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Athens University of Economics and BusinessMarketing of FinancialServices: 4 Ps of theMarketing MixPaulina Papastathopoulou, Ph.D.Lecturer in MarketingDepartment of Marketing and Communications1The Boston Consulting Group’s Growth-Share MatrixStarsQuestion Marks20%16%14%12%10%8%Cash CowDogs6%4%2%Relative Market Share0,1x0,2x0,3x0,4x0,5x1x2x1,5x4x010xMarket Growth Rate18%21

Market Attractiveness: Competitive-PositionPortfolio Classification and StrategiesInvest / growBUSINESS STRENGTHSelectivity / T ATTRACTIVENESSHarvest / divest 5.001.005.003.671.002.333Market Attractiveness: Competitive-PositionPortfolio Classification & Strategies(b) StrategiesBUSINESS STRENGTHStrongHighMedium1. Invest to grow atmaximum digestible role2. Concentrate effort onmaintaining strengthMediumINVEST TO BUILDWeakBUILD SELECTIVELY1. Specialize around limited1. Challenge for leadership2.Build selectively on strengths strengths3. Reinforce vulnerable areas 2.Seek ways to overcomeweaknessesBUILD SELECTIVELY SELECTIVITY/MANAGELIMITED EXPANSION ORHARVESTFOR EARNINGS1. Invest heavily in mostattractive segments2. Build up ability tocounter competition3. Emphasize profitabilityby raising productivityPROTECT & REFOCUSLowMARKET ATTRACTIVENESSPROTECT POSITION1.Protect existing program2. Concentrate investments insegments where profitability isgood and risks are relatively lowMANAGE FOREARNINGS1. Manage for current earnings 1. Protect position in most2. Concentrate on attractiveprofitable segmentssegments2. Upgrade product line3. Defend strengths3. Minimize investment1. Look for ways to expandwithout high risk; otherwise,minimize investment &rationalize operationsDIVEST1. Sell at time that will maximizecash value2. Cut fixed costs & avoidinvestment meanwhile42

PRODUCT POLICY5Several levels of aproduct the core benefitthe actual product: product featuresthe expected product: product promisesthe augmented product: service andsupportthe potential product: futuretransformations63

Example: Financial advice the core productReceiving advice on products and services tomeet current and future needs the actualproductImpartial advice from a reliable source theexpected productPeriodic reviews and mailing information tocustomers the augmented productAnticipate customers’ need, provide for needsbefore they arise the potential product7Benefits of brandingBranding gives the seller the opportunity to attract a loyal andprofitable set of customers. Brand loyalty gives sellers some protectionfrom competition and greater control in planning their marketingprogram.Strong brands help build the corporate image, making it easier tolaunch new brands and gain acceptance by distributors and consumers.Branding helps the seller to segment markets. Instead of Level Brothersselling a simple detergent, it offers many detergent brands, eachformulated differently and aimed at specific benefit-seeking segments.The seller's brand name and trademark provide legal protection ofunique product features, which competitors otherwise be likely to copy.The brand name makes it easier for the seller to process orders andtrack down problems.84

Branding strategies1. Corporate dominant strategies-applicable to all types of financial institutions-efficient way to promote many products-corporate identity: a way to identify physical dimension-divisional branding: to serve a separate segment of customers2. Dual branding strategies-used for mergers and acquisitions-justification: customers don’t alienate of the pre-merged organizations3. Brand-dominant strategies-focus on product-level9Tactical branding decisions1. Selecting the brand name2. Selecting the brand symbol/logo3. Registering a servicemark105

Types of brand names Corporate/house trade name (e.g. United Colors ofBenetton)combination of a corporate/house trade name withindividual product names; these are brand names withstrong company endorsement (e.g. Vodafone 60Promo, Vodafone SMS 150).combination of a common trade name with individualproduct names (e.g. Nescafé Classic, Nescafé Select,Nescafé Gold Blend of Nestlé)Induvidual brand names11Guidelines associated withbrand name success Use many vowels that makes its pronunciation easier (e.g. IKEA).Brand names must preferably be short (e.g., FIAT).Brand names should not carry negative or offensive meanings(e.g., Seat’s Malaga series could not be used in the Greek marketbecause it very much sounds like an offensive Greek word).Artificial brand names ensure that they are not used by anothercompany (e.g., KODAK).Brand names may describe certain product characteristics or uses(e.g. Everyday).Brand names may suggest the impact they have on people (e.g.EasyJet).Brand names should not be similar to competitive brands foravoiding customer confusion (e.g., B.F. Goodrich and Goodyeartire manufacturers usually cause confusion).126

Selecting the brandsymbol/logo Visual expression of a brandAppropriate vehicle for differentiation,brand awareness and loyalty.Successful logos convey the values of thefinancial service13Types of brand symbols Corporate names or trade names rendered in adistinctive typographic form (e.g., Coca-Cola,Mars)Visual devices divorced from the corporate name,but with a close and obvious association with thename or the activities of the business (e.g., the“dough boy” of Pillsbury).Abstract logos that have no obvious relation to thecorporate or product name (e.g. the Peugeot lion).Instead, such logos reflect the brand’s values (i.e.,Peugeot vehicles have the strength of a lion).147

Registering a servicemark Word, phrase, symbol or design, or a combinationof them, that identifies and distinguishes thesource of the services of one party from those ofothers.Not compulsory by lawAvoidance of commercial and legal risksServicemarks are followed by the symbol SMThe sign (“registered”) can only be used onlyafter the mark is actually registered, and not whilean application is pending.15Financial institutionscan register: A national servicemark. The standard procedureinvolves filing an application to the Ministry ofCommerce or Trade.A European servicemark. An application should besubmitted to the Office for Harmonization in InternalMarket (O.H.I.M.), which is based in Alicante, Spain.An international servicemark. An applicationshould be filed to the World Intellectual PropertyOrganisation (W.I.P.O.) based in Geneva,Switzerland (valid in more than 150 member states,except the U.S.A.).168

Co- branding strategy A co-branding strategy is followed when aproduct’s brand bears two or more well-knownbrand names.Aim: taking advantage of the strong image of thecooperating company in a specific market.Citi/AAdvantage VISA Gold Card which wascreated with the cooperation between Citibankand American Airlines, and particularly the bank’sVISA gold card with one of the most popular travelreward programmes in the world - the AmericanAirlines AAdvantage programme.17Cause- branding A specific “cause” is supported by the profitseeking financial services company, usually byoffering a percentage of the product’s sales to thenon-profit company.Cause-branding is common in credit cards.W.W.F. Eurobank Visa is cosponsored by theWorld Wild Fund and EFG Eurobank Ergasias-aleading Greek bank. EFG Eurobank Ergasiasoffers 1,5 Euros for every annual subscription,while 3 Euros are given to W.W.F. Hellas for everytransaction made with the card.189

PRODUCT DEVELOPMENTAIMS OF FINANCIAL SERVICE DEVELOPMENTReducing costs19High Increasing sales to the existing market increasing cross-selling attracting core accounts from competitors Developing products for sale to competitors’customers independent of the core account10%20%New-to-the-worldproductsNew product lines26%Revisions to/improvements inexisting products26%Additions toexisting product lines11%Low Attracting consumers from outside the present marketNewness to the company 7%Cost reductionsRepositioningLowHighNewness to the market10

Service innovativeness categoriesMax.New to the marketservicesINNOVATIVENESSNew to the companyservicesNew deliveryprocessesServicemodificationsService lineextensionsServicerepositioningsMin.21The New-Product-Development Decision ProcessIdentify:Coordinate,stimulate, and 1.Companyfactorssearch for ideas2.Their weightsin externalenvironment andamong tsYESPrepare:Propose:1.Market analysis1.Price2.Distribution 2.Cost s2.Consumerpreference tests3.Branding4.PackagingYESGo intolimitedproduction,prepareadvertisingYESBuy equipmentand go into fullproduction anddistributionYESLayfutureplansYES1. IdeagenerationIs theparticularidea worthconsidering?NO2. IdeascreeningIs the productideacompatiblewith eptdeveloping& testingCan we find agoodconcept for theproduct thatconsumerssay theywould try?4. MarketingstrategydevelopmentCan we find acost-effective,affordablemarketingstrategy?5. BusinessanalysisWill thisproductmeet ourprofitgoal?6.ProductdevelopmentHave wedeveloped aproduct thatIs soundtechnicallyandcommercially?7. MarkettestingHaveproductsales metourexpectation?8.CommercializationAre product salesmeeting ourexpectations?NONOYESYESNONONONOWould it help toShould we send themodify our productidea back fororproductmarketing program?development?NONODROP2211

New service development model (1)MarketingObjectivesFormulation of new service objectives and strategyInternalSourcesIdea generationEnvironmentalAnalysisExternalSourcesIdea screeningCustomerContactPersonnelConcept developmentProspectsConcept testingBudgetDevelopmentBusiness analysisMarketAssessmentProject authorisation23New service development model (2)Service design and testingOperationsPersonnelProcess and system design andtestingMarketing programme design andtestingAllPersonnelUsersUsersPersonnel trainingService testing andpilot runUsersTest marketingFull-scale launchPost-launch review24Source: Scheuing and Johnson (1989)12

Key differences between new productsand new services Intangibility: Simultaneous production & consumption: Clients buy both the service outcome as well as the service experience.Company-client interface is critical for successHeterogeneity: Risk of haphazard development process (skipping steps)Risk of new service imitationAbsence of a physical prototype to testDifficulties in service evaluation-Physical clues are importantDifficulties in determining actual cost of new servicePossible customer perceptions of inconsistency, unreliability and purchase riskNeed for tailoring service to customer needsPerishability: Possible over- or under-capacity problems.Need for service line additions that will make use of existing operating anddelivery systems during periods of low demand and/or offer alternate, peak loadversions of a service when the company is strapped to capacity25Idea generation The ideas can be based on customers' needs,solutions to customers' problems, inventors'cognitive processes, an extensive marketresearch and recent market trends. Only a smallproportion of ideas generated at this stage cansurvive through the long new financial productdevelopment process, a major characteristic of aneffective idea generation is that a wide variety ofideas from a wide variety of sources need to beconsidered.2613

Idea screening,development and testing It is one of the key new financial productdevelopment activities that banks use toreduce the risks and uncertaintiesassociated with new financial products.This way potentially successful newfinancial product ideas are checked.27Tips for idea screeningIn order to identify the most important criteria for evaluating a newproduct idea, a market study can be very useful. Gatheringinformation about: What do the customers want to buy?What choice criteria do the customers use?Where do customers buy similar products?How much money are customers willing to pay for the product?How often do customers plan to buy the product?2814

Evaluating a Market Opportunity in Terms of theCompany’s Objectives and ResourcesIs the marketIs the marketopportunityopportunitycompatible withcompatible withcompany objectives ?company resources ?YESProfitobjectiveYESYESYESYESSales volume Sales growth Customer goodwillDoes companyhave ONONOYESDoes companyhave thenecessaryproduction& marketingknow-how ?NOYESDoes companycapability ?NOYESMove to next stagehave thenecessary distributionNOYESNOYESCan it beCan it beCan it beCan it beobtained at aobtained at aobtained at aobtained at areasonable cost ?reasonable cost ?reasonable cost ?reasonable cost ?NONONO29Scoring model for ideascreeningScreeningcriterionScoreWeight factorWeighted scoreMarket size50.31.5Difficulty of serviceimitation60.21.2Existence ofcompetitiveservices70.32.1Specialized Humanresourcesrequirements20.10.2Service fit withexisting marketsserved80.10.8Total score5.8Note:Score and weighted score ranges from 1-10Weighted factors sum up to 1.0Weighted scores 1-4: idea rejected, 4.1-6: idea reconsidered, 6.1-10: idea accepted3015

Screening criteria(a).Economic performance / Financial Potential:assessmentof the project’s market potential;expected sales growth, market growth and marketshare; ROI; and probability of success).(b).Corporate/Internal Synergy: utilisation of thecompany’s experiences, capabilities, and alreadyestablished marketing facilities).(c).Technological Synergy / Production-DesignSynergy: utilisation of current servuctionfacilities, methods and design tuniquenessandsuperiorityachievingacompetitive and/or technological edge.31Marketing strategydevelopment This include following: Description of the target market, its size, structureand behavior, planned positioning, sales, marketshare and profit goals for the first