Marketing Financial Services - Assignment Example

?Marketing Financial Services Table of Contents Introduction 3 SWOT Analysis 5 Marketing Tools 7 Issues 7 Current Issues 9 Control Systems Used 9 Conclusion 11 References 13 Bibliography 18 Introduction Marketing can be recognized as a key to success for any organization, irrespective of its size and sector in which it operates. Development of marketing in financial service sectors has been quite sluggish. It was further observed that for a long period of time the industry was seen to be primarily product led. The financial service sector has been growing at the fastest rate in the UK economy (Ennew & Et. Al, 1995). Marketing of the financial service is quite a recent phenomenon even in developed nations of the world. The financial services industry plays a vital role in safeguarding the prospects of economic development around the globe (Ennew & Waite, 2006). The banking sector is increasingly faced with issue of service quality. Since it is quite difficult to differentiate between money and the financial services, banks are therefore continually working to enhance the service quality so that the competitive edge can be maintained. However, the most critical factor associated with improvement of service quality is determination of the service quality characteristics that are considered as important by consumers. It also becomes important to consider the elements of the service quality that are important for different group of consumers (Stafford, 1996). It has been found that the service has increased worldwide significantly in general terms. However, the financial services have experienced a less encouraging future. The reason behind this has been the market saturation that has led to search for the growth opportunities. To enhance the growth opportunities two approaches seem to be viable. One of them is to make use of the traditional marketing technique such as advertising and the other approach is to expand its operation into the international markets. However, managing the international advertising is a cumbersome task. Therefore, this is also a marketing issue that the financial organization faces (Albers-Miller & Straughan, 2000). M&S Money is a wholly owned subsidiary of HSBC Bank Plc. The trading name of Marks and Spencer Financial Services Plc is M&S Money. The most important thing to be considered is that M&S lends the consumers’ savings to other M&S customers in the UK. The money is lent in the form of personal loans or through M&S Credit Card (Marks and Spencer, n.d.). It was in the year 2004, when M&S Money became part of the HSBC Group; however it continued to operate under M&S Money brand. The company has around 1500 employees. It is headquartered at Chester where the group actively supports its local community. It endeavors to focus its effort both voluntarily and financially on schools and charities. The company has wide range of products catering to wider group of people all around the globe. The insurance products of the company have won many awards. Other products include loans and saving products. Its mission is to cater to the needs of various groups of people by providing them financial solutions that are both simple and underpinned by the core values of Marks and Spencer which are quality, value, innovation, service and trust. The company’s most attractive product has been the credit card which allows the customers to shop for 15 months with no interest to pay. Travel money is another product of M&S where 0% commission is levied on foreign currency and on foreign travelers’ cheque. Loans such as personal loans and car buying loans are also few of the other products of the company. SWOT Analysis The company is the best loan provider in the UK and provides several other products. It is the top choice of most of the customers in the country (Docstoc, 2010). M&S Money has received various awards. Recently in the year 2011, the company received award for the best travel insurance providers and the best pet insurance provider. It also received Defaqto 5 Star Rating in the same year. Similarly, it has been receiving awards from the year 2006 to 2011 constantly which demonstrates that the company has been performing quite well (Marks and Spencer, 2011). The company keeps on introducing new offers in order to attract the wide group of people. It keeps on revising the rate of interest on the loan rates so that borrowing money becomes easier for general public. This has the potential to cater to the needs of the people. For instance, the company decided to reduce the loan rates to 6.9% APR Representative from February 2011 onwards (Marks and Spencer, 2011). The fact that UK and all developed countries face the problem of lower consuming nature of the consumers is a weakness for the company. Therefore, they need to struggle to achieve their expected earnings (Marks and Spencer, 2010). Unsecured lending by the bank is also a major internal weakness for the company. When the core business performs well, retailers’ strong reputation caters to incentive and function as a platform where people can invest. However, if the core business performs badly, then the senior management is at a pressure from the investors to focus on sorting out its problems. The opportunity stems from the fact that the country i.e. the UK has the strongest business environment of all the major European economies for the period from the year 2007 to 2010. The country has a population of around 61.4 million having strong workforce of approximately 28 million who are actively involved in supporting the economy. The other opportunity stems from the fact that London has been the central location for some of the biggest, most successful and dynamic companies of the world (RSM Tenon, 2011). The threats for the company are the strict regulations and policies as set up by the Financial Service Authority. It sets out the standards that M&S needs to meet and failure to adhere to the standards may lead to severe actions against the firm (RSM Tenon, 2011). It was announced by the Financial Services Authority that the mortgage debt taken by the homemakers reached dangerous levels. It was further analyzed by the regulators that the rate of borrowing was more than 3.5 times the income of the homemakers. The payment model would be affordable to the homemakers when the interest rates are low. However, it becomes difficult for the homemakers to make payments when the rate of interest rises. Such issues are threats to the company. The increasing homeowners debt is a major concern for the insurance dealers as well (Marks and Spencer, 2011). Although the global economy is recovering, the conditions still remain challenging and uncertain. A positive but a moderate economic growth is expected in the developed countries and it is also believed that the emerging countries will lead in the recovery phase. Other threats for the company are its major competitors namely Tesco Personal Finance and Sainsbury Bank. Marketing Tools Financial Service Institutions such as Marks & Spencer use various strategies to promote themselves in the market. Financial companies can make use of various marketing tools such as newsletter, affiliate programs, referrals, press releases, direct mails and corporate websites in order to promote their products. Cold calling can also be a useful marketing tool to promote products and services. It has been found that the Marks & Spencer Money makes use of customer care portal through which the customers can get information regarding the queries that they have. Customer Issues The customers of financial services are having individualized needs and wants and are resisting conventional segmentation techniques. The consistency in the behavior and the orderliness provides ways to fragmentation as well as market instability. It has been analyzed that financial service retailers, formalized, structured and risk averse, might find their preferences for the uniformity hinders their ability to serve diverse and evolving markets (Dawes & Brown, 2000). For a sound purchase decision it is important to make the consumers aware of the prices of the products. According to a research, it has been found that the consumer’s price awareness for manufactured goods has grown considerably. However, on the other hand, for the financial services, an overall comprehension of the level price awareness and its potential determinant has been quite limited. This is a serious issue in the field of financial service marketing that needs to be addressed as soon as possible and the consumers awareness regarding the prices of the financial services needs to be raised (Estelami, 2005). There is vast difference among the customers in terms of their interest in financial services, usage of the product and their likelihood of switching to other products. In addition to this, determination of satisfaction, behavioral intention and loyalty are affected by satisfaction with the employees and the kind of services that is rendered. It has been noted by researchers that young people’s needs become multifaceted after they reach certain milestones. Therefore, it is the duty of the banks to take into account these changing needs of people and should be fully aware of it (Foscht & Et. Al, 2010). Customer care has been one of the major issues faced by the company. The company had invested heavily in the customer marketing databases which were outsourced to other third party suppliers. However, these were continuously struggling to deliver the quality of analysis that was required for the business since the business was moving towards more customer-centric strategy. It was further noted that employees of the company were not sufficiently aware of the needs of customers because of the poor performance of customers’ database. However, in the cut throat competition era, it becomes important for companies to have a customer system that could analyze customer data and provide easy-to-use and up-to-date customer information. Current Issues The issue for the company has been to manage its growing customer base so that it can understand its customers well and market its products to them more efficiently. If the issues are handled in an effective manner then it can lead to greater flexibility in the organisation. Since the country has recently recovered from its recession new strategies need to be adopted in order to lure the customers. Promotional activities play a vital role in this regards. Thus, Marks & Spencer needs to focus on this promotional issue for coping with the market requirements. Control Systems Used Strategies can be formulated for adding values to the financial service sector and hence competitive advantage can be gained. However, it has been evident that the retail financial services demonstrate increased complexity and is considered as non-existent in the eyes of consumers. It has been noted that features and qualities of the services provided plays a vital role in adding value to more complex services such as organizational factors, image and reputation. Price can act as an important variable in adding value to more simple rather than complex offering (Delvin, 1997). There are various dimensions that are linked to the service quality in online banking so that a satisfactory online banking system can be created. It has been analyzed by the researchers that there is strong support for link between Perceived Ease Of Use (PEOU) and perceived security and Perceived Usefulness (PU), between PEOU and satisfaction, reliability and PU and PEOU, and lastly between loyalty and satisfaction. This linkage contributes to both theoretical and practical knowledge of the study (Karjaluoto & Et. Al, 2009). Marks and Spencer Money, with the help of Kognitio, implemented a comprehensive marketing campaign using its customer intelligence database platform. Kognitio is the key project partner and has expertise in data warehousing. With the help of the new system, it has been possible for Marks and Spencer Money to have detail information regarding customers, their purchasing history, lifestyle data and current status. The system also provides the company with updated information regarding the latest customer information (Marks and Spencer, n.d.). The company also makes use of six sigma method in order to execute critical operation and improve the quality of services that is provided to the customers (Pivotal Resources, 2010). Online banking is an emerging sector in financial marketing. It provides multifarious benefits to bankers as well as consumers. Bankers get the benefit of cost cutting and can gain access to a wider market. On the other hand, consumers get the benefit of banking anytime, anywhere and at any place and also have the prospect of empowerment through the availability of complete information. It has been analyzed that customers are becoming more inclined towards online banking at an increasing rate; whereas most of the banks are unable to provide this service to them. Despite the fact that online banking has been used widely by consumers, customers have been using traditional banking methods such as telephone to complain if they have any. Marks and Spencer Money has also made use of customer care portal that takes care of customers’ compliant and answers any queries regarding products and services to the customers instantly. This is the added advantage of the company. In light of the competition that the company faces, it becomes important for the company to make its strategies in such a way that it becomes possible for them to differentiate themselves from those of the competitors (Stewart & McCabe, 2006). Conclusion The marketing of financial services has been a recent phenomenon. It has been analyzed that banks increasingly face the problem of service. In order to improve the services it is advisable to develop various strategies so that it can serve its customers in a better manner. Throughout the research paper the financial activities of Marks & Spencer Money has been evaluated. It is closely associated with the retail group namely Marks and Spencer, along with which Marks and Spencer Money works on marketing activities and customer-facing. The company is a wholly owned subsidiary of the global banking giant HSBC. The major strength of the company is that it has been an award winning company since the year 2006. The weakness for the company has been the inability to meet the expected earnings because of the problem of customers’ needs and demands. There are immense opportunities for the company. The UK has been a country with strong business environment and active workforce. Rising mortgage debt along with competition are threats to the company. The company has faced several challenges since the time of its inception. However, it has been able to cope up with the challenges in an effective manner. It has made use of various marketing tools in order to market its products successfully. Use of online banking has been one of the recent trends for most of the consumers since it provides lots of benefits to the customers. It can also act as a promotional tool for the companies. In addition to this, quality of the service delivered plays a vital role in order to build the brand differentiation in the service sectors. Internal marketing can be a useful tool in this regards which can help the company to draw the attention to service as well as encourage the staffs to give their best support towards attaining the goals of the organization. Internal marketing aims at including all the employees in the creation of culture and brand values of the banks (Papasolomou & Vronitis , 2006). References Albers-Miller, N D. & Straughan, R D., 2000. Financial Services Advertising In Eight Non-English Speaking Countries. 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