can offer competitors
an opportunity to quickly copy the banks new product/ Service
It is beneficial to move quickly from the test marketing stage to a full scale
implementation of the product
Implementation or commercialization
This is the stage at which a company commands its resources to a full scale introduction
of the product to the market. Introducing a new banking product requires heavy
involvement by the marketing department. A great deal of money is invested in
advertising and sales promotion.
The launching of new product is often tied to an employee incentive campaign to boost
initial sales. At the same time the bank might offer a premium to the customer for
purchasing the new product
Evaluation
The final stage in developing a new pdt involves the use of primary an secondary research
to monitor the progress of the new pdt in relation to the companys goals.

Effecting monitoring enables the bank to take corrective action where needed, as well as
gain additional knowledge that will facilitate the introduction of the next new product.

PRICING

Pricing strategy for financial product

Pricing decision may relate to pricing new product or changing prices of existing
products. A bank should consider changing the price of an established product when.
1. There is a sudden change in the banks costs.
2.

The competition initiates a price change.

3.

The establishment of a new price becomes permissible as a result of a change in

regulations.
Pricing Strategies
When pricing a new product (where it is new to the firm, new to the market or both)
bank management will have at least three general objectives in mind.
1. Getting the product accepted
2. Maintaining strength in the market in the face of competition.
3. Creating profit.
Two of the most important strategies for pricing new product are skimming pricing and
penetration pricing.
Skimming pricing:- Skimming pricing is a strategy that involves setting a high initial price
for the product so as to skim the cream of demand for the product. Thus strategy is especially
suitable for products that are new to the market for the following reasons.
1. The amount of the product that can be sold is less likely to be affected by price
when the product is new than it will be later, when competition has more of an
influence.
2. A skimming price strategy allows the marketer to attract customers who are less
price sensitive before lowering price to attract those who are more price sensitive.

3. A high initial price may help the new product achieve an image of audit and
prestige.
4. A skimming price can be used to test the demand for a product. It is preferable to
begin with a high price and then reduce it rather than to begin with a low price and
then have to raise it to

cover Unforeseen costs or to capitalize fully on the

popularity of the product.

Penetration pricing
Penetration is the opposite of skimming. It uses a low initial price as a means of
capturing a large share of the market as early as possible. Thus strategy warrants serious
consideration when one or more of the following conditions exist.
1. The quantity of product sold is highly sensitive to price, even in the introductory
stage of the product life cycle.
2. Substantial economies in production or distribution costs can be achieved with large
volume of sales.
3. The product will face the threat of strong competition soon after introduction or at
the time of introduction.
4. There is not an elite market for the product that is no group of potential customers is
likely to be willing to pay a premium price to obtain the product early.
Other pricing strategies
Three other pricing strategies may be used either in pricing new products or repairing
existing ones.
1. Perceived value pricing: - This strategy is based not on the Question what does it
cost us to deliver thus product? but rather on the question what is the perceived
value of this product to the customer? The more tangible and intangible features
that are added to a product, the higher the perceived value of the customer and
consequently, the higher price that can be charged. To use perceived value pricing
effectively, a firm must reduce the customers price sensibility or the price elasticity
of demand by differentiating the product, trying other products to it or adding nonprice benefits.

Consumers willingness to pay for perceived value helps justify a banks expenditure to
develop an image or position in the market and to make the necessary investment to provide a
high level of customer service. The bank with a regulation for quality products and a high
level of personalized service, and whose overall image among the target market is highly
favorable, will be able to change slightly higher fees than its competitors. Customers who feel
that the employers at there bank know them, treat them personably and professionally are
eager to help them are not likely to shop around to save a few dollars on a checking account
or to get a slightly higher interest rate on a certificate of deposit.
2. Relationship pricing. :- Relationship pricing strategies encourage customers to
have

multiple accounts and services with the bank. Thus encouragement is

provided in the form of lower fees, higher savings interest rates, or lower loan
interest rates for customers with multiple accountants. Some examples are
1. Allowing combined balances in all accounts to offset balance requirement for no
charge checking.
2. Pricing higher rates on deposits and charging lower rates on loans or reducing loan
application fees for customers who have both checking and saving with the bank
and maintain a specified combined monthly balance.
3. Charging a lower rate on personal loans to a customer who agrees to have the
monthly payment automatically deducted from has or checking accounts.
4. Charging a lower general fees, or lower interest rate to credit card customers who
also have a checking or saving accounts.
5. Paying a higher interest rate on larger savings or certificate of deposit balances.
To use relationship pricing effectively a bank must have either an integrated system
that enables the various computer application for checking, saving and loans to
communicate with one another or a monthly updated central information file linking
all relationship for each account holder.
Three benefits accure to the bank that uses relationship pricing.
1. Economic
2. The second benefit relates to customer retention
3. The third benefit is or should be increased profitability.

3. Behaviour modification pricing:- Thus strategy uses pricing to get customers to take
certain actions that will lower costs for the bank. For example, a bank in an automated letter
network must pay on interchange fee when the customer uses another banks ATM. To
discourage its customers from using ATMs of other banks and thus causing it to pay the
interchange fee, a bank often charges customers more for using other banks ATM than for
using its own. Thus pricing strategy will work only to the extent that demand is elastic that is
that customer will choose the lower-period attainable rather than pay the higher fee. In
addition the banks ATM must be conveniently located. If they are not, customers who use
ATMs frequently may decide to move there accounts to a bank with more convenient ATM
location.
Why Banks change prices
1. The number of accounts or market share has declined.
2. Prices are too high relative to the competition and relative to the benefit of the
product.
3. Prices are too low, given cost increases or heavy demand.
4. The bank prices seems higher to customers than they really are
5. The product has been enhanced, adding cost to the bank or value to the customer.

Guidelines of Service Pricing

The following are the guidelines for pricing of services.
1 . The pricing strategy should be such that demand fluctuations are successfully handled.
2.

Service prices should be based on costs so as to take in to account the cost of tangible
clues of intangible Services.

3.

The pricing strategy should be such as to provide value addition and quality indication to
the customers.

4.

The pricing strategy should be such as to cope-up with the degree of competition.

Short-term Pricing Tactics in Service Industries

Price Tactics
Differential or flexible
pricing

Objectives
a. Build primary

Forms / Examples
a. Price time

demand during non-

differentials (eg.

peak time

Telephone services)

b. Even out of

b. Customer ability

fluctuations in

(housing loans and

demand

rate of interest
increasing with
principal)
c. Service product price
differentials (barber
shops)
d. Place differentials
(discount at hotels

Discount pricing

a. To enable service

during off seasons)

Telephone corporation

production and

offering lower tariffs for non-

consumption to take

peak periods

place.
b. To encourage actions
like early payments,
bulk purchase or peak
Diversionary pricing

usage
To make customer visit office A service station may offer

at least once to avail basic

certain discount on car wash

service at a discount and with only but for other repairs or

that experience try out others
Guarantee pricing

a. To enable high

maintenance jobs charge the

full rate.
Employment agencies charge

quality operator to

either or both the parties after

compete with others

the assignment gets over

b. To satisfy a customer
seeking clear
assurance before
High price maintenance

paying for it.

To hold out against the price

Cellular phones services

pricing

threat of the low priced

pricing.

sellers and the customer

Loss leader pricing

associate price with quality

To charge a reduced price for

To attract first time trials, a

the first order with a hope to

restaurant offers a discount

get further business at better

on the day of inauguration.

prices.

DISTRIBUTION

Distribution strategy
Distribution strategy is mainly concerned with making the product available at the
deserved time and place. Even the right product for a market segment provides limited
satisfaction or none at all if it is not available when and where consumers want it.
Accordingly, two important demands of distribution strategy for banks are sets
location and case of access. Furthermore, the current social environment places a heavy
emphasis on time as well as convenience. As a result many banks have joined automated
letter networks to maximize the number of location where customers can access there
accounts. Many banks also provide telephone banking, services and pc banking services that
enable customer to performer transactions and make account 24 hours a day, 7 days a week.
Since banking products and services are largely intangible, they are difficult to
separate from the people who distribute them. There is especially true at the time the
customers initiates the relationship with a bank, but it also applies to the say-today servicing
of accounts. Although the use of technology has reduced contact with tellers, there will
always be a need for personal customer services, whether it be in person or by phone. The
growing implementation of customer relations and sales training programmers in banks
reflect managements recognition of the importance of the human demand in the banks
distribution strategy.

Eight channels of distribution for Bank sources

ATM card
Credit card
Debit card
Telephone
Personal computer
Branch
Automated Loan machine
Virtual branch
***********************

DEVELOPMENT OF FINANCIAL SERVICES

Ideas that have survived the screening process are then worked up into specific
service concepts that is to say, the basic idea for the new product must be translated into a
specific of features and attributes which the product will display. At this stage it is common to
test this newly defined product and to identify consumer and market reactions in order to
make any necessary modifications to the product before it is launched.

Screening the ideas

Concept development tested

Marketing strategy development-who should be target consumers, pricing stability

Business analysis

Service development-infrastructure

Market testing

Commercialization.
NPD strategy

Idea generation

Idea screening

Development and
Testing

Product Launch

1. New product development strategy:- A clear strategy is important to ensure that all
those involved understand the importance of NPD and what the organizations wishes
to achieve. The process of NDP is to be orientated towards taking advantage of new
market segments, seen as crucial to the continued competitiveness of the
organizations, required to maintain profitability, or designed to reduce excess capacity
or even out fluctuating demands. The ideas that should be considered are likely to
vary according to the purpose of the NDP programme.
2. Idea generation:- Ideas may be generated from both inside and outside an
organization. Ideas may be generated internally from specialize NPD teams, from
employee feedback or suggestions. Externally, ideas may be generated based on
customer feedback, market research, specialist new product development agencies or
by copying competitions.
3. Idea screening:- The variety of ideas produced at idea-generation stage. Idea
screening means deciding in advance, a set of criteria to be used when ideas are
evaluated:

Doest the idea fit with the organizations strategy?

Does the idea fit with the organizations capabilities?

Does the idea appeal to the right market segments?

Is the idea variable in terms of cost and profit?

4. Development and Testing:-At this stage it is common to test this newly defined
product and to identify consumer and market reactions in order to make any necessary
modifications to the product before it is launched.
5. Product launch:- At this stage the major decisions are essentially of an operational
nature-decision regarding the timing of launch, the geographical location of the
launch and the specific marketing tactics to be used in support of that launch.
Test Market
A rest market, in the field of business and marketing, is a geographical region or
demographic group used to gauge the viability of a product or service in the mass market
prior to a wide scale roll-out. The criteria used to judge the acceptability of a test market
region or group includes:
1.a population that is demographically similar to the proposed target market; and
2. relative isolation from densely populated media markets to that advertising to the test
audience can be efficient and economical.
1. The test market ideally aims to duplicate everything promotion and distribution as
well as product on a smaller scale.

Test Marketing Procedure

1.determine the number of cities
2. selection of the cities
3. duration of the test
4. collect necessary information
5. take necessary actions

Where should we communicate this?

When do the communications need to take place?

ADVERTISING AND SALES PROMOTION

The Fourth P: Promotion
It is now established that there are clear differences in information usage between goods and
services. First, the difference is that consumers of services are less likely to purchase without
information than those of goods. Second, the consumer of services will prefer personal
sources over impersonal sources of information. And third, the basic characteristics of
services have implication for communication strategy.
The above three influence the decision regarding the
a) Communication Objectives
b) Target Audiences, and
c) Planning of each of the sub elements in promotion mix
Promotion Objectives
The basic objectives of the promotion mix are;
1 . Develop personal relations with client (personal relations might result in satisfaction,
more than their service offer)
2.

Make a strong impression of competency, honesty and sincerity.(professional orientation

to service transaction so as to win buyer's confidence in seller's ability to deliver the
service)

3.

Should be able to use indirect selling techniques (creating derived demand or act as a
buying consultant)

4.

Manage to maintain a fine image by positive word of mouth.

5.

Packaging and customization

Adverting is only one element of the promotion mix, but it often considered
prominent in the overall marketing mix design. Its high visibility and pervasiveness made it
as an important social and encomia topic in Indian society.
1.

Advertising is the dissemination of information by non-personal means through

paid media where the source is the sponsoring organization.
Advertising may be defined as the process of buying sponsor-identified media space or time
in order to promote a product or an idea.
The American Marketing Association, Chicago, has defined advertising as any from of nonpersonal presentation or promotion of ideas, goods or services, by an identified sponsor.
Advertisement is a mass communicating of information intended to persuade buyers to by
products with a view to maximizing a companys profits.
The elements of advertising are:
(i)

It is a mass communication reaching a large group of consumers.

(ii)

It makes mass production possible

(iii)

It is non-personal communication, for it is not delivered by an actual person, nor is it

addressed to a specific person.

(iv)

It is a commercial communication because it is used to help assure the advertiser of a

long business life with profitable sales.

(v)

Advertising can be economical, for it reaches large groups of people. This keeps the
cost per message low.

(vi)

The communication is speedy, permitting an advertiser to speak to million of buyers

in a matter of a few hours.

(vii)

Advertising is identified communication. The advertiser sings his name to his

advertisement for the purpose of publicizing his identity.

Financial Services Advertising

Financial advertising, depending on the product, is governed by regulation and the
Advertising Standard Authority and, depending on the subject matter, additionally by
statutory regulation under the Financial Services and Market Act 2000 (FSMA) and under
the Consumer Credit legislation.
Advertising:- Advertising Paid non personal communication delivered through various media
and designed to inform, persuade, or remind members of a particular audience.
Nature of advertising

Advertising is distinguished from other forms of promotion as follows.

It has a verbal and/or visual message.

The sponsor of the message is identified

Delivery is through recognizable media

There is payment by the advertiser to the media for carrying the message

Advertisers are increasingly being able to reach specific audiences with tailormade messages.

Advertising can be classified by the target audience to which is directed.

Consumer advertising generally appears in mass media and is directed to end

consumers: may be product or institutional in nature.

The Advertising Plan

As pointed out earlier, advertising plan and decision making focus on three crucial
areas; objectives and target selection, message strategy and tactics, and media
strategy and tactics. Let us elaborate on these points.
1. Objectives and Target Selection:-An important part of the objective is the
development of a precise, disciplined description of the target audience. It is
often tempting to direct advertising at a broad audience; but everyone is a
potential customer. It is best to consider directing the advertising to more
selected groups to develop stimulating copy. It is quite possible to develop
several campaigns, each directed at different segment of the market, or to
develop one campaign based on multiple objectives.

2. Message Strategy and Tactics:- Message strategy must decide what the
advertising is meand to communicate by way of benefits, feeling, brand
personality, or action content. Once the content of the campaign has been
decided, decisions must be made on the bnest-most effective-ways of
communicating that content. The decisions such as the choice of a spokesperson,
the use of humor or fear or other tones, and the selection of particular copy,
visuals, and layout, are what we call message tactics
3. Media Strategy and Tactics:-Message strategy is concerned with decisions about
how much is to be allocated to create and test advertising copy, media strategy
concerns decisions on how many media rupees to spend on an advertising
campaign.
4. Media tacties:- Comprise the decisions on which specific media (television,
radio, magazines, etc) or media vehicles (Readers /digest, etc) to spend these
dollars.
Sales Promotion:- Sales promotion is one of the most loosely used terms in the
marketing vocabulary. We define sales promotion as demand. Stimulating devices
designed to supplement advertising and facilities personal selling. In other words,
sales promotion signifies all those activities that supplement, coordinate and make
the efforts of personal selling and advertising more effective. It is non recurrent in
nature which means it cant be used continuously.
Definition of sales promotion:- According to American Marketing Association
Those marketing activities other than personal selling advertising and publicity that
stimulate consumer purchasing and dealer effectiveness such as display shows and
exhibitions demonstrations and various non-recurrent selling efforts not in the
ordinary routine. W.J Stanton defines sales promotion as all those activities other
than advertising, personal selling, public relations and publicity that are intended to
stimulate customer demand and improve the marketing performance of sellers.

Demand-stimulating devices designed at supplement advertising and

facilities personal selling.

Sales promotions include such things as coupons, in-store displays,

premiums, trade shows, in-store demonstrations , and contents.

The target for these activities may be middlemen, end users, or the
producers own sales force.

Objectives of Sales Promotion

The basic objectives of sales promotion are:(i)To introduce new products:- To induce buyers to purchase a new product, free
samples may be distributed or money and merchandise allowance may be
offered to business to stock and sell the product.
(ii)To attract new customers:- New customers may be attracted through issue of
free samples, premiums contests and similar devices
(iii) To induce present customers to buy more:-Present customers may be
induced to buy more by knowing more about a product, its ingredients and uses.
(iv) To help firm remain competitive:- Sales promotions may be undertaken to
meet competition from a firm.
(v) To increase sales in off season:- Buyers may be encouraged to use the
product in off seasons by showing them the variety of uses of the product.
(vi) To increase the inventories of business buyers:- Retailers may be induced to
keep in stock more units of a product so that more sales can be effected.

ADVERTISEMENT AND SALESPROMOTION OF FINANCIAL SERVICES

Promotion: This includes advertising , sales promotion, publicity , and personal selling , and
refers to the various methods of promoting the product, brand, or company advertising
The American marketing association defines advertising as "the placement of announcements
and persuasive messages in time or space purchased in any of the mass media by business
firms, nonprofit organisations, government agencies and individuals who seek in form and or
audience about their products, services, organisations or ideas".
Paid advertising takes place;

print media(magazines and news papers)

Broadcast media(radio and television)

out door and transit advertising

Direct marketing

Online through the world wide web

advertisements in newspapers, magazines, brochures, leaflets, circulars, mailings,

e-mails, text transmissions. fax transmissions, catalogues, follow-up literature and
other electronic and printed material posters and other promotional media in public
places, including moving images cinema and video commercials advertisements in
non-broadcast electronic media, including online advertisements in paid-for space (eg
banner and pop-up advertisements) viewdata services marketing databases containing
consumers' personal information sales promotions advertisement promotions

Product advertising focuses on selling a specific product or services

Goal of advertising is to inform, influence, and persuade the target market
It create awareness to the target audience
SEBI'S CODE OF ADVERTISEMENT
1.

ANY ADVERTISEMENT SHOULD BE TRUTHFUL.FAIR AND CLEAR

2.

IT SHOULD BE FACTFUALLY CORRECT AND NOT AN EXAGGERATED OR

MIS LEADING STATEMENT

3.

IT SHOULD NOT CONTAIN ANY PROMISE OR GUARENTEE OF INCOME OR

APPRECIATION OR ANY OTHER GAINS

4.

CORPORATE ADVERTISEMENT SHOULDNOT BE GIVEN DURING THE

PERIOD,SUBSCRIPTION IS OPEN. PRODUCT ADVERTISEMENT IF GIVEN
SHOULD NOT REFER TO CORPORATE PERFORMANCE

5.

IT SHOULD NOT CONTAIN ANY INFORMAL INFORMATION NOT GIVEN IN

THE PROSPECTOUS.

6.

DURING THE PERIOD SUBSCRIPTION IS OPEN, NO STATEMENT SHOULD BE

GIVEN TO THE PRESS ABOUT THE STATE OF SUBSCRIPTION OR OVER
SUBSCRIPTION
PRACTICE

MEMBERS

OF

THE

COMMITTEE

OF

ADVERTISING

Personal sales
Oral presentation given by a salesman who approaches individuals or a group of potential
customers:
Live, interactive relationship
Personal interest
Mention and response
Short-term incentives to encourage buying of products:
Instant appeal
Anxiety to sell

SALES PROMOTION RULES

The sales promotion rules are designed primarily to protect the public but they also apply to
trade promotions and incentive schemes and to the promotional elements of sponsorships.
They regulate the nature and administration of promotional marketing techniques. Those
techniques generally involve providing a range of direct or indirect additional benefits,
usually on a temporary basis, designed to make goods or services more attractive to
purchasers. The rules do not apply to the routine, non-promotional, distribution of products or
to product extensions, for example the suitability of one-off editorial supplements (be they in
printed or electronic form) to newspapers and magazines. Promoters are responsible for all
aspects and all stages of promotions. Promotions should be conducted equitably, promptly
and efficiently and should be seen to deal fairly and honourably with consumers. Promoters
should avoid causing unnecessary disappointment.

MARKET RESEARCH
Market research is the identification of customers' financial needs and wants and forecasting
and researching future financial market needs and competitor's activities. It is the systematic
design, collection, analysis. and reporting of data and findings relevant to a specific
marketing situation facing the company.
The Marketing Research Process
Define the problem and research objectives
Develop the research plan
Collect the information
Analyze the information
Present the findings
Make the decision
Research Approaches
In the marketing research, the primary data can be collected in five main ways: through
observation, focus groups, surveys, behavioral data, and experiences.

Observational research
Fresh data can be gathered by observing the relevant actors and settings. Consumers can be
unobtrusively observed as they shop or as they Consume products.
Focus Group Research

A focus group is a gathering of six to ten people who are carefully selected based on certain
demographic, psychographic, or other considerations and brought together to discuss at
length various topics of interest. Participants are normally paid a small sum for attending. A
professional research moderator provides questions and probes based on a discussion guide or
agenda prepared by the responsible marketing managers to ensure that the right material gets
covered.
Survey Research
Companies undertake surveys to learn about people's knowledge, beliefs, preferences, and
satisfaction. It can also put the questions to ail ongoing consumer panel run by itself or
another company. It may do a mall intercept study by having researchers approach people in a
shopping and ask them questions.
Behavioral Data
Customers leave traces of their purchasing behavior in store scanning data, catalog purchases,
and customer databases. Much can be learned by analyzing these data. Customer's actual
purchases reflect preferences and often are more reliable than statements they offer to market
researchers.

Experimental Research
The most scientifically valid research is experimental research. The purpose of experimental
research is to capture cause-and-effect relationships by eliminating competing explanations of
the observed findings. The design and execution of the experiment eliminate alternative
hypotheses that might explain the results, research and marketing managers can have
confidence in the conclusions. Experiments call for matched group of subjects, subjecting
them to different treatments, controlling extraneous variables, and checking whether observed
response differences are statistically significant.
Researchers have a choice of three main research instruments in collecting primary data.
They are;
Questionnaires
Qualitative measures
Mechanical devices

Once the sampling plan has been determined, the researcher Must decide the subject should
be contacted on the basis of the methods like;
Mail questionnaire
Telephone Interview
Personal Interview
Online Interview

Consider the example of market research in bank marketing;

Marketing begins with information about the market in which the bank operates. In the field
of bank marketing research is important. The bank which really practices marketing or which
is market oriented, while thinking of introducing anew type of cheque system or a tic" service
for example, will not make a decision on the alternatives until it has found out what its
customers want.
Market research is the process by which a bank attempts to obtain the customer and the
competitor information Marketing research is an. integral part of the decision making
process. Market research in banking is an essential tool of marketing for affective planning. It
can be used to gather more knowledge about the market in which the bank is operating. With
the help of this marketing research new service can be developed and existing services can be
improved. Better and more effective promotion programmes can be designed which can be
accepted by the customers. Marketing research serves as a communication channel between
tile market and the bank. The single most important reason for undertaking market research is
to improve the quality of managerial decision making,
Market Research in Indian Banks
The following broad areas of market research were considered for the studies in Indian Banks
are:
New service development
New service product acceptance
Research and development of existing financial service
Bank image study

 Measuring banks advertising effectiveness

Measurement of market potentials
Market research of competitive service product
Customers opinion study
Customer profile study, and
Market share analysis
Most of the market research studies were conducted for internal use and no formal reports
were prepared. It is important to note that the subjected or issue researched by the bank;
Most important subject for market research is the customer service/customer
profile/opinion studies.
In the case of Indian Banks only three banks have researched the Market Share
Analysis.
Rural areas are also a part of the market research activities.
Study on all India Savings and Deposit Trends and Patterns
Measuring banks advertising effectiveness
Banks advertising and Publicity and its image among consumers
Survey on personal finance and banking.

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