Financial services are the economic services providers by the financial industry, which encompasses a broad range of organizations that manage money, including credit unions, banks credit card companies, insurance companies, accountancy companies, consumer finance companies, stock brokerages, investment funds, and some government-sponsored enterprises. As of 2004, the financial services industry represented 20% of the market capitalization.
The term “financial services” become more prevalent in the United States partly as a result of the Gramm-Leach-Bliley Act of the late 1990s, which enabled different types of companies operating in the U.S financial services industry at that time to merge.
Companies usually have two distinct approaches to this new type of business. One approach would be a bank that simply buys an insurance company or an investment bank, keeps the original brands of the acquired firm, and adds the acquisition to its holding company simply to diversify its earnings marketing financial services provides a thorough immersion in marketing concepts and activities related to the special requirements of the Entrepreneurial Marketing.
Definition and Meaning of Service
According to (Kotler), a service is “any act or performance that one party can offer to another that is essentially intangible and does not result in the ownership of anything. Its production may or may not be tied to a physical product” (Okeke, 2000 P.166).
The American Marketing Association (AMA) also defined services as those “activities”, benefits, or satisfactions which are offered services for sale or are provided in connection with the sales of goods. Industries that are engaged in the provision of services are many and divergent.
For instance, in the non-business or government sector, we have such services as the hospital, postal, military, and police services.
In the business sector, on the other hand, we have examples in the airlines, banks, insurance, hotel, and tourism, to maintain just a few. The focus of this unit is however the general marketing principles and fundamental concepts in the service organizations
In the evolution of the services marketing literature, there have been arguments about the context in which services should be considered a distinctive area of study in marketing. On the other hand, some have argued that a service contains many important elements common to goods, which makes services marketing obsoletes as a separate discipline.
Thus Levitt (1972) observed; there is no such thing as a service industry. There are only industries where service components are greater or less than those of the other industries.
Characteristics of Services
These are the characteristics of services that create special marketing opportunities and challenges and result in marketing programs substantially different from those in marketing.
Unlike physical products, they cannot be seen, felt, tasted, heard, or even smelt before they are bought. E.g. when a service such as entertainment or travel is purchased, the buyer has nothing to show for it.
Thus, it can be concluded that the consumer is only buying a performance offered by the seller. The intangibility of services makes promotion more difficult than for tangible products.
To solve these problems, modern marketing has now suggested intensive use of sales force and advertising which should emphasize more the level of tangibility present in the services.
The level of tangibility present in the service offered derives from three principal sources:
Tangible goods: which are included in the service offer and consumed by the user.
The physical environment in which the service production/consumption process takes place, and
Tangible evidence of service performance
It is difficult to standardize output among many providers or sellers of the same service. An actor or a medical doctor might be superb in one performance but mediocre in another. A customer of the bank may observe that cashiers are helpful and courteous on one trip, but rude on another.
Car repairs by motor mechanics do not give the same quality of service. Complicating this is the difficulty in evaluating the quality of service.
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Services often cannot be separated from their providers. This means that some services are produced or created and consumed or dispensed simultaneously. E.g. a barber almost creates and dispenses his service at the same time. In the air transportation business, a consumer produces a flight ticket first.
The service is produced as the aircraft takes off, and consumption occurs because the consumer is on board, it is a constraint that a seller’s services cannot be sold in many markets at the same time E.g. A doctor can only treat a few patients daily.
Services cannot be stored hence, they are highly perishable. If services are not utilized when produced, they go to waste. An empty aircraft, empty seats in a theatre and idle barbers in a shop all constitute business that is lost forever.
Markets for some services fluctuate considerably by season, by days of the week; by hours of the day, etc. these features combined offer executives in service organizations challenges and opportunities for profitably planning, pricing and promotion. They might look or search for new uses of the idle periods during off-seasons.
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