MARKETING MIX

IN FINANCIAL SERVICES

Introduction to marketing
The term "marketing mix" was first used in 1953 when Neil Borden, in
his American Marketing Association presidential address, took the
recipe idea one step further and coined the term "marketing-mix". A
prominent marketer, E. Jerome McCarthy, proposed a 4 P’s
classification in 1960, which has seen wide use. The four Ps concepts is
explained in most marketing textbooks and classes.
The marketing mix is probably the most famous marketing term. Its
elements are the basic, practical components of a marketing plan. Also
known as the Four P's, the marketing mix elements
are price, place, product, and promotion.
The concept is simple. Think about another common mix - a cake mix.
All cakes contain eggs, milk, flour, and sugar. However, you can alter
the final cake by altering the amounts of mix elements contained in it.
So for a sweet cake add more sugar! It is the same with the marketing
mix. The offer you make to you customer can be altered by varying the
mix elements. So for a high profile brand, increase the focus on
promotion and desensitize the weight given to price. Another way to
think about the marketing mix is to use the image of an artist's palette.
The marketer mixes the prime color’s (mix elements) in different
quantities to deliver a particular final color. Every hand painted picture
is original in some way, as is every marketing mix. Some commentators
will increase the marketing mix to the Five P's, to include people.
Others will increase the mix to Seven P's, to include physical
evidence and process. The term was coined by Neil H. Borden in his
article The Concept of the Marketing Mix in 1965. Mix applied to a real
business

INTORDUCTION TO SERVICES MIX

A service is the action of doing something for someone or something. It
is largely intangible (i.e. not material). A product is tangible (i.e.
material) since you can touch it and own it. A service tends to be an
experience that is consumed at the point where it is purchased, and
cannot be owned since is quickly perishes. A person could go to a café
one day and have excellent service, and then return the next day and
have a poor experience. So often marketers talk about the nature of a
service as:
Inseparable - From the point where it is consumed, and from the
provider of the service. For example, you cannot take a live theatre
performance home to consume it (a DVD of the same performance
would be a product, not a service)
Intangible - and cannot have a real, physical presence as does a product.
For example, motor insurance may have a certificate, but the financial
service itself cannot be touched i.e. it is intangible.
Perishable - in that once it has occurred it cannot be repeated in exactly
the same way. For example, once a 100 meters Olympic final has been
run, there will be not other for 4 more years, and even then it will be
staged in a different place with many different finalists.
Variability- since the human involvement of service provision means
that no two services will be completely identical. For example, returning
to the same garage time and time again for a service on your car might
see different levels of customer satisfaction, or speediness of work.
Right of ownership - is not taken to the service, since you merely
experience it. For example, an engineer may service your air-
conditioning, but you do not own the service, the engineer or his
equipment. You cannot sell it on once it has been consumed, and do not
take ownership of it.

MEANING OF FINANCIAL SERVICES

Financial services comprise of assisting in sourcing of funds
(intermediation), funding, advising and procedural assistance in
deployment of funds. The financial services sector plays a predominant
role in stimulating and sustaining the economic growth of a nation. Till
recently the public sector institution have been showing dominance in all
the areas of financial services like banking, insurances, term lending,
housing finance etc in the Indian financial system.
But after the initiative of economic Liberalization by the Government,
the private as well as the foreign players are also putting rapid strides in
this particular sector. Consequently the financial services sector in India
started growing rapidly in the economy. The competitive climate in the
Indian Financial services sector has dramatically changed over the last
few years.
Financial services thus, could be fund based wherein the services
provider will invest his own funds and will bear some risk on his own
balance sheet to an extend. Most activities are, however fee based.
These are intermediation activities. The services provider here would act
as a facilitator between the funding agency and the corporate or firm.
Fee based activates would also include assistance in investment
decisions.

Major players in the Indian financial service sector

At present the player in the Indian financial Services Sector belongs to

one of the following Indian Financial Markets.

1. Commercial and personal credit market.

2. Insurance market.
3. Housing Finance Market
4. Money Market & Debt market
5. Capital market
6. Government Securities Market
7. Hire purchase & securities market
8. Forex market
The seven elements of marketing mix in financial services

PRODUCT

PHYSICAL
EVIDENCE PRICE

7 PS OF
PROCESS MARKETING

PLACE

PEOPLE
PROMOTION

1. Product
2. Price
3. Place
4. Promotion
5. People
6. Process
7. Physical Evidence

Product
For many a product is simply the tangible, physical entity that they may
be buying or selling. You buy a new car and that's the product - simple!
Or may be not. When you buy a car, is the product more complex than
you first thought.
The financial companies should aim at creating new generic products as
per the need of the customer. Attractive schemes have to be created
coupled with effective delivery in order to optimize customer
satisfaction.
It is always better to bring modification in the existing products by
adding some new features and elimination of outdated products. In the
competitive market the task of selling a product is tougher since the core
product are the same? This necessitates product differentiation. There
should be different producer in the arrays of the company, so that the
company can cater the needs of the different groups of the investors or
the customers.
In order to design and develop new product one should take the help of
market research to assess the needs of the customer availability of
existing product and future growth in demand.

Price
There are many ways to price a product. Let's have a look at some of
them and try to understand the best policy/strategy in various situations.
The potential customer generally frames their investment strategies in
the background of pricing decisions. The prices take different dimension
depending open the type of financial services. The prices of financial
services are always linked with return.
For an insurance company the price means the premium, for the banks it
is the rate of interest and for mutual funds it is the NAV. However,
while deciding pricing, incentives, brokerage and agency commission
this items will affect the unlimited returns to the investors. After all the
cases only the competitive prices and the promised return catches the
sentiment of the customers.

Place
Place is also known as channel, distribution, or intermediary. It is the
mechanism through which goods and/or services are moved from the
manufacturer/ service provider to the user or consumer. The important
considerations while making place decision are available for the smooth
functioning and convenient disposal. In short, place means where actual
consumption is done.

Promotion
In order to promote the business in highly competitive words, it is the
time to develop creative promotional tool kits so that impulse buying is
stimulated amongst the potential customers. The promotional of sales
mat be thought advertisements, road shows, personal financing shows
contest ect. The various promotional tools used by the major players are.
(a) Personal promotion: person to person or conferences.

(b) Impersonal promotion: Advertising, publicity and sales

promotion measures

People
People are the most important element of any service or experience.
Services tend to be produced and consumed at the same movement, and
aspects of the customer experience are altered to meet the 'individual
needs' of the person consuming it. Most of us can think of a situation
where the personal service offered by individuals has made or tainted a
tour, vacation or restaurant meal. Remember, people buy from people
that they like, so the attitude, skills and appearance of all staff need to be
first class. Here are some ways in which people add value to an
experience, as part of the marketing mix - training, personal selling and
customer service.
Marketing of service is significantly influenced by the qualities of
services and interpersonal relationship between the customer and
services organizations. In order to motivate the potential customer the
services should be offered in the best possible manner. In the
competitive world of financial services market orientation of product
and customer orientation of services are the two key factors. Prompt and
timely services as per the needs of customer would make difference.

Process
Process is another element of the extended marketing mix, or 7P's.There
are a number of perceptions of the concept of process within the
business and marketing literature. Some see processes as a means to
achieve an outcome, for example - to achieve a 30% market share a
company implements a marketing planning process
 Another view is that marketing has a number of processes that integrate
together to create an overall marketing process, for example -
telemarketing and Internet marketing can be integrated. A further view is
that marketing processes are used to control the marketing mix, i.e.
processes that measure the achievement marketing objectives. All views
are understandable, but not particularly customer focused.

 Deliver value through all elements of the marketing mix. Process,

physical evidence and people enhance services.
 Feedback can be taken and the mix can be altered.
 Customers are retained, and other serves or products are extended
and marked to them.
 The process itself can be tailored to the needs of different
individuals, experiencing a similar service at the same time.
Processes essentially have inputs, through inputs and outputs (or
outcomes). Marketing adds value to each of the stages. Take a look at
the lesson on value chain analysis to consider a series of processes at
work.

Physical evidence
Physical evidence is the material part of a service. Strictly speaking
there are no physical attributes to a service, so a consumer tends to rely
on material cues.
There are many examples of physical evidence, including some of the
following:
 Packaging.
 Internet/web pages.
 Paperwork (such as invoices, tickets and despatch notes).
 Brochures.
 Furnishings.
 Signage (such as those on aircraft and vehicles).
 Uniforms.
 Business cards.
A sporting event is packed full of physical evidence. Your tickets have
your team's logos printed on them, and players are wearing uniforms.
The stadium itself could be impressive and have an electrifying
atmosphere. You travelled there and parked quickly nearby, and your
seats are comfortable and close to restrooms and store. All you need now
is for your team to win!
Some organisations depend heavily upon physical evidence as a means
of marketing communications, for example tourism attractions and
resorts (e.g. Disney World), parcel and mail services (e.g. UPS trucks),
and large banks and insurance companies (e.g. Lods of London).

Financial Services (Last Updated: June 2010)

The Indian economy is estimated to have grown by 7.4 per cent

in 2009-10. According to the latest Central Statistical
Organisation (CSO) data, financial services, banking, insurance
and real estate sectors rose by 9.7 per cent in 2009-10.

As per the Securities and Exchange Board of India (SEBI),

number of registered Foreign Institutional Investors (FIIs)
as on May 31, 2010 was 1710 and the cumulative
investments in equity since November 1992 to May 31,
2010, was US$ 77.2 billion , while the cumulative
investments in debt during the same period were US$ 13.4
billion . The total FII inflow in equity during January to
May 2010 was US$ 4.6 billion while it was US$ 5.9 billion
in debt. Net investment made by FIIs in equity between
June 1, 2010 and June 14, 2010 was US$ 530.05 million
while it was US$ 875.73 million in debt, as per the latest
data released by SEBI.

The average assets under management of the mutual fund

industry stood at US$ 170.46 billion for the month of May
2010, as compared to US$ 135.58 billion in May 2009,
according to the data released by Association of Mutual Funds
in India (AMFI).

As on June 4, 2010, India's foreign exchange reserves totaled

US$ 271. billion, an increase of US$ 9.87 billion over the same
period last year, according to the Reserve Bank of India's
Weekly Statistical Supplement.

Private equity (PE) firms invested about US$ 2 billion across 56

deals during the quarter ended March 2010, according to a
study by Venture Intelligence, a research service focused on PE
and merger and acquisitions (M&A) transaction activity in
India. The amount invested during the January-March 2010
quarter was the highest in the last six quarters. The figure was
significantly higher than that during the same period last year
(January-March 2009) which witnessed US$ 620 million being
invested across 58 deals and also the immediate previous
quarter (October-December 2009) where investments worth
US$ 1,681 million were made across 102 deals.

Also, a study by Project Finance International (PFI), a source of

global project finance intelligence and a Thomson Reuters
publication has ranked India on top in the global project finance
(PF) market in 2009, ahead of Australia, Spain and the US.

The study said the main market for PF in 2009 was the
domestic Indian market, which raised US$ 30 billion,
accounting for 21.5 per cent of the global PF market. This was
up from US$ 19 billion in 2008.

Qualified Institutional Placements (QIPs)

QIP is a capital raising tool, whereby a listed company can

issue equity shares, fully and partly convertible debentures, or
securities other than warrants, which are convertible into equity
shares, to a qualified institutional buyer (QIB).

In 2009, Indian companies had raised close to US$ 7.13 billion

by way of 45 QIP issuances.

Stock markets

According to data from Bloomberg, India's market cap as a

percentage of world market cap was 2.8 per cent as on
December 31, 2009.

In 2009, there were 21 IPOs that raised US$ 4.18 billion as

compared to 36 IPOs in 2008 that raised US$ 3.62 billion.

Further, according to ICICI Securities, Indian companies are likely to

raise up to US$ 42.43 billion from the primary market over the next
three years. According to Madhabi Puri-Buch, Managing Director and
CEO, ICICI Securities' nearly US$ 20 billion will be raised from the
initial public offer (IPO) market this fiscal (2010-11), of which around
US$ 8.49 billion would be from the public sector and an equal amount
from private companies.
Moreover, on the back of an increase in the participation of agriculture
and other commodities, the 23 commodity exchanges posted 50 per cent
year-on-year growth in turnover in the April-February period of 2009-
10, to touch US$ 1.53 trillion, according to the commodity markets
regulator, Forward Markets Commission (FMC).

Insurance

India is the fifth largest life insurance market in the emerging insurance
economies globally and the segment is growing at a healthy 32-34 per
cent annually, according to the Life Insurance Council.

According to the Insurance Regulatory and Development Authority

(IRDA), total first year premium collected in 2009-10 was US$ 24.64
billion, an increase of 25.46 per cent over US$ 19.64 billion collected in
2008-09.

Further, according to IRDA, in April 2010, life insurance companies

collected first year premium worth US$ 1.29 billion, as compared to
US$ 810.9 million in the corresponding period of 2009.

The life insurance industry is expected to cross the Rs 3 lakh crore total
premium income mark in 2010-11. “This year, we are expecting a
growth of 18 per cent in total premium income. If achieved, it is
expected to cross the US$ 64.4 billion mark,” said SB Mathur, secretary
general, Life Insurance Council. Total premium income, at US$ 56.04
billion, rose 18 per cent during 2009-10, against US$ 47.6 billion in the
previous year.

Banking services

According to the weekly statistical supplement (WSS) of the Reserve

Bank of India (RBI), Indian bank loans represented a rise of 19.1 per
cent as of June 4, 2010 while deposits were up 14.3 per cent from the
previous year.
Furthermore, outstanding loans showed an increase from US$ 12.39
billion to US$ 703.5 billion in the two weeks to June 4, 2010.

The WSS reflected that bank deposits rose by US$ 3.24 billion to US$
975 billion in the two weeks to June 4.

Exchange rate used: 1 USD = 46.74 INR (as on June 2010).