Is financial service a product or a service?
The Development of Financial Service Marketing: Is Financial Service a Product or a Service?
-Views in the Financial Services Marketing Manual
The Financial Services Marketing Manual published in April 2009 has made a comprehensive and cutting-edge research in this field. As for the basic concept of financial service marketing, the authors Evelyn ElLynch and Duke Vannali put forward:
In order to apply general marketing principles to financial services, we must first ask: Is the product being promoted a product or a service? What is the difference? First of all, we admit that there are many differences between them. For example, suppose you are in charge of a new credit card business called Topnotch Card, which is aimed at the high-end market. This kind of credit card provides many extra services, and correspondingly, it also charges a fairly high annual fee. As a marketer, one of your jobs is to help product designers determine which additional functions of products will be most expected by future customers and how much they are willing to pay for these services by using market research methods such as focus group interviews and surveys. Next, you need to accurately show the advantages of the products you are marketing compared with the competitors' products, and find out the marketing methods to spread the above advantages to your target market. These are typical product marketing.
You have done all the above work well, and your top-notch card has been issued, and the progress is better than you expected. But then you began to notice some disturbing figures-some customers began to cancel credit card business, and this far exceeded your expectations. After a lot of interviews with new and old customers, you find that the service provided to credit card customers is unbalanced. Sometimes customer service representatives can provide great help to customers, but sometimes they will make customers feel dissatisfied. The reason is that although customer service representatives are trained to provide first-class credit card services, their salaries are linked to the number of customers they serve, not to customer satisfaction. As a result, the customer's experience of the card is inconsistent with its luxurious and tailor-made brand image. The mistake is that you are marketing a product (all top cards are the same), not a service (the experience of using top cards is different every time).
Financial services as products
As mentioned earlier, financial services are neither products nor services, but they are both. Here are some aspects of financial services that are the same as products:
1. separability. Unlike many kinds of services, the production of many financial products can be separated from their consumption. Consumers don't have to go to the bank in person to use a current deposit account. Just like sports shoes, current deposit accounts are "generated" before sale and subsequent use.
2. Lack of perishability. Unlike booking dinner, credit cards will appear when customers need them. It won't rot. This makes it easier for financial providers to manage the supply and demand of services. Unlike restaurants with limited seats, every customer wants to occupy a table at 8 pm on Saturday, and the supply of credit cards can be adjusted to meet the demand.
3. Mass production. Usually, all kinds of services are created and delivered at one time within a certain period of time, while products are usually mass-produced. Many financial services, such as financial advice, are personalized. On the contrary, other financial services can be produced and sold in large quantities, such as insurance policies, school savings accounts or data analysis systems used by bond traders. Mass production makes it possible to promote sales in batches and reduce costs.
Financial services are services.
A current deposit account can be "withdrawn" but cannot be moved. Unlike facing a car, you can't touch the current account with your eyes or hands, nor can you check its appearance. The current account does not actually exist. Although the word "product" is often used in financial circles, financial services "products" are not products in the full sense, because they are intangible. Invisible things have some common features.
1. Low market access cost. There is little or no cost to manufacture, store and distribute financial "products". The start-up cost is very low, which means that the threshold for creating or copying a financial product is very low. Although there may be legal restrictions and certain marketing expenses, the capital cost of creating a new product can be ignored, and there is no warehousing and logistics cost.
2. Go public quickly. When a manufacturer produces a new type of toy or airplane, he must first design a blueprint, make a model, check the integrity of the design, and often even reshape the sample before the product is put into trial sale. But in the field of financial services, creativity is a product. If the investment bank can come up with a new method of cash flow securitization (such as selling a share of a pop singer's future royalties), then the ink on the stock issuance plan is dry, and it can sell shares.
3. Lack of exclusivity. A successful new manufacturing product can usually enjoy exclusivity for a period of time, during which there is no competition. In order to prevent competitors from stealing identical models, products can be patented (such as a drug) or registered as trademarks (such as software). If other manufacturers want to build a competitive production facility (for example, a facility for producing a new type of aircraft), the cost is too high to be feasible.
However, in the field of financial services, there is a lack of protection measures and the cost of market entry is low. Merrill Lynch "invented" the first CMA (cash management account) in the late 1970s. This is the first time that a brokerage firm has launched an account with both investment services and demand deposit services. This "invention" was very successful and brought many new businesses to Merrill Lynch. But it didn't last long. A few years later, all brokerage companies had such accounts. Although Merrill Lynch registered a trademark for the product name, it could not protect the idea, and its first-Mover advantage as a founder soon disappeared.
Service first
Because it is easy to copy a new financial service concept, it is difficult to differentiate products. No matter what additional features you add to your product, such as attached credit cards or online bill payment, these ideas can easily be copied by your competitors. In the long run, added value comes not from the product itself, but from other aspects.
So where does the added value come from? The most important difference still comes from service. For products, you can control their quality from the source of the production process. For the service, its quality is in the hands of sales staff or customer management personnel, who can improve (or reduce) its quality. This means that the quality of your products will vary from person to person who sells or provides products. All HP 22 10 color copiers are the same, but all financial advisors are different.
Therefore, one of the biggest challenges faced by marketing financial service institutions is to control service quality. This is an arduous task, especially in the field where third parties are responsible for providing services, because they have no direct employment relationship with service manufacturers. These third parties include investment advisers, independent insurance intermediaries or third-party administrators of pension plans.
Development of financial service marketing
In fact, not only in China, but also abroad, the research on financial service marketing started late. There is relatively little relevant information. The marketing focus of representative events in time stage was born in 1950s. 1958 first mentioned marketing advertisement and promotion at the joint meeting of national banks. In the 1960s, friendly service was popularized and "smile" service was improved. In the 1970s, financial innovation was the fastest. 196 1 year, the introduction of large negotiable certificates of deposit (CDs) kicked off the wave of bank product innovation.
A comprehensive "financial revolution" broke out in the 1970s: insurance companies launched various types of insurance, and banks provided credit card services, mutual funds, international insurance and other financial products and services in the 1980s to innovate financial positioning and modern marketing. Many financial institutions chose to determine their own image and service focus. Strengthen the investigation and analysis of marketing environment, make long-term and short-term marketing plans, establish market segmentation and value orientation, and establish the competitive advantage of marketing departments.
Marketing research, analysis, planning and control