The Marketing-Finance Interface: A Relational Exchange Perspective

1. The Marketing-Finance Interface: A Relational Exchange Perspective Ko de Ruyter, Professor and Chair, Marketing Department, Maastricht University

2. No school for old men… • During the past two decades strong focus on the marketing of services, specifically financial services • Tracing back the origins of the MF interface; The Marketing-Finance: A Relational Exchange Perspective, Journal of Business Research (2000) • Wall street vs. Main street • Marketing managers: Procedural Fairness (+) • Finance managers: Interfunctional Rivalry (-) • Both: Mutual Resource dependence • The Marketing-Finance Interface: A Relational Exchange Perspective

3. 2004 New Kid on the Block: • JBR paper A Marketing-Finance approach towards industrial channel contract relationships: a model and application

4. We fast forward to 2008: Research on the Formation of Online Investors’ Self-Efficacy

5. Current Trend • Online consumers are active co-producers of financial services • Not only trust the bank, but also trust themselves • Confidence or self-efficacy is based on increasing variety of information sources • As a result self-efficacy updating is a dynamic process • We suspect that different patterns will exist!

6. Service Providers Educate Customers • Bank of America: “tools and independent research to help you choose the right investments” • Alex: Alex Academy • ABN-AMRO: TradeGlobe Academy, TradeBox

7. Managerial Problem: How can customers adapt to their new service role? • Online investment induces self-defeating behaviors such as excessive trading because of overconfidence • This is particularly problematic because: • customers tend to attribute service failures more to the firm than to themselves, • share these bad experiences effortlessly with online peers, • and can seamlessly switch to a competitor’s web site

8. Research Questions • How can novice investors be successful online? • Does investors’ self-efficacy matter? • How is self-efficacy formed during pre-purchase information search?

9. Research Design • Computerized survey using online investment context • Respondents were asked to invest a predetermined sum of money in stocks • Respondents were asked to look at three websites; a firm, expert, and peer information source of which source evaluations and self-efficacy were recorded

10. Example: Third-Party Web Site

11. Research Findings Highly efficacious consumers: • achieve higher profits • have higher usage intentions • Perceive higher service value

12. Research Findings • Information source credibility and argument quality increase self-efficacy • Consumers differentiate among information sources and weigh associated evaluations differently • Focus on third-party credibility and firm argument quality. Surprisingly, peer source is less relevant.

13. Research Findings • Amount of search does not affect self-efficacy • Consumers’ engagement impacts effect of source evaluations

14. Research Findings • Multiple investor segments exist based on response to information: • Segment 1 (n = 89): increases self-efficacy during search • Segment 2 (n = 146): maintains self-efficacy • Segment 3 (n = 22): decreases self-efficacy

15. Research Findings • Increasing segment: inexperienced, spends high effort, obtains high profits (€ 61.27 after 2 months) • Maintaining segment: experienced, little less effort, medium performance (€ 52.09) • Decreasing segment: experienced, low effort, low performance (€ 1.29), less motivation than other groups

16. Implications • Control investors’ information search by partnering with and linking to credible external information providers • Provide high quality information: authenticity, consistency, clarity of content and style, and an explicit and transparent service recovery strategy • Increase customers’ engagement by incorporating interactive user forums, real-time updates, customizable home pages, and virtual agents

17. Implications • Inexperienced investors make up for lack of experience by spending high effort • This strategy pays off for novices compared to experienced investors • A minority of investors is unmotivated and performs poorly

18. Implications: What to do with underperforming customers? • Convince customers that spending high effort on information evaluation and investment decision pays off • Set realistic service expectations; customer makes own success • Make information easy to digest; summary section with necessary info, click-through to details