Luxurification vs. Commodification of financial service

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When we discuss the debate between Luxurification vs. Commodification, we tend to associate finance services more tilted towards latter. The idea that it is the service required by everybody as well as there are less differentiation in terms of products being offered by multiple organization. It was more applicable to the developing countries. But, with the changing demographics and increasing disposable income the preference for luxury has increased in this space also.

In this space, we may see the continuum of the financial services being offered varying from purely commodity to luxury services. The banks are trying to differentiate themselves by providing the customized products as well as services. The varying is not just across organization but is also present within organization. What I mean by this is, organizations are providing commodified financial services as well as luxurified financial services to different customer segment.

The luxurification is happening not only through products being offered and services being provided, but also through other marketing mix variables like servicescapes, employee, pricing, channel, and promotion. The organizations are trying to lure high-end customers through these add-on things, and actual products remain more or less same. Organizations are using the consumer psychology to use luxury services everywhere, by offering these proxy indicators of luxury in a sector, which otherwise looks like a commodified sector.

Ardhendu Shekhar Singh, Associate Professor, Symbiosis School of Banking and Finance, Symbiosis International (Deemed University), Pune

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