Services Marketing

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

Portfolio Management

Definition of Portfolio Management

Market Segmentation and Marketing Mix

Product
Price
People
Place Promotion
Process Physical Evidence

Recent Trends in Portfolio Management Industry in India

Section Summary - Portfolio Management

Portfolio management service refers to managing the funds of a customer taking into consideration their short-term and long term needs. As the customers may not have the time or expertise, their assets are managed by the portfolio managers who invest in different financial instruments like bonds, insurance, stocks, real estate, etc.

The market for these services is divided into discretionary services and non-discretionary services. In the case of non-discretionary services, the decision-making regarding investments lies with the customers, whereas in the case of discretionary services, it vests with the service provider. The product needs to be designed to suit the specific needs of individual investors.

A standard product might not suit the needs of all investors as their needs and profiles differ. The price of portfolio management services is generally calculated as a percentage of the net asset value or a percentage of the returns or profits earned on the investment portfolio. People assume center stage in portfolio management services, as portfolio managers determine the success of an investment portfolio.

Process plays a pivotal role; it starts with understanding the customer profile and needs and ends with performance evaluation of the portfolio. In providing physical evidence, the service provider's achievements, clearances from regulatory bodies, quality compliance certifications like ISO 9001:2000, past performance, etc. can be used effectively through brochures and displays.

The PMS business in India, which was nonexistent till the beginning of the century has emerged strongly as the income levels of Indians have been increasing at a fast pace. More changes can be expected in the sector with more global players entering the market through strategic tie-ups and SEBI being expected to introduce some reforms in the sector.

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