financial product

8/8/2019 Financial Product

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FINANCIAL PRODUCT:AN

INTRODUCTION Financial products refer to those instruments that help yousave, invest, get insurance or get a mortgage they act as aninvestment avenue and provide the required financialsecurity to the investors based on the risk-return profile of

the financial products. In the past, traditional financial products were offered in

India through government initiatives by Public Sector Banks(PSBs) (deposit account, credit account), Life InsuranceCorporation (LIC), and postal department (recurringdeposit, National Saving Certificate, Kisan Vikas Patra).

However, in recent years with the advent of liberalization offinancial services industry, diverse financial products havebeen introduced through participation of private andforeign entities in addition to the public sector enterprises.


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VARIOUS FINANCIAL PRODUCTS


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FINANCIAL PRODUCTS: ADVANTAGES

TO ISSUERS AND INTERMEDIARIES:

RAISING OF CAPITAL:COMPANIES AND FINANCIAL INSTITUTIONS ISSUE FINANCIAL PRODUCT TO RAISE

CAPITAL TO MEET THE FINANCIAL OBLIGATION BROUGHT ABOUT BY THEIR OPERATIONAL ACTIVITIES.

CORE PRODUCT: HELPS IN INCOME GENERATION FOR FINANCIAL INSTITUTIONS.

SOURCE OF INCOME:BROKERS,INTERMEDIARIES,CUSTODIANS ETC DERIVE A FIXED INCOME BY SELLING

FIANANCIAL PRODUCT

BUILDING IMAGE:MANY AFFLUENT COMPANIES ISSUE PRODUCTS LIKE SHARES IN ORDER TO INVOLVE

PARTICIPATION FROM THE INVESTORS AND TO CONNECT WITH THEM .

TO THE INVESTOR:

INVESTMENT OPPORTUNITIES:A WIDE VARIETY OF FINANCIAL PRODUCT OFFERS A LOT OF INCENTIVES

AND OPPORTUNITIES TO DESIGN THEIR PORTFOLIO TO EXTRACT MAXIMUM BENEFIT FROM THE PRODUCT

AS ACCORDING TO THEIR NEED AND INCOME.

DISSEMINATION OF KNOWLEDGE :THE VARIOUS MARKET AND PLAYERS PROVIDE KNOWLEDGE TO THE

POTENTIAL INVESTOR ABOUT THE COMPANIES PERFORMANCE AND THUS SUPPLEMENTS THEIR

INVESTMENT DECISION MAKING PROCESS.


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FINANCIAL

PRODUCTS:DISADVANTAGES HIGH AMOUNT OF RISK INVOLVED DEPENDING

ON THE TYPE OF SECURITIES.

DUE TO THE LACK OF KNOWLEDGE,PORTFOLIO

MANAGEMENT IS COMPLEX IN NATURE .

HIGH AMOUNT OF BROKERAGE AND

COMMISSION CHARGED LEADING TO INCREASE

IN COST TO THE ISSUER AND INVESTOR. DUE TO HIGH VOLATILITY OF FINANCIAL

PRODUCT ,IT IS DIFFICULT TO PREDICT THE ROI.

LACK OF TRASPERANCY AND CLARITY.


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MANAGEMENT OF FINANCIAL

PRODUCTS


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REGULATORY BODIESWith the growth of a product comes about a lot of legal and ethical issues,so it becomes

necessary for the government to intervene in the activites carried out inorder to ensureinvestor protection,ethical means of carrying out the activites and also to provide the

framework in which the activities should be carried out.

Sebi: the securities exchange board of india was established on April 12, 1992 in

accordance with the provisions of the Securities and Exchange Board of India Act,

1992.

FUNCIONS : Review of the market operations,organisationsal structure and administrative

control of the exchange

Registration and regulation of the working of intermediaries

Registration and regulation of mutual fund ,venture ,capital funds and collective

investment schemes

Promoting and regulating self regulatory organisation

Prohibiting fraudulent and unfair trade practices in the securities market

Prohibition of insider trading

Investor education and the training of intermediaries,

Inspection and inquiries.

Regulating substantial acquistion of shares and take over.


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Irda:

The Insurance regulatory and development authority has the following duties,functions and powers as laid

sown by The Section 14 of IRDA Act, 1999.

o issue to the applicant a certificate of registration, renew, modify, withdraw, suspend or cancelsuch registration;

o protection of the interests of the policy holders in matters concerning assigning of policy,

nomination by policy holders, insurable interest, settlement of insurance claim, surrender value ofpolicy and other terms and conditions of contracts of insurance;

o specifying requisite qualifications, code of conduct and practical training for intermediary or

insurance intermediaries and agents

o specifying the code of conduct for surveyors and loss assessors;o promoting efficiency in the conduct of insurance business;

o promoting and regulating professional organisations connected with the insurance and re-

insurance business;

THESE REGULATORY BODIES HELP IN THE SMOOTH FUNCTIONING OF THE MARKETING AND MANAGEMENT

OF VARIOUS FINANCIAL PRODUCT.NOW WE DISCUSS THE VARIOUS TYPES OF FINANCIAL PRODUCT ANDTHEIR MANGEMENT AND MARKETING TECHNIQUES:


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FINANCIAL PRODUCTS:MARKETINGOrganizations, both existing players and potential entrants, are looking to

aggressively compete in the growing banking, financial services, andinsurance (BFSI) sector in India. Therefore, there is a lot of action on themarketing front SUCH AS:

Customer Focus:

Various factors influence consumer behavior in purchasing financialproducts. A situational approach can be adopted to understand buyer

behavior. on the basis of level of involvement and consumer confidence(which depends on the perceived uncertainty).

Marketing research : contributes in terms of market structure analysis,market potential, and demand forecasting.

Segmentation: Financial marketers generally adopt one of the followingtargeting strategies -- undifferentiated marketing, differentiated marketing,and concentrated marketing.

CRM includes customer knowledge management, technology adoption andimplementation, and performance measurement. The customer knowledgemanagement 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.


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MARKETING STRATEGY OF DIFFERENT

FINANCIAL PRODUCT Shares:

a share is a unit of account for various financial instruments includingstocks, investments in limited partnerships, and REITs. IT ALSO representS THEownership of the company.

MARKETING OF SHARES:Initially, the shares are issued by corporations to finance their businessneeds which is done by the process of initial public offering thriugh the primarymarket.

An Initial Public Offering (IPO) refers to an "offering" or "flotation," in which acompany issues common stock or shares to the public for the first time.

They are often issued by smaller, younger companies seeking capital to expand,

but can also be done by large privately-owned companies looking to becomepublicly traded.

In an IPO the issuer may obtain the assistance of an underwriting firm, which helpsit determine what type ofsecurity to issue ,best offering price and time to bring itto the market.


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Management of Shares:

The issuance of shares are managed by the issuer,book runner lead

manager(merchant banker) and the syndicate member who also

help in drafting the prospectus and determining the price of

issuance of the share by a book building process.


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Mutual Funds:

It is a professionally managed type of collective investmentscheme that pools money from many investors and invests

typically in investment securities.

Systematic Investment Plan (SIP) is an innovation in paymentoption for mutual fund investors. designed for those interested ingradually accumulating wealth over a long term period.

Mutual fund marketers use advertising, sales promotions, brand

communications, and public relations to attract investors and toincrease their sales.

Fund marketers give away incentives and gifts to the investors forinvesting in their funds and such incentives and gifts may act as acatalyst for attracting more sales. They also give incentives (incash or kind) to their trade partners and their representatives.

Further, the fund houses have started the process of overhaulingtheir brand image to promote themselves more effectively to thecustomers.


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Non Life Insurance:

The common non-life insurance products are motor

vehicle insurance, personal accident insurance, healthinsurance, and householder's insurance.

The promotional mix in the non-life insurance industry isprimarily centered on advertising. Two of the most commonadvertising appeals used by non-life insurance mark

Non-life insurance marketers use multiple distributionchannels to reach their target customers.

The traditional channels include direct mail and direct salesforce, insurance agents, brokers, and agencies.

The contemporary channels of distribution include callcenters; tie-ups with corporate agents, NGOs, automobiledistributors, etc.; worksite marketing; and bank assurance.


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Credit Cards:

A small plastic card issued to users as a system ofpayment. It allows its holder to buy goods and servicesbased on the holder's promise to pay for these goods andservices.

Credit card marketers use direct sales personnel, directselling agents, direct mail, and the Internet as personalselling tools. They also use public relations (PR) efforts as

part of their promotional mix. Sales promotion techniques include introductory offers, cash

back schemes, rewards, programs, and cause-relatedmarketing.

Bank branches are the predominant means of distribution.

In addition, the advent of technology has led to the use ofcall centers, the Internet, and creation of terminals atmerchant establishments.


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CONCLUSION

INDIA IS WITNESSING A REVOLUTIONARY GROWTH INTHE NUMBER OF FINANCIAL PRODUCT BEINGINTRODUCED DUE TO RISE IN INVESTORS FOLLOWEDBY SUBSTANTIAL GROWTH OF THE DOMESTIC

COMPANIES AND MORE FOREIGN PLAYERS EMERGINGIN THE MARKET .

THE ECONOMY OF THE COUNTRY MAY SEE ANUPSURGE BUT IT IS NECESSARY THAT THE REGULATORSKEEP AN EYE ON THE INNOVATIVE PRODUCTS IN

ORDER TO REDUCE INVESTOR FRAUDS AND ENSUREETHICAL FUNCTIONING OF THE FINANCIAL MARKETSYSTEM.

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