Topic 8 Flashcards
The marketing mix involves elements which need to be right to attract and retain customers, these elements are interdependent, what is the impact of this?
If one element is changed must consider the impact on the other factors
Each provider must find their own right balance to its prospective and existing customers, must be aware of customers and aware of competitors actions
What are the 3 other Ps which only apply to financial services providers?
People
Process
Physical evidence
Explain the element of Product/Commodity
The thing that performs the service customers need/want
Providers must have different versions of each product to suit different types of customers - must constantly review products to make sure its still relevant
Must consider competitors and find USP - require constant product development
Explain the element of Price/Cost
Interest rate / fees
Price determines how much people buy, which types of product and level of service they expect
What 4 things does the price charged for financial products depend on?
Cost of providing Demand for product Prices charged by competitors Image provider wishes to promote (Insurance price is based on risk)
Explain the element of Promotion/Communication
Process of creating awareness of a product - must then be maintained and increased
Is an ongoing activity which can be enhanced with use of a strong brand
What 3 things does good promotion include?
Describes the product
Highlights strengths
Shows advantages in relation to rivals
Explain the element of Place/Channel
Means of delivery
Customers want convenience
Most providers offer all channels
Face to Face is good for success of securing customers
What 4 factors determine delivery channels used?
Cost
Target market segment
Effectiveness
Competitors
Explain the element of People
As financial services is a people-centred business - employees must have good people skills, well qualified and trained, motivated and good attitude to customers
Good relationship helps get loyal customers
Explain the element of Process
The process of providing the service - through use of computer technology - customers do not like experiencing difficulty trying to use the phone to contact
Explain the element of Physical Evidence
Important as there is no tangible product - service cannot be experienced before delivery, so there will always be uncertainty over the product they will receive
Can be reassured by tangible evidence such as pleasant bank receptions and good feedback from other customers
What is advertising?
Promotion of products on a non-personal basis to raise awareness - aims to capture attention and interest, brand awareness and encourage purchases
Needs to be repeated and consistent
What are the 2 main reasons for advertising?
Create awareness of generic product - informative advertising
Influence people to choose a particular product - persuasive advertising - important in oligopoly
What is branding?
Name, design, logo or symbol which distinguishes product/provider - way of gaining competitive advantage and brand loyalty
What are 6 advantages of branding?
Product differentiation Effective advertising Brand loyalty Relative price insensitivity Brand extension Better targeted marketing
What is Public Relations?
A long term process by which a provider promotes a particular public image and a reputation
PR department of a company aims to create and maintain this image
What are 4 features of good PR?
Generates interest in providers
Prompts potential customers to find out more
Triggers previous customers to buy again
Reinforces firms image and reassure existing customers
In what 3 ways is PR different from advertising?
Not paid for directly, liaise with journalists to create positive news stories
Target audience is all stakeholders
Aims to influence public perception
What does a providers reputation depend on?
The publics perceptions of the customers experience and quality of service and publicity received
PR attempts to limit damage since financial crisis
What is sales literature?
All text created by a providers marketing department, often the main contact between customer and provider until they decide to buy
Also made available more detailed to IFAs so they are always well informed and up to date with new products and changes to existing ones
What is direct selling?
Sales that happen directly between the customers and provider without intervention of financial adviser
Increasing with increasing technology and changes in consumer attitudes
What is remote direct selling?
Not in the same physical space
Eliminate benefits of personal selling
What is personal direct selling?
Seller is present with buyer
What are the 6 main ways of attracting and retaining customers?
The marketing mix Customer service Reputation and brand image Loss leaders Deals and product offers Social and ethical considerations
What 5 key features of the marketing mix to help attract and retain customers
Product sold at clean and fair price
Product purchased by fully informed customer
Product delivered via suitable and convenient channel
Product designed to suit customers circumstances
Product satisfies customers needs
Customers expect a high standard of customer service and are very critical when they do not receive this, providers can measure quality by counting the number of complaints received, what are 5 types of frequent complaints?
Current account customers complain that electronic transfers and cheques take too long to clear, online server is down, overdrafts are very expensive
Savings customers are unhappy about low interest rates and not happy when introductory bonus rate is withdrawn without notice
Investment, pensions and annuities customers are unhappy about complex products, do not understand returns and think fees are too high
Customers find it hard to get loans, high arrangement fees
Insurance customers find insurers go to great lengths to avoid paying out
How does brand image and reputation lead to attracting and retaining customers?
Strong brand gains customers by building association between providers names and values which customers think providers should have (trust, reliability and service)
However, strong brand on its own will not retain customers, require a good product, fair price and high quality customer service as well, or customers will switch
How do loss leader products lead to attracting and retaining customers?
Product offers a product which is sold at below cost to bring customers in who then purchase other products which earn a profit
Attract customers which they hope will become long term repeat customers
Eg) offering advice
What are the 2 general approaches to selling?
Relationship marketing
Transactional selling
What is transactional selling?
Centres on the product rather than customer, wants to make many individual sales and close deals quickly
No attempt to create relationship, find out needs or if product is suitable
May apply this approach if believe it will develop brand awareness quicker and cheaper as it uses less human resources
What is relationship marketing?
Centred on building long term relationships - form interactive bond between provider and consumer
Sales staff trained to know clients well, sales only made once product is known to be suitable
Transactional selling appears to be more efficient due to reduced amount of time and resources used, but as short term sales are less likely to be repeated, process is not actually efficient, how is relationship market more efficient?
Although it is expensive, balances out cost with increased revenue as products are best suited to customers needs, encourages loyalty and repeat sales
What is the 80:20 rule?
States 80% of effects rise from 20% of the causes
80% of sales/profits/complaints rise from 20% of customers
Explain the 80:20 rule in terms of transactional and relationship marketing?
If 80% of sales come from 20% of customers, these customers are worth keeping
However, if in favour of transactional - firms may waste money trying to develop relationships with 80% of customers who only account for 20% of sales
