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Chapter 15

Marketing of loans

Solutions to discussion questions

Q1. What is the importance of the marketing of loans in the overall loans portfolio strategy of a financial institution?

A. Loan portfolio strategy is decided on the basis of several considerations like financial and human resources, risk-return trade off, overall competitive strategy etc. Once the loan portfolio composition is decided, it is necessary to achieve the goals set there in. Marketing plan helps a financial institution to realise these goals. The goal of any financial services marketing plan, is to identify the customer’s financial needs and wants, develop appropriate banking products and services to meet customer’s needs, determine the prices at which the products and services will be sold, advertise and promote the products and services, arrange for appropriate distribution channels and lastly forecast and research future financial needs. The marketing policy and plan thus helps a financial institution in realising its goals.

Q2. What is a marketing plan? Why do financial institutions need to prepare one?

A. All organisations whether financial or non-financial, operate in a competitive environment and need to prepare a marketing plan. The marketing plan is a document that gives information about aspects like the target market, competitors, how does the organisation intend to advertise and promote itself at the market place, how products and services should be priced, what are the channels of distribution of products or services, what are the strengths, weaknesses, opportunities and threats that an organisation needs to take in to consideration.

A financial institution like any organisation operates in a competitive environment and needs to consider these aspects if it has to succeed. Hence it is important for it to prepare a marketing plan.

Q3. What is competitor analysis? How is it carried out?

A. Competitor analysis is also...