Marketing of Financial Services

Marketing of Financial Services
CHAPTER 1
INTRODUCTION
The forces of deregulation, advancing technology and
general trend towards globalisation have vastly increased the
competitive pressures within the financial services market that
has in turn affected both the structure and operation of financial
service providing firms like banks.
Banks are providers of financial services, financial
intermediaries and key participants in a nation's payment system.
As such banks play a major role in the economy and in the
financial well being of a nation. In India since 1992,
deregulation, technology, and aggressive competition fostered
more changes in the banking industry than it has experienced in
its entire history. Precisely because of competition, providing
financial services in an able manner requires an excellent
marketing orientation.
Banks now operate in a situation of keen competition in
their financial service activities, whether it is canvassing of
deposits, extending credit line or in selling ancillary services.
With the liberalization of the banking sector and entry of more
players, banks need to become market oriented with new and
innovative schemes, at competitive prices available at the place
the customer needs them and delivered with efficiency and
quality of service
Role of Marketing
2

The key objective of an organizations marketing efforts is
to develop satisfying relationships with customers that benefit
both the customer and the organization. These efforts lead
marketing to serve an important role within most organizations
and within society.
The organizational level, marketing is a vital business
function that is necessary in nearly all industries whether the
organization operates as a for-profit or as a not-for-profit. For the
for-profit organization, marketing is responsible for most tasks
that bring revenue and, hopefully, profits to an organization. For
the not-for-profit organization, marketing is responsible for
attracting customers needed to support the not-for-profits
mission, such as raising donations or supporting a cause. For
both types of organizations, it is unlikely they can survive
without a strong marketing effort.
Marketing is also the organizational business area that
interacts most frequently with the public and, consequently, what
the public knows about an organization is determined by their
interactions with marketers. For example, customers may believe
a company is dynamic and creative based on its advertising
message.
At a broader level marketing offers significant benefits to society.

These benefits include:
Developing products that satisfy needs, including products that
enhance societys quality of life

Creating a competitive environment that helps lower product prices
Developing product distribution systems that offer access to products
to a large number of customers and many geographic regions
Building demand for products that require organizations to expand
their labour force
Offering techniques that have the ability to convey messages that
change societal behaviour in a positive way (e.g., anti-smoking
advertising)
Objective of Marketing
The main objective of marketing may be mentioned below:
1. Creation
of
demand
and
securing
consumers
satisfaction:
4

Marketing is consumer oriented activity. Marketing tries to
create demand of it is product through advertising and sales
promotion measures. Consumers satisfaction is the ultimate end
of all business activity. The business cannot last long without
consumers satisfaction. The potential growth of the company is
possible, if consumers are satisfied. Business has its own profit
motive. Earning is directly related to sales, which is affected by
consumers satisfaction.
2. Retaining reasonable market share:

Survival of the enterprise depends upon capturing reasonable
share of the market. Marketing helps the enterprise in positioning
itself firm in the market. The success of marketing depends upon
capturing more share of the market.
3. Building goodwill:
The competent and capable marketing management sells
quality product at reasonable price and thus goodwill of the
enterprise is built. Marketing adopts various image building
activities by popularizing products at convenient outlets.
4. Profitable sales volume:
Marketing management refers to all business activities, which
are consumer oriented. It is the sincere effort of marketing
management to maximize the profit of the company. As profit is
directly related to sales, so the marketing management to
maximize the profit of the company. As profit is directly related
to sales, so the marketing management tries to increase its sales
by
market
development,
product
development,
market
penetration and diversification. The management looks for the

opportunities and tries its best to avail of then opportunities. It is
the duty of the market management to undertake profitable
operation and maximize the profit of the business.
5. Service to the social organisations:
5

Social responsibility must be assumed by the business. These
days business is assumed to have a social outlook, so it must earn
its profit by rendering service to the following section:
(a) Employees:
i. Payment of fair wages.
ii. Providing job security.
iii. Scientific selection and training
iv. Human treatment.
v. Promotional avenues.
(b) Consumers:
i. Producing sufficient quantity of goods and supplying at
ii.
reasonable price and appropriate place

Supplying pure, useful and unadulterated goods.
CHAPTER 2
EVOLUTION OF MARKETING CONCEPTS
1. The Exchange Concept:
Trade has existed since man was able to produce a surplus.
The first kind of this trade was called barter system. It means
exchanging goods with one another. During the 1800s the world
was facing industrial revolution. People were shifting from
agricultural to industrial products, their income was increasing
and they demanded new products. The products had a
commanding position since whatever produced, was demanded
and consumed by the customer.
2. The Production Concept:

6

This concept is an oldest of the concept in business. It holds
that consumer will prefer products that are widely available and
inexpensive. Managers focusing on this concept concentrate on
achieving high production efficiency, low costs, and mass
distribution. They assume that consumers are primarily interested
in product availability and low prices. This orientation makes
sense in developing countries, where consumers are more
interested in obtaining the product than in its features.
3. The Product Concept:

This orientation holds that consumers will favour those
products that offer the most quality, performance, or innovative
features. Managers focusing on this concept concentrate on
making superior products and improving them over time. They
assume that buyers admire well-made products and can appraise
quality and performance. However, these managers are
sometimes caught up in a love affair with their product and do
not realize what the market needs. Management might commit
the better-mousetrap fallacy, believing that a better mousetrap
will lead people to beat a path to its door.
4. The Selling Concept:

This is another common business orientation. It holds that
consumers and businesses, if left alone, will ordinarily not buy
enough of the selling companys products. The organization
must, therefore, undertake an aggressive selling and promotion
effort. This concept assumes that consumers typically show
buying inertia or resistance and must be coaxed into buying. It
also assumes that the company has a whole battery of effective
selling and promotional tools to stimulate more buying. Most
firms practice the selling concept when they have overcapacity.
Their aim is to sell what they make rather than make what the
market wants.
7

The selling concept starts with the seller and its focus is on
existing product, it being seller-oriented. The company believes
in aggressive selling and other promotions. Customer value and
satisfaction are no concern for the seller. The firm produces the
products first and then figures out ways to sell and make profits.
Different company department operate without coordination
5. The Marketing Concept:

This is a business philosophy that challenges the above
three business orientation. Its central tenets crystallized in the
1995s. It holds that the key to achieving its organizational goals
(goals of the selling company) consists of the company being
more effective than competitors in creating, delivering, and
communicating concept rests on four pillars: target market,
customer needs, integrated marketing and profitability.
Marketing orientation starts with the customer and the
company strives to learn customer needs and wants. Develops
appropriate products or services to satisfy the customer. Business
is viewed as a customer need satisfying activity. All departments
coordinate their activities and the focus is on customer needs.
Profits are an outcome of doing the job well by the company. It
requires reliable company wide information system and
maintains it. All departments are responsive to informational
inputs. Everybody understands the critical role played by
marketing, a fact visibly demonstrable when the head of
marketing is part of top management
6. The societal Marketing Concept:

This concept holds that the organizations task is to
determine the needs, wants, and interest of target markets and to
deliver the desired satisfaction more efficiently than competitors
(this is the original Marketing Concept). Additionally, it holds

that this all must be done in a way that preserves or enhances the
consumers and the societys well-being.
This orientation arose as some questioned whether the
Marketing concept is an appropriate philosophy in an age of
environmental deterioration, resource shortages, explosive
population growth, world hunger and poverty, and neglected
social services.
7. The Relationship Marketing Concept:

Relationship marketing is changing the way marketers use
traditional media channel to build brand image and awareness.
Marketers are not just re-allocating a budget between existing
media choices. The aim is to build relationship instead of a
onetime sale, which is termed as a transaction.
With more companies turning into relationship, marketing
more money is being funnelled into proprietary media for
communicating directly with consumers. Relationship marketing
centres on developing an on-going relationship with consumers
across a family of instead products and services. Its purpose is to
build a long-term bond between the company and consumer.
CHAPTER 3
FINANCIAL PRODUCT IN INDIA
Financial products refer to those instruments that help you
save, invest, get insurance or get a mortgage. The major types of
financial products are:
1. Shares and Stocks:

These represent ownership of a company. While shares
are initially issued by corporation to finance their business needs,
they are subsequently bought and sold by individuals in the share
market. They are associated with high risk and high return.
Returns on shares can be in the form of dividend payouts by the
company or profits on the sales on shares in the stock market.
Shares, stocks, equities and securities are words that are
generally used interchangeably.
Equities are a type of security that represents the
ownership in a company. Equities are traded (bought and sold) in
stock markets. Alternatively, they can be purchased via the Initial
Public Offering (IPO) route, i.e. directly from the company.
2. Bonds:
They are issued by companies to finance their business
operations and by governments to fund expenses like
infrastructure and social programs. Bonds have fixed interest
rates, making the risk associated with them lower than that with
shares. The principal or face value of bonds is recovered at the
time of maturity.
Bonds are fixed income instruments which are issued
for the purpose of raising capital. Bonds issued by the
Government carry the lowest level of risk but could deliver fair
returns.
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3. Treasury Bills:
These are instruments issued by the government for
financing its short term needs. They are issued at a discount to
the face value. The profit earned by the investor is the difference
between the face or maturity value and the price at which the
Treasury bill was issued.
4. Options:
Options are rights to buy and sell shares. An option
holder does not actually purchase shares. Instead, he purchases
the rights on the shares.
5. Mutual Fund:
These are professionally managed financial instruments
that involve the diversification of investment into a number of
financial products, such as shares, bonds and government
securities. This helps to reduce an investors risk exposure, while
increasing the profit potential. This investment avenue is popular
because of its cost-efficiency, risk-diversification, professional
management and sound regulation. You can invest as little as Rs.
1,000 per month in a mutual fund.
A mutual fund allows a group of people to pool their
money together and have it professionally managed, in keeping
with a predetermined investment objective. The portfolio
manager trades the funds underlying securities, realizing a gain
or loss, and collects the dividend or interest income. The
investment proceeds are then passed along to the individual
stocks
6. Certificate of Deposits:
Certificate of deposits (or CDs) are issued by banks,
thrift institutions and credit unions. They usually have a fixed
term and fixed interest rate.
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Investing in bank or post-office deposits is a very
common way of securing surplus funds. These instruments are at
the low end of the risk-return spectrum.
7. Annuities:
These are contract between investors and insurance
companies. Wherein the latter makes periodic payments in
exchange for financial protection in the event of an unfortunate
incident.
8. Insurance:
A contract in which one party agrees to pay for another
partys financial loss resulting from a specified event (for
example, a collision, theft, or storm damage).
9. Banking:
Banks
are
financial
intermediary
institution
for
receiving, lending, and safeguarding money as well as

conduction other financial transactions. There are several types
of banks: nationalized banks, foreign banks, private banks, cooperative banks, agricultural credit unions, small industries
development banks and investment banks.
CHAPTER 4
FUNCTIONS OF MARKETING
This function involves the transfer of ownership of goods
from producers to the users of goods. It involves:
1. Buying and assembling:

Buying is the first step of marketing. In case of
manufacturing concerns, raw material is purchased and trading
concern purchase finished goods, buying is marketing function,
because it refers to decision-making by marketing management
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as to the time, quantity, quality, price and sellers goods to be
bought. Goods may also be assembled or collected from different
sources and made available to the users.
2. Selling:
It is a process, whereby goods and services flow finally to
the consumers. Selling function involves:
(a) Planning production of need based goods.
(b) Discovery of the market for goods and sales promotion for creating
demand.
(c) Salesmanship, advertising and sales promotion for creating demand.
(d) Determining terms of sales and price, quantity, quality, nature of
packing and delivery etc.
(e) Transfer of title and possession goods. Selling creates demand for
products.
3. Physical supply of goods:

Marketing management has to decide about the
distribution of goods. This function involves:
(a) Transportation:
Transportation facilities the transfer of products from one to
other place. It reduces the distance between the producers and
consumers. These days the business uses road, rail, water and air
transport for acquiring goods and also for distribution of goods.
Marketing management will have to take into consideration of
goods. Transport plays an important role in localizing the
industry and the nature and type of goods to he produced.
(b) Warehousing:
There is wide gap between the production and actual sales
of goods. This is why marketing management is required to make
necessary arrangement of storing the raw material and finished
goods.
4. Transfer of Ownership and Products:

13

It involves the following function which facilitates the
transfer of goods and ownership:
(a) Product planning and development:
Effective product planning anticipates the wants and
expectations of the consumers and develops the accordingly. It
requires improvement in the existing product and development of
the new product. Decision regarding size, design, colour,
packaging, quality etc. have to be reviewed from time to time.
The policy of product differentiation and highlighting the unique
and novel features of the product should be adopted. The
enterprise should always he prepared to produce goods to suit the
ever changing needs to the customer.
(b) Standardizing, grading branding and labelling:
Standardizing is the process of making goods perfectly
identical to the model product. Standardizing and grading make
goods easily marketable. In case of standardization, the product
contains certain desirable qualities like durability, safety, utility,
and special features such as design, weight, colour and size.
Standardization facilitates the purchasing and selling of the
product. Goods are sold by description. In India ISI mark issued
by the Bureau of Indian standard guarantees the quality of the
product. In case of grading, product into different classes of
uniform characteristics. Grading is adopted generally in food
rains, cotton, tobacco, fruits, apples, mangoes, minerals etc.
Fixing and securing remuneration prices from the product is the
objective of grading.
(c) Advertising and sales promotion:
It creates demand for goods among new customers can
sustain the demand for goods among existing consumers.
Promotion
Includes all the activities of the manufacturers to influence the
behaviours of buyer through communicating. It is the process of
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communicating, persuading and motivating consumers. Sales
promotion refers to those activities which supplement both
selling and advertising, displays, demonstration and exposition. It
is a form of mass communication.
CHAPTER 5
MARKETING APPROACHES ADOPTED BY
BANKS
Marketing strategies play a very important role in
determining the growth of the financial services industry.
Various marketing strategies adopted by the major financial
service providers like banks and are discussed below:
1. Banks:
The marketing and distribution strategies of banks are
different in urban and rural areas due to diverse demographic and
socioeconomic nature of these markets. Private Banks are mostly
concentrated in urban areas due to higher income, better
infrastructure, higher investor base and concentration of
commercial activities in the urban areas of the country. The
distribution channel used by such banks includes bank branches,
ATMs, internet banking, phone banking, direct selling agents,
call centres, etc.
The distribution networks developed by public banks in
urban as well as rural areas are a result of policy measures due to
which the number of public sector bank branches is higher as
compared to private or foreign banks. Private sector banks are
also penetrating into the rural areas by using the non-branch
delivery systems like the Business Facilitator (BF) model or
15

Business Correspondent (BC) model proposed by RBI in 2006.
Under the BF model, banks utilize the network of intermediaries
such as creating awareness and educating on the financial
products, collecting and processing information of
Borrowers, selling banking products and financial services to
rural household, etc. The activities in a Business Correspondent
model include all those of the BF model and further include
disbursing small value credit, etc. Intermediaries under these
models have knowledge about the local population and provide
feedback about the requirement of the local population. As the
local population has trust in these intermediaries it is possible to
cross-sell various products.
Cross-selling helps in customer retention, reduces customer
acquisition costs. It also benefits the customer through fair prices
for the products, easier processing and customized products. The
usage of such non branching delivery channel has been very less.
However, with rising incomes in the semi urban and rural areas,
there is further scope for private banks to adopt such nonbranching delivery models. In addition to the branch and nonbranch delivery system adopted respectively by public and
private sector banks; banks also use simple-to-use cash
dispensing and collecting machines similar to ATMs which have
operating instructions in vernacular language too.
Banks have also initiated credit plus services such as
setting up of rural training centres for small enterprises, farmers
clubs, knowledge centres, credit counselling centres for
educating the semi-urban and rural population with respect to
minimizing yield risk and price risk in agriculture. This, further,
leads to lower lending rates and lower credit risk.
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CHAPTER 6
MARKETING OF FINANCIAL SERVICES
1. India:
India has a diversified financial sector, which is
undergoing rapid expansion. The sector comprises commercial
banks, insurance companies, non-banking financial companies,
co-operatives, pension funds, mutual funds and other smaller
financial entities. The financial sector in India is predominantly a
banking sector with commercial banks accounting for more than
60 per cent of the total assets held by the financial system.
India's services sector has always served the countrys
economy well, accounting for about 57 per cent of the gross
domestic product (GDP). In this regard, the financial services
sector has been an important contributor.
The Government of India has introduced reforms to
liberalise, regulate and enhance this industry. At present, India is
undoubtedly one of the world's most vibrant capital markets.
Challenges remain, but the future of the sector looks good. The advent
of technology has also aided the growth of the industry. About 75 per
cent of the insurance policies sold by 2020 would, in one way or
another, be influenced by digital channels during the pre-purchase,
purchase or renewal stages, as per a report by Boston Consulting
Group (BCG) and Google India.
2. United State of America:

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Financial markets in the United States are the largest and
most liquid in the world. In 2014, finance and insurance represented
7.2 percent (or $1.26 trillion) of U.S. gross domestic product.
Leadership in this large, high-growth sector translates into substantial
economic activity and direct and indirect job creation in the United
States.
Financial services and products help facilitate and finance the
export of U.S. manufactured goods and agricultural products. In 2011,
the United States exported $92.5 billion in financial services and
had a $23.0 billion surplus in financial services and insurance trade
(excluding re-insurance, the financial services and insurance sectors
had a surplus of $59.5 billion.) The financial services and insurance
sectors employed million people in 2014. The securities subsector of
the industry shows great potential for employment growth, with a 12
percent increase expected by 2018. According to the U.S. Department
of Labor, 888,600 people were employed in the securities and
investment sector at the end of 2014.
Investment in the U.S. financial services industry offers
significant advantages for financial firms. In 2012, at least 132 of
Fortunes Global 500 companies have chosen to locate their
headquarters in the United States to take advantage of its creative,
competitive, and comprehensive financial services sector. The
industry offers the greatest array of financial instruments and products
to allow consumers to manage risk, create wealth, and meet financial
needs.
3. United Kingdom:
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The
financial
services
sector
includes
banking,
insurance, securities dealing, derivatives and fund management.

Related professional services include legal services, accounting
and management consulting. The UK is the world's leading
centre for cross-border financial and related professional
services. London is core to the UK's leading position, but other
cities such as Edinburgh and Glasgow in Scotland; Birmingham,
Bristol, Leeds, Liverpool, Manchester, Norwich, Reading and
Sheffield in England; Cardiff in Wales; and Belfast in Northern
Ireland are also important financial centres.
The UK has the fourth largest banking sector globally,
the third largest insurance sector, the second largest fund
management industry and the second largest legal services sector.
The UK's position in many global wholesale financial markets
has strengthened over the past decade. Today, London and the
wider UK have the leading share of trading in many international
financial markets such as foreign exchange trading (41% of the
global total), OTC derivatives trading (49%), cross-border bank
lending (17%) and international insurance (22%). The UK is also
the leading European centre for investment and private banking,
hedge funds, private equity, exchange traded derivatives and
sovereign wealth funds.
Financial and related professional services also help the
wider economy and facilitate people's everyday lives. 90% of
households purchase at least one insurance product, UK fund
manager help protect and grow 4.0 trillion in financial assets,
mortgages help home ownership for 90% of the population and
there around 9,000 bank branches in the UK.
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4. China:
Due to Chinas historic economic expansion in the last
two decades, capital is no longer scarce companies are looking
for more sophisticated ways to manage their financial dividends
and the consumer demand for financial services is on the rise.
This has resulted in a dramatic increase in market size
for financial services of all kinds. Financial intermediation,
essentially the sum total of deposits and loans, totalled
approximately RMB1.77 trillion, or approximately US$280
billion, in 2009. At the end of 2010, total Chinese banking assets
topped RMB94.3 trillion (US$15 trillion), up 20 percent from the
previous year. In 2010, China produced US$5.6 billion in
investment-banking revenue the largest in Asia. Chinas total
insurance premium volume has grown RMB160.9 billion (US$25
billion) to RMB1.45 trillion (US$225 billion).
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Chinas focus on developing its financial services
market has driven foreign direct investment in financial services
which increased 122 percent from 2007 to 2010. This growth has
the potential to create tremendous opportunities for U.S. banks,
investors and insurance providers. Am Cham Shanghai member
companies are focused on accessing this growing market and in
fact have taken a lead role in Chinas financial service market
ranking second in financial service exports to China behind
Japan.
U.S. financial services play a key role in the larger
effort to increase U.S. service exports, an area where the U.S. has
significant competitive advantages, and achieve the objectives of
the National Export Initiative (NEI)
Marketing of Bank
1. India:
The Indian banking system, by habit and tradition,
considered deposit growth as the business objective and other
parameters
such
as
productivity,
profitability,
customer
satisfaction, etc. were considered less important. In view of the

competitive surroundings in which a bank is compelled to
function, there is need for formulation of a strategic action plan
for its marketing efforts. A marketing strategy, in general, is a
systematic, appropriate and feasible set of concepts and actions
through which the institution strives to achieve its goal of
customer satisfaction and profitable survival. Strategy should be
designed after taking into account the strengths and weaknesses
of the organisation. For example, a bank or branch with clientele
from various segments could think of market penetration by
offering the existing range of services to existing customers. On
the other hand, a bank which is having expanding business
through new branches or branches which are not facing acute
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competition could think of Market Development by offering
the existing services to new customers. However, the real
marketing challenges arise from the institutions capability to
design new product range for their customers of various
segments. The strategy, therefore, lies in increasing the client
base and consolidating the relationship with existing and new
clients through existing or newly developed products.
The operational aspects of strategies for marketing
contain actions such as development of Relationship Banking,
designing of effective delivery system, ensuring customeroriented services and modifying the system into a personal
selling organisation. In western banking, officials assigned the
job of personally contacting the customers and offering the
services at doorsteps had been able to make a significant impact
on the development of business for their organisations. The
importance and role of personal selling and customer contacts in
the marketing efforts of a banking institution stem from the
success of such efforts in many banking institutions all over the
world.
The implementation of the strategies is as crucial as its
design in ensuring successful marketing. The communication of
the adopted strategies to different tiers of the institution and
ensuring of its proper understanding by personnel at all levels is
essential for successful implementation of the strategies. The
communication becomes difficult in organisations which have
substantial branch network spread over a large geographical area.
The field staff at the branch level should be trained to implement
the strategies after modifying them to suit the environment in
which they are operating. The knowledge of the local
environment, demographic features and cultural aspects is an
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essential requirement for the field staff involved in marketing
efforts for the organisation.
2. United State of America:

The middle market has always represented a critical
client base for US banks; through over the last decade some have
focused their cash-management services more on large
companies. With these customers proving increasingly difficult to
serve profitably, its time to pay renewed attention to the middle
market companies with $40 million to $500 million in annual
revenues where growth is stronger and margins look more
attractive.
Historically, middle-market bank customers have been
unwilling to incur the administrative cost of switching to a new
institution, even when they were dissatisfied with their present
service. McKinsey, however, has identified critical moments
when banks can establish a new cash-management relationship
with them. To take advantage of these evergreen opportunities,
Banks must overcome a number of internal sales and service
challenges. Doing so will require better low-cost service,
segmented product and service offerings, world-class account
planning, and revamped sales organizations. These moves can
increase
banks
revenues
from
middle-market
cash
management by 10 to 12 percent in just 18 months.

Cash-management revenues from the middle market,
amounting to some $16 billion a year, are growing by 3 to 5
percent annually. By contrast, revenues from the large corporate
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sector are growing by about 1 percent. Banks active in the middle
market show that its margin are higher partly because smaller
companies have less negotiating leverage and partly because they
are less likely to sweep their relatively small balances from
noninterest-bearing accounts into interests-bearing products.
These small numbers add up to a profitable business.
Middle-market companies are interesting not only
because of their growth and margin potential but also because
they increasingly desire sophisticated solution to their cashmanagement needs. In this segment there is growing demand for
services such as remote capture and payables automation.
Moreover, middle-market CFOs, unlike counterparts at
large companies, usually cant draw on in-house capabilities to
meet all their needs internally. Banks thus have new
opportunities to sell more value-added products.
Timing is easier to address. The opportunity is
especially ripe at three key moments. The first comes when a
customers bank merges: many middle-market customers seem
prepared to contemplate change if they think that the integration
process will be painful. The second opening occurs when a
company expands rapidly, whether by acquisition or organic
growth. Companies that move beyond the small-business stage
may quickly find them facing cash-management needs their
existing banks cant provide. The third opportunities comes when
a customers leadership team (especially the CFO) changes, and
the new regime wishes to make its mark. One way of doing so is
to initiate a new financial-services relationship
Devising a compelling and well-targeted offer is more
daunting than offering it at the right time. In our experience, four
factors can make it harder for a bank to meet the demands of
middle-market customers. The first concern their expectations of
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service and value. Second, banks too often overlook the nuances
of the middle market, whose demand vary markedly by
behaviour, size, and sector.
Third is account planning? Fourth is organizational
dilemma, arising mainly from the traditional split between
commercial-leading and cash-management operations. Although
some institution have made progress on this front, the lead
relationship manager at many banks still focuses on lending
products at the expenses of cash-management ones.
To attract and retain middle-market customers, banks
follow these marketing practices:
(i)
Middle-market companies need extra support
when they create new banking relationship- for
example, when a bank makes a first sale to such a
customer or cross-sells products to an existing
(ii)
customer.
The bank should have a single contact point to
(iii)
resolve problems.
The customer service associate must either solve
problem on his or her own or refer the customer
to someone else in a clear hierarchy of problem
(iv)
solvers, not a chain of intermediaries.

The customer must always have the sense of
dealing with a single institution rather than a
collection of disjoined processes that fail to
(v)
communicate.
To provide creative tools that makes it easier for
new customer to change banks or add new
services as part of an existing relationship. For
example many banks have developed a software
package that automatically converts a new
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customers data from the old file format to the
(vi)
new one.
Banks must recognise, above all, that middlemarket treasury officers have less time and fewer
resources for cash management than their peers in
larger organization. The letter have specialized
finance staffs with different needs and work
styles, whereas the financial controller of a
middle-market company typically has to do
everything him- or herself.

(vii) This brings in the need for a well-designed,
intuitive, and well-integrated online portal, similar
to the offering of a good personal bank but with
more features and flexibility. Many banks offer
electronic products like remote cheque capture,
electronic data interchange, the outsourcing of
payables, and payroll cards.
(viii) Banks that provide the right loan at the right time
(ix)
will tend to win more clients.

Relationship managers should be rewarded for
cross-selling cash-management products. 10 to 20
percent of their bonuses can be based on such
sales. Equally important, their work must be
judged by not only the initial purchase but also
the actual use of the product, so that sales teams
are more likely to sells customers the right one.
(x)
While the size of an individual middle-market

account may not justify continuing high-level
product support, banks should leverage their
experts more effectively. When cash management
is a customers primary need, banks should
26

consider assigning the entire responsibility for the
relationship to a cash-management expert rather
than a relationship manager who specialize in
(xi)
leading.
Growth only by acquiring new customers is not
always feasible. To grow in the domestic market,
banks will need to strengthen relationship with
their current customers and innovate their
offerings.
(xii) When banks do comes up with new products, the
products often fail because they dont focus
enough on the consumer. For example the illdefined smart-card and electronic cash systems,
which have yet to take off in the U.S. by contrast,
the smart-card system in Hong Kong called
octopus, which enables user to ride public
transportation without having to buy tickets is a
big hit. Banks should become more customers
focused.
(xiii) Internal changes can improve the chance of
success. Citibank linked its customer service
performance to sales success. Its not only a
brilliant way to improve customer service; it can
also give the banks marketers greater insight into
consumer needs than they ever had before.
(xiv) Banks should look for new insight from the
existing customer data. Most financial-service
companies either dont mine their data enough or
dont do it in a way that allows the information to
reach product development. One tool that is often
used in consumer products but frequently
27

overlooked in financial service is conjoint
analysis.
(xv) Successful bank innovation begins first by
learning to look at things from the customers
point of view and then trying to solve a problem.
In the next few years, the keep-it-simple
offering are likely to be the industrys big
winners.
3. United Kingdom:
28

UK is one of the cheapest countries to bank in. it has a
special kind of account called if-in-credit banking. The cost to
the individual of running a typical current account in the UK is
70% lower than in similar countries.
Due to growth in GDP, population, prosperity, and
purchasing power of the people, the need for banking services is
constantly growing. The marketing management process for
banks involves the development of sales personnel, marketing
programme support, customer relation and market performance.
The way in which a bank delivers customer service
depicts and communicates the banks philosophy of business to
the customer. The success of banks in the UK depends on how
they promote their products online and how they meet customers
specific requirement. Thus banks need to have strong websites
which give complete information, have easy-to-use interface,
create product matches according to customers need and give
comparative analysis so that customers can make decision easily.
Bank should use quantitative and qualitative research
methods, website analysis, customer feedback and user testing to
deliver a customer-focus experience and satisfy the customers.
The retail banking sector in the UK has commercial
banks which deal with individual customers. Products like fixed,
current and saving account as well as mortgages & loans are
common in retail banking.
(i)
Retail banking in the UK is made up of the following:

Multiple products (deposits, credit cards, insurance,
(ii)
investments and securities).

Multiple channel of distribution (call centre, branches,
internet and kiosks or ATMs).
29

(iii)
Multiple customer groups (consumer, small business and

corporate).
Banks benefit from the implementation of IT and the
new electronic delivery channels. For e.g. HSBC was the first to
bring the concept of TV banking in the UK and Lloyds, Barclays
and Nationwide have excellent online banking facilities.
4. China:
Expansion abroad is a priority for Chinas financial
institutions. Given the current worldwide financial crisis, and
relatively large amount of liquidity at their disposal, Chinese
banks are in a good position to make meaningful progress
towards this goal.
However its experience with Non-performing Loans
(NPLs) makes it cautious. For instance, the Bank of China has
not gotten final approval yet for its announced 20% stake in
Rothschild.
Chinese financial institution initially moved overseas to
serve corporate clients expanding their businesses abroad.
Maintaining these clients business is a top priority today as well,
30

as increasing number of Chinese companies move overseas, and
competition increase at home with the influx of foreign bank like
Citigroup and Standard Chartered. These initial moves abroad
came about via organic growth as well as M&A.
Chinese banks are viewing expansion abroad as a way to
get training in management, organization, and risk assessment.
ICBC paid $5.6 billion USD for a 20% stake in South Africas
Standard Bank last year, for example, not only to better serve the
growing ranks of Chinese companies doing business in the region
but to learn technical skills, management and operation
techniques directly from their partners.
Chinese financial institutions are using M&A to build
more quickly a meaningful strategic presence abroad. The first
major stake by a mainland Chinese bank in a European bank was
made in July, 2007, when the China Development Bank (CDB)
purchased a stake I Barclays bank CDB expects to learn from
Barclays expertise in global commodity markets, investment
banking, and risk management.
The first strategic investment by a mainland Chinese
bank in a U.S. bank was made last October when China
Minsheng Bank bought 5% of UCBH Holding, the holding
company of san Franciscos United Commercial Bank, a bank
catering mainly to small and medium-sized local ChineseAmerican run businesses. In September 2008, Bank of China
announced its plans to purchase a 20% stake in French bank LCF
Rothschild for 236.3 million euros ($340 million USD). The two
banks will work together to develop asset management services
for Chinas newly wealthy once approval is given.
Chinese banks still face significant rules and regulation,
as well as degree of suspicion and protectionism as they move to
expand abroad. One of the main reasons UCBH was willing to
31

partners with Minsheng Bank, for example, was, as a private
bank Minsheng had minimal connections to the government, and
thus the partnership was more likely to be approved by the Fed.
Satisfying requirements of regulatory bodies like the Fed.
In addition to financial return on investment, Chinese
financial institutions push to acquire stakes in international
heavyweights is in large part to get access to management,
organizational, and technical expertise not yet fully developed at
home, and assistance in developing new service areas, such as
wealth management in the case of Bank of China and LCF
Rothschild. Companies overwhelmingly agreed that finding
people with experience in leading a cross-cultural operation
overseas, and people with the necessary technical, managerial,
and/ or operational skills is a top challenge in their push abroad.
With the Wall Street calamity, Chinese financial institution have
been increasing their recruiting of Chinese who worked in Wall
Street and are now vying to come back to China.
Chinese financial institution are generally moving first
to developing regions, where the business of their Chinese clients
is increasing most rapidly, though they continue to work towards
building presence in North American and Western European
countries as their ultimate goal.
Even at present, Bank of China and ICBC focus more on
State-run Enterprises and on political issues than on developing
the services that carter to the needs of SMEs and retail clients. In
the China market, they lag behind smaller private banks like
China Merchants Bank in customer satisfaction.
32
Marketing of Insurance
1. India:
Insurance is a form of risk management primarily used to
hedge against the risk of a contingent, uncertain loss. It is the
equitable transfer of the risk of a loss from one entity to another, in
exchange for payment.
In India, it has been eleven years, since the insurance market
has been opened up, and the new entrants in to the market have set up
shop in most of the cities. The public sector companies have already
established themselves in the market. But there are multiple
challenges face by theses insurance companies, of which two are
critical:
Designing the products suiting the market
Using the right marketing strategies to reach all customer segments.
While the companies have been quite successful in dealing
with the first of these challenges using the existing product features
and leveraging the technical
know-how of their partners, most are
still grappling with the right channel mix for reaching potential
customers.
The insurance industry of India consists of 52 insurance
companies of which 24 are in life insurance business and 28 are non33

life insurers. Among the life insurers, Life Insurance Corporation
(LIC) is the sole public sector company.
Out of 28 non-life insurance companies, there are six public
sector
insurers,
which
include
two
specialised
insurers
namely Agriculture Insurance Company Ltd for Crop Insurance

and Export Credit Guarantee Corporation of India for Credit
Insurance. Moreover, there are 5 private sector insurers are
registered to underwrite policies exclusively in Health, Personal
Accident and Travel insurance segments. They are Star Health and
Allied Insurance Company Ltd, Apollo Munich Health Insurance
Company Ltd, Max Bupa Health Insurance Company Ltd, Religare
Health Insurance Company Ltd and Cigna TTK Health Insurance
Company Ltd.
In addition to 52 insurance companies, there is sole national
re-insurer, namely, General Insurance Corporation of India. Other
stakeholders in Indian Insurance market include licensed Agents
(Individual and Corporate), Brokers, Common Service Centres, WebAggregators, Surveyors and Third Party Administrators servicing
Health Insurance claims.
Insurance Laws (Amendment) Act, 2015 provides for
enhancement of the Foreign Investment Cap in an Indian Insurance
Company from 26% to an Explicitly Composite Limit of 49% with
the safeguard of Indian Ownership and Control.
Insurance penetration of India i.e. Premium collected by
Indian insurers is 3.90% of GDP in FY 2013-14. Per capita premium
underwritten i.e. insurance density in India during FY 2013-14 is US$
52.0.
34
2. United States of America:

US insurance leads are the potential customers to whom
insurance companies sell their insurance policies. A USA insurance
lead is one of the major means to attract customers and improve sales.
US insurance leads prove to be valuable marketing methods. It
enables companies to generate quality leads. This further makes it
possible for companies to increase profits and ultimately achieve
success.
To further the development of the insurance sector in the US,
the Congressional Legislation has indicated a green signal to various
financial institutions, comprising insurance carriers, and banks to sell
products of one another.
Here are some ways to generate US insurance leads:
Pay-Per-Click Methods:
Insurance companies/ agents can leverage the internet to get
quality US insurance leads. Companies can advertise on relevant
website which in turn will help them to generate useful leads. These
have more probability of getting converted into sales. Payment is
usually based on the number of people who click on the insurance
advertisement.
Pay-For-Call Methods:
This is a valuable USA insurance lead generation technology.
Thus, an insurance company pays only for the leads which they
receive a phone call from through advertising. This method is useful
for insurance companies that have their own website.
Co-registration Methods:
This is perhaps the perhaps the best method for generating
targeted leads. It offers customers an easy and time efficient measure
to choose a policy. In co-registration method, any visitor who
35

subscribe for a newsletter is given some options through check boxes.
Visitors can check the option they want more information on, without
being forced to fill the online filling process while subscribing for
newsletters.
The US insurance leads industry indemnifies against losses
that occur from a number of perils. These perils may be due to
accident, theft, damages due to fire, health issues, and disabilities or
death. The USA insurance lead industry is growing faster than any
other form of insurance in the US. In 2006, the US insurance sector
had 2.3 million people employed on wage and salary jobs.
Some of the major occupation in the insurance industry
includes management, business, financial operation, administrative
support and sales. Insurance sales agents are also called as
producers, who may work independently or just tend to sale for one
company
Insurance marketing is basically just the marketing of
insurance product marketing of this sort is an important tool when it
comes to the business of insurance. The marketing of insurance
readily happens in the life insurance department as well as non life
insurance department.
What type of advertising and marketing is most suitable for
your insurance business? You must consider how much of budget you
have and work from there. You also need to know who your target
market is. For example, are you going to sale one type of insurance
such as life insurance or a variety, such as health insurance, auto
insurance and house insurance? What is the demographic you are
aiming for? The more you know the better able will you be to figure
out what type insurance marketing you should to grow your business.
Online advertising is one marketing tool that is worth the
money as the internet takes on more power at influence all of the
time, having a web presence will put you on the cyber map and get
36

you notice. Block line advertising in trade journals, industry
publication and periodicals is way to go. This is because industry
professionals read these publications to keep in the know. Televisions
ads and print ads are excellent form of insurance marketing. However
the down side is that both can be very expensive. You may go way
beyond your advertising budget if you decide to use either one of the
methods. However if you can afford it then your best course of action
is to either consult with an external advertising agency or hire one to
help you develop campaign that is conductive to what you need most.
Your goal of course is to gain exposure and to increase your sales.
If you decide that print ads would suit your style and your
budget just fine then coloured ads are the most expensive to produce
but can be very appealing to the eye. You can also choose a reverse
type for your advertisements. Think back to what black and white
television looked like. The ad would have white lettering on a stark
black background. The black background sets off the lettering and
gives it that catchy effect.
Life Insurance Marketing is one of the most strenuous jobs
for those who are involved in the insurance marketing. It is because of
the everlasting conflict between the insurance companies which want
to profit the most and the insured person who wants to get as much
compensation as possible from the insurance company. Commissions
for the Life Insurance companies are very high and they seldom make
profit out of the policies. Also the insurance policy need to be
transparent so that the potential customer understands it totally and
should not feel that they have been treated unfairly by the insurance
company.
What one can do is to change the public perception about the
Life insurance companies. One can connect himself or herself with
companies whose workers need a plan for Life Insurance. One can
also go to crowded places and advertise for the Life Insurance
37

Company. The Life insurance companies also offer fliers and hanging
banners. One can also offer a free health check in a reputed place to
the insured. Competition much tougher for the Life insurance
companies as most of the companies offer similar types of premiums
and facilities. So it has become very important for the life insurance
companies to concentrate on Life Insurance Marketing and attract as
many people as possible towards their company.
The Life Insurance Companies prefer to go for Group Life
Insurance for a group of people from a particular company or a family
so that they get a group of customers and even if they compensate for
some of them for various reasons they usually make it up with others
premiums. They also get loss paper to control and also they provide
better facilities for their clients. So to promote this type of policy they
need to have social and industrial connection. Even for other policies
like term life insurance and permanent life insurance one need to
aware of making people realize the profit of the policy by various
means before going for Life Insurance Marketing one actually needs
to know the market target and the desires of the people who are
actually seen as potential insurance customer.
A very common way to promote a Life insurance company
through Life Insurance Marketing is to make the name of the handling
out pamphlets, hanging banners in populated areas and by providing
exciting offers.
Telephone marketing is another way of Life Insurance
Marketing. One can see the telephone companies send message about
various offers and they even make phone calls. Web insurance
policies. The pop ups that one sees while using Internet are actually a
very effective way of sending message across the potential insurance
customers.
38

One should listen to the existing Life Insurance Policy
Holders as well as the potential Life insurance policy holders and
listen to what people who actually matters have to say. One common
problem that the insured persons face is that the insurance companies
do not inform its clients about the hike in the premium rates. This
thing should be informed about everything related to his policy and
the Life insurance Company should keep the transparency as much as
possible.
A Life Insurance Company should not charge different Life
insurance client different charges for the same policy. This kind of
policy gives the Life insurance policy holders the feeling that they are
being treated unfairly and also that the Life insurance companies are
also looking for profits and not the betterment of customer welfare.
When a Life insurance claim is filed, especially for a very
big hefty amount, the Life insurance Company should help out the
policy holder in processing out the paperwork. One should not let
bureaucracy enter and make it so difficult for the one making the
claim so that the gives up his. This has always been a common tactic
on the insurance companys part to avoid paying claims claimed by
the policy holder. This though makes a short term profit for the
company but it hurts in the long run as the reputation of the company
is hampered severely.
People in this Life insurance industry should always try to
keep in constant contact with the existing customers as well. The
competition in the insurance market is so fierce today that no
company wants to lose out on a customer to another company. Clients
who are not contacted for a longer period of time normally fail to
remain loyal to the insurance company and look for a different Life
39

insurance company. The company can keep the records of the clients
birthday and days like anniversary and sent him or her small tokens of
love or loyalty at a regular basis. If the company can afford a little
more it can send dinner coupons to the Life insurance policy holder.
These things can be considered as an effective Life Insurance
Marketing strategy.
3. United Kingdom:
The UK insurance sector is an important part of the UK
economy. There are two broad sectors in the UK insurance marketlong term insurance and general insurance. Long term insurance
covers life insurance, pensions, annuities and income protection
insurance. General insurance covers motor insurance, accident and
health insurance, general liability insurance and pecuniary-loss
insurance.
40

The main insurance products are life insurance, pension,
property, casualty and health insurance. Competition in the UK
insurance industry is intense and thus insurance companies are not
able to increase premium rates.
Direct line is the biggest brand within the Royal Bank of
Scotland Insurance. It is UKs leading personal lines insurer and No.
2 general insurer behind Aviva. Direct Line revolutionized the UK
insurance market when it used strategy that insurance can be sold
cheaper by cutting out brokers and dealing directly with customers by
phone. Direct Line has now successfully expanded into the European
Market
UK insurance companies are now investing heavily in IT to
expand and also to meet regulatory requirements of Solvency II. The
challenges for the UK insurance industry are as follows:The emergence of a more knowledgeable customer base.
Increase in online purchase and trading
Increased volume of information to manage.
New EU directives and accounting standards.
4. China
In addition to governmental restriction and regulations,
foreign insurance companies have also faced a number of Chinese
market challenges. Reinsurance business is closed to foreign insurers.
Joint venture management appears to be very difficult in China. For
example, recently, three experienced senior managers of Sino-foreign
JVs were removed from their management position in AXA
Minmetals Assurance Co (France), Allianz Dazhong Life Insurance
Co. (Germany), and China Life and Colonial Life Insurance Co.
(Australia). There are a number of reasons for the management
41

Challenges.
First, there are cultural differences such as conflict between
the JV partners and lack of familiarity with the Chinese business
climate leading to problem in the localization of international
enterprises. For example, the foreign companies did not realize that
many Chinese today have more interest in insurance or financial
products that are closely linked to investment and financial
management.
An important area of competition will be for trained and
experienced Chinese personnel. Another area of competition will be
for the publics confidence
CHAPTER 7
CONCLUSION
Customers for financial services are changing in terms of
their wants, needs, desires, expectations and problems and financial
service providers have to understand who their customers are, what
they prefer, why they buy, who makes the decision and how the
consumer uses the product and service.
In conformity with these changes, there should be changes in
the Bank's services, training, attitudes and images, marketing
strategies and patterns of organization and control. New technology
driven products blended with the traditional ones and personalized
42

service will enable banks to extend a variety of financial services
under one roof.
CHAPTER 8
BIBLIOGRAPHY
Books:
43

Marketing of Financial service by Laila Dias
Marketing of Banking Financial Services by P.
Mohan
Reddy
Internet:
Wikipedia
www.sribd.com
44

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