Marketing of Financial Services

June 2022 Examination

Q1.

Ans 1.
Introduction:
The marketing mix refers to a company's combination of actions or strategies for promoting its
brand or merchandise in the market. Pricing, manufacturing, promotional, and positioning are the
four Ps of a traditional marketing mix. However, in today's marketing mix, additional Ps such as
package, placement, personnel, and even politics are becoming increasingly important mix
additives. Many additives in the advertising mix interact with one another. They create an
employer's business strategy, which can lead to significant success if executed correctly.
However, if things go wrong, it could take years for the organisation to recover. The marketing
mix necessitates a great deal of comprehension, market research, and consultation with various
individuals, ranging from buyers to exchange to manufacture, and so on.

Concept and application:

Marketing is a critical management procedure in which individuals and groups obtain what they
require and desire by creating, purchasing, and selling value-added products with others. A
marketing combination is a collection of managed marketing equipment that a company uses to
generate the desired response in its target market. The advertising mix includes everything a
company can do to influence people's preferences for its product. To eventually have the 8
PlayStation for advertising, previously known as the seven ps, the traditional 4 P marketing mix
framework must be accurate and up to date.
HDFC is a significant financial services company in the Indian market. The personal business
enterprise baking company's headquarters are in Mumbai, Maharashtra. The company was
founded in 1994, and its first department opened in February 1995.

Let us elaborate on HDFC financial institutions' carrier advertising mix using the eight ps:

• Product: HDFC provides a comprehensive range of products and services, such as commercial
loans, debit cards, and funding strategies, to meet the financial needs of Indian clients of all
demographics. Clients can choose from appealing investment options such as DEMAT accounts,
mutual funds, stocks, and derivatives. The ability to use digital technology has aided the rapid
expansion of financial services.

• Headquarters: HDFC is headquartered in Mumbai, India. However, the financial services

company has maintained a significant presence in India through its banking locations and ATMs.
During the most recent fiscal year, HDFC's physical network included 5,103 banking branches
and 13,168 ATMs in 2,748 towns and cities (Annual document 2018-19). The company is
constantly expanding its physical network throughout India, including rural areas.

• Price: Alternatively, the company intends to make its products available to customers
throughout India, particularly those living in rural and semi-urban areas. At the same time, while
banking with public banks can be more cost-effective in some cases, HDFC customers believe
the bank is better suited to their financial and finance needs for a variety of reasons. Aside from
excellent service, HDFC is the most preferred bank for a variety of reasons, including its lower
interest rates.

• Promotion: In addition to traditional marketing and promotion channels, HDFC promotes its
brand and services through digital generation and various new equipment and processes. Credit
cards, mortgages, and other merchandise are available through the company's website. As a
major financial services firm in India, it has amassed a sizable market share. HDFC has
significant brand equity as a result of its ongoing focus on consumer comfort. It can benefit from
its commitment to service by being accepted as accurate by its clients. However, the company
promotes itself through other virtual systems, such as social media. HDFC Bank's Facebook page
has more than 2. 8 million followers.
• People: In addition to the other categories, HDFC excels in human resources. The company's
sole focus is on hiring and training employees, which may assist the company in understanding
its goal of becoming a "international elegance Indian bank." HDFC's business strategy is founded
on five fundamental values. The enterprise's pillars are superior improvement, customer
orientation, product administration, humans, and sustainability. Aside from being a true centre
price, the agency's employees' happiness and contentment are critical priorities. The organisation
believes that incredible satisfaction and brilliant efforts will ultimately determine its fulfilment.

• Method: To provide hassle-free financial services to all of its customers while maintaining the
efficiency of banking operations. In terms of digitization and security, HDFC Bank now leads
the Indian banking market. In recent years, the corporation has made significant investments in
digital technologies and artificial intelligence (AI) to make banks more secure and approachable.
HDFC prioritises the introduction of client-centric goods and services. The bank places a high
value on novel strategies and sports. As part of its move virtual strategy, HDFC launched its
virtual Transformation and mobile Banking businesses in July 2014. The DTMB group intends
to expand HDFC's technological technology in virtual, phone, and social media environments.

• Physical evidence: In this digital age, many customers use their cell phones and smartphone
plans to access their bank debts online. HDFC, on the other hand, has a large physical
community that spans India, including rural areas. Customers can also access the majority of
offerings online. They can, however, go to a nearby workplace to speak with a consultant in
person or inquire about new goods or services. Because of the growing popularity of online
banking, most operations have virtually eliminated the use of paper.

• Performance: Advertising success can be measured not only in terms of monetary rewards, but
also in terms of reputational benefits. Companies are increasingly championing topics that are
important to their prospects through marketing projects. The idea is to strengthen bonds between
people who share common interests and ideals. These are frequently popular environmental and
social concerns at the time.

Conclusion:
As a result, the company has quickly expanded its range of services aimed at semi-urban clients
as a key player in the services market, and retail outlets are located in India's semi-urban and
rural areas.

Q2.

Ans 2.
Introduction:

A credit score, which ranges from 300 to 850, can be used to determine a person's
creditworthiness. A borrower's credit rating will make them more appealing to capable lenders.
The credit rating of a character is determined by their credit records, which include the number
of customers they've opened and their total debt burden. Lenders use credit scores to assess
debtors' likelihood of repaying a loan on time. For example, a person's credit score rating can
influence the amount of a preliminary deposit required when renting a condo. Creditors
frequently scrutinise consumers' credit ratings, particularly when converting a credit card's
interest rate or restricting credit score. A credit score is a numerical representation of a person's
ability to repay a loan. It's a numerical breakdown of their creditworthiness. Credit scores are
generated by credit reporting companies in the country primarily based on a variety of factors
such as the length of your credit history, compensation histories, and credit inquiries, among
others. When applying for a credit score, debit card, or loan from a bank or an NBFC, having a
higher credit rating may entitle you to additional benefits such as a larger loan amount, a lower
interest rate, and the ability to repay the loan over a longer period of time.

Concept and application:

A person's credit score influences their financial decisions. It has a big impact on whether or not
a lender will give you credit score. Subprime debtors have credit scores lower than 640. To
compensate for the additional risk, lenders charge higher interest rates on subprime mortgages.
Furthermore, borrowers with poor credit are more likely to default on the loan or require a co-
signer. A credit score of 700 or higher is considered excellent and can result in a lower interest
rate; this means the borrower will pay less interest at some point during the loan's lifetime.
Ratings of 800 or higher are considered excellent.

Your credit score, total debt, and length of credit history are all determined by your charge
records. Improved rankings may also give deliverability creditors and lenders more confidence
when evaluating a loan request.

Credit scores:

 Outstanding: 800 to 850

 Very Good: 740 to 799
 Comprehensive: 670 to 739
 Reasonable: 580 to 669
 Modest: 300 to 579

Their credit rating is an important indicator of their financial situation. At a glance, it tells
lenders how dependable you are with your credit card spending. Your credit score and your
ability to obtain additional mortgages or credit score strains are linked. A higher credit score may
also qualify you for the lowest possible interest rates when borrowing money. Many specific
steps can be taken to improve your credit score. You might want to install it a few times and give
it a shot.

Observe these step-by-step techniques to boom your credit score:

• Examining credit score reports: You must be aware of the factors that are working in your
favour (or against you) for credit score enhancement. Your credit history may be able to help you
with this. Making on-time payments, keeping credit card balances low, and having a variety of
bills (credit cards, loans, and older credit bills) improves your FICO score. The most important
criteria for lowering your score are past due or neglected payments, large card balances,
collections, and judgments.

• A Sneak Peek at Bill Payments: Price records are the most important factor in determining
who has already paid off their student loans. It is preferable to keep them on your document.
Your credit score will improve if you make your payments on time and fairly. Avoiding late fees
as much as possible is a simple way to improve your credit score, so make sure you do it. Make a
plan to keep music out of your monthly expenses (either on paper or digitally). You can set up
due-date reminders to notify you when an invoice is due. It is possible to make automated
payments from your bank account.

• Aim for a credit usage rate of 30% or less: Credit use refers to the amount of money
you borrow at any given time. In FICO credit score calculations, it ranks second to charge
history. The best way to keep your regular credit score intake under control is to make your
payments on time every month. If you can't, your total credit limit must be greater than 30% of
your total outstanding debt. Your credit score, aiming for a credit usage charge of 10% or less, is
most likely beneficial.

• Consider Debt Consolidation: If you have several outstanding debts, a debt consolidation
loan from a bank or credit union may be the best option. Pay off your debts sooner if you can get
a mortgage with a lower interest rate. Credit utilisation ratios can be improved as a result.

• Looking forward: Keeping the music of your credit score with the help of a top-notch
membership score over a year makes it easy to keep the song of your progress. They monitor
your credit report for any changes, such as a paid-off account or a newly opened account.

Conclusion:

As a result of the preceding measures, the purchaser's credit rating may become more desirable.
Each of the steps outlined above will help to improve a person's credit score.

Q3.

Ans 3a.
Introduction:
Because the majority of effective loss of life is insured, "pure chance life insurance" is classified
as such. Furthermore, there are no concerns about maturity or investment. Term insurance is an
example of a pure danger insurance coverage. Pure threat coverage, which provides economical
protection, covers the untimely death of the life assured. If the nominee's life is assured, life
insurance companies can pay the nominee the promised amount (lifestyles cowl quantity).
Individuals who outlive the term of the policy will not be compensated. Furthermore, it will no
longer pay benefits to the insured. Term plans do not provide maturity benefits.
Concept and application:

As the name implies, a ULIP combines the benefits of each coverage and investment into a
single package. ULIPs offer significant advantages over traditional wealth creation vehicles. It
also protects your family's future from the unforeseeable twists and turns of life. If the policy
owner dies during the active term of the policy, the beneficiary receives financial protection. A
term insurance policy provides annual payments. This is known as a term plan.

Ankur Desai, 36, must relocate for a term plan. The following are the advantages of the time
plan:

• Term life insurance products are less pricey than endowment plans and provide more
excellent comprehensive insurance. As a result, a person may also get greater excellent coverage
for the same charge. For example, you can buy a 30-year-old term plan with Rs 1 crore insurance
for 30 years.

• Riders can be added to term plans by policyholders to make them more beneficial.
Assume the insured person contracts an acute infection after purchasing an essential
contamination rider or plan. In that case, they are eligible for the guaranteed money as well as an
equal death benefit for the duration of the coverage. There are also additional riders to choose
from, such as process loss, disability, and premium remission. Choosing riders based on the
policyholder's preferences can help make life insurance more suitable and relevant for him.

• Some insurance companies allow clients to enhance their existing insurance coverage at
various stages of their lives. For example, if a policyholder marries and becomes determined,
their life insurance coverage may be increased by 50% and 25%, respectively. This allows him to
start with basic coverage and gradually expand his insurance as his responsibilities and ability to
pay grow.

Conclusion:
As a result, Mr. Ankur Desai should select the term plan because it will cover the future of his
spouse and 3-year-old daughter in the event that Mr. Ankur Desai passes away during the term
insurance's term.

b.

Ans 3b.
Introduction:
It is possible to set aside money on the grounds of your assets to grow over time and provide a
consistent income after you retire. As your employment earnings decline, retirement gain plans
provide financial security so that you can continue to work proudly without jeopardising your
way of life. Because of the rising cost of living and inflation, financial planning has become even
more important.

Concept and application:

Retirement and pension plans provide a consistent source of income throughout retirement from
the money you saved during your working years. Despite the fact that living expenses are
constantly rising, you and your family can live comfortably without your regular salary.
Unexpected expenses can also be reduced with a well-planned retirement plan.

Your standard of living in your mid-30s is likely to be significantly higher than it was in your
early twenties when you first started working. What happens if you are unable to work? You
might not have thought of it. We should not be concerned about making retirement plans as we
get older. It's either far or not at all. Having a good start on your retirement nest egg could make
or break your financial future. You should start planning for your retirement now for the
following reasons.

• The more money you spend, the more money you make.

• Maintaining your independence is critical.

• Obtaining outcomes
Mr. Ankur Desai may choose from the subsequent retirement plans:

• Tax-Free Bonds: Although they are not currently available on the primary market, tax-free
bonds can be protected in retirement portfolios. Among the numerous government-backed
institutions that provide them are Indian Railway Finance Company Ltd (IRFC), Energy Finance
Corp., NHAI, HUDCO, and Rural Electrification Corp.

• Immediate Annuities: Deferred annuities allow you to keep assets during your working years
while receiving a pension after retirement. Contributions can be made in one lump sum or
monthly. Annuity schemes require a lump-sum payment to the insurer on the spot.

• Mutual funds: When retiring, a portion of one's property should be invested in equity-backed
products because the non-income period can last a decade or more. Inflation will affect your
retirement income even after you've retired (interest, dividends, and so on). Stocks outperform
other assets in terms of customer rate returns, according to numerous studies.

Conclusion:

As a result, Mr. Ankur Desai, who wishes to retire at 60, can select any of the above investing
plans for his retirement. These plans may even assist Mr. Desai in storing taxes.