Financial Services Marketing Logic: A Normative And Positive Approach

Customer relations and marketing are core competitive power of financial institutions(FIs). As China’s financial reform continues at a greater speed, market oriented firms are in urgent need of guidance from scientifically creative marketing plan for their products and services. Likewise their corporate strategy, business model, service system as well as innovations should follow a clear and clean marketing logic. Since the turn of this century, corporate governance and quality of assets of Chinese FIs have been greatly improved as a result of grand scale reforms in the banking sector. Firms are better at managing risks and innovating products and services, but still lack a sound marketing logic in their marketing practices. Although firms have embraced “customer focus” as a mindset, there has always been marketing problems in customer experience with financial services. FIs would risk falling behind in their strive to be among global great firms without a scientifically sound marketing logic for guidance. In this study, new service marketing thoughts and modern finance theory are applied in building up a framework of 13 foundational premises(FPs) that reflects a service-based and relationship-based marketing logic for financial services. The core logic of the framework is customer’s center stage role in value co-creation interaction with service providers. Both normative research and positive research methods are used in creating the theoretical framework and in testing the validity and establishing the applied importance of the framework through real world case studies.In the marketing literature review part, highlights are made of the most influential marketing thoughts since 1950 s, with a much detailed account of the most recent development and application of service dominant logic and service logic. Key marketing concepts(service, value, value creation and value co-creation) are reviewed and explained specifically for use in financial services marketing. The key role interaction plays in value co-creation is the focus of review given the concerns involved in handling liquidity, return and risk of financial assets. Then implications of such a new service logic for financial services marketing are discussed.With reference to the fundamental premises(FPs) of the frameworks put forward by the service dominant logic school and the service logic school, a service logic framework for financial services marketing is proposed. This 13 FP- framework is a systems-functional set of code of conduct and business practice for banking institutions.In the positive research part, four bank marketing cases are used to test the validity and value of the proposed marketing logic framework. The case stories include ING Direct Canada, ING Direct USA, Wells Fargo & Company, Minsheng Bank of China. Each case is analyzed from a different perspective of the logic framework and in light of the specific relevance of the case situation.Hence, for ING Direct Canada and ING Direct USA, the analytic focus is on the firms’ service-based marketing concept, value propositions and value co-creation logic, and how they translate these concepts and market knowledge into value for and with customers while successfully grow their unique differentiation capability for success and power in guiding people’s mind and behavior through financial services marketing. The ING stories showcased how a firm’s marketing logic defines its meaning of existence and how its marketing practices create value for the society at large.In the Wells Fargo & Company case, the evolution of the firm’s marketing logic is reviewed in the perspective of its long history and rich legacy. The firm’s dominant logic for marketing has been both service-based and relationship-based value creation. It guides the firm in formulating strategy, setting up a repeatable business model that outperforms its competitors in good time and in bad times. It nurtures a strong and healthy company culture where everyone is ready to deliver quality service. As a steadfast retail banking giant, Wells Fargo’s marketing logic has made its differentiation strategy through cross-selling innovative products and services a great success. This study looks into how Wells Fargo uses its high touch and high tech. capabilities for value-creating experiences with its customers so that as bank-customer relations strengthen, their value co-creation processes get enhanced. The research findings from this case have implications for banks in transformaing their marketing logic and improving marketing performance.In the Minsheng Bank of China case, particular attention is given to the responsibility logic, institutional logic and value creation logic as they are of critical importance in guiding financial innovations of firms operating in the contemporary Chinese financial ecosystems. In summary of its success factors, the study traces up the footsteps of the bank’s search for sound business models for its strategies over different time horizons and contexts and eventually, puts the firm’s marketing logic into a theoretical framework-Mingsheng Bank’s Marketing Logic.Financial services marketing is an emerging academic inter-discipline between finance and marketing. In this new research area, there are many concepts to be clarified and theoretical groundwork to be done, yet financial services marketing practice has been most active in recent decades. This study has proposed a marketing logic framework and tested its applied importance and validity in real bank marketing cases. Efforts have also been made to put case stories in different perspectives of the marketing logic framework so as to bring out success factors of the case firms for wider references.This study has shown the direct and far-reaching impact of a firm’s marketing logic on its strategy, business model, management systems and its culture. The new service concept embodied in the marketing logic will bring home new understanding of service and value creation to consumers, financial service firms and will contribute to the society by promoting economic and cultural advancement. It is hoped that this service logic for financial services marketing will be of value and use for both academia and practice. Additionally, it may serve as a guideline for China’s financial reform efforts.