Marketing of Financial Services: Conceptual Framework and Overview

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Questions and Answers

What is the primary purpose of a company raising money through the sale of securities?

To buy and sell shares in publicly traded companies

To access capital and investors (correct)

To finance a variety of projects and activities

To provide investors with a slice of ownership in the company

What is the main function of the primary market in the stock market?

To facilitate the buying and selling of existing shares

To offer new issues of shares for the first time (correct)

To regulate the stock market

To provide access to capital for companies

What type of investment is a bond?

An equity investment

A debt investment (correct)

A fixed-income investment

A stock investment

What is the main difference between the primary and secondary markets?

The primary market is for new issues, while the secondary market is for buying and selling existing shares Signup and view all the answers

What is the alternative name for the bond market?

The credit market Signup and view all the answers

Which of the following types of bonds is used by municipalities to finance projects?

Municipal bonds Signup and view all the answers

What is the primary reason for banks to adopt a marketing orientation?

To operate efficiently in a competitive environment Signup and view all the answers

What is the impact of deregulation, technology, and globalization on financial service providing firms like banks?

Increased competitive pressures Signup and view all the answers

What is the role of banks in a nation’s economy?

Providers of financial services Signup and view all the answers

What has been the impact of liberalization of the banking sector in India?

Entry of more players Signup and view all the answers

What is essential for banks to provide financial services effectively?

Excellent marketing orientation Signup and view all the answers

What do banks need to do to remain competitive in the financial services market?

Provide banking-related services that are market-oriented Signup and view all the answers

What is the collective term for treasury bonds, notes, and bills?

Treasuries Signup and view all the answers

What is the primary purpose of the money market?

Short-term borrowing and lending Signup and view all the answers

What is a characteristic of money market securities?

High liquidity and short maturities Signup and view all the answers

Why is the money market considered a safe place to invest?

Due to the highly liquid nature of the securities and short maturities Signup and view all the answers

What is a risk associated with money market securities?

Risk of default on securities Signup and view all the answers

What is the term for investing in the cash market?

Spot Investing Signup and view all the answers

What is the primary reason for conducting transactions in the third and fourth markets?

To avoid significantly affecting the security's price Signup and view all the answers

What is a key difference between the third market and the fourth market?

The counterparties involved in the transactions Signup and view all the answers

How do firms typically raise money according to the text?

Through loans, bonds, or stock offerings Signup and view all the answers

What is the primary goal of marketing according to the text?

To provide customer satisfaction Signup and view all the answers

What level of access do individual investors have to the third and fourth markets?

No access Signup and view all the answers

What is the broader field in which the 4 + 3Ps (7Ps) of marketing plays a role?

Marketing Signup and view all the answers

What is the primary function of the 'People' component in the 3Ps?

To provide marketing services to the target market Signup and view all the answers

Why is it important for marketing managers to invest time in training their marketing personnel?

To equip them with the necessary skills to positively influence the target market Signup and view all the answers

What is the purpose of the 'Process' component in the 3Ps?

To employ relevant and supportive services to customers Signup and view all the answers

What is the role of the physical environment in the 'Physical Evidence' component?

To influence customers' confidence in the organization Signup and view all the answers

Why is it important for marketing managers to make key decisions on after-sales service?

To create brand loyalty and a long-lasting relationship with customers Signup and view all the answers

What is the primary goal of marketing managers in terms of the 3Ps?

To positively influence the target market and create brand loyalty Signup and view all the answers

Study Notes

Financial Markets

Companies raise money by selling securities (stocks and bonds) in the capital markets.
Stock markets allow investors to buy and sell shares in publicly traded companies, providing companies with access to capital and investors with ownership and potential gains.

Primary and Secondary Markets

The primary market is where new issues are first offered, with subsequent trading in the secondary market.

Bond Markets

A bond is a debt investment where an investor loans money to an entity (corporate or governmental) at a fixed interest rate.
Bonds are used to finance projects and activities by companies, municipalities, states, and governments.
Bonds can be bought and sold by investors on credit markets worldwide.

Types of Bonds

Corporate bonds
Municipal bonds
U.S. Treasury bonds (T-bonds)

Money Market

A segment of the financial market where financial instruments with high liquidity and short maturities are traded.
Participants use the money market to borrow and lend in the short term (several days to just under a year).
Money market securities include negotiable certificates of deposit (CDs), banker’s acceptances, U.S. Treasury bills, commercial paper, municipal notes, Eurodollars, federal funds, and repurchase agreements (repos).

Characteristics of Money Market Securities

High liquidity
Short maturities
Low returns due to conservative nature
Risks include default on securities like commercial paper

Third and Fourth Markets

Third market: OTC transactions between broker-dealers and large institutions
Fourth market: Transactions between large institutions
Limited access, with little effect on average investors

Financial Institutions and Markets

Help firms raise money through loans, bonds, or stocks
Provide capital and investors with ownership and potential gains

4 + 3Ps of Marketing

4Ps: product, price, promotion, and place
3Ps: people, process, and physical evidence
People: marketing personnel providing services to the target market
Process: ways of providing relevant services to customers
Physical evidence: the physical environment of the business, influencing customer confidence

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Description

Test your knowledge of marketing concepts in the financial services sector, covering types of financial markets in India, marketing mix, and the theoretical framework of marketing financial services. Assess your understanding of the competitive pressures and globalization trends impacting the industry.