This document discusses distribution channels for marketing financial products. It covers various distribution models like banks, financial institutions, agents, brokers, direct marketing and new channels like internet and mobile. It describes the functions of distribution channels like providing customer service, promotions and physical distribution of products. The document also discusses factors that influence selection of distribution channels and challenges of distributing financial products in rural markets like lack of awareness, infrastructure issues and cultural diversity.

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Marketing of
Financial
Products
Lecture – 5
Parveen Sharma
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Contents
 Distribution
 Distribution channel - Banks & FI’s
 Distribution channel – Functions
 Distribution of Insurance Products
 New Marketing Places
 Factor influencing channel section
 Distribution Channel Selection
 Concerns with distribution in rural market

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Distribution of Financial Products
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This sub-mix draws our attention on the channelization of services
to the ultimate customers.
Companies can change their Products, Advertising and Pricing easily
but not their distribution channels. Its not an easy task to change
distribution cannel, franchisees, dealers and retailers.
 Distribution in financial services marketing is concerned with how
the service is delivered to the consumer, making sure that it is
available in a place, at a time and in a format that is appropriate and
convenient for the customer.

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Consumer convenience
HDFC Bank ‘Lost Boy’ advertisement
emphasizing huge branch network
Distribution of Financial Products

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Distribution Channel: FI’s
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Financial Service
Organization
Direct
Own sales force
Telephone
Internet
Direct mail
Indirect
Joint venture
Intermediaries
Own retail
Outlets

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Distribution Channel: Banks
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Distribution Channel
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Direct Distribution
• Direct contact between producer and customer.
• Most common in B2B markets.
• Often found in the marketing of relatively expensive, complex products
that may require demonstrations.
• Internet is helping companies distribute directly to consumer market.
Distribution Channels Using Marketing Intermediaries
• Producers distribute products through intermediaries.
• Financial products sold to thousands of consumers in widely scattered
locations.
Multi-channelling is increasingly seen as a means of addressing a range of customer
needs & expectations (security, privacy, convenience, accessibility, reliability, speed)
enabling a FI’s to more effectively and efficiently serve a diversity of target markets

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Distribution Channel Importance
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Functions of distribution channels
 Market information & customer education
 Promotion
 Contact
 Servicing
 Product information
 Physical distribution
 Financing

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Distribution Channel Importance
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Setting standards for customers service
 Speed: Fast servicing, transaction & response rates
 Accuracy: in debiting, crediting, posting,
calculating, filing, reporting or so
 Safety: in branch, online and mobile
 Service without gap: delivering
what is promised
The Citibank Express ATM is equipped with an
online banking connection, video conferencing
& biometric identity authentication

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Marketing Mix - Place
A look at distribution channels of insurance companies
Traditional
 Agents: Most companies in India use,
also called insurance advisors/ planners
 Brokers: Assistance in risk assessment,
administration & performance of contracts
New Competition
 Direct marketing
 Corporate agents
 IFA’s
 Telemarketing
 Worksite marketing
 Internet marketing
 Bancassurance
LIC had
12,78,234
agents as on 31
March 2012, out
of which the
number of active
agents was
12,14,111
(95%)*
*Annual Report 2011-12

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Social & Mobile ‘ready to access’ customer service
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New Marketing Places

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Evolving Models of Retail Banking Distribution
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New Marketing Places

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Some Global Trends Observations
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New Marketing Places
 Decline in the size of branch networks as technology based distribution
became more widespread and cheaper
 Signs of a possible reversal of this trend with an increase in branch
networks in some areas as a mean of reaching HNI or un-bankable
 Consumer preferences for face to face interaction remains strong
 Emergence of a new model of mini branches and use of more
imaginative design & layout and greater use of the one-stop shop concept
 Greater emphasis on relationship building
www.nottingham.ac.uk/business/businesscentres/crbfs/documents/researchreports/paper51.pdf

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Distribution Channel Selection
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Factor influencing channel section
 Product characteristics
 Market characteristics
 Customer characteristics
 Company resources
 Competition
 Product lines
 Regulatory and legal aspects

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Example of Nature of Product influencing channel section
Example of Regulatory changes impacting channel selection
•Simple to understand
•High penetration
•Retail & Institutional
customer focus
•(Retail, Banking &
Institutional all channel
focus)
•Not so simple to understand
•Low penetration
•Educated customer &
Institutional customer focus
•(Banking & Institutional
channel focus)
Distribution Channel Selection

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Concerns with Distribution in Rural Market
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 Lack of Awareness: Low awareness of financial products
 Competition: leading to more focus on urban area than rural & semi urban
 Scale of Investments: small ticket size & risk averse
 Customers scattered over wide areas: accessibility problems for FI’s
 Rural infrastructure: lack infrastructural facilities like roads, electricity,
telecommunications & Internet networks
 Irregularity in payments: irregular incomes leading to lapsing of policies/
discontinuing SIP
 Operational challenges: documentation & verification problems
 Cultural diversity: promotional & marketing challenge

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or
Email to parveen_72@yahoo.in

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