Services Marketing

Chapter 25 : Marketing of Financial Services (Banking, Insurance, Mutual Fund & Portfolio Management Services)

Mutual Fund Industry

Definition
Market Segmentation,

Marketing Mix of Mutual Fund Industry

Product
Price
Place Promotion Process People and Physical Evidence

Recent Trends in Mutual Fund Industry

Section Summary - Mutual Fund Industry

A mutual fund pools the savings from numerous investors and invests them in diversified securities in the capital market in order to optimize the returns, safety and liquidity and offer the maximum benefits to investors. Mutual funds can be divided into open-ended, closed-ended and interval schemes, based on their structure.

The mutual funds market can be segmented into growth fund, income fund, balanced fund and money-market fund, based on the customer's investment objective. In purchasing mutual funds, investors look for capital appreciation, liquidity and safety. Therefore, marketers are required to design the products keeping those objectives in mind.

Products that are customized and designed to suit the risk profile of the customer and his investment objective are offered in the market. The price of a fund chiefly depends on the underlying stocks' performances and the stock market trends. The company's performance allows it to charge a load on the purchase and redemption prices.

The various channels of distribution used by mutual fund companies include their own employees, distribution companies, agents, banks and post offices apart from the Internet. The role of people becomes quite important in the mutual fund industry for two reasons. The fund manager determines the success of a fund in the market. As there is limited knowledge of mutual funds among investors, they need to be convinced by the employees and agents to invest in mutual funds.

The mutual fund industry has evolved as a competitive industry in the financial services sector with the introduction of reforms. The entry of global and private players and the inventions of technology like the Internet have transformed the business completely. The development of the equity market has made the mutual fund an attractive investment option for consumers. The option to invest in foreign equities is expected to change the mutual fund market in India further.

Portfolio Management »