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Segmentation, Targeting and Positioning

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Mobile phones have been popular and have reached a vast majority of users all over the world. As in any field of design, form often comes at the expense of function. If usability issues caused by browser incompatibilities, version-related quirks, scripting engines, and flaky connectivity do not provide enough of a challenge, usability experts will now have a new factor to consider phones and devices that look great, but at the expense of being intuitive or even usable at all. Clearly, there is not a dichotomous relationship between looks and intellect savvy designers and detail-oriented usability experts can work together using iterative redesign to create the right combination, if both sides respect the work of the other and are reasonable in making compromises. Beyond the immediate scope of whether a device looks cool or not is the social propriety of the device (McCabe 2002). Technologies that have long-lasting and widespread social impact are usually plagued with a period of emerging etiquette and public standards of appropriateness before that technology is accepted by the mainstream. To date, there are many different viewpoints that cellular phone advocates and critics might have regarding the use of telephony in public. The question of the success or failure of any given technology is never actually a matter of machines alone (Proctor & Vu 2005).Today's mobile phone is essentially a two-way radio, a device dating from 1906, made possible by digital signal processing, a technique first demonstrated in 1938. Diffusing this technology, as is always the case, has depended at least as much on social factors as technological capabilities. Smart phones propose to have increased functionality and graphical capabilities, which could lead to a more complex and graphic rich interface. If so, gathering user requirements from the current mobile phones may not be as applicable as was thought to addressing the cultural issues surrounding the design of future smart phone interfaces (Aakhus & Katz 2002). Asking questions on the participants' Internet use was thought to somehow compensate for their interaction with the simple graphic interfaces of their current mobile phones. The telephone and its latest mobile incarnation have a unique place in the history of humanity's development. In the history of human imagination the power of real-time interactive oral communication over great distances had been a power so great that even most divine beings were considered incapable of it. The spread of mobile communication, most obtrusively as cell phones but increasingly in other wireless devices, is affecting people's lives and relationships. Cell phones speed the pace and efficiency of life, but also allow more flexibility at business and professional levels as well as in family and personal life. They are a boon for those who feel they are not accomplishing enough. Mobile technology also affects the way people interact when face to face or, rather and increasingly, face-to-face-to-mobile-phone-face, since people are ever more likely to include the mobile phone as a participant in what would otherwise be a face-to-face dyad or small group, and even parties (Kalbfleisch 2004). The mobile phone industry cannot use all the segmentation criteria available to the industry because the target markets have similar needs and wants. The market in such industry has demands that can be considered as unitary.  Creating a segmentation will only confuse the market and would mean a rigorous task for the business and its marketing professionals.


Question 2

The causes of the British difficulties in designing, engineering, and producing volume cars explain the success in sports cars. The sports car designers were adept at differentiating their product, thereby creating demand. They were aware not only of the market, but also that production methods had to be compatible with low annual output. Studies of production frequently overlook this vital connection of anticipated demand and the choice of manufacturing methods. While the traditional sports car a two-passenger coupé or roadster built along racing lines has a long and honored history in Europe, its adoption in the United States was slow in coming and to this day is not as thorough as might have been expected. There are a number of obvious explanations for this phenomenon, including the American penchant for bigness, the desire to have each vehicle capable of doubling as a family car, and the problems of owning a clearly upper-class car used solely for pleasure in a classless society that casts aspersions on the idle rich. Nonetheless, interest in such vehicles was there from the beginning. The development of the sports car has been explored extensively by automotive aficionados. In addition, there are numerous global surveys of the sports car phenomenon, some of which contain significant segments devoted to American contributions (Pooler 2003). Some brands create their images by using distinctive product features to create imagery. One such classic example is the Mazda Miata sports car. For many buyers, the British brands MG and Triumph represent the prototypical sports car. The design of the cars, the sense of speed when driving one, and even the sound of the exhaust have had a powerful influence on buyers' view of the ideal sports car. The Mazda Miata is designed to capture the imagery associated with the MG and Triumph sports cars. For example, to re-create the sound of the British sports cars, Mazda tested over 100 different exhaust systems. All were designed to function well, but they varied in terms of the sound that they produced. The goal was to identify the system that would best reproduce the MG/Triumph sound. To recreate the driving feel, Miata speedometers are calibrated so that the sense of speed associated with the MG/Triumph sports car is mimicked. In all, Mazda made a wide variety of product design decisions to collectively evoke the image of the British sports car. MG sports cars created a niche market in the USA after the war on the basis of differentiated characteristics and product image. The growing demand for sports cars encouraged complementary Austin-Healey and rival Triumph models to enter the US market. To meet increasing overseas demand and lower manufacturing costs, the sports car companies adopted mass production methods and standardized components. Sports cars consistently returned the largest unit profits and achieved the largest export sales of the parent firms' model range (Berger 2001). Sports cars are known to be very fast, open and low build. Sports cars have two seats, two doors, brisk acceleration, sharp braking and precise handling. This type of vehicle doesn't give much attention to passenger space, comfort and space for putting things. The production of sports car would mean more finances for the firm. Sports cars have higher values than other models because of its elegance and the market value of such product. The price of a single sport car is equal to the price of two to three vehicles thus the production of sports car products would mean higher income for the firm  Many drivers consider the brand name of the sports car whenever they one to buy one. Drivers also consider the car's history and racing reputation.

Question 3

  The world is now concentrating on the economic relations and management of the trade conflicts. It is in this area that nations are showing policy ambivalence. While nations would like to expand trade and reduce or even eliminate economic nationalism, they are prepared to indulge in managed trade to resolve trade conflicts. Managed trade is generally used to protect economic boundaries and ensure national economic well-being as a high priority (Shiomi & Wada 1995). The global economy tends to progress toward elimination of these boundaries. While the demands of the political economy and national security favor technonationalism, the need for corporate strategic alliances and economic competition will support technoglobalism. Further, there is some element of technoglobalism in every aspect of a modern industry. But some industries are more prone to depend on it than others. Automobile manufacturing is such an industry. Indeed, a major evolution in this industry has been that it is becoming more and more difficult to identify a purely national automotive product. The extension of the value chain necessitated by fierce national competition made it necessary for the location of parts production to be based mostly on labor costs, labor peace, and other economic incentives. Managed trade forced many automobile producers to further locate transplants in major consumer markets (Yang 1995). It is an export of the corporate culture as well as organizational and management styles, which is ultimately more important than winning the competition in the domestic market of the other societies. The transplants have generally not only changed the inter-firm relationship between assemblers and domestic parts suppliers, but also forced the domestic assemblers of the host countries to at least incorporate some of the inter-firm linkages transferred by the transplants to compete successfully. It is, indeed, in diffusion of the management of Inter-firm structural relations more than elimination of the tariffs and non-tariff barriers that the globalization of the economy has led to the porousness of national economic boundaries (Gereffi & Korzeniewicz 1994). The need for strategic alliances in the auto industry is becoming more and more critical, with computers, electronics, and other high-tech innovations being increasingly integrated into the auto manufacturing process. Three or four decades ago, such alliances were practically nonexistent, because the world automobile industry was dominated by less than a dozen producers. In pursuit of competitiveness in technology, innovative and strong auto companies increasingly turn to strategic alliances with their counterparts of equal capabilities. This has led to technoglobalism, resulting in a difficulty in identifying a product in this industry as having 100 percent domestic content. As brand names have evolved, they no longer coincide with national identity (Kleiner & Roth 2000). The production and sale of sports cars should be targeted for the richer sector of a nation’s economy.  It should focus on high earning individuals. The economy of the nation should also be experiencing a positive trend before sports cars would be purchased. The sports cars would not be purchased if the economy is in rough condition. Even the well financed market would not attempt to buy a sports car during a financial crisis in the economy.  Lastly the nation should have safe and well maintained roads and streets to prevent much damage to the sports cars. The roads of the country should be well paved and should make sure that the sports cars would serve its purpose. The roads should have minimal to no potholes or humps to prevent damage to the sports cars and accidents that will involve people, properties or other cars.

Question 4

It is better for a firm to have different types of products or services than to have different type of segmentation. If a firm has different type of products it can reach a wider market and it can prove its uniqueness in its industry. If a firm has different type of segmentation, it might need to spend a lot to make sure that each segment would be satisfied. The basic idea is that competitive strategy may have as its principal targets either the industry or a segment of the industry; and that strategic advantage may be gained either through product differentiation or cost leadership. Logically this should lead to four, rather than three, generic strategies, but it is argued that the two strategies which can be deployed to exploit a market segment as distinct from the market as a whole should be subsumed under the general heading of a focus strategy. It was generally found that firms of the type investigated deployed a focus strategy with an emphasis on differentiation, particularly in the direction of quality of service. The probe structure attached to each agenda item enabled the interviewer to obtain systematic coverage and, in certain instances when the probe structure was to achieve a deeper level of understanding. Smaller firms, targeting market segments rather than the whole industry and using a cost focus or differentiation strategy, and larger firms, operating at the industry level and pursuing a cost leadership strategy, frequently enjoy better returns on investments than firms with middling market shares which are not clear on their strategies. The latter may be unsure whether it is best to target the whole industry or to go for niche exploitation, and may not be clearly committed to either a cost leadership or differentiation focus. As a consequence competitive strategy may be formulated in an inconsistent fashion (Lodish, Kallianpur & Morgan 2001). Firms guilty of this may let themselves get stuck in the middle, thereby losing competitive advantage, to the detriment of profitability and rate of return on investments. A focus strategy, aimed at the particular market segment, therefore seems most likely to offer the business a competitive advantage. A focus strategy involves a judicious mix of differentiation and cost control at the level of a single market segment or, more usually, several highly interrelated market segments. Typically, there may be several feasible successful focus strategies in an industry, depending on the characteristics of each market segment. As a focus strategy involves both differentiation and cost control, the business needs to beware of inconsistency in strategy formulation because product differentiation may, in itself, be costly to pursue Sometimes targeting may involve segments who differ on response to other elements of the marketing mix, however most smaller, entrepreneurial ventures differentiate target segments on the value they place on the differential benefits they perceive the firm to deliver. If a firm can target those people who value their offering the highest compared to the competition, it has many benefits including better pricing and higher margins, more satisfied customers, and usually a better barrier to potential and actual competition. Every product or service idea has to be wanted by some market segment more than competitive products or services in order to obtain sales. Very simply, if customers won't choose the new product or service over the existing product or service, then a firm won't succeed. In many cases, the appropriate sales force size can be dictated by the market segments that are being targeted and the costs and incremental benefits associated with the role of the sales force. In many cases, a salesperson is a necessary part of what the channel expects from the entrepreneur (Reid 1995).

Question 5

Market segmentation focuses on dividing a market into smaller groups with the same wants, needs, behavior or characteristic. Market segmentation helps in clearing a market so that the firm can make specific strategies that relate to the wants, needs and characteristic of a market. Market segmentation can be done based on a product specific basis wherein the focus is to divide the market according to the products purchased by the clients. Market segmentation involves breaking down the entire market into smaller submarkets or subgroups that can be reached more effectively with different marketing programs. The question of market segmentation is a managerial one that is, should the market be segmented? That is the statistically significant differences found among segments also managerially significant? One must examine the benefits of market segmentation vis-à-vis its costs. To make this type of assessment, one must first determine whether any statistically significant differences between, for example, two segments justify the cost of developing target marketing (Michman 1991). Target marketing distinguishes among many market segments, selects one or more of these segments, and develops products and marketing mixes tailored to each segment. For instance, consider a 10 percent difference among younger and older customers desiring a particular telecommunication service. If one wishes to consider different marketing strategies to appeal to these two segments, one should examine whether a 10 percent difference in service desirability between the two segments justifies the extra cost associated with the development of two strategies rather than one. 10 percent should be translated into numbers of customers and potential revenues. Potential revenues could be estimated by calculating the proportion of those expressing intentions to use and those who are expected to use it and continue using. A more precise estimate of the importance of each segment in terms of potential revenues must include not only the number of potential users but also the monthly or usage rate. The costs associated with target marketing may include the cost of developing an entirely different marketing mix for each segment. To the extent that segments differ in the way they respond to the seller's efforts, different marketing efforts aimed at each segment are needed and often justified. Market segmentation appears to be an effective strategic tool for addressing the mature market, not only because this market is highly diversified but also because of its size. Segmentation is a process in which a firm's market is partitioned into submarkets with the objective of having the response to the firm's marketing activities and product/service offerings vary greatly across segments, but have little variability within each segment Sometimes targeting may involve segments who differ on response to other elements of the marketing mix, however entrepreneurial ventures differentiate target segments on the value they place on the differential benefits they perceive the firm to deliver. If a firm can target those people who value their offering the highest compared to the competition, it has many benefits including better pricing, more satisfied customers, and usually a better barrier to potential and actual competition.  (Moschis 1994). Lifestyle market segmentation is better than other segmentation since it focuses on determining the lifestyles of each target market. Once the firm has a concrete segment of each lifestyle it can classify each market to their similar lifestyle. Making use of the lifestyle market segmentation would mean that the firm would be able to cater to a specific market and would have a specialized target for a specific market. Lifestyle market segmentation reduces the need for creating more than one product.



Customer based pricing method focuses on listening and following the demands of the customers in pricing a product or service. Not all customers are profitable. It is therefore important to understand the relative profitability of different customer segments. The greatest retention efforts should be directed to those segments that are presently or potentially the most profitable. It should be recognized, however, that even unprofitable customers may be valuable in their contribution towards fixed costs, and considerable caution is needed in the allocation of fixed and variable costs, to ensure that customers who make a contribution are not simply discarded (Beynon 2001). Customer based pricing can be compared to cost plus pricing. Prices are numerical statements of what a customer must pay for an item. But the key to effective pricing is to ensure that the price charged reflects the amount of value a customer is receiving. A fundamental principle in market-based pricing is to recognize that price is a statement of value, not a statement of costs. One of the leading causes of new-product failure is a phenomenon marketers refer to as the price crunch. This is the situation where the company charges a price that is significantly higher or lower than the amount of value customers associate with a particular purchase. The underlying reason for much of ineffective pricing is a preoccupation among those who set prices with the need to cover costs. Cost coverage, not customer value, is the single most important factor in the pricing policies of most companies.  The most popular method for determining prices is called cost-plus pricing. Cost per unit is determined, usually based on some allocation scheme, and a profit margin is added. Customer considerations, and especially value to the user, are virtually ignored Cost-plus pricing is perhaps the oldest pricing strategy; in effect it says that the selling firm will charge its cost plus a certain markup. The strategy is appropriate for a price maker because it does not consider what the competition is charging or will charge. Cost-plus pricing is also appropriate for new products without close substitutes. Cost-plus pricing may also be used to establish a floor for the price of a product while he market establishes the ceiling. Cost-plus pricing has many variations, depending on what is taken to be the base and what is taken to be the markup. The markup consists of two components an amount to cover the costs not included in the base and a profit (Cheatham, CB & Cheatham, LR 1993). Cost-plus pricing has two dangers. One danger is that it is entirely self focused as far as the seller is concerned. It does not consider what the customer is willing to pay or what competitors will charge. In other words, it does not consider factors that are external to the firm. The other danger in cost-plus pricing is that there is no incentive to cut costs. In fact the larger the cost base, the larger the amount of the profit when the markup percentage is applied (Garda 1992). Cost-Plus pricing is used because such method is easy to calculate and such method will only need a little information. Cost-Plus pricing includes several varieties, but all of them calculate the cost of the product afterwards it includes a certain amount that will be treated as a profit.  Cost-Plus pricing has various disadvantage, one of which is it attracts inefficiency. It is also criticized because some believe that it tends to ignore the role of consumers and competitors, Moreover a disadvantage of such method is it focuses too much on sunk costs rather than just using incremental costs. Lastly some say that it causes businesses to lose focus on performance because the cost will just be paid by the client.

Question 2

As market turbulence becomes more pronounced, marketing decisions and decision making processes need to be more sophisticated so that proactive marketing policies can be successfully put in place. Classical pricing decisions, typically, are not proactive in that they do not have the flexibility and fine tuning capable of responding not only to the changing economy but also to changing target markets and newly emerging market segments. Instead, traditional pricing practices have taken two clearly identified routes: demand-oriented pricing and cost oriented pricing. Particularly in economic downturns, because of cash flow problems, the firms are tempted to raise prices. This is not only detrimental to the firm, but, typically, to the economy as well. Even if the firm has some monopoly power, in adverse economic conditions, this power dissipates. The firm must be extremely sensitive to customers' reactions so that the firm will not fall into a trap of raising its prices and losing revenues in large proportions. Turbulence in and volatility of the market place, necessitate a proactive pricing approach. Traditionally, pricing decisions have been made by either cost plus or demand and supply analytics. Neither one of these approaches truly provides the basis for the needed pro activity (Samli1993). Rather, the traditional approaches lead to price stickiness or price inertia, indicating insensitivity to market changes and turbulence. Finally, sensitivity to market changes and developments such as mass customization will enable the firm to function well in volatile markets. The firm must consider the needs and abilities of many different markets and must develop a price-to-volume combination that will optimize the total revenues as well as the profits. International market share goals for organizations have a dynamic character. As isolating mechanisms are weak, the goal is to distribute product quickly across as many markets as possible at the highest price points allowed, before price erosion sets in. Real-time data on inventory and as to how sales are changing are also required in order to facilitate dynamic pricing, a tactic of reducing price just fast enough to maximize production with no stock-outs or inventory buildup. The key to fast-cycle internationalization is not to be found in traditional measures of international strength like economies of scale and adaptability to local cultures, but rather in the ability to respond quickly to wide swings in regional differences in demand, dynamic pricing, rapid entry and exit, fast-paced innovation, and the ability to cannibalize one’s own products. On this basis, it would seem reasonable to expect that historical dominance in international industries is a poor predictor of who will dominate future fast-cycle markets (Mckern 2003). Firms use various methods of pricing that depends on the situation in the environment. One type of pricing strategy is dynamic pricing.  Dynamic pricing is the standard means of pricing in various types of industries. Dynamic pricing focuses on making sure that higher prices are charged during the peak season so that profits are gained. Dynamic pricing main goal is to improve sales margins and then increase sales. In such method the company gains the chance to price differently on different occasion. This gives the company a way to control its product range based on profit margins. Dynamic pricing will help the business make sure that it has a balance of profits and losses in a year even if there is a weak and strong season. Prices especially in dynamic pricing are affected if there are changes in income rates and the rate of clients coming in to avail of a product or service. Prices also change if the need for a product exceeds the supplies available for consumption.

Question 3

Competition is the most important basis of pricing strategies. A firm needs to make sure that its prices would be competitive with the prices of other firms so that they will not suffer losses and financial problems. The pricing method will always be affected by competition since the firm would always check for trends in the pricing method of competing companies especially if the competitor firm is dominating the industry. Other basis of pricing method includes the environment and the comment of clients. Competitive market models rely on firms' costs turning upwards in an output range well below that demanded by one market, so that many profit maximizers can compete for custom, their given prices being driven down to match minimum and minimized average costs. Natural monopoly ceases to exist, even in form, if the point of minimum average cost is reached at a fraction of total market demand, or if demand expands to bring maximizing output into one increasing-cost range. Even where it exists in form, natural monopoly may have no adverse effects if there are potential entrants or substitute products waiting to move in on any departure from competitive pricing.  The normal profits of a perfectly competitive firm are assumed to cover an element of new and replacement investment as well as current costs of production. Since perfect competition is an extreme case, most firms can also expect some residual 'supernormal' profit to distribute among shareholders or spend on further investment. But strong product-market competition, or heavy calls from other elements of cost, may still leave supernormal profits below the level needed to finance the firm's strategic plans, especially if strong ownership-market competition requires a significant proportion to be distributed to shareholders. The key to using the competitive positioning pricing strategy is in being sure that the target audience agrees with the position chosen. If a company wishes to be recognized as the high-price quality line, the products must be easily recognized in order to deserve this position. The use of competitive positioning in relationship to the company and its competition will have an impact on the company image. The utilization of competitive positioning as a pricing strategy should be understood and supported by both the internal organization and all the channel members. Communications from the channel members relating what competitive pricing events are taking place in the channel will alert the manufacturer of needed action. When the manufacturer does take competitive pricing action, the result will first be felt by the marketing channel members. It is their job to report the effectiveness of the pricing strategies employed by the manufacturer or marketer (Shipman1999). When channel managers understand the competitive deal and have successfully stopped its effect on the channel members, it is the time to plan a reestablishment of the company's competitive marketing channel pricing position or strategy. If the competitive price offer represents a lower price position in the channel and the company intends to be identified as the economy price setter, then a program to recapture that place in the marketing channel should be considered or a new strategic position adopted (Mcmanus 2001). In competitive pricing, the company’s price will be based on competitor’s price.  In this approach the company determines the prices of competitors; analyze the benefits and disadvantage of such price and applies it to the company’s pricing system.  Competitive pricing can help a business in any industry to make sure that they will have profits similar to the competitors. Competitive pricing is what businesses and companies need because of the high level competition in the industry.

Question 4

Pricing will always be affected by competition, the clients and the situation in the environment. Pricing can also be changed by the image the firm wants to project. Pricing can affect the image of a company. Pricing can attract or make clients go away. Pricing is one factor being looked at by clients of businesses. Lastly pricing can be affected by the financial stature of the firm. If a firm needs sources of income it will be enticed to increase the prices even if it means reduced number of clients and a negative image of the firm. There are times wherein the firm still charges a single price for so many goods and services; this is due to the minimal difference in the cost of producing the different product or service.  A variety of motivations explain the adoption of a new customer approach by global companies. A major reason is the cost of conducting personal visits or customer sales call continues to increase. Firms cannot afford to allow their sales force to make unproductive sales calls. Firms have come to believe that a more efficient method of marketing is to establish and maintain long-term relationships with their customers. When a long-term relationship is established and nurtured, it is less necessary to spend significant amounts of money advertising to make customers aware of the product offering and then employing a sales force to stimulate demand for unwanted products/services to potential customers (Ford Honeycutt & Simintiras 2003).Global customers expect low manufacturing costs, excellent design, and having their needs met. The firm wants to form a relationship with its best customers because this orientation appears to generate lower-cost customers. The firm expects the sales force to work the marketplace to reach new customers or to find outlets for products that have been overproduced or under-engineered. While a firm’s orientation may change slightly, depending upon the market situation, the firm normally adheres to a single orientation more than the rest. Pricing is possibly a company's most important decision, also a source of internal conflict. Marketers with their sights set clearly on the market place think that they know what the price should be. Pricing is an important part of doing a business. Companies need to have a pricing system that fits well with the needs of clients and the demand of the environment The pricing system needs to be well thought of and should be based on the events in the environment.  The competitive position pricing method tries to establish prices in relationship to specific competitive products or against specific companies that are competitors. The competitive pricing relationship to be established is a strategic management choice. The relationship may be strategically positioned as being priced equal to competitive products. It may also be established to more favorably price products in order to attract the lower price buyers. Finally, the pricing relationship strategy may be to price higher than competitors for similar products. Higher pricing is sometimes referred to as quality pricing. This strategy is intended to imply that the higher price exists for a good reason. In competitive position pricing a company will determine its major competitors and price its products according to a strategic relationship with the prices of these companies. The company will then try to maintain the planned strategic pricing relationship as a basic pricing position for most or all of the products in its line. If the company believes that it offers superior quality and product uniqueness that provides a favorable cost-to-benefit ratio relative to the competitive companies, then it may set a standard higher price than its competitors. This will probably be a price that is always higher than the competition by a set percentage (Yudelson 1999).

Question 5

Financial system is comprised of interconnected but complex financial markets, institutions, services, transactions, instruments and transactions. Financial systems are important because they make sure that the economy can allocate its resources properly. The financial system aims to make sure that consumption of households and the expenditures of businesses would be planned smoothly. A functional financial system is defined as one which, irrespective of its stage of development or institutional fabric, finances accumulation with the least increase of financial fragility through the process of growth. The measure of efficiency of the financial system in contemporary financial theory is based upon the competitive capital market paradigm. From a neoclassical perspective, in a competitive capital market saving/capital is allocated optimally; hence inefficiency attaches to anything outside that paradigm: real-life institutional arrangements are implicitly seen as distortions in relation to the optimal outcome of the idealized structure. The role of analysis is thus to point to the imperfections of such structures and, perhaps, to the ways of re-establishing the sovereignty of the market forces. From a post-Keynesian perspective, financial systems are more than intermediaries between saving and investment: they create saving as much as they allocate saving. Both roles are equally important in an entrepreneur economy: finance creates the means of commanding resources that will permit entrepreneurs to implement their production and investment decisions; funding represents an incentive for both banks and wealth-holders to hold securities and, additionally, reduces the financial fragility inherent to growing monetary economies Since neither the availability of finance nor the existence of mechanisms for funding can be warranted by the pure forces of free competition, the meaning of efficiency here must forcibly have a different connotation in the analysis. In order to stress this difference, functionality would be the term used (Engwall & Morgan 1999).Functionality has two distinctive dimensions: one concern the stability of the financial system and another is related to the allocation of real resources. This first is the macroeconomic dimension, the second, the microeconomic. The financial system has evolved from a bank-oriented phase via a market-oriented era through to the present securitized system. The financial sector dominates over the real sector of the economy. There has, however, been scant investigation into the spatial distribution of institutional funds and its relationship with regional development, even though the volume of respective funds being generated at regional level is substantial.  With the increasing power of institutional investors, the government began to alter its regional policy stance. The present financial system may be described as a branch banking system. It is an integrated structure in which the major financial institutions’ head offices are concentrated in the central capital markets, yet there is a growing tendency for certain activities to be relocated, mostly in other provincial towns and cities. Thus, regional financial sector growth opportunities, above those facilitated by the overall growth of a regional economy, largely depend on the willingness of the central capital markets to devolve their activities to the regions. The clearing banks and the building societies have redefined their organizational structures (Leyshon & Thrift 1997). A form of financial system is an insurance business. When facing a discount oriented competitor, such firm needs to make sure that the benefits of their service would be highly emphasized to prevent themselves from emulating the strategies of the competitors.


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