Marketing of Financial Products Ch 5

7/27/2019 Marketing of Financial Products Ch 5

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Chapter II: The Banks Client Behavior

Dr. Karim Kobeissi


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Structure of the Banking

MarketIn the banking market, we can distinguish two tpes of

customers: lenders !depositors of mone" and

borrowers!customers of products that are made#up b

the banking transformation process"$

%lthough, these two tpes of customer consume

apparentl distinct products& however, the inscribe

their behaviour in the same customer purchase

process$

The customer purchase process represents a road map of

customers minds that bankers and marketers use to

help guide their marketing and sales strategies$


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Section ': Client Behavior in Services'$' The (urchase (rocess for Services

The purchase process is the stages a buer

passes through in making choices about which

services to bu$ In the purchase decision

process for services we can distinguish five

stages:

Stage ': )eed *ecognition$

Stage +: Information Search$

Stage : -valuation of %lternatives$

Stage .: (urchase$

Stage /: (ostpurchase evaluation of decision$


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0ive Stages Model of the Customer (urchase (rocess


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Stage ': )eed *ecognition

1 It is linked to the perception of a gap between

a desired state and the current state$

1 It is not an absolute and ob2ective standard

but a perceived gap where sub2ectivit plas

an important role$

1

If the perceived gap is low, below a certain

threshold, the need will be inactive

$


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Stage +: Information Search

The Internal Search

It is activated 2ust after the recognition of the need$ This research

is performed in the client own memor where he tends to identif

all relevant information to the sub2ect$ 0or a first purchase, the

lack of e3perience limits the possession of specific knowledge$

The -3ternal Search

It4s called prior research to purchasing$ The first motivation is the

desire to make the best choices of consumption$ 5suall, this

research is ver limited$ 6owever, for comple3 purchases, this

research is important: It involves a large number of product

attributes !e$g$, price, 7ualit8", uses man e3ternal sources of

information !e$g$, friends and compan websites" and involves a

lot of time$


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Stage : -valuation of %lternatives

In this stage, four problems can occur:

'" 9efining Selection riteria

%mong the man possible criteria !e$g$ price, room

service, internet connection, valet parking, S(%8", the

client retains onl a few$

+" Selection of (ossible Solutions

Screening offers led to the definition of a set of

offerings that the client choice operate !6ilton, .

Seasons, *egenc"$


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Stage : -valuation of %lternatives !con"

" -stimation of %lternatives

It is to evaluate the performance !based on gathered

information" of each of the offerings in the range

mentioned against each criterion$

." The hoice of a 9ecision *ule

(erformed in a compensator logic or not, and onl

according to the e3pectations and priorities of the

client$


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-valuation Model Interpretation

ompensator Model of

0ishbein

% consumer4s overall attitude toward a

supplier !or offer" is a function of:

'"The evaluation of the goodness of a

particular attribute a supplier ma have$

+"The strength of belief that a particular

supplier has that attribute$

ompensator Model of

%dditive 9ifference

In this model the suppliers !or offers" are

compared b attribute, two suppliers at a time$

The offer having the highest note will be chosen$

on2onctive Model !non

compensator" $

The chosen supplier !or offer" is the one for

which the evaluation of ever attribute e3ceeds

a minimum threshold fi3ed b the consumer$

9iscon2onctif Model !non

compensator"

The chosen offer is the one for which the

evaluation of certain attributes e3ceed some

minimum thresholds fi3ed b the consumer$

e3icographi7ue Model

!non compensator"

The consumer classifies the attributes in

ascending order$ The most performing

supplier !or offer" is chosen$ In case of

e7ualit, the alternatives are compared on

the second attribute and so on$

In a compensator model a poor evaluation of one attribute can be offset b a

strong evaluation on another$ In a non compensator model suppliers !or offers"

are evaluated one attribute at a time, until one is superior$


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Stage .: (urchase

tage .: (urchase

%fter evaluating the solutions, the consumer is in a buing situation&

however, his purchasing intention is still uncertain$ In fact, the

customer has to consider different tpes of perceived risks that

are associated with the purchase of the service before making up

his mind:

a" 0inancial risk

Monetar loss or une3pected costs:

# will I loose mone if I make the investment recommended b m

stockbroker

0utur communications !whether to pass on positive or

negative recommendations to others"$


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onsumers ma skip or minimi?e one or more stages in the

purchase decision process depending on:

'"Their level of involvement !e$g$, having a hair cut @s

having a medical operation"$

+"The personal, social, and economic significance of the

purchase !e$g$, one da @s twent das residence at a

hotel"$


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%pplied -3emple on the ompensator Model of 0ishbein

%ttribute !i"

ei A -valuation of the

goodness of the attribute

!i" that the supplier !or

service" has$

biAThe strength of belief that the bank

has the attribute !i"

Bank % Bank B Bank C

(ro3imit . ' #'

=orking hours ' '

)etwork + + ' #'

Credits + '

Interest rate

on savings

+ ' #+

Services

invoicing

#' # #'

verall attitude scores Ao=e

ibi

+ +' #'

%ccording to this model, bank % will be chosen b the client$


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%pplied -3emple on the ompensator Model of %dditive 9ifference

%ttribute !i"

-valuation of the

attribute !i" b the

client

Comparison done b the client

Bank % Bank B Bank C Comparaison

between

bank % D B

Comparaison between

bank % D C

Comparaison between

bank B D C

(ro3imit ' #' !" > !'" A + !" > !#'" A . !'" > !#'" A +

=orking

hours

' !'" > !" A #+ !'" > !" A #+ !" > !" A E

)etwork + ' #' !+" > !'" A ' !+" > !#'" A !'" > !#'" A +

Credits + ' !+" > !" A #' !+" > !'" A ' !" > !'" A +

Interest rate

on savings

' #+ !" > !'" A + !" > !#+" A / !'" > !#+" A

Services

invoicing

# #' !# " > ! #'" A #+ !#" > !" A # F !#'" > !" A # .

Total of additive difference E / /

%ccording to this model, bank C is re2ected and the client hesitate between % D B$


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%pplied -3emple on the on2onctif Model

%ttribute !i" Minimal %ccepted

evel




(ro3imit ' ' #'

=orking hours E '

)etwork # ' + ' #'

Credits ' + '

Interest rateon savings

' ' #+

Services

invoicing

#' # #'

%ccording to this model, bank C is re2ected due to its poor performance in term of

pro3imit and interest rate$ Bank % is also re2ected due to its poor performance in term ofservice invoicing $ Bank B will be chosen$


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%pplied -3emple on the 9iscon2onctif Model

%ttribute

!i"

ei A -valuation of

the goodness of the

attribute !i" that the

supplier !or service"

has$

Minimal

%ccepted

evel

biAThe strength of belief that the

bank has the attribute !i"


(ro3imit / . . .

Credits . '

Interest

rate on

savings

+ ' #+

)etwork + ' + ' #'

=orking

hours

' E '

Services

invoicing

#' #' # #'

%ccording to this model, onl bank % meet all the re7uirements of the client$ Conse7uentl,

bank % will be chosen$


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%pplied -3emple on the e3icographi7ue Model

%ttribute !i" ei A -valuation of

the goodness of the

attribute !i" that the

supplier !or service"has$




=orking hours / '

Services

invoicing

. # #'

(ro3imit ' #'

)etwork + + ' #'

Credits + + '

Interest rate

on savings

' ' #+

%ccording to this model, banks B D C have e7ual score on the most

important attribute !working hours"$ The choice is settled b wa of

the second most important attribute !Services invoicing" bank C will


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Section +: 0actors Influencing The Banking Client

The analsis of clients behaviors in banking allows to

differentiate man tpes of behaviors which will

guide the definition of the offers4 characteristics

that best match each client$

Before introducing the different factors that affect

the banking client, it is necessar to present the

various dimensions of the banking client behavior$


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'$ 9imensions of the Banking Client Behavior

The analsis of the banking client behavior leads to

consider his numerous facets that are focused

around three dimensions:

a" The prospecting dimension$

b" The purchasing dimension$

c" The consuming dimension$


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The 9imensions of the Banking lient Behavior

%nal?ed Content Conse7uences for

Banks Marketing

(rospective (art of the client

that decides

where to bu and

perform

arbitration

between multiple

points of sale$

The behavior of the client is anal?ed

according to his process of choice

between different points of sale$

%pparentl, there is two tpes of

prospective clients:

#% Gflu3 clientH chooses the bank branch

due to its closeness$

#% Gtraffic client G chooses the agenc

for other reasons !word of mouth, image,habits" and he fre7uent it more rarel but

for longer durations of visit$

9evelop the loalt of both

tpes of prospective

clients$

(urchasing (art of the client

that purchase and

which we must

know the

purchasing

processes and

comportements inrelation to the

various products$

The behavior of the client is anal?ed to

detect the perception of the products

and offers at the different points of sale$

In particular, it is a 7uestion of detecting

among the various tpes of products

those that are the ob2ect of spontaneous

purchases or in contrast scriptedpurchases$

rgani?ation of premises$

Identifing staff tasks and

response times$

Consuming (art of the client

that consumes

and develops

treasur, saving

and retirement

needs$

The behavior of the client is anal?ed

according to his needs$

Structure the banks offers

in distinguished product

lines that meet the needs

of consumers4 segments$

The offer is a

comprehensive and

materiali?ed answer to the


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+$ The 9ifferent 0actors That Influence The Banking Client

+$' Social Influences

Social Classes

9ifferent studies have showed that modest social classes tend to borrow to fulfilltheir personal needs while wealthier classes borrow mainl for the purposes oftheir professional activities$

These results demonstrate the importance of social class in e3plaining financialbehavior and its possible use as a criterion for segmentation and thus designingdifferentiated offers$

Social roups

Social groups appl their influence on the individual through interpersonal

relationships$ Two mechanisms have been identified:

a" )ormative Influence: the group puts pressure on the individual to adopt itsstandards of consumption$

b" Informative Influence : The group is a source of information, especiall forcomple3 purchases, and, more generall, when the individual perceives a lack of

competence to collect and process information from other sources$


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The 9ifferent 0actors That Influence The Banking Client !con"

0amil

In a restricted environment, the famil has the most decisive

and direct influence on the individual$ The famil must be

taken into account to capture oung clients'b acting on the

influence of their parents$

+$+ Socio#demographic Influences

%ge, gender, race, ethnicit, income level, marital status,

number of children, occupation, and education level$$ %re the

socio#demographic features that are fre7uentl used b

marketers to define the demographic profile of a client$


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The 9ifferent 0actors That Influence The Banking Client !con"

+$ (schological Influences

Individuals attitudes towards mone are different$=e can distinguish two ma2or dimensions thatcan be used to develop a simplified diagram thatrepresents individuals perceptions of mone:

a" The (schological 9imension

Two e3tremes: Mone fusion, carnal correspondsto an absence of distance, and moneinstrumental reflecting a ma3imum differencebetween being and having$

b" The Moral 9imension

9istinguished b having mone, mone earned

!work", and fun mone$

Documents

Marketing of Financial Products Ch 5