ling a claim, and for those that do, the outcome of their experience may not be captured or recorded anywhere for others to examine and learn from. The net effect is that the majority of consumers may never determine the most objective aspect of the quality of an insurance company, which is the protection it offers its policyholders in case of losses. Quality assessments in such a context are therefore not objective and largely based on subjective factors such as the customer s recognition of the name of the company or suggestions and advice provided by friends or insurance brokers, or even by their subjective perception. In a similar fashion, in the context of securities brokerage services, customers may not necessarily be able to determine whether the broker is providing them with the most objective and informed advice. The objective quality of a broker-recommended investment portfolio may not be evident for many years until the securities within that portfolio have exhibited their long-term characteristics. A similar issue can be identified in the context of tax returns. While a tax accountant s ability to secure the highest tax refund is probably the most objective aspect of quality, a client may never be certain of having received the highest possible refund. Such an inquiry would require one to file taxes with multiple accountants as a means of testing, which is a highly impractical exercise. In all these contexts, despite the important role that the financial services provider plays in securing the financial well-being of the customer, quality assessments by the customer may be driven by highly subjective aspects of the service experience such as the friendliness of the service providers or perceptions of the level of expertise portrayed in the service processprices of financial services are intrinsically complex. For example, the lease price of an automobile might consist of monthly payments, the number of payments and a down payment, rather than the single sticker price used when purchasing the vehicle with cash. Often the price consists of multiple numbers, some of which the consumer may not even completely understand. This not only makes the task of understanding the various prices available in the marketplace difficult for the consumer, but it also creates scenarios that may lead to deceptive and, in some cases, unethical practices by marketers and financial professionals as well as salespeople in general. practice of marketing financial services is distinctly different from other marketing practices due to the dozens of regulations that rule the industry. For example, the type of content included in a financial service advertisement is controlled and closely monitored by regulatory bodies, such as the Securities and Exchange Commission, the Federal Trade Commission, and the departments of insurance in individual countries along with the states of the USA.of the other unique aspects of financial services marketing is the fact that consumers needs for financial services vary significantly from one customer to the other. As a result, the types of services that a financial services organization introduces to the marketplace may be best suited for specific groups of consumers rather than for the mass markets. Recognizing and identifying individuals that a particular financial service is best suited for is the task of the financial services marketer. Therefore, it is important to not only understand the underlying technology that is used for segmenting and grouping customers based on their needs, but also to have an accurate understanding of consumer segments that are most relevant to a given financial service. This is especially true in light of the abundance of customer data available for segmentation analysis. For example, most financially active have credit history records that can be purchased and used as the basis for understanding each person s credit behavior and financial needs. Financial institutions also possess large 12 Marketing Financial Services amounts of transaction-based data on their existing customers that can be effectively used to target them with relevant financial services. Consumer Protection: Any informed discussion of financial services marketing must also include issues related to consumer protection and conflicts of interest, which have historically characterized the industry. The human inability to make rational financial decisions has fascinated researchers in psychology, economics, finance and marketing for decades. Consumers can often make catastrophic decisions related to financial services. Research in psychology has for example established an array of human judgment errors that are persistent and highly influential in consumers financial decisions (Chapters 2 and 3). It appears that the human brain is simply not hardwired to respond rationally to financial stimuli. This issue is further complicated by the fact that most financial servic...
