SUMMARY – Estelami Hooman (2007) “Marketing Financial Services”, Dog Ear Publishing Ch8 Segmenting – requirement for successful MFS * breaking down of a market into smaller groups of consumers based on their needs efficiencies in mkt activities * unique: abundance of individual data and resources * process: 1.
collecting data 2. using market segmentation tools (computer driven, cluster analysis) 3. ustomer targeting 1. internally collected data (customer demographics, life stage, psychographics, transaction records) / externally purchased (credit info, geo-demographics) 2. cluster analysis: most popular segmentation approach, uses computer algorithm that objectively recognizes segments BUT input variables affects strogly, max 10 variables, no correlated variables 3.
argeting customer with mkt plans in particular segments: age, life stage, social class / can be used with pricing strategies * targeting through predictive models: predict a individual consumer’s behavior based on information on existing customers * segmenting existing customers (in contrast to new customer acquisition above): focus on loyal customers (CRM), profits from existing easier than acquiring new (eg cross-selling) * loyalty: higher than in other industries due to lack of initiative to change, decreasing due to competition procedures for processing complaints! measuring loyalty: repeated transactions, analyzing complaints, customer surveys Ch9 Customer satisfaction satisfied customer: buys potentially other products, less price sensitive, less post purchase dissonance, word-of-mouth * customer’s quality perceptions: objective performance, quality of human contacts, company image * satisfaction formation: expectations – performance disconfirmation satisfaction * measuring satisfaction: customer retention cycle, cross-sold services, complaints, surveys * determinants of services satisfaction: reliability, responsiveness, assurance, empathy, tangibles * improving satisfaction with gap analysis: expectations, perceived actual / to improve, monitor development / to eliminate major gaps do not over-promise * CRM: increasing profits from a single customers * profitability of financial services 1. number of customers: customer acquisition (advertising, price cutting, direct selling, co-branding) 2. rofit per customer: customer retention (bundling, individually catered incentives, cyclical timing, employee protocols, customer prioritization (not all customers equally important! ), complaint solicitation, personal contacts, target marketing), cross-selling (product crossover matrix) * ROI for service quality improvements = [(customers affected by improvement * profit impact of improvement (%) * life-time profits of one customer) / improvement investment] – 1 * conclusions: customer prioritization cause not all customers equally important(! ), segmentation, cross-selling, defection rates lower than in other markets * Ch10 Regulations – protecting vulnerable consumers objectives: consumer protection, healthy competition, ensuring consumer access to critical financial services * U. S. regulatory bodies: Treasury, SEC, NASD, NAIC, FED, FASB * banks: regulation D=deposit insurance, A=complaints, B=equal access for all, E=electronic transfers, M=leases, L=competition, R=limits relationships between securities dealer and banks, Z=truth in lending act (disclosure requirements for credit contracts), Glass-Steagall 1933 Gramm-Leach-Bliley 1999 (fin. serv.
modernization act), Check21 * insurance: state level, state regulators follow NAIC, no exaggerating, prevent competitors’ price-fixing * brokerages & investment services: investment advisers and brokers SEC, over-the-counter brokers NASD, U. S. atriot act, Reg FD, having best interest of clients in mind, clear communication, no overstating returns * consumer privacy: fair credit reporting+billing act, identity theft protection act 1998 * consumer communications: telephone consumer protection act 1992 (8am-9pm, training staff), telemarketing act 2003 (do-not-call list) Ch11 Strategic market planning * strategic challenges of MFS: complex, non-emotional, intangible, affected by economic forces, regulations, employees’ importance to image, difficulty to quantify costs and profits of individuals * segmentation, technology * DIAMOND framework describing fundamental marketing strategies after 1999 (post Glass-Steagall): Diversification, Integration of resources, Acquisitions and mergers, Organizational restructuring (flexibility, declining face-to-face contact, technology, outsourcing), New products and markets (wipeout insurance for skiers, flex-mortgage), Deregulation * 10 guiding principles of MFS: 1. uantify quality 2. customer life-time value 3.
pioneer 4. company image 5. avoid adverse selection 6. avoid diluted focus* 7.
customer defections very costly 8. unique selling proposition 9. regulatory alertness 10. consumer trust *(brand name can be extended into new product categories only up to a certain limit) * developing a marketing plan: 3.
understanding environment (emerging trends etc) 4. opportunity identification (growth) 5. setting goals (limited number, o,5-3yrs) 6. specifying overall strategy 7. determining expected financial results (profits, ROI, revenue/optimistic, pessimistic, most likely) 8.
specifying actions and timing
