Within our society, financial institutions are becoming more abundant. Along with this present growth, the field of marketing financial services has also grown in size and scope with new entrants everyday. The relatively stable banking environment is being altered with innovation, opportunism, and government intervention. This era, marked by the government's luminous hand of deregulation (defined as the act of removing regulations or restrictions from a specific entity), has expanded consumer options to the extent that commercial banking must now become an aggressively competing member of the financial services industry. In this new era, important marketing areas such as regulation, environment, product, competition in the market, and delivery of product can no longer be overlooked.
II. What is Marketing and Its Role in the Success of Financial Institutions?
What is marketing? According to the American Marketing Association, marketing is the "performance of business activities that direct the flow of goods and services from producer to consumer or user." In the context of the financial institution, marketing is defined as the "creation and delivery of customer-satisfying services as a profit to the bank or financial institution."(McMahon, 1986). With further examination of the previously stated definition, it can be seen that marketing is looked upon as 1) an active process (therefore, ongoing with endless possibilities), with 2) a direct focus on the customer or consumer. Initially, it can be seen that marketing plans that result in efficient returns and profits do not appear out of thin year, but are created. (McMahon, 1986). Once created, these plans must be delivered properly to the consumer. For example, a teller at a bank, with poor delivery and selling, can ultimately destroy a thoroughly thought out creation aimed at providing superior customer service. Also, marketing is customer-oriented, meaning that it is imperative to take into account whether customers are satisfied and their needs/wants are fulfilled by the products or services offered by the bank. (Reidenbach and Pitts, 1986). Marketing, like any other activity associated with business, is goal-directed. To meet specific goals, individuals in management of these financial institutions create a marketing strategy. A marketing strategy "consists of a very clear definition of the prospective customers and the creation of a marketing mix to satisfy them." (Tillman, 1968). The marketing mix is simply terminology describing decisions about product, place, promotion, and price. Marketing strategies or schemes within a specific bank are planned, organized, directed, and controlled with the intentions of fulfilling some pre-determined goal. These goals can have various time spans. For example, a particular bank may want to "introduce a new consumer loan plan" or "increase the total number of new accounts opened by 10% over an eight month period." An action of this nature would result in returns to the short run. On the other hand, if the bank wanted to "improve its image within the community", the bank would have a longer period of time to accomplish the goal (long run). Bank marketing serves the role of bringing the product to the consumer or customer in a way that is understandable and relatively easy to comprehend. Bank marketing also has the duty of responding appropriately and realistically to externally and internally generated change in the environment. For example, many financial institutions, including the likes of First Union, Bank of America, and First Citizens, all offer various products and services to meet the needs of a demanding society full of varying personalities and values. Without a myriad of varied services and products, these institutions could stand to lose many customers and bigger than that, profits. In the eyes of many, bank marketing appears to be a relatively simple process, but when faced...
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