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Marketing Financial products.

April 7, 2010


Working for a Top Multinational Bank , Citibank and selling its products & services in the market may sound exciting to most of us , however it is not that easy or exciting as it seems. This holds true for any other product of a financial company or a bank , however prestigious it may be be it be a Indian or a Multinational company. Unlike any Conventional companies which sells a tangible product i.e. which can be seen or felt like a car , air conditioner, television, food, clothing, etc  , the financial products are the part of service industry. The financial products are intangible products i.e. they cannot be seen or felt although they satisfy the customers. The examples are Bank’s deposits (account opening) , credit or debit cards , Insurance products, financial services like Vehicle finance ( car finance , two wheeler finance) or consumer durables finance (Television, Air -Condition , fridge) , home loan, commercial vehicle loan, education loan , Business loan , Stocks & Shares, Mutual funds, Bonds, top end financial products like currency & commodity trading . All these products are financial products and are intangible although in terms of customer satisfaction their importance is as high as that of tangible products if not more.

Unlike the tangible products which were marketed since the birth of market itself , the history of intangible products is relatively new. Its birth also took place due to the underlying principle of Marketing that is the Need and its satisfaction . It is the offspring of the feudal system when the peasants used to take credit from the money lenders or the landlords against their land , house or jewelry promising to pay it in given time. Paper work was nominal and since the peasants were illiterate they just had to put their thumb impression instead of their signature on the deed or paper. Forgery and exploitation against these poor and illiterate peasants was and is very high as we have heard and read about it.

Slowly and slowly a systematic and legal approach to market the financial products started taking place. The introduction and growth of banks and financial companies backed by the government started the new phase in the financial sector. This contributed to the development of the finance to its present stage.The last two hundred years has seen the rapid  growth and development in finance with new tools developing.The rapid Urbanization leading to the growth of towns and cities, the introduction of currency as exchange medium in the market, the rise in literacy level and the growth of Working class were the key factors leading to the growth in Finance.This was also accompanied with the growth in technology, communication and marketing.

The rise of Monetary system in the economy leading to the complete eradication of Barter system is the single most important factor to the growth of modern finance. The government itself has become the borrower. All countries now have their own Currency, their own Reserve or Central banks to control & regulate the economy , and many private and government banks and financial institutions to provide financial Products & services to the public under the guidance of the Central Bank. In case of Insurance companies their is an autonomous regulatory authority which controls & regulates the Insurance sector. All the Insurance companies sell their insurance products in the retail sector under the guidelines laid down by this authority.

Finance has now become a subject of science with more and more research and study being done here to launch new financial products for the benefit of public in the retail sector. May financial research institutes  have come up for this purpose. The growth in banks , insurance companies and  financial institutions  was astounding in last fifty years and last ten years in India with the deregulation of the financial sector. Every day we hear a new financial product being launched in the market by different companies. Companies now days offer complete financial solutions to their customers .

That brings us to the question that how do these companies market their  financial products. Their is nothing special about this as the marketing tactics and training are similar to that employed by other industries.The only difference lies in the fact that only papers and documents  are exchanged between the buyers and sellers instead of a visible product.Of course the buyer has to pay the required amount well in advance to purchase the  product . In return he gets a legal document which is recognized be the government of  and by all respective institutions where this document is used. For example an American Express credit card is a legal document recognized by the Government of India  and by all shops , Institutions and establishments where this credit card is valid.None of these establishments can refuse this credit card. Same holds true for other financial products where a legal document is given to the customer by the financial companies like a Insurance policy , mutual policy, bonds, shares , or vehicle finance. All terms and conditions , expiry date , are provided to the customer along with this document.The company continue to provide their services to their customers until the expiry of the legal document which may be from few months like in case of short term fixed deposits to life long as in case of life insurance policies.

All the companies  selling financial products employ the similar marketing methods to sell their financial products. Direct marketing , retail marketing ,mail marketing and advertising are the main marketing methods employed by these companies.Direct marketing cam be done by the companies the company itself or by hiring an agency known as Direct sales associate or both. For this the company recruits sales person who are then trained and sent to the market to sell their products. This can be done directly by the company or by its direct sales associates. Companies like Citibank , I.C.I.C.I. bank, H.D.F.C. bank, Standard & Chartered Bank, American express, Morgan Stanley , use direct sales associate who employ their own salesmen to market their products. This is very cost effective and efficient for them to market their products this way . Companies like LIC, ICICI Prudential ,Tata AIG, especially in insurance sector directly employ the salesmen to sell their products.

Advertising is also done directly by the company itself or they hire an advertising agency  to prepare and launch an advertisement for them. Hiring an advertising agency is very common . Hiring a public relation company is also becoming popular .  Staging road shows, events , stage shows featuring popular film stars, sports events featuring sports stars , fashion shows sponsored by these companies are becoming very common feature being telecasted in mass media like television. The recent IPL Cricket tournament being held in India is an example featuring all popular film stars , cricket stars and leading Business men in one platform.

Other methods that are used are sending mails to the prospects by post or email .

One very important feature that distinguishes financial product marketing from other product marketing is Documentation. 

Documentation is the legal paper work involved while transferring the ownership rights to the customer. Since the transaction involves transfer of money which may be from few thousand to millions , the sales person must be very careful while collecting the documents. Risk against forgery is very high for both parties in financial marketing as the goods are delivered after a waiting period ranging from few months to 15-20 years.Documents like birth certificate, Income proof, Identity-card, proof of residence , bank statement are very essential to check the credential of the customers . All the required documents have to be submitted as per the company’s policy with no compromise how big the person might be in the eyes of public. Certain categories of persons are blacklisted if their is a case of fraud or default is found against them. Defaulters are those customers  who were not able to pay their loan in time thus losing their right over the financial products. This is very common in case of vehicle finance, consumer finance , premiums of insurance and home loans.

In the last 20 years there has been a tremendous growth in Retail finance Marketing. Retail finance marketing is the marketing of financial products directly to the customers for their consumption. It is like purchasing a kilogram of sugar from a local shop. This is retail marketing. In case of finance it will be like purchasing a mutual fund from the local bank . Now days all banks and financial institutions have a separate  department offering retail services to the customers like Account opening section, Vehicle finance section, Insurance section, Home loan section, Loan for Business and Education, Shares  and mutual funds section, Currency and commodity trading section and so on.   Any customer who is interested in any of the above products or seek information about them can just come here and talk to the company’s representatives. He can get the same information in the computer online like online banking as all these companies have their own websites giving full information about itself and their products already launches and the future products to be launched in near future. Information can be provided even on Cello phone thanks to the latest technology. They can purchase these products online thanks to the surge in credit or debit cards. All the companies have their Help centre and customer care centre which are opened 24 hours. The prospect can seek information on telephone and can call the company’s representative at his place to know about the product. Otherwise too the prospects keep on getting phone calls and daily mailers from these representatives persuading them to buy their products.

All the shops selling consumer durables, cars , two wheelers  offer the finance facility to these customers in which they can pay in installments after purchasing the product. Companies like Maruti Suzuki and Toyota who sell cars in India have come up with a unique idea of selling their cars , offering finance for them and giving car insurance under one roof in their showroom  in a single day.The customers does not have to go here and there to seek information. In just one day the customer drives away with his car, its finance as well as its insurance just sitting in the showroom and signing the documents.

Credit and debit cards have become a necessity . They are accepted every where and are safe too. Purchasing by credit cards is now a common phenomenon in the market. Booking of train or plane tickets , online purchasing, purchasing consumer durables, household products,  , petrol , payment of telephone bills, electricity and water bills , Income and house tax , movie tickets, sports match tickets , daily amenities can  all done by credit cards that too online on computer. All this is possible thanks to the research and development in the modern finance.

In today’s world these financial products have become a necessity. We cannot hope live a comfortable life  and enjoy the benefits and luxury of present day without using these financial products. The growth in finance has lead way to the the present day’s  Consumerism. Everything in today’s world can be and is purchased through finance. Your house, your furniture, your car, your food, clothing, your television, fridge, washing machine are being purchased on credit.You can invest your money in these financial products like saving account in banks, bonds , mutual funds, insurance policies and shares & debentures and earn more money through interest , dividends and Bonus. Your earning and repayment  your debt is a part of today’s life. How you do this is answered by the finance experts who guide you through the whole process  after gathering information about you like you income and wealth, your family, your address and other necessary information. They provide you with the Financial Solution to all your problems and letting you have the cake and eat it too.  










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