Term Paper on Home Equity Loan
This paper devises a brief promotional plan of home equity loan. To understand the full context of the promotional plan, we first need to explain as to what are home equity loans. Home equity loans are secured with a second mortgage on the applicant's home that allows a person to borrow against the value of his/her home. Home equity loans are generally distributed in one lump sum, and their rates are fixed for the entire term of the loan. Tapping into the investment in your home with a home equity loan has several advantages. The annual interest charges on such loans may be fully deductible for those who itemize an important factor that distinguishes these loans from other forms of consumer credit. In addition, because the collateral for the loan or credit line is your home, their interest rates are significantly lower than for other consumer loans or credit cards.
Now as we have defined the matter, lets draw an outline for the promotion of
this product. Designing a marketing mix, we have the four Ps’, the Product,
that is the home equity loans, pricing, that will constitute of the equity
structure and the payback schedule, promotion, which includes the
communication mix, and lastly the place, that is the distribution. The last
element of the marketing mix needs extreme concentration as there would be
agencies and other appointed agents that would be assisting in the promotion
of the product (service rather).
For designing the product planning
strategy, there needs to be certain things to consider. Such as the time
period for which the product is offered. Lets assume that the home equity
loan ranges from the repayment period from three years to fifteen years. In
this connection the interest rates need to be abreast with the market rates
and should also take in to account the inflation and other domestic and
foreign risks. As the decision is taken at the top level, by the committee
formed for this product, and considering that I am a member of the
committee, I decide the interest rate at 12% annually, payable in monthly
installment, with the equity ration of 60:40. Obviously, at this interest
rate I have to see as to what would be my market.
At this, I have segmented my market as follows:
Salaried individuals of selected public and private organization, servicing
for no less than two years as a permanent employee in the same organization,
with the salary bracket of take home salary to around US $3,000 and onwards.
I have not included business professionals due to increased risk associated
with the repayment as of business conditions and financial strength.
The communication mix would consist of the following medium:
Paper media that would exclusively target two types of audiences:
A happy family with feelings of comfort and satisfaction
Singles or solitary livers
In the newspapers and magazines, there would be detailed information about
the repayment schedule and interest rates. Off course, full detail would
only be given through the attractive brochures to the prospective clients.
In television advertising, the same would be projected. My product would
also have a web site that would include all the elements of customer
requirement like calculator for taking out the exact amount that they have
to pay. Telemarketing, yes I would be incorporating into my marketing
plan. For this I need to recruit and train at least 10 people to cover the
market. In my opinion, one-week training would be great in which the new
recruits would be given training on qualities of the product and how to
handle the prospect. For outdoor sales, I need to recruit 20 people, and be
given the training. And yes, their salary structure would incorporate
incentives like commissions on each sale that would range from amount and
years of loans. The most difficult part is handling of agents that would be
helping me in promoting and selling my product. A specific profit margin is
to be decided and the corporate mission and vision ingrained in to their
strategy.
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