The Changing Role of Marketing in Banking
The Changing Role of Marketing in Banking
Banking has come to adjust and change successively over the past decade in order to accommodate the digital age. However, even far before that aspects of engaging the customer and aligning the client’s interests with financial institutions’ characterized the way that banks did business. It is on that foundation that marketing, as an anticipation mechanism to the customer’s needs has evolved to become incorporated into everyday business. Whether it is in terms of enticing loans or attracting people to the services offered within, marketing has been used as a tool to increase the revenue in regards to banking institutions and has even gone into securing a prominent role in future growth plans.
Types of Marketing
By definition, marketing in banking encompasses the activities that go towards satisfying the requirements of the bank’s clientele while managing to efficiently beat the competition. Through marketing, the banks get to showcase its products and at the same time, learn of the environment around them in terms of needs which in turn fuels revenue (Aloni, 2012). However, every financial institution is run by certain objectives that are set prior to inception. Therefore, by integrating marketing into their services, these objectives are more easily achieved since they become aligned with what the customer wants and desires especially in regards to financial services such as loans or savings.
There are three types of marketing in the financial sector; traditional external, internal and interactive. The former focuses on product, price, place and promotion (Ogbadu & Abdullahi, 2013). Essentially, in terms of price, the fees or commission in terms of interest that are charged by the bank are changed to appropriately attract different types of customers. It may occur in informing the bank’s clients of better interest rates on loans taken or perhaps in a change in commissions associated with their financial matters.
Additionally, through the effective setting up of a branch of networks, the very concept of place is redefined since diverse markets are tapped into. If more branches are located in strategized part of the country, then more people can get access to the bank’s services, sufficiently marketing them. Moreover, the external format deals with promotion, this is in relation to advertisements aired on media outlets with the facilitation of sales promotions. Finally, the product concept relates and combines all these factors, largely contributing to its overall effect. When the customer finally witnesses the overall effect made by addressing the four factors above, they buy into the bank’s ideas and financial framework.
Alternatively, internal marketing categorizes and seeks to adjust the people and processes involved within the bank in order to appeal to their clients. These processes include the employees who are regarded in much the same way as customers and given incentives or motivational skills in order to improve their efficiency (Norden, 2016). Ultimately, the Human Resources department is also incorporated, where adjustments are made to ensure that the environment that the employees work in is healthy and wholesome. In return, with stronger motivations, proper wages and the appeal of respect garnered from fellow work mates, their natures are coaxed into reflective the same strength to the clients influencing an ideal of marketing.
Banking has changed over the years leading to the development of the interactive type of marketing which was a concept not as possible before. Essentially, since positive customer feedback largely influences the way services are meted out, the interaction between the customer and the employee has been focused to reduce conflict while at the same time create a fruitful outcome. With the advent of the digital age, this is a concept that has become increasingly more relevant since now customers can give lasting reviews in an online capacity which can either serve to damage or build a financial institution’s reputation.
Purpose of Marketing
Creation of an identity is imperative towards gaining an edge in a competitive atmosphere. As such, it is one of the key roles in marketing a banking institution or franchise. Edges or niches are sought out whether in terms of services or in the products that are being sold or provided by the bank. In exchange, a distinction is generated eliminating competition creating an event bigger market share (Kozak, 2014). Moreover, a distinct identity becomes a selling point for a bank’s brand image conveying strong leadership and a masterful control on the events that exist in the financial world. Thus, in future applications, it becomes easier to convey or communicate new products to
Another key advantage and selling point attributed to marketing is that the customer certainly becomes aware of the products and services that the institution is offering. In this age, information is the key determinant of everything, and has been made available through the internet and online resources (Ogbadu & Abdullahi, 2013). This integration has come about mostly due to the increase of customer financial needs such as ease of money transfer, accessibility and advice. Therefore, when the brand is properly marketed, the customer is easily informed that the same services or desires that they are in need of can be found at the particular branch making their work easier.
With more traffic, comes more revenue for the bank. Essentially, the more customers fork towards an attractive brand name or image, the better chances that the same brand may have over its competitors (Delacastro, 2016). They may thus grow to enjoy a larger market share and control over it in terms of services and supply. At the end of the day, such a stand is important because it keeps the business operational and afloat enabling it in future times to expand and spread its branches over a larger geographical area. Furthermore, revenue ensures that the bank’s employees are well catered for improving their loyalty and trust towards a long standing employment record.
Objectives are a large part of why institutions are formed. Every founder has a specific set of targets which are fixed in their mind and puts their efforts towards achieving them. Whether it is the maximization of profits or the control of a market, these objectives can only be implemented through proper marketing and a solid control on the advertisement channels utilized by the company. That way, bank’s image is honed to suit the needs and wants of the customer without any repercussions on the trustworthiness or sustainability of their business model. In turn, and as has been seen in the changing role of marketing, better channels are used such as the internet, reducing the risk associated with marketing.
In order to as well gain an effective control on the market mix in regard to a bank’s business schedules, it becomes imperative to incorporate marketing. Decisions are always a matter of weighing the consequences with the current resources and without proper market evaluation and a measure of the customer’s wants, the bank or financial institution may end up making choices that might have far-reaching impacts in a negative manner (Norden, 2016). Therefore, through marketing, each sector, whether it is in the product, place or the promotion of services, can be held against a scale of the market’s needs thereby measuring its effectiveness and improving the manner in which the bank does business.
Changing Concept of Marketing
Bankers have come to more aptly realize that the social connectivity that has characterized this age has as well influenced the banking choices of customers. No longer does the client have to come physically to the institution in order to learn of their services or products instead getting feedback and reviews from countless of other people due to the internet. As such, the marketing concepts that they use have changed in order to fit in the times while at the same time managing to take advantage of the internet as a resource. Countless new ways of banking such as E-Banking have been innovated and customer care services made around the clock to answer any queries.
Initially, identifying profitable markets was the first step to be considered when doing marketing. Different geographical areas have different types of customers with varying needs. Additionally, each industry has customer segments which all differ as well in terms of the requirements or desires. In modern times, it has moved from actual surveys by word of mouth to conducting feasibility tests using technology that allows the bank members to not have to be there in person. In turn, risks are assessed more carefully and adjusted according to the equipment or resources that the bank is willing to provide towards customer satisfaction.
Once the needs are assessed and a reasonable conclusion reached, goals are set in accordance to the expectations of the marketing efforts. More often than not, ventures set up a marketing plan but without a clear idea of what is desired. Whether it is an increase of revenue or rather improving the relations that the bank’s employees has with customers, it becomes imperative to execute each one of them while focusing on the goals stipulated (Ogbadu & Abdullahi, 2013). At the end of the day, goals keep the company in check and finds which are allocated to take care of marketing are as well minimized and kept at a safe distance away from other tasks.
Additionally, managing and effectively promoting the various services that the banks have has changed effectively. Feedback is now considered as one of the most important aspects closely followed by the standards set in regards to government bodies and the rights of the people (Mala & John, 2014). At the end of the day, these regulations prevent a crisis from occurring or the fraudulent behavior of managers who are interested in pursuing their own interests. By promoting the bank’s services, it ensures that they gain traction and popularity within the market segment that the institution is operating within. In turn, clients get easily reached and their input utilized towards generating more products or services that satisfy them.
Finally, an important concept of marketing has to do with constantly adapting or changing when compared to the environment that the bank exists. From the very definition, marketing in banking is specifically targeted to overshadow any competition by having better brand image and a stronger presence. Therefore, the financial environment has to be constantly weighed so that any changes can be dealt with through adjustments in the mechanisms that run the financial institution making the marketing techniques more efficient and focused. All in all, the combination of the above factors lead to a description of key concepts that encompass marketing in banking, the strategies that guide these concepts, utilize them in various ways.
Basically, when trying to market their brand, the bank could opt for creating new products or services which appeal to the same customers but in a specialized way. Marketing mix calls for a focus on the product, pricing or performance that governs various sectors in the field, therefore, if the bank originally had a general savings account which dealt with adult customers, it would make sense to create a children bank account and thereby integrate even the youth towards saving for their future (Mala & John, 2014). The technique has the added appeal of pulling in the parents to the children after they witness the advantages of saving and the proficiency with which the company is handling it.
Additionally, capitalizing on its strengths and weakness is a solid technique since it specifically reduces the risk while improving the chances of success. A test can be conducted to affirm the various segments of the business that is doing well. If it happens to be dealing with customers, then a specific effort can be made to encourage personal interactions with customers in order to infect them with the enthusiasm that the bank has towards marketing their products to their clients. When such an approach is utilized, it as well follows logic that weak areas be eliminated. Branches that are not performing to an expected level can be closed down to minimize losses.
Finally, constantly researching to gain new, dynamic customer segments and fields to be addressed is a ground-breaking strategy in marketing (Norden, 2016). Since it is a new field, it has the appeal of supplying the bank with a bigger market share that is incomparable to its competitors. Moreover, innovative techniques can be formulated which precede the ones used before enabling the bank to move forward in the industry, becoming a marketing and financial giant. With the combination of these strategies, marketing becomes easier through a spirit of strong leadership combined with employees who are loyal to its organizational objectives.
In conclusion, whereas times have changed, marketing is a concept that has remained constant in the banking industry. The only effect has been advancement in techniques used to keep up with technology and ever-growing customer segments. When compared to before, where external marketing held the foremost priority, methods such as interactive marketing have exposed its flaws and managed to focus on its strengths. Moreover, product, price, place and promotion still lay at the very core and heart of what it means to efficiently market and grab a hold of the clients who demand expert banking services. Additionally, there are three key strategies to gaining a foothold of efficient marketing techniques; by gaining a hold of new markets, introducing new products and finally focusing on the strengths that have carried the bank thus far. In combination, these factors have a lasting impact on the marketing scope of the industry.
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