Marketing and financial
services: an overview
• Learning outcomes
• The ﬁnancial services industry
• Marketing services
• Financial services
• Corporate social responsibility
• After the credit crunch
• Further reading
• Case study: Long live mutuality! The friendly society
March 17, 2010 17:26
6 d MARKETING FINANCIAL SERVICES
By the end of this chapter, the reader will be able to:
• Understand how marketing theory underpins the marketing of ﬁnancial services
• Appreciate how recent thinking in marketing and services marketing applies to ﬁnancial services
• Be able to identify key issues for marketers of ﬁnancial services
March 17, 2010 17:26
MARKETING AND FINANCIAL SERVICES: AN OVERVIEW
services: an offering in
which the dominant part
is intangible, which is the
case in most ﬁnancial
value: the aim of
marketing is to
create/deliver an offering
that allows the
derive beneﬁts particular
to their needs/wants
Services are products that we purchase and consume in ever-growing quantities; they range from restaurant meals to university education. In business markets, services include such things as cleaning and IT. The businesses that provide these services understand that delivering value and customer satisfaction are key to ensuring their businesses survive and ﬂourish. Such is the importance and pervasiveness of services provision that it is argued that services now dominate marketing (see Vargo and Lusch 2004), whereas goods used to have the upper hand.
What are financial services?
Financial services are any service or product of a ﬁnancial nature that is traded in ﬁnancial markets; speciﬁcally, they are ﬁnancial instruments – for example, treasury bills and government bonds. There are a number of ways that ﬁnancial instruments can be classiﬁed. Do they have a ﬁxed or variable interest rate? How long to they take to mature? Are they offered by a deposit-taking or non-deposit taking intermediary? Financial services cover an extensive range of instruments and in the United Kingdom the Financial Services Authority (FSA) provides information to the consumer marketplace on bank accounts, equity release schemes and long-term care (moneymadeclear.fsa.gov.uk/products/products_explained.html). The marketplace for ﬁnancial services is extensive, as banks, insurers and investment banks operate in a global marketplace and have a wide range of customers, including retail consumers, business customers of all sizes and other ﬁnancial institutions. Other examples of ﬁnancial services can be seen in Figure 1.1, which also shows services offered to businesses, domestic and global, for proﬁt and not for proﬁt.
From a marketing perspective, there are some important points to remember about ﬁnancial services. Looking at Figure 1.1, it is clear that none of the products is very desirable, especially when compared with other things that money can be spent on, such as cars, designer handbags or holidays. In fact, several of the examples are downright unattractive, such as pensions and funeral plans. This lack of intrinsic desirability is key in the marketing of ﬁnancial services. Marketers of these products have to be aware that customers, whether retail consumers or business customers, do not purchase these items because they are in themselves desirable or ‘must have’ products. What ﬁnancial services generally do allow customers to do is to purchase or acquire those products and other services that are desired, such as holidays, or indeed the ‘must have’ handbag; or, for business customers, these products offer the possibility...