Retail Financial Service Industry
Financial Services Free Essay Example
There has been renewed competition in the financial service industry in the recent time. This is because of the several upcoming financial service firms that offer almost similar services. In this paper we examine the retail sector of financial service industry in preparation of a management report which analyzes this industry.
Major Challenges Facing Customer Service Professionals
The major challenge facing the customer service professionals is the ever increasing competition in the financial industry targeting the same consumer market. This has caused the customer service to increase to seek innovative ways of attracting and retaining the customers. With increased competition and pressure for the financial companies to increase their profits, the customer care professionals are faced with an uphill task of balancing the pricing of its products as well as explaining the reasons thereof to the consumers (Ennew, Watkins & Wright, 1995).
Another challenge is that of changing customer demands and preferences. The customers are increasingly becoming cognizant. This is a situation where customers have become so sophisticated and knowledgeable to the extent that the existing customer service may not be in a position to service them (Lowenthal, 2002). These demands are accelerated by the fact that consumers have enough information concerning financial markets. Faced with this challenge the customer care professionals are supposed to grow their expertise to match up with the customer expectations.
Moreover, another challenge facing the customer care is that of cross cultural customer diversity. Due to the increased competition, there is need for financial institutions to penetrate into the local cultures and tap on new markets. The challenge is dealing with various cultures and believes in the financial sector (Hodgetts & Hegar, 2007). Some cultures may demand that their money must not earn interest whereas the financial services may not have that option leaving the customer care personnel to create possible ways of averting the situations. Different cultures come with different needs and demands.
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Impact of Projected Demographic Changes in Society
The demographic makeup of a population gives the general view of people making up a general population in terms of size, age, gender, race, marital status or even social status. The changes in the demographic makeup are affecting the way financial industry should offer their services so as to be able to satisfy all the population groups. It has been one major determining factor in business environment.
The increase in the size of the population is expected to bring in more potential customers for the financial sector. Increased population reduces fierce competition by virtue of having many customers to be served. However, the decrease in population will cause the reduction in the customers to be served thus increasing the competition in the financial industry. The size of population is affected by birth rate, death rate as well as migration (Kew & Stredwick, 2005).
The other projected demographic factor is changes in the ethnicity. This has a major issue which relate to the language. With huge population speaking certain language, it will pressurize financial sector to recognize it as second language so as to maintain its customers (Kew & Stredwick, 2005). For those financial companies that will be able to meet the customer language requirements means that they will be able to attract more customers increasing the competition.
Moreover, the other change is that of the working population (Kew & Stredwick, 2005). The increase in the working population means that there is need for more financial services. This has an effect of increasing demand resulting in reduced competition. However, with reduced working population, the customer needs becomes few which forces the companies to compete for those existing.
The age of the population also matters in terms of competition. Where the large base of customers is made up of young people, the competition is high due to the fact that they are easily enticed by advertisement. However, for mature and old population they tend to be satisfied, loyal and committed (Kew & Stredwick, 2005). This loyalty has a definite reduction in the competition at financial industry.
Impact of Technology in the Financial Industry
With the increase in technology it will have an impact on the way business is conducted by the financial service providers. The technology is changing both external and internal business environments. The advent of internet has increased the ease of information obtaining by customers. This has an effect of shifting the marketing strategies of financial industry to technology related modes (Foss & Stone, 2002).
The information technology reduces the operational costs in the financial industry thus causing cost advantage. The internet enables the industry to carry online services such as bill payments, balance enquiries or account transfers (Ho & Mallick, 2006). This technology causes increased penetration to the market while keeping costs down and achieving set standards.
The other impact of technology is that it will facilitate customer transactions within the same network. The ATMs and credit cards are as a result of technology which is increasing the speed at which customers settle their transactions automatically. With technology advance, these automated equipments have been widely distributed and thus making them available almost everywhere thus reaching a huge customer base (Ho & Mallick, 2006). Although technology will impact more positively on the financial sector, there are fears associated with cyber crimes which use technology to defraud financial institutions which causes a negative effect.
The role of Marketing Science in Financial Industry
The customer satisfaction and service quality research is most important in financial industry. The ability of an organization to understand the needs of its customers is crucial for its success. The company that is aware of its customers is likely to develop competitive sales, marketing and communications strategies (Birn, 2004).
The most important role of marketing science is that it is core to making decisions of the company. These decisions made are foundation for ensuring increased sales through customer satisfaction. The better knowledge of customer quality requirements and needs has a sure impact on the planning of company’s strategies (Birn, 2004).
Services to be offered to Foster Customer Loyalty
Customer loyalty is the target for most financial companies because it assures future profitability of the business. Therefore it is important for the company to engage in services that boost this loyalty. The first is that the company should develop brand through its sales and marketing services. This will involve services that target awareness and management of customer satisfaction (Smith, 2002). A strong brand name will make customers to identify with the unique brand leading to customer loyalty.
In addition, the company should carry out services that are aimed at excellent product development. The developed products should be flexible, support customization as well as leverage multiple distribution channels. The products should be aligned to customer needs and features (Smith, 2002). The entire team capable of meeting exact product requirement of the customer will have achieved the customer loyalty.
Moreover, the other aspect is related to how the actual service is offered to the customer. This is the responsibility of all parts that directly deal with the customers to ensure that they provide the needed customer support in a friendly manner. The customer would be happy through nice correspondence and trainings on proper product usage (Smith, 2002). All the quality services offered to the buyers ensure that the customer loyalty is achieved.
Therefore, brand and customer interface are the crucial factors to enhance successful retail sector marketing. Focusing on these competencies enables the financial firms to gain the required competitive advantage. Thus we can conclude that a strong name and consistent value added customer interface is a sure way of enabling customer loyalty which translates to firm’s profitability (Smith, 2002)