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

Department of Marketing 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

Department of Marketing New Kid on the Block: JBR paper A Marketing-Finance approach towards industrial channel contract relationships: a model and application

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

Department of Marketing 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!

Department of Marketing 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

Department of Marketing 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

Department of Marketing Research Questions How can novice investors be successful online? Does investors’ self-efficacy matter? How is self-efficacy formed during pre- purchase information search?

Department of Marketing 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

Department of Marketing Example: Third-Party Web Site

Department of Marketing Research Findings Highly efficacious consumers: achieve higher profits have higher usage intentions Perceive higher service value

Department of Marketing 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.

Department of Marketing Research Findings Amount of search does not affect self- efficacy Consumers’ engagement impacts effect of source evaluations

Department of Marketing 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

Department of Marketing Research Findings Increasing segment: inexperienced, spends high effort, obtains high profits (€ 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

Department of Marketing 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

Department of Marketing 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

Department of Marketing 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