Marketing Financial Products
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Chapter 3 : Product Management and Customer Relationship Management
The Product Concept and Product Management
Levels of a Product
Factors Influencing Product Strategies
Product Mix Strategies
Branding in Financial Products
Importance of CRM in Marketing Financial Products
Need for CRM in Marketing Financial Products
Benefits of CRM
CRM and Relationship Marketing
Two Types of Relationship Marketing
Levels of Relationship Marketing
CRM and One-to-One Marketing
CRM Concepts
Customer Knowledge
Customer Loyalty
Customer Switching
CRM Implementation and Evaluation
Customer Knowledge Management
Role of Technology in CRM Implementation
Performance Evaluation of a CRM Program
Future Outlook for CRM Usage in India
Chapter Summary
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Financial product marketers need to manage their product
portfolio in response to the changing environment and consumer needs, in
addition to managing customer relationships effectively for achieving long-term
profitability. The concept of a product can be understood in terms of the
following four terms – actual product, expected product, augmented product, and
potential product. For a financial product, the product strategy is greatly
influenced by customers, competitors, technology, and government & legislation.
Depending on these factors, the product mix strategy could be product mix
expansion, product mix contraction, and product modification.
Branding in financial services is done more at the corporate level than at the
product level. Branding should start with a clear strategy for targeting and
positioning. The brand image should be consistent with the marketing strategy.
Advertising can be successful in building the brand only if the financial
product caters to the requirements of the consumer and the entire service
experience is consistent with the brand image that is communicated. |
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In the financial product sector, brands can occur in three tiers -- master
brand, core brands, and sub-core brands. When there are multiple tiers, the
brands in all the tiers should convey the same organizational values. These
values can be communicated through brand logos and taglines.
CRM is a strategic tool for marketers to acquire customers, retain them, and
maintain long-term profitable relationships with them. It uses information
technology to achieve these objectives. Competitive pressures have led
marketers to realize the necessity of customer retention to survive in a
deregulated economy. CRM has enabled the shift in approach from being
product-centric to being customer-centric. In addition to maximizing
customer value, CRM helps marketers to cross-sell products, achieve
long-term profitability, and build the brand.
Relationship marketing is concerned with relationships that exist between
any two stakeholders of a business. It involves relationship building with
both external customers and internal customers. In an organization,
relationship marketing can be at one of the following five levels -- basic,
reactive, accountability, proactive, and partnership levels. One-to-one
marketing essentially involves knowing about each and every possible need of
the targeted customers and developing tailor-made solutions for them. To
implement one-to-one marketing, the marketer needs to identify the target
customers, differentiate them into groups, interact with each customer
group, and provide customized products and solutions in a cost-effective
manner. This can be done using the technique of mass customization.
Customer knowledge, customer loyalty, and customer switching are three
important concepts in CRM. The components of customer knowledge can be
classified into three broad categories: knowledge about the customer,
knowledge to support the customer, and knowledge from the customer. Customer
loyalty can be either affirmative loyalty or reluctant loyalty. The level of
affirmative loyalty is influenced not only by traditional factors, such as
customers, product offerings, employees, and measurement systems, but also
on emerging practices such as electronic customer care. Eight different
reasons have been identified for customer switching. They include (a) core
service failures, (b) service encounter failures, (c) price failures, (d)
inconvenience, (e) employee response to service failures, (f) attraction by
competitors, (g) ethical problems, and (h) involuntary switching. The first
five reasons in this list can be addressed through the use of CRM
techniques.
Implementation of CRM includes customer knowledge management, technology
adoption and implementation, and performance measurement. The customer
knowledge management process (journey) is a cycle with four inter-related
steps – developing a customer-focused strategy; developing the customer
buying process; implementing actions, tactics, campaigns; and customer
learning. Technology implementation has become the key to CRM implementation
in an organization as huge volumes of customer data can be stored, managed,
and retrieved using the latest technologies. CRM software tools can be
categorized into operational CRM tools and analytical CRM tools. When the
performance measurement of the CRM activities is done using a carefully
defined basket of metrics, it helps in managing and controlling the CRM
initiatives in the organization. In the future, large enterprises in India
are expected to opt for CRM applications which have pre-built interfaces
with standard ERP applications, while the small and medium business
enterprises may still continue to use stand-alone CRM applications. The
usage of CRM in India is expected to evolve from ensuring operational
efficiency (in customer handling) to yielding strategic benefits -- through
real-time customer segmentation, and co-creation of products with customers.
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