marketing and regulation mutual fund
TRANSCRIPT
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Marketing and distribution ofMutual Funds
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1.Introduction2.Market analysis3.Factor affecting marketing of mutualfund4.Segmentation5.Targeting (10 p)6.Positioning7. Example
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Mutual fund serve as an instrument of capitalformation and financial intermediaries to bridgebetween the supply and demand of capital in themarket
They relieve the investor of problem of investing their
saving and dealing with them effectively as well asensuring a low risk steady return , liquidity andcapital appreciation
Mutual fund also attract foreign capital flow into thecountry and secure profitable investment avenueabroad for domestic saving thought the opening of
offshore fund in various foreign sectors All of these factors have necessitated the need for a
sophisticated investment instrument for growth andsafety.
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The response of these has been an aggressivemarketing of mutual fund.
For successful mutual fund marketing mustcreate confidence among potential investor
and strengthen their desire to invest theirmoney with a particular fund
Additionally ,organization image ,visibility ofoperational policies and quality of
management form and indirect butnevertheless important part of mutual fundmarketing.
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R = Research STP = Segmentation, targeting and
positioning
MM = Marketing mix I = Implementation
C = Control
R IM cTP
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PROBLEM DEFINATION GOAL SETTING
MARKET SEGMENTATION
CUSTOMER ANALYSIS
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Market analysis is
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Distribution The act of spreading or apportioning.
The commercial activity of transporting and
selling goods and services from one producerto consumer.
Channel:
Any distinct part of distribution system
through which a supplier reaches a customer.
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1.Government policy2. Inflation
3. Strong competitor
4. Market volatility
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Demographical
PsychographicalBehavioral
Geographical
states, region, cities,density &climate
Age, sex, income ,
size of family,occupation&education.
social class,personality &life style.
knowledge,attitude &response
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Education Earning Years Post Retirement Years
Phase I Phase II Phase III
Age- 22 yrs Age- 60 yrs
Marriage
Child birth
Childs Education
Childs Marriage
Housing
22 yrs 38 yrs 10- 20 yrs
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60Retirement
40Middle Age
27Young Married
22Young Independent
Earnings
Consumption
Savings
All individuals have a finite period to save for their investment goals
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1. Knowing the perception, attitudes andunderstanding of investors. understanding the profile of investors. Awareness and attitude towards various modes of
saving.
Motivation behind the investment.
2. Market growth and size.3. Analyzing the market. production of economy. Rate of saving. Distribution of investor.
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The part of the qualified available market thecompany decide to pursue.
Target market
produ
ct
Pric
e
Plac
e
promoti
on
people
Physicalevidence
Processperforman
cepartner
perception
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Product line to be offered, quality, design,range of service
Branding-selection of product name,brandpolicy
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Entry Load : Nil
Exit Load** : For redemption/switch-out of units
within 365 days from the date of allotment: 1.00%of applicable NAV. For redemption/switch-out ofunits after 365 days from the date of allotment: Nil.
Exit / Entry Load is NIL for units issued in Bonus &
Dividend. Reinvestment.
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AMC
TIER AGENCIESBANKSBROKERDIRECT
MARKETINGINTERNET
Institutional
brokerIFAS
LARGECORPOR
ATE
CORPORATE
HNWCUSTO
MERS
RETAILCUSTO
MERS
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Promotion is communicating with the public inan attempt to influence them toward buying
your products and/or services
Advertising(electronic and print media)
Campaign
Through existing customer
Education programs
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InvestorsEmployee of the organization
Fund mangers
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To shaping first impression
Managing trust
Facilating quality of serviceChanging the image
Socializing employee
Example-Scheme, APPREANCE
Behavior, ARCHITECTURE COLOUR
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It assures service availability and consistentquality.
It should be customer friendly
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Entry Load - 0% Exit Load - If redeemed bet. 0 to 1 Year it is
1%.
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Frontend load or sales charge Back-end load 12b-1 fees No-load funds Share classes
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Advertisement should be true ,clear and fair. The sale offers should contain only information
which is included in current prospectus of funds
Advertisement should not be so framed so as
exploit the lack of experience of investors.Advertisement should not contain information
,the accuracy of which depend on an assumption.
If an advertisement guarantees a minimum return
it should mention the resource of guarantee
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The mutual funds should not use any unethical meansto sell, market or induce any investor to buy theirschemes.
maintain high standards of integrity and fairness in alltheir dealings
It was made mandatory for all distributors and agentsof mutual funds,, to pass the AMFI certificationexamination (SEBI circular dated September 25,2001)
the mutual funds shall monitor the activities of their
agents/distributors to ensure that they do not indulgein any kind of malpractice or unethical practice whileselling/marketing mutual funds units.
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Take necessary steps to ensure that the clients interest is protected. Adhere to SEBI Mutual Fund Regulations and guidelines related to
selling, distribution and advertising practices
Provide full and latest information of schemes to investors in theform of offer documents, performance reports, fact sheets, portfolio
disclosures and brochures
Highlight risk factors of each scheme, avoid misrepresentation andexaggeration, and urge investors to go through offer documents/keyinformation memorandum before deciding to make investments.
Avoid commission driven malpractices such as
that all investor related statutory communications (such as changesin fundamental attributes, exit/entry load, exit options, and othermaterial aspects) are sent to investors reliably and on time.
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SEBI had done away with entry load in cases where theinvestors directly invested in mutual funds without goingthrough an agent or a distributor.
Who will benefit? Of course, the investors! How? Because now that there will be no entry load on the money
invested, all the money would be used to buy mutual fundunits unlike earlier when 2.25 per cent were lopped offand the rest invested
Distributors will get a fee for their advice and hencedistributors will have to give the right advice rather thanpromoting schemes, which offer them superior brokerage
Who loses?
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The retail distributors, the fund houses to some extent,
and the relationship managers of banks who made aneat commission out of their advice to investors onwhich funds to buy and sell.
How? They will now have to negotiate with the clients and
decide on a fee (smart investors can negotiate this totheir own benefit) whereas initially they used to get afixed brokerage from the fund house.
The retail distributors may reduce or may entirely stopselling mutual funds as it may no longer be lucrative tothem. This will hamper the business of fund houses.
Why SEBI removed it?
To increase investment in mutual funds. Government was not getting any direct benefit from
the entry load charged.