Student booklet.doc - IFS Institute of Financial Services...

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IFS: Institute of Financial Services DIPLOMA IN FINANCIAL STUDIES Unit 2 Chapter 1 Developing Financial Services to meet customer needs Key words and essentials for the external assessment 1
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Why do individuals choose products? People buy financial service products and services to satisfy their needs but how do people decide which product to buy? The customer will have to weigh up a number of factors: objective such as the price of one product against another and items contained in the ‘Terms & Conditions’ subjective such as his or her feelings about the product and the image created by the provider’s advertising Individual factors include: needs, wants and aspirations attitude to risk available resources any advice received preferred delivery channels his perception of the advantages and disadvantages of each product his perception of the provider Financial service providers have an incentive to try to understand the needs of their customers – both existing and potential. Providers who have enough information can: contact existing customers to offer them a loan, at just the time they are likely to need one – cross-marketing or contact people who aren’t currently customers, but who the provider believes are most likely to respond because of their needs - this is called target marketing Financial service providers break the population into different categories of people – this is called market segmentation Why do financial services providers decide to launch products? 2 Market segmentation is a means of subdividing the market into separate ‘sub-sets’ of customers/possible customers. It allows the subsets to be evaluated as possible target markets, so that activity can be focused where – and in the way that- it will be most effective .
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To make money The main aim of most businesses is to make a profit. If the financial
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