Marketing Financial Services - Essay Example

Marketing Financial Services Introduction Morgan Stanley is one of the most well known financial services firm in the world. Its head quarter is based in New York. The firm operates all over the world and deals mainly in institutional securities and investment management. Morgan Stanley advises large institutional clients how to raise funds from the market and how to manage its investment portfolio. The recent financial crisis has hit the company badly but it has recovered well from that. The company’s reputation is also good in the financial market. The brand name of Morgan Stanley is well established since it is been operating in the financial industry for a long time. It was founded way back in 1935 so it is a well known brand in the financial markets. This text will include a detailed SWOT analysis of Morgan Stanly. It will include strengths and weakness of the organization with respect to its competitors and the general situation of the world economy. The analysis will also include threats and opportunities faced by the company. The main issues regarding marketing of the company will also be discussed. The main focus of the text will be on the marketing of Morgan Stanley and how the issues facing the company can be resolved. SWOT Analysis Morgan Stanley operates in a financial industry so its marketing strategies are entirely different from firms that sell consumer products. This section will elaborate upon its strengths, weakness, opportunities and threats and in turn will suggest about how the company should be shaping its marketing strategies. With increasing competition in the financial sector and a very recent recession this might not be easy for the company so it is important to do SWOT analysis keeping the overall situation of the financial industry in mind today. Strengths of Morgan Stanley The main strength of the company is its global presence and well established brand name. Morgan Stanley is a well known name on Wall Street so investors are pretty much aware of the company and the services which it offers. Also news about the market given by Morgan Stanley analysts is given attention by the traders in financial markets. This shows the reliability of the name of the company in the financial sector. This reliability and brand image is very good especially in the financial sector because customers in this industry take into consideration these two elements (O'Loughlin, Szmigin & Turnbull, 2004). Global presence of the company is a strong point of Morgan Stanley. The worldwide services of the company allow it to operate in different markets. It can connect customers of financial services from different markets. For example it can hedge funds by buying securities in different regions and can reduce risk. This is a great benefit of operating in a worldwide market. Also the global financial markets are getting complicated with newer products coming every day. In such an environment more than 50,000 employees of Morgan Stanley help customers in finding the right product for them. With the derivative market and Islamic finance newer avenues are available for investors and the company is well prepared to treat all kinds of demands of its customers. Currently the company is making full use of its brand image and it is reflected in its advertisements. The company uses internet marketing or e-marketing as a marketing tool. This is because of the fact that internet plays a major role in financial industry. Many traders work from their homes through internet so it is very important to use internet as a marketing tool. The company also uses television advertisement but they are aired on specific news channels. The reason for this is that the main clients of the company are large institutional investors and buyers. Large companies and very rich individuals and groups use the services of the company so it is important that marketing caters to the need of these high standard clients. If one observes the advertisements of Morgan Stanley then it is clear that a sense of high quality and standard is portrayed. This is to cater to the needs of the high standard customers. It is also important for Morgan Stanley to target common investors as well. The company also underwrites stocks and help companies raise capital from the market. These products are also bought by small investors so it is important to cater to this target group as well. For this e-marketing is used by Morgan Stanley. The company does not have to tell customer what Morgan Stanley is rather it just has to ensure that the name of Morgan Stanley is remembered by all its customers. The company is currently outsourcing its marketing to an ad agency (Gianatasio, D. 2010). This is a good step because marketing is something in which the company has no specialization. It is better that specialist should design the marketing strategies of the company. The phenomenon of outsourcing the marketing is picking up the pace in many industries in order to focus on the core values of the business. Weaknesses of Morgan Stanley Apart of the strengths of the company it also has its weaknesses. Investment banks in general are not perceived as honest since the 2008 economic crisis. Morgan Stanley is also therefore currently not very famous among investors. The bad name that is attached with the big investment bank is because of the fact that they sold Collateralized Debt Obligations (CDO’s) that they knew are risky but they were sold with AAA label. The company has also been fined for not following financial regulations and this is adding to the distrust of people. Customer relationship management is very important in the financial industry because a lot is riding for investors (Peppard, J. 2000). No doubt that Morgan Stanley mainly deals with large institutional clients but small investors also contribute a major part of profit that the company makes. It is not in any way useful or helpful that these small investors are losing their faith with the company. People who have lost all their money in the crisis will take years to get back on track with their lives and in this way potential market for the company will shrink. Lesser people will be able to use services of the company and this can seriously hurt Morgan Stanley’s profits. The weakness of the company is also its control on employees. The amount of bonuses given to employees is huge and that entices them to break laws. Employees try to hide information from the investors and disclose partial information. All this is done to ensure that bonuses are earned. This whole culture of high bonuses is hurting the company. Morgan Stanley is a huge company and it is difficult to track all employees. Employees who deal with investors mislead them to buy at all costs. If the investor makes money then its good but when the investor will lose money it will hurt his trust badly. So employee control is lacking in the company. Great incentives are given to the employees and that is hurting the company instead of making it stronger. Cost ineffectiveness is also a problem because of the competition that is increasing in the financial sector (Orlow, et al. 1996). Especially after the economic meltdown of 2008 cost effectiveness is the only way firms can reduce loses. All these weaknesses are important to analyze because the perception of people can be changed about the company. Advertisements should focus on these issues and should depict Morgan Stanley a company that values its customers and hides no information. This will help increase the reliability of the company. Parts of advertisement should show how customers are valued by the company. Marketing should make people realize that Morgan Stanley care about their money so the name should give people a feeling of trust. Marketing can help shape consumer perception and this is what that is needed to be done by Morgan Stanley. There is a strong relationship between customer loyalty and technical service quality (Bell & Eisingerich, 2007). This is a part where company is lagging behind so special focus should be given to service quality in advertisements. People should be made aware that Morgan Stanley provides high quality of technical service. Also companies should start to pay writers to write articles on the internet that should tell people that the role of Morgan Stanley in the financial crisis was very limited. This will help because people who invest money don’t do so easily. They research greatly about the company and the product, and usually this research takes place on internet. This medium should be targeted by Morgan Stanley to tell people that it did not caused the financial crisis of 2008. These writers may not be very high profiled but they will do well only if they are successful in creating a small influence of potential investors. Opportunities for Morgan Stanley Opportunities for Morgan Stanley are great a world where communication is faster and easier. At the same time many emerging markets like India and Brazil are surfacing and they present great opportunity to Morgan Stanley. These emerging markets are in a phase of developing their financial markets and once that is done they will become source of great profits for the company. One of the reasons for this is the huge population of these countries. When industries will grow people will save more and will invest more in financial markets if they are developed enough. This will allow investment banks like Morgan Stanley to come and give investors solutions and products. The experience of the company and its global presence will help customers in choosing the right products. Morgan Stanley will have a more developed base of employees and it will be able to cater to the demands of the customer better than newer companies. Morgan Stanley can also tap in financial services industry of the Asian countries where financial industry is not developed. A great advantage for Morgan Stanley will be the absence of regulations in these countries. The financial sector is small and people don’t have enough avenues to invest in therefore if Morgan Stanley comes up with newer products then it can make money. Also the regulations are not very developed in these countries and it will help the company exploit these markets. The complexity of the financial products like CDOs, CDSs etc is also an opportunity for Morgan Stanley even in financially difficult times (Smith, R. 2008). It is not possible for every firm to deal with the complex derivatives and bonds so this gives Morgan Stanley an edge over other companies. With a strong base and understanding of such products the company can earn profits regularly. All these opportunities have great marketing implications for Morgan Stanley. The company can devise its future marketing campaigns keeping in mind the opportunities that present in front of the company. The aspect of complexity can be used to target customers in the emerging markets. The fact that Morgan Stanley has a diverse pool of employees who are ever ready to serve the customers should be highlighted by in the advertisements of the company. Also marketing should be done keeping in mind the cultural values of the country. When entering in new markets financial services firms face efficiency barriers like culture and language (Berger, Young, & Udell, 2002). All these elements should be taken into account when designing the marketing of Morgan Stanley when entering in new markets. The best thing would be to allow the local advertisement firms market the company because they will have a better understanding of the local environment, culture and values of the market. Advertisements should also highlight the values of Morgan Stanley. There should be uniformity in the marketing of the company in all markets. Morgan Stanley cannot advocate customer care in United States and cost effectiveness in India. The main theme of marketing should remain the same but the values of the company should be linked or matched to the local values. This is a very important point that Morgan Stanley should keep in mind when designing its marketing campaign in the emerging markets. Threats facing Morgan Stanley There are also some major threats that the company is facing it today. The financial crisis of 2008 is still new and people still remember about the crisis. The financial industry has not yet recovered fully from the financial crisis and there is still a threat that economic crisis may return. This is one threat that is facing the financial industry. Morgan Stanley is although a big name in the financial services industry but still it faces threat of foreign competition. It is based in United States and many firms are trying to enter the financial market of United States of America. So Morgan Stanley faces threat of competition from new entrants. United States financial markets are highly unregulated so it is easy for firms with large capitals to gain entry (Krishnan et al. 1999). Morgan Stanley also faces threat of from new financial innovations. Financial services industry is a very innovative industry with new products coming regularly. This is another threat that is facing Morgan Stanley in today’s competitive world. Another threat is related to information threat. The use of internet has increased chances of information theft in the financial threat (Jen-Yeh & Chang, 2007). Theft of financial information can tarnish the image of the company and cause customers to lose faith in the company. Small firms can also come together and integrate their operations in order to compete with the large investment banks (Berger, A. 2000). This is a major threat that Morgan Stanley is facing currently. The financial sector of US has some large players so small firms integrate and try to compete large firms. Morgan Stanley has to keep this in mind. These threats have marketing implications for the firm. Morgan Stanley has to market its product keeping in mind these threats. The company must design its marketing plan portraying its strengths and telling customer that new firms cannot provide them the services Morgan Stanley can provide. Advertisement should clearly highlight the weakness of these new entrants and in this way customer loyalty can be maintained. The firm can also market that it caters to customers in a unique way so as to differentiate from other firms that are providing financial services to the customers. All these things must be included in the marketing plan of the company. Conclusion Morgan Stanley is a well known in the financial sector and is based in United States but has offices all over the world. The biggest strength of the company is its brand image and a large base of employees. The company also has experience of many years in the financial sector. But the firm is also facing problems regarding customer relationship due to the financial crisis. It has an opportunity to excel in the emerging markets but also face threat of competition from new entrants. References Bell & Eisingerich. (2007). The paradox of customer education: Customer expertise and loyalty in the financial services industry, European Journal of Marketing, 41(5-6), pp.466 – 486 Berger, A. (2000). The Integration of the Financial Services Industry: Where are the Efficiencies? FEDS Paper No. 2000-36. Berger, Young, & Udell. (2002). Efficiency Barriers to the Consolidation of the European Financial Services Industry, European Financial Management, 7(1), pp. 117-130 Gianatasio, D. (2010). Morgan Stanley Picks Martin Agency. Brand Week. Retrieved from http://www.brandweek.com/bw/content_display/news-and-features/direct/e3ib786618f922dfc1d335c8281e14bea83 Jen-Yeh & Chang. (2007). Threats and countermeasures for information system security: A cross-industry study, Information & Management, 44(5), pp. 480-491 Krishnan et al. (1999). Customer Satisfaction for financial services: the role of products, services, and information technology. Working Paper 99-004, University of Michigan Business School. O'Loughlin, Szmigin & Turnbull. (2004). Branding and relationships: Customer and supplier perspectives, Journal of Financial Services Marketing, 8, pp. 218-230 Orlow, et al. (1996). Ongoing restructuring of retail banking, Research Paper #9634, Federal Reserve Bank of New York. Peppard, J. (2000). Customer Relationship Management (CRM) in financial services, European Management Journal, 18(3), pp. 312-327 Smith, R. (2008). Goldman Sachs, Morgan Stanley Aren't Dead Yet: Roy C. Smith. Bloomberg. Retrieved from http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aHtKfUp6o.TE Read More