Topic 8

Question 1

The marketing mix involves elements which need to be right to attract and retain customers, these elements are interdependent, what is the impact of this?

Answer 1

If one element is changed must consider the impact on the other factors

Each provider must find their own right balance to its prospective and existing customers, must be aware of customers and aware of competitors actions

Question 2

What are the 3 other Ps which only apply to financial services providers?

Answer 2

People
Process
Physical evidence

Question 3

Explain the element of Product/Commodity

Answer 3

The thing that performs the service customers need/want

Providers must have different versions of each product to suit different types of customers - must constantly review products to make sure its still relevant

Must consider competitors and find USP - require constant product development

Question 4

Explain the element of Price/Cost

Answer 4

Interest rate / fees

Price determines how much people buy, which types of product and level of service they expect

Question 5

What 4 things does the price charged for financial products depend on?

Answer 5

Cost of providing 
Demand for product
Prices charged by competitors
Image provider wishes to promote
(Insurance price is based on risk)

Question 6

Explain the element of Promotion/Communication

Answer 6

Process of creating awareness of a product - must then be maintained and increased
Is an ongoing activity which can be enhanced with use of a strong brand

Question 7

What 3 things does good promotion include?

Answer 7

Describes the product
Highlights strengths
Shows advantages in relation to rivals

Question 8

Explain the element of Place/Channel

Answer 8

Means of delivery
Customers want convenience
Most providers offer all channels
Face to Face is good for success of securing customers

Question 9

What 4 factors determine delivery channels used?

Answer 9

Cost
Target market segment
Effectiveness
Competitors

Question 10

Explain the element of People

Answer 10

As financial services is a people-centred business - employees must have good people skills, well qualified and trained, motivated and good attitude to customers

Good relationship helps get loyal customers

Question 11

Explain the element of Process

Answer 11

The process of providing the service - through use of computer technology - customers do not like experiencing difficulty trying to use the phone to contact

Question 12

Explain the element of Physical Evidence

Answer 12

Important as there is no tangible product - service cannot be experienced before delivery, so there will always be uncertainty over the product they will receive

Can be reassured by tangible evidence such as pleasant bank receptions and good feedback from other customers

Question 13

What is advertising?

Answer 13

Promotion of products on a non-personal basis to raise awareness - aims to capture attention and interest, brand awareness and encourage purchases

Needs to be repeated and consistent

Question 14

What are the 2 main reasons for advertising?

Answer 14

Create awareness of generic product - informative advertising

Influence people to choose a particular product - persuasive advertising - important in oligopoly

Question 15

What is branding?

Answer 15

Name, design, logo or symbol which distinguishes product/provider - way of gaining competitive advantage and brand loyalty

Question 16

What are 6 advantages of branding?

Answer 16

Product differentiation
Effective advertising
Brand loyalty
Relative price insensitivity
Brand extension
Better targeted marketing

Question 17

What is Public Relations?

Answer 17

A long term process by which a provider promotes a particular public image and a reputation

PR department of a company aims to create and maintain this image

Question 18

What are 4 features of good PR?

Answer 18

Generates interest in providers
Prompts potential customers to find out more
Triggers previous customers to buy again
Reinforces firms image and reassure existing customers

Question 19

In what 3 ways is PR different from advertising?

Answer 19

Not paid for directly, liaise with journalists to create positive news stories
Target audience is all stakeholders
Aims to influence public perception

Question 20

What does a providers reputation depend on?

Answer 20

The publics perceptions of the customers experience and quality of service and publicity received

PR attempts to limit damage since financial crisis

Question 21

What is sales literature?

Answer 21

All text created by a providers marketing department, often the main contact between customer and provider until they decide to buy

Also made available more detailed to IFAs so they are always well informed and up to date with new products and changes to existing ones

Question 22

What is direct selling?

Answer 22

Sales that happen directly between the customers and provider without intervention of financial adviser

Increasing with increasing technology and changes in consumer attitudes

Question 23

What is remote direct selling?

Answer 23

Not in the same physical space

Eliminate benefits of personal selling

Question 24

What is personal direct selling?

Answer 24

Seller is present with buyer

Question 25

What are the 6 main ways of attracting and retaining customers?

Answer 25

``` The marketing mix Customer service Reputation and brand image Loss leaders Deals and product offers Social and ethical considerations ```

Question 26

What 5 key features of the marketing mix to help attract and retain customers

Answer 26

Product sold at clean and fair price Product purchased by fully informed customer Product delivered via suitable and convenient channel Product designed to suit customers circumstances Product satisfies customers needs

Question 27

Customers expect a high standard of customer service and are very critical when they do not receive this, providers can measure quality by counting the number of complaints received, what are 5 types of frequent complaints?

Answer 27

Current account customers complain that electronic transfers and cheques take too long to clear, online server is down, overdrafts are very expensive Savings customers are unhappy about low interest rates and not happy when introductory bonus rate is withdrawn without notice Investment, pensions and annuities customers are unhappy about complex products, do not understand returns and think fees are too high Customers find it hard to get loans, high arrangement fees Insurance customers find insurers go to great lengths to avoid paying out

Question 28

How does brand image and reputation lead to attracting and retaining customers?

Answer 28

Strong brand gains customers by building association between providers names and values which customers think providers should have (trust, reliability and service) However, strong brand on its own will not retain customers, require a good product, fair price and high quality customer service as well, or customers will switch

Question 29

How do loss leader products lead to attracting and retaining customers?

Answer 29

Product offers a product which is sold at below cost to bring customers in who then purchase other products which earn a profit Attract customers which they hope will become long term repeat customers Eg) offering advice

Question 30

What are the 2 general approaches to selling?

Answer 30

Relationship marketing | Transactional selling

Question 31

What is transactional selling?

Answer 31

Centres on the product rather than customer, wants to make many individual sales and close deals quickly No attempt to create relationship, find out needs or if product is suitable May apply this approach if believe it will develop brand awareness quicker and cheaper as it uses less human resources

Question 32

What is relationship marketing?

Answer 32

Centred on building long term relationships - form interactive bond between provider and consumer Sales staff trained to know clients well, sales only made once product is known to be suitable

Question 33

Transactional selling appears to be more efficient due to reduced amount of time and resources used, but as short term sales are less likely to be repeated, process is not actually efficient, how is relationship market more efficient?

Answer 33

Although it is expensive, balances out cost with increased revenue as products are best suited to customers needs, encourages loyalty and repeat sales

Question 34

What is the 80:20 rule?

Answer 34

States 80% of effects rise from 20% of the causes | 80% of sales/profits/complaints rise from 20% of customers

Question 35

Explain the 80:20 rule in terms of transactional and relationship marketing?

Answer 35

If 80% of sales come from 20% of customers, these customers are worth keeping However, if in favour of transactional - firms may waste money trying to develop relationships with 80% of customers who only account for 20% of sales