New product development is one of the major challenges facing the marketing of financial services. The intense competition, deregulation, drastic environmental changes and technological developments within the financial markets have led to the adoption of more innovative product development systems. In comparison with the other three main elements in the marketing mix (price, promotion and place or distribution), product development is relatively less costly and more flexible to implement. Promotion and advertising in general are very costly and require long-term investment budgets; distribution is certainly a long-term decision and also requires major investment in either real estate and/ or computer and distribution systems; pricing is not as flexible in financial services as it is in tangible-products sectors or industries. As a result product development is one of the least expensive and most flexible marketing mix elements available.
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