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MARKETING FINANCIAL SERVICES Prof. Sato Ridad
RATIONALE One of the critical needs of less-developed countries like the Philippines is capital formation. At the forefront of capital formation is the financial services industry. The South-East Asian economic depression in the 1990’s has forced different financial service organizations to converge in order to achieve economies of scale. The same financial organization is now able to market and distribute various financial products other than its core product/s. Information Technology has made this possible. Banks offer credit cards, insurance and mutual funds. Insurance companies sell pre-need, besides non-life and life insurance. Pre-need offers insurance riders with pension, education and/or memorial plans. Because of the convergence of financial services, financial institutions have become more alike in their product offering and, thus, have greater need to differentiate their services from one another. As a student enrolled under the Marketing Financial Services program, you will have an overview of the full spectrum of the financial services industry. Various financial products currently available locally and internationally, will be discussed. Determining the logic behind each financial product and how you could best market the particular financial service organization, will be the main topics of this program.

COURSE OUTLINE (20 Sessions) I. Financial Products and Services ( Core and Concentric )
We will cover the entire product spectrum of financial services, their business logic, and how they converge and compete with one another. We will discuss two product categories: A. Core Product — e.g. Banks’ savings/current accounts; Pre-Need’s pension, education, life plans B. Concentric Products — all other value-added services as unique selling points (USP’s), e.g.: Banks’ brokerage, mutual funds, insurance over-thecounter; Pre-Need’s insurance riders, loans

Financial Products & Services plus their Added Value/s
1. Banking Private Banking, Leasing Brokerage Mutual Funds

2. Insurance 3. Credit Cards 4. Securities i. Stocks ii. Mutual Funds 5. Brokerage

Non-Life Whole/Term Life iii. Income iv. Pension Fixed

Insurance Annuities

Academic Plans v. emorial Plans

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Plans Full-Service, Discount or Electronic Brokers

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Marketing the Financial Products and Services Marketing financial services is unique from marketing physical goods and marketing other services. A. Transfer of Information vs. Transfer of Physical Goods — Role of IT is very
significant in marketing financial services. e.g., P1M-worth of hamburgers are stored in warehouses and distributed by trucks, while P1M-worth of savings/stocks/credit are stored in the form of information on computers and that information is distributed by postage or internet. B. Relational Transactions vs. One-Time Transaction — Business transactions may be one-time, like restaurants. In financial services, almost always there is a continuous relationship between the financial service provider and the client. There is always a subsequent relational transaction. Sessions: 1-9 1.1 Regulatory Environment and Evolution of the Financial Services Industry (FSI) 1Objective: To appreciate the issues and environmental forces that shape the financial services marketplace. 1.1.1 1.1.2 1.1.3 Cases: Main features and sectors of the FSI Marketing environment in today's FSI: Environmental Analysis Strategic factors in the FSI and its sub-sectors

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(Session 2) Sears, Roebuck and Company (Session 3) Sears, Roebuck & Co. (Session 5) Evolving Financial Services Industry: Competition & Technology (Session 5) The Retail Financial Services Industry (Session 7) Retail Financial Services Industry (Session 8) AMVESCAP (HBS 9-701-016) (Session 9) Chase Manhattan Bank (A) (HBS 9-590-084)

Sessions: 10-12 1.2 Market Segmentation, Targeting and Positioning in the FSI

3Objective:
1.2.1 1.2.2 Cases:

To understand the various bases for market segmentation and critically evaluate those used for effective market positioning. Bases for financial market segmentation Target market selection and positioning strategies with various financial products (Session 10) Charles Schwab: A Category of One (HBS 9-700-043) (Session 11) Chase Manhattan Bank (B) (HBS 9-590-085) (Session 12) Quicken Insurance: The Race to Click and Close (HBS 9-800-295)

Sessions: 13-14 1.3 Consumer Behavior in the FSI

4Objective:
1.3.1 1.3.2 Cases:

To examine how models of consumer behavior apply to the FS Industry.

Consumer behavior in the various FS sectors Retail and Commercial FS (Session 13) DLJdirect: Putting Our Reputation Online (HBS 9-800-164) (Session 14) Charles Schwab: Financial Advisors Service (HBS 9-691-072)

Sessions: 15-16 1.4 Financial Product Designing and Launching in the FSI Objective: To identify the critical factors in product development and product launching. 1.4.1 1.4.2 Cases: The concept of service product Product mix decision and product development and launching in various FS (Session 15) State Street Bank &Trust Co.: New Product Dev’t (HBS 9-696-087) (Session 16) Eaton Vance and Prime Rate Reserves (HBS 9-290-020)

Substitute Cases: State Street Boston Corporation: Leading with IT (HBS 9-195-135) Apex Insurance Corporation (AIC): Flood Insurance Program (HBS 9-692-024) Sessions: 17-18 1.5 Distribution of Financial Products and Services Objective: To recognize the crucial components in the delivery of financial services, i.e., channels used, the cost of delivery, and role of information technology. 1.5.1 1.5.2 Distribution channels for FS, including on-line and electronic FS Product pricing in various FS sectors

1.5.3 Cases:

Relationship and Database Marketing (Session 17) Interactive Insurance. Services: Redefining Insurance Distribution (HBS 9-399-017) (Session 18) Wells Fargo Online Financial Services (A) (HBS 9-198-146)

Substitute Cases: State Street Boston Corporation: Leading with IT – (A) (HBS 9-195-135) ETrade Securities, Inc. (M-286) Intuit: QuickBooks Upgrade (Darden UVA-M-0496) Cofidis (HBS 9-501-055) WingspanBank.com (HBS 9-600-035) Session 19: Integrating Activity: Retail Financial Services Industry Cases Session 20: Group Work: Case Application

Faculty Profile ATTY. SATO RIDAD President Professional Financial Plans

Sato Ridad is President of Professional Financial Plans (Professional), the 1st Pension Plan Company in the country and one of the Top 10 Pre-Need Plan Companies. He sits on the Board of the Philippine Federation of Pre-Need Plan Companies, Inc. and is a member of the Financial Executives Institute of the Philippines (FINEX). Shortly before being appointed President of Professional, he was SVP for the Business Development Group of LBC Corporation, a partner of Professional. He developed financial products specially designed to address the needs of LBC’s vast Overseas Filipino Workers client base. Revolutionizing the freight-forwarding business, he successfully led the design and implementation of training and converting LBC’s traditional cargo handlers into sellers of financial products, over-the-counter at various LBC air posts nationwide. For two years, Sato was sent abroad to study the various markets of Hong Kong, Brunei, Malaysia, Singapore, Spain, Italy, and the U.S. Within such period, he developed a financial product, the Professional Guaranteed Pension Fund, which was successfully launched in Hong Kong, Europe and the U.S. With his developmental work

for LBC, he brought home with him a deep appreciation and knowledge of, and a wide range of perspectives on global markets and economies. Prior to his stint with LBC, he worked as SVP of Net Curricula, Inc., a company which integrated information technology into mainstream education. They provided internet services, systems integration, applications software, and training for faculty. He was in charge of Corporate Planning and Marketing. Formerly a Professor at the Ateneo de Manila University and at the Assumption College, Sato taught Development Economics, Current Issues and Problems in Economics Business Policy, Financial Management, Fundamentals of Management, and Business Organization. Sato graduated with a degree in Management Economics at the Ateneo de Manila University, of which he was Student Council president, earned his Juris Doctor at the Ateneo de Manila Law School and his Master in Management at the Asian Institute of Management.