NMIMS Global Access School

For Continuing Education (NGA-SCE)

Course: Marketing of Financial Services
Internal Assignment Applicable for April 2022 Examination

Q1. Develop a Service Marketing Mix (using 8 Ps) for an Asset Management Company
(Mutual Fund) of your choice.

ANS.

The marketing mix has been defined as the set of marketing tools that the firm uses to pursue
its marketing objectives in the target market. The marketing mix refers to the set of tactics
and action that a company uses to promote its brand and product in marketplace. It enables
the companies to establish good relationship with customers. The marketing mixes have
multiple area of focus which is the part of companies marketing plan. Focusing on a
marketing mix helps organizations make strategic decisions when launching new products or
revising existing product. The marketing mix uses four Ps as it tools for deciding the
marketing strategy which are product, price, place, promotion. However in case of service
marketing there are four more Ps so there are total 8 Ps of marketing. These are the 8 Ps of
service marketing product, price, place, promotion, people, process, productivity, physical
evidence.

An asset management business (mutual fund) is a corporation that offers a variety of mutual
fund schemes to investors. An asset management company (AMC) is a firm that invests
pooled funds from clients, putting the capital to work through different investments including
stocks, bonds, real estate, master limited partnerships, and more.

As per the question we have to develop service marketing mix for an asset management
company of our choice so we will choose J.P. Morgan which has been a leading asset
manager for individuals, advisors and institutions for many decades. It is one of big and
renowned company offering financial and investment banking services globally. This
company offers wide variety of product and services.

Now we will take deeper look into the 8Ps of service marketing mix for the J.P. Morgan
which are product, price, place and distribution, promotion, people, process, productivity,
physical evidence.
  Product: - J.P. Morgan offers financial services and investment banking   for
consumers and small business, commercial banking, financial transactions processing
and asset management to its clients. J.P. Morgan assists firms to raise capital, and loan
origination and syndication. Due to this company have creditors to borrow money or
finance loan from them. The firm provides credit cards, education finance, merchant
services, and home loans among other services.
 Place and Distribution: - J.P. Morgan has a vast services network to serve its
customers in various locations globally. JP Morgan and Chase have a
powerful distribution channel that helps in providing excellent services. Personal
services are available through bank branches and ATMs. It has nearly fifteen
thousand five hundred ATMs and more than five thousand three hundred bank
branches to its name. The firm’s other channels include mobile banking and online
mode, which allows clients to create accounts and access services in real-time.
The Corporate bank has spread its operations to one hundred countries and offers
corporate solutions.

 Pricing: - JP Morgan and Chase offer several types of services and charge different
rates for them. As it faces competition from several financial institutions and hence
has adopted a competitive pricing policy. It has kept its interest rates and brokerage
percentage a lower than its rival institutions.
 Promotion: - JP Morgan and Chase is a strong brand and have a vast differentiated
client base. The bank has good name and gives special focus on client relationships
as part of its promotional strategy to retain customer loyalty. Social media platform
is one of the most advantageous promotional tools at present and the company has
used it to gain maximum advantage. The company also promotes its services
through advertisement on its website and facebook page.
 People: - JP Morgan has a highly qualified and capable workforce. Their employees
continue to work tirelessly to serve the customers, clients and communities, and are
deeply committed to support them. The company always focuses to provide value
services to their customers and serve them in a better way.
 Process: - JP Morgan offers quite personalized services based on client’s
requirement and it aims to build customer loyalty and provide customer satisfaction.
Services in the company are also available through digital means which is online
mode which are very quick and personalized in nature.
  Productivity: - JP Morgan has adopted the six sigma method to improve the
efficiency and bring quality in its product and services. In JP Morgan Core
Strategy focuses on initiatives that cross businesses and functions (Corporate
Strategy) or are functionally-aligned (Integrated Payments Strategy). They aim to
provide their services flawlessly with less possible errors.

 Physical Evidence: - Physical evidence basically means the physical and presentable
existence in the marketplace. JP Morgan is present widely with its nearly fifteen
thousand five hundred ATMs and more than five thousand three hundred bank
branches to its name. An online website is also part of physical evidence that is user-
friendly and allows customers to view its products and services in details. Anything
which forms a part of tangibility of firm can be counted for physical evidence.

Conclusion

From the above discussion we learnt that how JP Morgan uses its service marketing mix 8Ps.
All 8Ps which are product, price, place and distribution, promotion, people, process,
productivity, physical evidence. These marketing mixes are important tool in deciding
marketing strategy. The service marketing mixes have a vital role in JP Morgan and Chase
company success.

Q2. Your client had avoided investing in equities for his long-term goals. He found
equity investments too risky and did not understand when to enter and exit the
market. Explain some investment techniques that help negate the biases involved in
investing.

An equity investment is money that is invested in a company by purchasing shares of that

company in the stock market. These shares are typically traded on a stock exchange.  In
other words, it is an operation where an individual or company invests money into a private
or public company to become a shareholder. Equity investment allows investors to make
huge profits in a frequently changing market. Though the profits are generated faster, the
risk element is also quite high. An equity fund offers investors a diversified investment
option typically for a minimum initial investment amount. The rising and falling of share
prices regulate when to buy or sell your shares. When the prices are low, one should
purchase the shares and sell them when the price goes up. Investing in Equity favors long-
term wealth creation. The main objective of any investment is to increase the value of
capital invested. Shares earn dividends and interests, which are paid annually. 
 There are some advantages of equity investment given as
below:-

 Risk spread
 Easy transferability
 Profitability
 Easy Monitoring
 Dividends and Interest Income

An Investing technique is the way which guides an investor regarding investment of fund.
There are several investment techniques some are discussed below:-

 Value Investing: - Value investor seeks stocks they believe are undervalued. They
look for stocks with prices they believe don’t fully reflect the intrinsic value of the
security. Value investors actively look for stocks they think the stock market is
underestimating. They believe the market overreacts to good and bad news, resulting
in stock price movements that do not correspond to a company's long-
term fundamentals. This overreaction offers an opportunity to profit by buying stocks
at discounted prices on sale.
 Growth Investing: - Growth investing is an investment style and strategy that is
focused on increasing an investor's capital. Growth investors typically invest
in growth stocks that is, young or small companies whose earnings are expected to
increase at an above-average rate compared to their industry sector or the overall
market. Growth investing is highly attractive to many investors because buying stock
in emerging companies can provide impressive returns.
 Income Investing: - Income investing strategy focuses on generating cash income
from stocks rather than investing in stocks that only increase the value of your
portfolio. There are two types of cash income which an investor can earn
(1) Dividend and (2) Fixed interest income from bonds. Investors who are looking for
steady income from investments opt for such a strategy.
 Dividend Growth Investing: - This strategy involves buying shares of companies
that pay continuous quality dividends, then letting the shares sit there unless you want
to buy more. Companies with a long history of dividend payments are more stable and
less volatile.  A dividend-paying company that experiences growth year over year are
covering their expenses and have increasing cash flow.  These companies usually
slowly increase the dividends they pay to shareholders due to their continuous growth.

 Indexing: - This type of investment strategy allows investors to invest a small portion
of stocks in a market index. Indexing offers greater diversification, as well as lower
expenses and fees, than actively managed strategies.
 Passive and Active Strategies: - The passive strategy involves buying and
holding stocks and not frequently deals in them to avoid higher transaction
costs.  Passive strategy following investors believes they cannot outperform the
market due to its volatility; hence passive strategies tend to be less risky. On the other
hand, active strategies involve frequent buying and selling. Active strategy following
investors believes they can outperform the market and can gain more returns than an
average investor would.
 Contrarian investing: - These types of strategy allow investors to buy stocks of
companies at the time of the down market. Contrarian investing is a type
of investment in which investors actively go against prevailing market patterns by
selling when others buy, and buying when most investors sell. However, investors
shouldn’t just buy stocks of any company during downtime.

Tips to consider while Investing:-

 Goal setting: - Before investing one must consider the future financial needs and
decide whether they can invest in long term or willing to go for short term
investing and how much return is expected.
 Investment Advisor: - Find a good consulting firm or brokerage firm. They will
guide and give consultation regarding where and how to invest so that you meet
your investment objectives.
 Research and Trend Analysis: Before investing in any stock one must do prior
research and get some information on past trend to get an overall idea about the
stock. This little bit of research helps in making better investment decision.
 Portfolio optimization: - Selection of the best portfolio out of the given options.
The portfolio which gives maximum return at the lowest possible risk is an ideal
portfolio.
 Risk diversification: - Always build a portfolio which is diverse and have a
combination of debt, equity and derivative this will help to decrease the level of
risk.

Investment is not a risky job if done with proper knowledge and strategy. It is very
important to have a good investment strategy. A good investment strategy helps to
build portfolio which will have more chance of success and generating good
return. From the above discussion we get to know various investing technique
which will help our client to make an easy and smooth investment decision and
generate good returns.
Q3. You are a Financial Planner. Your client Amit Advani aged 37 years and works
with a Pharma company earning Rs 18 lakhs per year. His wife Deepti, aged 34 years, is
a homemaker. They have one son Nilesh aged 7 years. The couple requires your help to
make some financial decisions. (You can make any assumptions to build up your case
further.)

a. Amit wants to buy a Pure Risk Life Insurance cover of Rs 2 crore. He is confused about
whether he should buy a ULIP, Endowment, or a Term Plan. Recommend the product best
suited for his requirement.
b. Amit and Deepti want your help to invest for Nilesh’s higher education which they
estimate would be required after 14 years.

Ans (a)

The importance of Insurance has increased nowadays as it provides risk cover

against the various types of risk. Insurance is a means of protection from
financial loss. However still there lack of awareness about insurance as people
are unaware and hesitate to pay for the contingent events. Here in the above
given case as Mr. Amit who wishes to buy an pure risk insurance plan and he
is confused on that part for which type of insurance to go for ULIP,
Endowment or term Plan so we have explained that below:-

 ULIP: - A unit linked insurance plan (ULIP) is a multi-faceted product that offers
both insurance coverage and investment exposure in equities or bonds. This product
requires policyholders to make regular premium payments. In ULIPs' money you pay
as a premium is divided between funds and risk protection. In ULIP Part of the
premiums goes toward insurance coverage, while the remaining portion is pooled
with assets from other policyholders and invested in either equities, bonds, or a
combination of both. So we can say that this insurance plan is a product that offers a
combination of insurance and investment payout in single product. Endowment plan
guarantee returns upon the insured's death or upon the insured's maturity, unit-linked
insurance plans (ULIPs) do not guarantee returns.
 Endowment Plan: - Endowment plans are life insurance policies with dual purpose.
This life insurance policy, apart from covering the life of the insured, helps the
policyholder save regularly over a specific period of time so that is able to get a lump
sum amount on the policy maturity in case policyholder survives the policy term. The
money received at maturity can be used for various short and long term financial
goals, such as a child’s education, buying a car, post-retirement goals, and more. It
also helps you protect your family financially, in case of an unfortunate event,
through the in-built life cover.
 Term Plan: - Term insurance is a type of life insurance where the insurance company
offers the coverage for a fixed term in exchange for a specific amount or premium
over a time period. . If the policyholder dies, the sum insured is paid to the nominee in
a lump sum or as monthly payments, depending on the terms of policy. For eg.
Individual buying insurance life cover of 1 crore at a premium of 500 rs . Month. Also
premium can be paid one time or in regular intervals for the complete policy tenure.
On the other hand, this insurance does not provide the same savings or wealth-
building benefits as a ULIP or endowment insurance policy but the financial security
provided by term insurance is more than ULIP or endowment plan.

Conclusion

Selection of the insurance plan is totally depends on the value for money, time
frame, future needs, time period and risk tolerance level. All the three plans
ULIP, term plan, endowment plan have their own pros and cons associated
with it. So here in the above given case Mr. amit who is young working
professional works in a pharma company and earns a decent salary of 18 lakhs
per year and as per above information he want pure risk life insurance cover of
rs 2 crore and for such amount of insurance as risk cover I think so it will be
more suitable to go for term insurance plan. As in term insurance plan
premium amount is quite low but gives huge amount of cover against risk for
the insured term. So as per the requirements of mr. Amit he should go for term
insurance plan.

Ans(b)

Investment of funds for future needs and requirement is must but before
investing one must consider the future need, the time period, risk factor. Here
in the above case amit and deepti wants to invest money for their son’s higher
education which they will require after 14 years but investing from know will
be good option.

Here to fulfill the above need amit and deepti should consider mutual funds.
They can invest a particular portion of their savings in a good portfolio of
mutual funds. A mutual fund is a type of financial vehicle made up of a pool
of money collected from many investors to invest in securities like stocks,
bonds, money market instruments, and other assets.
The portfolio of mutual funds can be divided mainly into three parts which are
equity, debt, hybrid (combination of both debt and equity).
 Equity: - An equity investment is money that is invested in a company by
purchasing shares of that company in the stock market. These shares are
typically traded on a stock exchange. The main benefit from an equity
investment is the possibility to increase the value of the principal amount
invested. This comes in the form of capital gains and dividends. At the same
time the equity investments are bit risky in nature as the price of stocks keeps
on fluctuating with market conditions so one need to properly analyze market.

Debt: - A debt fund invests in fixed-interest generating securities such as

corporate bonds, government securities, treasury bills, commercial paper, and
other money market instruments. The investment in debt fund has moderate
level of risk and interest or return is also stable throughout the period.
However the rate of return generated from debt investment is not enough.

Hybrid: - Hybrid investments are the combination of debt and equity

investments. A hybrid fund is a classification of a mutual fund or ETF that
invests in different types of assets or asset classes to produce a diversified
portfolio. Mutual funds are hybrid in nature which includes combination of
both debt and equity. The level of risk in bit high in mutual funds also the level
of return is also high in mutual funds. Hybrid equity or debt funds that seek to
balance returns and risk are known as solution-oriented schemes. Investing in
good portfolio of hybrid fund will help to generate good return and keep
balanced risk over a period.

In the above case amit and deepti they are willing to invest for higher
education of there child for 14 years it is advisable to go for hybrid fund
option the combination of both debt and equity. This will help them to
generate good return with balanced risk.

IMAGE SOURCE:- INTERNET

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