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Diversity makes for interesting times

I always thought ‘May you live in interesting times’ was a Chinese curse brought to public attention by Robert Kennedy during a speech in Cape Town in 1966. But if he made it up, which many now believe, how wrong was he?

The mortgage world is living in interesting times. Do I think this is a curse? In the words of the youth of today, no way. It makes life exciting.

Did the editors of mortgage publications ever wonder how they would fill their pages after Mortgage Day? If they did, they needn’t have worried.

Apart from keeping on top of developments so that I can do my job, my marketing background means I find the changes we are seeing fascinating. In the past few months we have witnessed a steady stream of announcements from companies evolving into new-look organisations, all trying to make more of the market they operate in or rely upon.

We have seen a packager stop packaging and become a lender. We have seen a large business-to-consumer broker launch a business-to-business facility, selling its secured loans to brokers rather than consumers. The list goes on.

Apart from the firms concerned, who benefits from such diversification? The two big winners are intermediaries and their customers. Pundits and experts who predicted a decline in product providers, mainly through the merging of building societies, underestimated the motivation of others to move into the resulting vacant spaces. Intermediaries should analyse these trends with care.

Diversification as a marketing activity should not be seen as a tactic for large companies alone. It applies to firms of all sizes. The bottom line is that the more products a consumer buys from a provider, the more likely they are to become a long-term customer.

Diversification for growth usually fits into one of three categories – developing products in the same market for existing customers, developing products in the same market for new customers or developing products in new markets. Not surprisingly, the first offers the least risk and is probably the easiest for intermediaries to exploit.

As we approach the year’s end it is a good time to contemplate 2007 and put plans in place. For brokers, the first stage of this planning should be an analysis of the products they do not offer. From this list they need to prioritise the products that are easy to add to their range and move right through to those that would need some extra development.

This exercise will result in the discovery of a number of extra products that brokers could diversify into offering without them having to make too much effort.


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