Customer acquisition strategies

and the marketing mix

Financial Services Marketing by
Ennew ． Waite

110/12/09
 Learning objectives
 understand the relationship between marketing strategy
and the marketing mix
 appreciate the differences and relationship between
annual marketing planning and the strategic marketing
plan
 explain the nature of the marketing mix as it applies to
financial services
 understand the challenges associated with developing a
financial services marketing mix

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 9.1 Introduction
 The marketing mix is a term used to describe the
marketing tools that a manager controls.
 It is important to recognize that decisions about the
marketing mix have both strategic and tactical
dimensions.
 The purpose of this chapter is to provide an overview of
the marketing mix for financial services, paying particular
attention to the way in which the marketing mix may be
used for customer acquisition.

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 9.2 Short-term marketing planning
 If the strategic marketing plan is about the setting of
long-term direction and the determination of
competitive advantage, the annual marketing plan is
about achieving a joined-up and co-ordinated approach
to achieving short-term marketing objectives.
 The conduct of the annual marketing plan comprises two
components:
 the process
 the written plan itself

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 9.2 Short-term marketing planning
 Figure 9.1 represents a sound core structure for the
ultimate output of the planning process.
Mission
A brief restatement from
Executive summary (for this plan)
the strategic marketing
Situation review (updated)
plan to ensure
SWOT analysis (updated)
consistency
Objectives (for the budget year)
Material specific to
the annual plan Product management and
development
Pricing
Marketing mix Distribution
Promotion
Internal communication
Implementation Summary activity schedule
Budget
Figure 9.1 The annual marketing plan. Accountability and evaluation

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 9.2 Short-term marketing planning
 The plan should make it clear where responsibility and
accountability lies for marketing objectives and the
successful completion of marketing-mix activities.

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 9.3 The role of the financial services
marketing mix

Chosen competitive position

Product Price Promotion Place

Target customers’ needs

Figure 9.2 Customer needs and the marketing mix.

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 9.3 The role of the financial services
marketing mix
 used to create the organization’s desired competitive
position there are two key requirements.
 1. Consistency with position.
 2. Synergy from mix elements.
 Thus, an effective marketing mix must aim for
consistency and synergy – consistency with strategic
position, and synergy from the individual elements.

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 9.4 The financial services marketing
mix: key issues
 The main differences between financial services and
physical goods were listed as:
 Intangibility
 Inseparability
 Heterogeneity
 Perishability
 Marketing activities might consider:
 Intangibility: providing consumers with physical evidence,
building trust and confidence

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 9.4 The financial services marketing
mix: key issues
 Inseparability: ensuring that staff are friendly and responsive,
processes for service delivery should be customer orientated
 Heterogeneity: standardizing service delivery processes,
encourage a high and consistent level of quality
 Perishability: automating services features, managing demand
through careful use of staff rosters or by using special price
mechanisms
 Thus, the provision of physical evidence, staff management
(people) and the systems for delivering service (process)
are all likely to be important elements of marketing
decision-making for financial services.

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 9.4 The financial services marketing
mix: key issues
9.4.1 People
 The ‘people’ factor in the marketing mix emphasizes the

important role played by individuals in the provision of

financial services.
 The people component of services marketing is

associated with personal selling which relates to product

promotion and distribution (place) elements of the
marketing mix.

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 9.4 The financial services marketing
mix: key issues
9.4.2 Process
 Process is concerned with the way in which the service is

delivered, including business policies for service

provision, procedures, the degree of mechanization etc.
 Reasons why process is important:
 1. the heterogeneity of services raises the issues of quality
management and control

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 9.4 The financial services marketing
mix: key issues
 2. service may be highly visible to the consumer and will need
to be flexible enough to accommodate potential demand
variations.
 3. the intangibility of services means that the process by
which the service is provided will often be an important
influence on the consumers’ assessment of service quality
 The main concern with process is typically in the context
of distribution, but it also has relevance to pricing
decisions.

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 9.4 The financial services marketing
mix: key issues
9.4.3 Physical evidence
 Physical evidence refers to anything tangible which is

associated with a given service.

 It is generally recognized that physical evidence can be

subdivided into two components:

 Peripheral evidence (e.g. a document wallet)
 Essential evidence (e.g. a bank branch)

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 9.5 Customer acquisition and the
financial services marketing mix
 This section focuses on the challenges which might
confront organizations when trying to manage these
elements with a view to the acquisition of new customers.
Case study 9.1 Customer acquisition at HDFC Bank
Background
 Liberalization during the 1990s paved the way for the influx of new

private-sector banks, the first of which was HDFC, launched in 1995.

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 9.5 Customer acquisition and the
financial services marketing mix
 The bank’s research had identified a significant middle-class
market, which expected a high quality of service and was willing to
pay for it.
Goal & Means
 persuade customers to switch to HDFC

 international levels of service at a reasonable price

Specific marketing mix decisions

Product
Offered a comprehensive range of banking services were
recognized as being of considerable importance.

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 9.5 Customer acquisition and the
financial services marketing mix
Price
 Offered its initial bank account with the requirement for a

minimum balance below the typical international bank, but still

higher than the public-sector.
 This ensured that HDFC had the margin to support the delivery of

superior service.
Promotions
Supports the line marketing promotion to reducing marketing
spend and the costs of acquisition.

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 9.5 Customer acquisition and the
financial services marketing mix
Place
 HDFC focused attention on the 10 largest cities in India, which
account for close to 40 per cent of the population, and
concentrated on gaining maximum market share in those areas
before expanding to other cities.
 Use its branch network and adopt self-service technology to
ensure that it met the diverse set of needs of its mid-market
customers.

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 9.5 Customer acquisition and the
financial services marketing mix
 However, not all financial services providers have been
so successful in managing the mix for consumer
acquisition.
 Historically, the financial services sector has received
considerable criticism for tending to focus on new
customer acquisition to the detriment of existing
customers.
 Care must be taken with the use of new-customer price
promotions to ensure the appropriate management of
expectations.

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 9.5 Customer acquisition and the
financial services marketing mix
 In addition to concerns about the way in which marketing
mix variables are used the specific features of the financial
services sector may create additional challenges.
 A further aspect of the mix that may be challenging in a
financial services context is place. (the channel of
distribution)
 Owing to the economics of new customer acquisition. The
profit is in the lifetime value of a new customer, and not
necessarily in the profitability of the first product
purchased.

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