Chapter 5

FINANCIAL SERVICES FINANCIAL SERVICES MARKETINGMARKETING

FINANCIAL SERVICES FINANCIAL SERVICES MARKETINGMARKETING

TRADITIONAL CHANNELS TRADITIONAL CHANNELS OFOF

DISTRIBUTIONDISTRIBUTION

INTRODUCTION Financial institutions need to make their

products available to customers Distribution involved a wide variety of activities:

Time – access when it is convenient to buy Place – available in any locations – accessible and

convenience Possession – access to the product for consumption

or future use

INTRODUCTION Distribution also provides a means of effectively

communicating with customers and vice versa Distribution of financial services has been

changed due to legislation, competitive pressures and customer demands

The traditional distribution has been via branch network

DISTRIBUTION CHANNELS

Distribution channel or marketing channel The groups of individuals or companies which are

involved in directing the flow and sale of products and services from the provider to the final consumer

Distribution channels can be classified into: Direct – the movement and sale of the product

directly between the provider and the customer Indirect – products flow via intermediaries or

middlemen

DISTRIBUTION CHANNELS

Direct distribution channels

Phone or Internet

Customer

Financial Services Providers

Customer

Financial Services Providers

Financial Services Providers

Company Sales staffs

Branch or ATM

Customer

DISTRIBUTION CHANNELS

Indirect distribution channels

Brokers CustomersFinancial Services Providers

Financial Services Providers

Financial Services Providers

Customers

DISTRIBUTION CHANNELS

Direct

Distribution Channels

Product and services delivered directly by the

producerRelies heavily on sales staff to contact customer

and make salesMore effective, the company has full control of the products and services offered

DISTRIBUTION CHANNELS

Direct

Distribution Channels

3 main types of direct distribution:

Branch networksCustomer goes to providerRequires the organization to have its own outlets with full range of servicesDominant distribution channel for retail banks

DISTRIBUTION CHANNELS

Direct

Distribution Channels

3 main types of direct distribution:

Company Sales ForceRequires the organization to have a dedicated sales force that take a range of services to actual & potential customersUse extensively in marketing life insurance products

DISTRIBUTION CHANNELS

Direct

Distribution Channels

3 main types of direct distribution:Remote distribution

Providers and customer are physically separate

Requires the organization to have the system that do not require any Face –to –face contact betweenCustomers & provider

Eg. Phone banking and internet banking

DISTRIBUTION CHANNELS

Indirect

Distribution Channels

Use intermediaries to distribute services Intermediaries are separate organization that responsible to provide services to consumersAdvantage – perform function of producers and producers could cut coastDisadvantage – less control over the ways the intermediaries marketed the services

BRANCH NETWORKS Branch network is a direct distribution channel Retail banks are traditionally rely on branch network Advantage :

High level of convenience to customers in strategic locations Using technology will automate basic transaction – costs can

be controlled Small number of staff can carry out a larger volume of

business Customers can do their banking while physically visiting the

branch- sense of security and assurance

BRANCH NETWORKS Disadvantages

High maintenance cost of ATMs Long queue during peak periods and the long waiting

period may results in frustrated customers Difficult to visit branch during normal working hours to

conduct basic banking activities Prone to vandalism due to non-availability of 24- hour

security guard on the ATM Can be frustrating to deal with face to face interaction

with branch staff

DIRECT SALES FORCE Financial providers ordered the company’s

staff to contact and attract customers Two roles of direct sales force include :

Make sale Problem solver Building and servicing continuing relationship Cross-sell other product

DIRECT SALES FORCE

Making the sales presentation

Dealing with objections

Contacting the prospect

The sales process

Closing the sale

Targeting and evaluating prospects

Preparing the ground work

DIRECT SALES FORCE In order for the sales force to perform better,

attract more given customers and get more sales , they need to be given remuneration

Among the remuneration methods are: Commission Straight salary Or the combination of the two

FINANCIAL PLANNERS A Financial Planner or Personal Financial Planner is a

practising professional who helps people to deal with various personal financial issues through proper planning

Include but not limited to these major areas tertiary education planning, retirement planning, investment planning , risk management and insurance planning, tax planning, estate planning and business succession planning (for business owners).

BANCASSURANCE Integrated banking and insurance business Where insurance- based and other related product

are distributed through a retail branch networks Eg. Eon Bank Group Bancassurance,

UOB,Maybank Life Assurance Berhad Advantage:

Reduce distribution cost Increase sales –in terms of accessing the bank’s existing

customer

BANCASSURANCE Customer database – able to identify types of

customers to buy certain products or services Challenges

Culture of selling is different – to move staffs towards a selling function may be challenging

Customer- many distrust life insurance Bancassurance – complex product may contribute

towards customers resistance

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