chapter 5
DESCRIPTION
traditional channel of distributionTRANSCRIPT
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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