Question

Note the differences between retail and corporate banking and services offered in each type of banking. In addition note on the differences between corporate (organizational) and personal markets (final consumers).

·         After doing the above activities summarize the differences and suggest financial services marketing implications using between 50 - 150 words.

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Answer 1

1.Note the differences between retail and corporate banking and services offered in each type of banking.

ANS) Retail Banking and Corporate Banking make up for the two very essential components of the field of finance. While retail banking mainly deals with individual customers, corporate banking focuses more on the corporate world. Apart from these, there are quite a few other differences among the two. Very popularly known as consumer banking or personal banking, retail banking is considered to be the more visible face of banking of the general public. The most vibrant characteristic of this branch, is the presence of numerous bank branches all over the major cities. Usually there is no, one specific bank which only focuses on catering to the needs of the general public, usually banks have branches that specialize in this field. Whereas on the other hand, corporate banking is very popularly known as, business banking. It basically is meant to highlight that aspect of banking, which solely deals with corporate customers. This type of banking is popularly known to be the key profit center, for most banks in the USA as well as other nations.

In terms of products and services, both the branches differ widely. While on one hand retail banking offers a number of services like, checking and savings accounts, certificates of deposit and Guaranteed Investment Certificates, Mortgages on residential as well as investment properties, automobile financing, credit cards, lines of credit, foreign currency and remittance services. Apart from these services, there are a few more targeted services, that are generally offered through another division or an affiliate of the bank like, stock brokerage, Insurance, Wealth Management, Private Banking and so on.

On the other hand, the corporate banking segment of the banking sector, usually is said to deal with clients on a varied scale. Here the clients usually range from small to mid sized local business firms, to huge conglomerate with billions in sale. It is the commercial banks, which usually offer a range of corporate banking products and services like, loans and other credit products, which is by far the biggest area of business for corporate banks. Other services include treasury and cash management services, equipment lending, treasury and cash management, commercial real estate, trade finance, employer services and so on.

While these two branches may have their differences, they are equally important for the economy, both on a domestic as well as a global level. Retail Banking usually is responsible for bringing in, large customer deposits, that enable banks to make loans to their retail and business customers. Whereas on the other hand, it is the commercial banks, which help in making the loans so as to enable businesses to grow as well as hire more people, thus in a way contributing to the economy of any particular country. In spite of their differences, both of these fields are highly preferred as career options, by a number of finance aspirants. In order to get their dream career and jobs, a lot of candidates go a step ahead and seek to get industry relevant education, by opting for a number of certification programs.

2 In addition note on the differences between corporate (organizational) and personal markets (final consumers).

Both individuals and organizations need to purchase items to accomplish their daily tasks. There is a large difference, however, in how and why an organization purchases goods and services versus how an individual shops. Understanding these differences is important if you want to tap into both an organizational and a consumer market.

Organizations purchase goods to use in their ongoing operations and to resell to consumers, while consumers purchase goods for their personal use. Organizations also purchase more raw materials – such as wood, steel and other items used in manufacturing – than individuals who don't have the tools or knowledge to put those raw materials to use as a product. Organizations generally purchase goods in larger volumes than individuals, and are driven by customer demand and need for manufacturing materials.

Consumers, on the other hand, are driven both by need and by want. It is possible to entice a consumer to purchase something he does not need through effective marketing or peer pressure, but it is much harder to entice an organization to buy an unnecessary product, especially when dealing with a purchasing department that is accountable for what it spends.

Buying Products in Bulk

Organizations often purchase in bulk, whereas consumers typically do not. For example, a consumer might buy three gallons of white paint to paint his house while an organization might need 3,000 gallons to paint shelving units for resale. The organizational market is thus more condensed – it is possible to have a business succeed catering only to a small number of organizational clients – while businesses that typically focus on consumers sell smaller quantities to more people.

That said, Costco and similar wholesale warehouse companies do successfully market low-price, high-quantity goods to individual consumers. These consumers tend to buy for small office spaces or family homes, however, rather than only for themselves.

Choices and Use

Consumers typically purchase goods for different reasons than organizations, and have more freedom in choosing the items they want. A consumer may purchase a chair so people can sit comfortably in his home. He will be able to choose any chair within his budget that he likes. An organization, on the other hand, may purchase a chair because an administrative assistant needs it to do his job.

The organization may be restricted in a chair purchase, not only by the budget set by a purchasing manager, but also by guidelines set by the Occupational Health and Safety Administration, and by company-wide guidelines on office furniture.

Marketing Strategy for Each

Reaching organizational clients requires explaining how your products and services will help their organization serve their clients and customers. It is a help them help others approach. However, to reach a consumer market, you have to show how your products enhance a consumer's life in some way. whether it makes life easier or more enjoyable, or both.

The differences and suggest financial services marketing implications

Products and services both need to be marketed. Marketing of products is easier in comparison to the marketing of services. This is due to the fundamental differences between products and services. Moreover, financial services are typical in nature as these involve considerable stake from the investor's side. Financial services are provided by various financial institutions, advisors, experts, special bodies etc. and in order to reach to the customers, the service providers need to market various financial services being provided by them. This is totally different as it is in the case of marketing of products. Products can be provided as samples or otherwise the images of products can be provided to the prospective customers which cannot be done in case of services. Services being intangible in nature are difficult to market. As the buyer cannot see or touch the services, he cannot have any proof or promise of performance. Services are also not possible to be delivered in the case of absence of service provider which is not so in the case of products. Many other such peculiar features of services make the marketing of services difficult. Marketing involves the activities like communication to the customer regarding the availability of financial service at a particular place or otherwise, brand building, after sales services, customer relation management, targeting and positioning decisions, pricing decisions etc. Financial services are one of the most peculiar services as it involves departing with ones money, directly or indirectly for some time. As soon as one departs from his money, there comes the risk whether he would get his principal funds back or not. This risk makes the marketing of financial services considerably difficult. Moreover, if any faulty advice is provided and if the loss occurs, it's actually monetary loss, which cannot be forgotten easily as money is earned with great difficulty.