Clasificación de los clientes: Gobierno del producto y mercado objetivo importante

Posted in Cumplimiento de los mercados on mayo 8, 2024
Jjj 1 2

Customer classification. Investment companies, brokerage houses, and similar firms are required to classify the customers according to their investment potential and, financial interests. The products to be offered to the customers must be governed by good business practices, including the investment code of conduct.

Customer Classification

Customer Classification: Product Governance And Important Target Market

The target market must be identified, ensure that employees know the market, and its compliance requirements when dealing with potential investors or clients. MiFID II provides product governance requirements mainly in Articles 16(3) and 24(2).

It states that the requirements on product governance apply to any assessment of the appropriateness to be subsequently carried out by the firm while providing services to their clients. The target market requirements apply to companies that manufacture products and to the product distributors representing various roles that each one of them plays in the product distribution lifecycle.

The guidelines are to be applied in an appropriate way considering the nature, scale, and complexity of the company’s business and, the range of the financial services provided to the investor clients. The guidelines provide the provisions related to the distributors and the companies distributing the financial products. 

The customer classification, and product governance and, target market identification should be based on both quantitative and, qualitative factors. The automation of the services provided to the target investor market tends to rely on quantitative data. Automation needs to be balanced with the qualitative factors, to make a balanced approach to identify the potential investors, their investment requirements in different companies, and their shares or securities.

Market Categories

The are six target market categories for consideration where it is important to define the target market of a product or security. The target market identification may be based on the experience of the product offerors. The six categories for target market identification include the following: 

  • The type of clients to whom the product is targeted – specification should at least be made according to MiFID II client categorization although additional descriptions may be used to refine the clients.
  • Knowledge and experience – the company must mention which knowledge the target customer should have about the elements of the securities or shares, such as the shares type, features, and, knowledge in thematically related areas. The firm should specify how practical experience a client should have to make investment decisions. This could involve setting a period for which a client has been active in the financial marketplace
  • Ability to bear losses, where the broker or investment company specifies the number of losses that a client should be willing to take and, bear considering the market dynamics and, news. 
  • The risk tolerance of the product, where it is suggested that the basic risk attitudes must be categorized different approaches to take the risk may be considered, such as considering the portfolio approach.
  • The objective of the client’s investment company is required to specify the investment objectives to the potential clients including the information related to the liquidity supply, retirement provision, or the number of years the investment in a particular security is to be held by the client.
  • Needs of the Clients where the needs of an identified target market of the potential client and the investment company are to be specified. This may range from general to specific investment-related information.

Understanding Target Markets

Few products today are intended to appeal to everyone. The Aveda Rosemary Mint Bath Bar, which retails for $20 per bar at Aveda beauty stores, is aimed at the upscale and eco-conscious woman who is willing to pay a premium for quality. Cle de Peau Beaute Synactif Soap costs $110 per bar and is targeted at wealthy, fashion-conscious women willing to pay a premium for a luxury product. On Amazon, an eight-pack of Dial soap costs less than $4.50 and is well-known for its effectiveness.

Knowing to whom a product or service will appeal and who will ultimately buy it is an important part of its success. Its user base can expand over time as a result of additional marketing, advertising, and word of mouth. That is why businesses invest significant time and money in defining their initial target markets, and why they follow up with special offers, social media campaigns, and specialized advertising.

Final Thoughts

It is as simple as dividing the population into groups that can be measured by key characteristics to divide a target market into various segments. Gender, age, income level, race, education, religion, marital status, and geographic location are among them.

Consumers with similar demographics tend to value similar products and services, which is why segmentation is one of the most important factors in determining target markets.