TYBVOC Sem VI Marketing of Financial Products
1 Category of Financial Products
a. Bank Products
b. Insurance Products
c. Mutual Funds
d. Pension Plans
2 Marketing Strategies
a. Marketing as a Management Function
b. Market Research
c. Market Segmentation
3 Product and Promotion Strategy
a. New Product Development
b. Life cycle planning
c. Distribution Strategy
d. Channel Strategy
4 Regulations Governing Financial Services Marketing
Ethics in Marketing of Financial Services
, Module-1 Category of Financial Products
Unit1. Bank Products
Introduction
Marketing of bank products is the aggregate function absorbed at providing facility to satisfy
customer’s monetary needs and wants, more than the rivalry keeping in view the
organizational objectives. Banking is a personalized service oriented industry and hence
should provide services which satisfy the customers’ needs. The marketing tactic includes
forestalling, classifying, responding and satisfying the customers’ needs and wants
effectually, professionally, and beneficially. It can be said that the presence of the bank has
miniature value without the presence of the customer. The main role of the bank is not only to
attain and win more and more customers but also to preserve them through operative
customer facility. Marketing as associated to banking is to explain a suitable promise to a
customer through a variety of products and services and also to confirm operative distribution
through satisfaction. The actual contentment delivered to a customer relay on how the
customer is cooperated with. It goes on to prominence that every employee from the highest
executive to the most junior employee of the bank should be concerned with marketing.
Product and Service:
A product is defined as “Anything that has the capacity to provide the satisfaction use or
perhaps, the profit desired by the customer”. Product and service are the words
used interchangeably in banking parlance. The bank products are deposit, borrowing or other
product like credit card or foreign exchange transaction which is tangible and measurable
whereas service can be such products plus the way/manner in which they are offered that can be
expressed but cannot be measured i. e .intangibles. Better service is more important than just a good
product in the marketing of banking service, so the focus should be on the want and need of
satisfying that product or service
Different Types of Products and Services
1) Deposits: –
Banks accept the deposits of the public. In order to attract the savings of
the people, the bank provides every sort of facility and inspiration to them and collects the s
scattered savings of the society. The bank opens an account of those people who deposit their
savings with the bank. These deposit accounts can mainly be of three types and people can
open any of these three types of accounts according to their wish. These accounts are
a) current account
b) saving bank account
c) fixed deposit account
,2) Loans:–
The bank just don’t keep with themselves the deposited amount of the people, rather they
advance them in the form of loans to the businessman and entrepreneurs, just to earn profits
for their partners. The loaned keeps some gold, silver, fixed and variable assets in the form of
security with the bank. The bank can advance loan to their customers in three ways: overdrafts,
money at call, discounting bills of exchange.
Following is the different types of Loan are:
a) Industrial Loans
The primary business of commercial banks is to make loans to large industrial corporations.
Corporations in any nation are interested in obtaining debt at favourable terms. The bank is in
a position to fulfil this demand through the services that they offer.
b) Project Finance
Project finance is one type of loan for which mega corporations largely rely on banks till
date. In case of project finance, the banker finances the project as an individual entity. The
parent company that is sponsoring the project has a limited liability in case the loan goes bad.
For instance, if bank funds DEF project that was initiated by ABC Corporation and the
project goes bankrupt over time.
c) Syndicated Loans
Banks often times combine to make huge syndicated loans to corporations. This is because
the debt requirements of a particular corporation, let’s say, General Electric may be so huge
that any single bank may not be in a position to full fill them without creating a significant
risk on their books. Hence, in such cases, several banks have to form a syndicate to full fill
the loan requirement.
d) Leasing
With the advent of off balance sheet financing, a lot of companies have started using leasing
as a financing method. This is because it provides control of the said asset without leveraging
the balance sheet of the given corporation. Banks have become heavily involved in the
business of such financial leases. Financial leases are being signed by companies for
acquiring real estate, automobiles, factory equipment or such other major fixed assets. It
needs to be noted that banks usually only fund financial leases and not pure play operational
leases.
e) Foreign Trade Financing
A lot of the corporations in the world today are multi-nationals. Thus their business interests
cross national borders. This means that foreign trade in rampant and has become the norm.
Now, foreign trade has some special financing needs. Banks have traditionally specialized in
such financing. In the modern world too, banks provide letters of credit, export financing,
, bank guarantees and other such services to corporations which help them conduct foreign
trade in an efficient manner.
f) Bills of Exchange
Companies often use bills of exchange for accounts receivables and accounts payables
purposes. For instance if company A agrees to pay company B at a later date, they could sign
a bill of exchange for the same. Company A can then take this bill of exchange to the bank at
get the bill discounted.
3) Credit Card:
Credit Card is “post paid” or “pay later” card that draws from a credit line-money made
available by the card issuer (bank) and gives one a grace period to pay. If the amount is not
paid full by the end of the period, one is charged interest
4) Debit Cards:
Debit Card is a “prepaid” or “pay now” card with some stored value. Debit Cards quickly
debit or subtract money from one’s savings account, or if one were taking out cash.
5) Automatic Teller Machine (ATM):
The ATM’s are used by banks for making the customers dealing easier It allows the
customers:
• To transfer money to and from accounts.
• To view account information.
• To order cash
• To receive cash.
6) Tele banking:
Tele banking refers to banking on phone services.Electronic Funds Transfer (EFT):. It
automatically transfers money from one account to another.
7) Mobile Banking:
A new revolution in the realm of e- banking is the emergence of mobile banking. On-line
banking is now moving to the mobile world, giving everybody with a mobile phone access to
real-time banking services, regardless of their location.
8) Internet Banking:
Internet banking involves use of internet for delivery of banking products and
services.
1 Category of Financial Products
a. Bank Products
b. Insurance Products
c. Mutual Funds
d. Pension Plans
2 Marketing Strategies
a. Marketing as a Management Function
b. Market Research
c. Market Segmentation
3 Product and Promotion Strategy
a. New Product Development
b. Life cycle planning
c. Distribution Strategy
d. Channel Strategy
4 Regulations Governing Financial Services Marketing
Ethics in Marketing of Financial Services
, Module-1 Category of Financial Products
Unit1. Bank Products
Introduction
Marketing of bank products is the aggregate function absorbed at providing facility to satisfy
customer’s monetary needs and wants, more than the rivalry keeping in view the
organizational objectives. Banking is a personalized service oriented industry and hence
should provide services which satisfy the customers’ needs. The marketing tactic includes
forestalling, classifying, responding and satisfying the customers’ needs and wants
effectually, professionally, and beneficially. It can be said that the presence of the bank has
miniature value without the presence of the customer. The main role of the bank is not only to
attain and win more and more customers but also to preserve them through operative
customer facility. Marketing as associated to banking is to explain a suitable promise to a
customer through a variety of products and services and also to confirm operative distribution
through satisfaction. The actual contentment delivered to a customer relay on how the
customer is cooperated with. It goes on to prominence that every employee from the highest
executive to the most junior employee of the bank should be concerned with marketing.
Product and Service:
A product is defined as “Anything that has the capacity to provide the satisfaction use or
perhaps, the profit desired by the customer”. Product and service are the words
used interchangeably in banking parlance. The bank products are deposit, borrowing or other
product like credit card or foreign exchange transaction which is tangible and measurable
whereas service can be such products plus the way/manner in which they are offered that can be
expressed but cannot be measured i. e .intangibles. Better service is more important than just a good
product in the marketing of banking service, so the focus should be on the want and need of
satisfying that product or service
Different Types of Products and Services
1) Deposits: –
Banks accept the deposits of the public. In order to attract the savings of
the people, the bank provides every sort of facility and inspiration to them and collects the s
scattered savings of the society. The bank opens an account of those people who deposit their
savings with the bank. These deposit accounts can mainly be of three types and people can
open any of these three types of accounts according to their wish. These accounts are
a) current account
b) saving bank account
c) fixed deposit account
,2) Loans:–
The bank just don’t keep with themselves the deposited amount of the people, rather they
advance them in the form of loans to the businessman and entrepreneurs, just to earn profits
for their partners. The loaned keeps some gold, silver, fixed and variable assets in the form of
security with the bank. The bank can advance loan to their customers in three ways: overdrafts,
money at call, discounting bills of exchange.
Following is the different types of Loan are:
a) Industrial Loans
The primary business of commercial banks is to make loans to large industrial corporations.
Corporations in any nation are interested in obtaining debt at favourable terms. The bank is in
a position to fulfil this demand through the services that they offer.
b) Project Finance
Project finance is one type of loan for which mega corporations largely rely on banks till
date. In case of project finance, the banker finances the project as an individual entity. The
parent company that is sponsoring the project has a limited liability in case the loan goes bad.
For instance, if bank funds DEF project that was initiated by ABC Corporation and the
project goes bankrupt over time.
c) Syndicated Loans
Banks often times combine to make huge syndicated loans to corporations. This is because
the debt requirements of a particular corporation, let’s say, General Electric may be so huge
that any single bank may not be in a position to full fill them without creating a significant
risk on their books. Hence, in such cases, several banks have to form a syndicate to full fill
the loan requirement.
d) Leasing
With the advent of off balance sheet financing, a lot of companies have started using leasing
as a financing method. This is because it provides control of the said asset without leveraging
the balance sheet of the given corporation. Banks have become heavily involved in the
business of such financial leases. Financial leases are being signed by companies for
acquiring real estate, automobiles, factory equipment or such other major fixed assets. It
needs to be noted that banks usually only fund financial leases and not pure play operational
leases.
e) Foreign Trade Financing
A lot of the corporations in the world today are multi-nationals. Thus their business interests
cross national borders. This means that foreign trade in rampant and has become the norm.
Now, foreign trade has some special financing needs. Banks have traditionally specialized in
such financing. In the modern world too, banks provide letters of credit, export financing,
, bank guarantees and other such services to corporations which help them conduct foreign
trade in an efficient manner.
f) Bills of Exchange
Companies often use bills of exchange for accounts receivables and accounts payables
purposes. For instance if company A agrees to pay company B at a later date, they could sign
a bill of exchange for the same. Company A can then take this bill of exchange to the bank at
get the bill discounted.
3) Credit Card:
Credit Card is “post paid” or “pay later” card that draws from a credit line-money made
available by the card issuer (bank) and gives one a grace period to pay. If the amount is not
paid full by the end of the period, one is charged interest
4) Debit Cards:
Debit Card is a “prepaid” or “pay now” card with some stored value. Debit Cards quickly
debit or subtract money from one’s savings account, or if one were taking out cash.
5) Automatic Teller Machine (ATM):
The ATM’s are used by banks for making the customers dealing easier It allows the
customers:
• To transfer money to and from accounts.
• To view account information.
• To order cash
• To receive cash.
6) Tele banking:
Tele banking refers to banking on phone services.Electronic Funds Transfer (EFT):. It
automatically transfers money from one account to another.
7) Mobile Banking:
A new revolution in the realm of e- banking is the emergence of mobile banking. On-line
banking is now moving to the mobile world, giving everybody with a mobile phone access to
real-time banking services, regardless of their location.
8) Internet Banking:
Internet banking involves use of internet for delivery of banking products and
services.
