Financial Services Marketing

Christine Ennew OBE is Professor of Marketing and Provost at the University of Warwick. She has been actively involved in financial services research for most of her academic career. She has published some 100 articles in refereed journals, presented over 60 refereed conference papers and produced 4 books.   Nigel Waite is a Director of 3R Insights, an advisory organisation that helps boards of directors to deliver good outcomes to customers of financial services companies. He is also Honorary Professor of Marketing at Nottingham University Business School.   Róisín Waite is Head of Group Digital at Barclays. Róisín was one of the first to graduate from the UKs first MSc in Digital Marketing Communications.

Contents

Acknowledgements

Introduction

PART I: Context and Strategy

Chapter 1: The Role, Contribution and Context of Financial Services

1.1 Introduction

1.2 Economic Development

1.3 Government Welfare Context

1.4 Lifetime Income Smoothing

1.5 The Management of Risk

1.6 Poverty and Financial Exclusion

1.7 Mutual and Proprietary Supply

1.8 Regulation of Financial Services

1.9 A New Philosophy and Approach to Regulation

1.9.1 On the role of financial markets

1.9.2 Three major regulatory challenges

1.9.3 UK regulatory reform – a new regulatory architecture, approach, and philosophy

1.9.4 Regulatory philosophy

1.9.5 European regulatory reforms

1.9.6 Potential impact of Brexit

1.9.7 Future challenges

1.10 Summary and conclusions

Case Study 1 Micro-insurance

Chapter 2: The Financial Services Marketplace: Structures, Products and Participants

2.1 Introduction

2.2 Some Historical Perspectives

2.3 The Geography of Supply

2.4 Financial Advice

2.6 Banking and Money Transmission

2.7 Lending and Credit

2.8 Saving and Investing

2.9. Life Insurance Products

2.9.1 Life Insurance

2.9.2 Health Insurance

2.9.3 Annuities

2.10 General Insurance

2.11 Summary and conclusions

Case Study 2: Police Mutual Assurance Society Limited (Police Mutual) *

Chapter 3: Marketing Financial Services: An Overview

3.1 Introduction

3.2 Defining Financial Services *

3.3 The Differences Between Goods and Services

3.4 The Distinctive Characteristics of Financial Service

3.4.1 Intangibility *

3.4.2 Inseparability

3.4.3 Perishability

3.4.4 Heterogeneity *

3.4.5 Fiduciary responsibility

3.4.6 Contingent Consumption

3.4.7 Duration of Consumption

3.5 The Marketing Challenge

3.6 Classifying Services

3.7 Summary and Conclusions

Case Study 3: Aktif Bank - Aktif Online

Chapter 4: Strategic Development and Marketing Planning

Objectives

4.1 Introduction

4.2 Strategic Marketing

4.3 Developing a Strategic Marketing Plan

4.3.2 Situation Analysis

4.3.3 Marketing Objectives

4.3.4 Marketing Strategy

4.3.5 Market Specific Strategy

4.3.6 Implementation

4.4 Tools for Strategy Development *

4.4.1 Growth Strategies

4.4.2 Selecting the Product Portfolio

4.4.3 Competitive Advantage

4.5 Summary and Conclusions

Case Study 4: Retail banking in China

Chapter 5: Analysing the Marketing Environment

5.1 Introduction *

5.2 The Marketing Environment

5.3 The Macro-Environment

5.3.1 The Political Environment

5.3.2 The Economic Environment

5.3.3 The Social Environment

5.3.4 The Technological Environment

5.4 The Market Environment

5.5 The Internal Environment

5.5.1 Resources

5.5.2 Competences/capabilities

5.5.3 Auditing the Internal Environment

5.6 Evaluating Developments in the Marketing Environment

5.7 Conclusions

Case Study 5: Private Banking in China

Chapter 6: Understanding the Financial Services Consumer

6.1 Introduction

6.2 Consumer Choice and Financial Services

6.2.1 Problem Recognition

6.2.2 Information Search

6.2.3 Evaluation of Alternatives

6.2.4 Purchase Decision

6.2.6 Summary

6.3 Consumer Buying Behaviour in Financial Services

6.4 Marketing Responses *

6.5 Researching Financial Services Customers

6.5.1 Processes and Outputs

6.5.2 Research for product and service development:

6.5.3 Research for brand and communications:

6.5.4 Stakeholder understanding

6.5.5 Market Understanding

6.5.6 Thought leadership and research for PR

6.5.7 Social Media monitoring

6.5.8 Qualitative and Quantitative methods, techniques and tools

6.5.8 Ethical Issues

6.6 Conclusions

Case study 6: Behavioural Economics and the Financial Services Consumer

Chapter 7: Segmentation Targeting and Positioning

7.1 Introduction

7.2 The Benefits of Segmentation and Targeting

7.3 Successful Segmentation

7.4 Approaches to Segmenting Consumer Markets

7.4.1 Customer Characteristics: Customer Orientated Segmentation

7.4.2 Customer Needs and Behaviours: Product Orientated Segmentation

7.5 Approaches to Segmenting Business-to-Business Markets

7.6 Segmentation in a Digital World

7.7 Targeting Strategies

7.7.1 Undifferentiated Targeting

7.7.2 Differentiated Targeting

7.7.3 Focused Segmentation

7.7.4 Customised Targeting

7.8 Positioning Products and Organisations

7.8.1 Perceptual Mapping

7.9 Repositioning

7.10 Summary and Conclusions

Case Study 7: Entrepreneurial Spark powered by Natwest

Chapter 8: Internationalisation Strategies for Financial Services

8.1 Introduction

8.2 Internationalisation and the Characteristics of Financial Services

8.3 The Drivers of Internationalisation

8.3.1 Firm-Specific Drivers of Internationalisation

8.3.2 Macro level Drivers of Internationalisation

8.3.2 The Extent of Internationalisation in Financial Services Sector

8.4 Globalisation Strategies

8.4.1 International Strategies

8.4.2 Global Strategies

8.4.3 Multi-Domestic Strategies

8.4.4 Trans-National Strategies

8.5 Strategy Selection and Implementation

8.5.1 Which markets to enter

8.5.1 Method of market entry

8.5.1 How to market in international markets

8.6 Summary and conclusions

Case Study 8: Prudential

Part II

Chapter 9: Customer Acquisition and the Marketing Mix

9.1 Introduction

9.2 Short Term Marketing Planning

9.3 The Role of the Financial Services Marketing Mix

9.4 The Financial Services Marketing Mix: Key Issues

9.4.1 Process

9.4.2 Physical Evidence

9.4.3 People

9.5 Customer Acquisition and the Financial Services Marketing Mix

9.6 Digital Marketing and Customer Acquisition

9.6.1 Context and Convenience

9.6.2 Segmentation and Targeting

9.6.3 Managing the Process

9.6.4 Migrants, Natives and Social Media

9.6.5 Integrating On and Off-Line

9.6.6 Digital organisational structure

9.7 Customer Acquisition and Ethical Behaviour

9.8 Summary and Conclusions

Case study 9: CIC Insurance, Kenya – A marketing Mix for Micro Insurance

Chapter 10: Product and Consumer needs

10.1 Introduction

10.2 The Concept of the Service Product

10.2.1 What Customers Want

10.2.2 What organisations can provide

10.3 Islamic Financial Instruments

10.4 Influences on Product Management

10.5 Managing Existing Product Lines

10.5.1 Product Attributes

10.5.2 Product Modification/Product Development

10.6 New Product Development

10.6.1 Major innovations:

10.7 Conclusions

Case Study 10: What is a bond

Chapter 11 Communication and Promotion

11.1 Introduction

11.2 Principles of Communication

11.3 Planning a Promotional Campaign

11.3.1 Stages in Communications Planning

11.3.2 Integrated Marketing Communications

11.4 Forms of Communication

11.4.1 Advertising

11.4.2 Personal Selling

11.4.3 Publicity/Public Relations

11.4.4 Sales Promotion

11.4.5 Direct Marketing

11.5 The digital effect

11.6. Summary and Conclusions

Case Study 11: Direct Line Insurance

Chapter 12: Price and Cost to the Consumer

12.1 Introduction

12.2 The Role and Characteristics of Price

12.3 The Challenges of Pricing for Providers of Financial Services

12.4 Methods Used for Determining Price

12.1.1 Cost-Based Pricing

12.4.2 Competition-Based Pricing

12.4.3 Marketing-oriented Pricing

12.5 Price Differentiation and Preferred Lives

12.6 Price Determination

12.7 Pricing Strategy and Promotional Pricing

12.8 Impact of digital marketing on charges and pricing

12.9 Summary and Conclusions

Case Study 12: Co-op Insurance: Using technology to deliver lower premiums to young drivers

Chapter 13: Consumer Convenience and Distribution

13.1 Introduction

13.2 Channels of Distribution: Distinguishing Features

13.3 Distribution Methods and Models

13.3.1 Direct versus Indirect Distribution

13.3.1 Whether Products are Bought or Sold

13.4 Distribution Channels

13.5 Summary and Conclusions

Case Study 13 The Aviva Financial Adviser Academy

Chapter 14: Customer Relationship Management: Principles and Practice

14.1 Introduction

14.2 Drivers of Change

14.3 Customer Persistency – Acquire the Right Customers

Acquisition process characteristics

14.4 Retaining the Right Customers

14.5 Customer Retention Strategies

Advocate

14.7 Lifetime Customer Value

14.8 Digital Marketing and its Impact on CRM

14.8.1 Context

14.8.2 Customer Data Management and Analytics

14.8.3 Integrating On and Off-line for Effective CRM

14.8.4 Personalisation

14.8.5 Social CRM

14.8.6 Digital tools - CRM systems

14.8.7 Data Privacy and Cookies

14.9 Relationship Marketing in Specific Contexts

14.9.1 Relationship Marketing and the Role of Intermediaries

14.9.2 Relationship Marketing: Some International Perspectives

14.10 Summary and Conclusions

Case 14: The American Express International Loyalty Programme

Chapter 15: Service Delivery and Service Quality

15.1 Introduction

15.3 The Service Profit Chain

15.3 Defining Service Quality

15.4 Models of Service Quality

15.4.1 The Nordic Perspective on Service Quality

15.4.2 The North American Perspective on Service Quality

15.4.3 Integrating the Nordic and the North American Perspectives

15.5 The Gap Model of Service Quality.

15.6 The Outcomes of Service Quality

15.7 Service Failure and Recovery

15.8 Summary and Conclusions

Case Study 15: Nationwide Building Society – Nationwide/KPMG Nunwood Service Tracker

Chapter 16: Satisfaction, Value, Trust and Fairness in Customer Relationships

16.1 Introduction

16.2 Consumer Evaluations: Value and Satisfaction

16.2.1 Customer Value

16.2.2 Customer Satisfaction

16.3 Managing Customer Expectations

16.4 The Measurement of Satisfaction

16.4.1 Customer Satisfaction

16.4.2 Employee Satisfaction

16.5 Consumer Trust

16.5.1 The Meaning of Trust *

16.5.2 Measuring Trust: The Trust Index

16.5.3 Trustworthiness

16.5.4 How Trust is Won, Retained and Lost

16.5.5 Trust in a digital world

16.6 Treating Customers Fairly

16.7 Summary and Conclusions

Case Study 16: NTUC Income: the Orange Revolution

Chapter 17: Marketing: Culture, Challenges and Social Responsibility

17.1 Introduction

17.2 People and Culture

17.3 Product Considerations

17.4 Pricing and Value

17.5 Advertising and Promotion

17.6 Distribution and Access

17.7 Processes

17.8 Evaluating Marketing Performance

17.9 Corporate Social Responsibility (CSR)

17.10 Towards a Sustainable Future

17.11 Summary and Conclusions

Case Study 17: Consumer Perceptions of CEOs and Directors of Financial Services Companies