Marketing Communication Strategy: Zopa UK - Essay Example

?Topic: Marketing Communication Strategy: Zopa UK As a marketing communications manager for Zopa UK, I have been en d to prepare a marketing communications plan for the period ranging September 2011 to September 2012. Zopa UK has been operating in the UK virtual environment for more than 5 years. ZOPA has been providing a lending and borrowing medium to people at cost-effective and competitive rates unlike banks that charge better rates to borrowers at their own terms and conditions. Before attempting a marketing communications strategy on Zopa UK, a situation analysis needs to be performed. Situation Analysis Zopa member strength was just 300 when it started in 2005. Within next 4 months, it reached to 26,000 members. Zopa has been able to offer competitive rates as its products are riskier to other market players (Chaffey, 2008). Total Lending between Zopa Members As the graph indicates business growth has been steady throughout 2009-10. In September 2010, its lending has crossed ? 100 million. At Zopa, loans are at least 20% less costly than banks. Lenders get better returns than they would get against depositing in saving accounts. Lenders have gained an average return of 8.2% per year in the previous 12 months. More than 1% of all unsecured loans in the UK have been realized through Zopa (Zopa Press Release, Sep. 2010). Positive factor is that Zopa has survived the recession. Unlike banks indulging in credit default swaps and other tactics, Zopa has presented a viable lending and borrowing option. Zopa spreads the risk for lenders and follows a lenient view over delayed payments. Actual defaults in payment are only 0.1% of the total loans, quite less than the banks. Average return to lenders on loans comes nearer to 8.9% after deducting 1% one-time fee and one-off charge, which was ?94.25 in 2008 (Keegan, 2008). Promotional Strategy & Positioning As stated, promotional strategy needs to be selective in choosing from a number of online and offline marketing mediums. Internet marketing, direct marketing, database marketing, and public relations – all mediums seem to be consistent to provide the competitive edge in the market but ratio of investment needs not to be equal considering the popularity of the virtual medium in marketing communications. Internet marketing Internet marketing can help in attracting new customers from the social media sites like Face Book where prospective customers have better chances of viewing the advertisement. Google advertisement through Pay-per-click programs and promotion through email marketing can be beneficial where only customers from the database could be sent promotional mailers, designed by the hired PR agency. Through Internet-TV, relevant audiences’ attention can be captured while their favourite programmes are run on television channels. At the same time, using SMS as means of advertisement to the target audience telling the features of the loan products can click the marketing campaign by contacting the right touch points to attract wider audiences. Using online media tools judiciously can make the marketing campaigns more effective and relevant (Wikipedia, 2010). Zopa can make the otherwise dull business of borrowing and lending more interesting through extensive use of blogging, an online medium, by discussing stories behind borrowings, entertaining Zopa prospective customers intelligently. Resources should be prudently used by mixing PR and word-of-mouth publicity with other marketing functions to save cost on customer acquisition. Related magazines and newspaper readers from The Guardian, The Financial Times, The Economist and The Institute of Directors house magazine should be our target audience as readers. We should involve PR agencies regularly to publish related articles on the risk of borrowing from banks and the leverage to prospective customers from virtual sites such as Zopa UK , explaining the difference in interest rates between the banks and online companies like ours selling ‘A category’ loans at reduced interest rates, costing less than a bank’s saving account . The maximum online marketing functions of Zopa can be accomplished through search engine marketing and affiliate marketing, the tools of internet marketing (Financial Spread Betting, 2011). On the lines of Lending Club, using Face Book audiences for finding customers to compete with Zopa, we should also use such online mediums smartly to get competitive advantage from our close competitors like Proper Marketplace Inc., in raising money. We also need to support Face Book applications as Bay Partners and Altura Ventures have done by remaining inside the social networking sites aggressively (White, 2007). Print Media Print media like radio, television, newspapers, and billboards are components of offline media. Marketing effort should combine both Medias in advertising Zopa products. Offline media can be a crucial and cheap tool in making the financial products popular through television and radio advertisement. For television advertisement, there is good scope of showing interesting visuals based on the storyline as per the features of loan products not provided by competitive companies and banks, not reducing costs by engaging intermediaries. Print media can highlight effectively the survival of Zopa in the economic meltdown when the financial markets were worst affected. Zopa does not practice any credit default swaps, it does not have government supported security guarantees unlike banks. Zopa’s flexible attitude over late payments with actual payment defaults only 0.1% of the total loans provides it a competitive edge over banks (Keegan, 2008). Making online videos visible to all audiences on such platforms as You Tube will help in generating people’s interest. We need to make all promotional initiatives at regular and continuous intervals to create brand value for the product (Wikipedia, 2010). Press releases by the website can help in increasing customer traffic by telling audiences how Zopa borrowers can get smaller loan at reduced rates unlike banks that charge less for long-term loans only. This can help in attracting traffic to the Zopa website from such customers whose needs are smaller to be paid back in short time. There is no need to get credit ratings unlike banks before sanctioning loans to attract such customers. Some more resources need to be allocated for better customer servicing by offering text messaging service although the website provides a comfy feeling to the visitors with its blog, discussion board, This month at Zopa, Member story and other regular features like Zopa Newsletter and Community (Zopa, 2011). Marketing Communications Strategy A marketing communications strategy framework for a budget of ?5million needs an integrated marketing communication (IMC) planning. Marketing research is basis to any marketing initiative for providing tangible and intangible resources to Zopa UK. A well planned and deliberately worked out marketing research can offer the leverage in profit making for short term and long run as well (Avasarikar & Chordiya, 2007). Marketing Research There is no unanimous definition of ‘Marketing Research’, as depending on the experiences and wisdom of researchers. For practical and conceptual clarity, some popular definitions include: It’s systematic problem analysis, model building and fact finding for improved decision making and control in marketing of goods and services – Philip Kotler. A marketing research involves research into sales aspect, product aspects, advertising aspects, motivation, export, service marketing and miscellaneous other activities of research. Considering the customer base of Zopa UK, its stakeholders are both its lenders and borrowers who visit the online virtual medium for availing their small and big monetary requirements. To contact its audiences, Zopa UK should identify and select them through any suitable medium such as online questionnaire, telephonic interview, personal interview and online interview. Online questionnaire seems to be the best choice keeping in view the type of loan product Zopa UK is selling. Mail questionnaire is the ideal method of contacting respondents who have least interest in the option of personal interviews or whose response could otherwise be discriminatory or could be misinterpreted by the interviewers. As stated above, this is done by inviting visitors for taking the survey questionnaire online. Some sort of motivation is offered to the visitors to answer the questionnaire. The best idea is to put a banner on most often visited sites to answer the questions and get a chance to win the prize. Online advertisement of the loan product could be a better choice in drawing customers in comparison to traditional marketing research methods (Avasarikar & Chordiya, 2007). Next best option should be to frame questions by the marketing team itself in stead of engaging the services of a market research firm although a market research firm can elicit straight forward answers than marketing representatives if product reviews are negative (Gorman, 2003). As Zopa marketing communications manager, I believe in developing own marketing and sales plan based on Zopa existing strength of public relations. It seems to be more relevant for two reasons. First, the business concept of providing loans at competitive and better rates than banks is not old to the market. It has to be marketed first by its own network of sales people so that its importance can be explained to prospects better way by the sales people. Second reason is that it is not wise to spend money on these expenses, as it can raise the cost of the business in the end making it less competitive (Patsula Media, 2001). Under the concept of integrated marketing communication (IMC), which is a holistic approach to market communication, a promotional strategy needs to be developed including both online and offline marketing channels. Promotion is an important element of marketing mix for developing an integrated marketing communication program. Creating and sustaining demand for Zopa financial products in the UK market needs a robust advertising and sales promotion strategy, which are important aspects of marketing communication. Mixed levels of Integration Zopa should use different types of market integration to get leverage from the comprehensive marketing planning through Horizontal, Vertical, Internal, External, and Data integration (MMC Learning, 2009). There is good scope for expanding business horizontally overseas through franchises, as a number of countries have shown such interest including China, New Zealand, India and South American countries. Business can increase seamlessly across the globe through different integration types. The target markets for Zopa are those people who find funding from banks beyond their reach as they are in freelance work, which the banks don’t recognize; consultants and entrepreneurs don’t have regular sources of income. These “freeformers” need to be approached by Zopa as they are almost 10% of the UK population, which in the next 10 to 15 years would multiply as this business model of working would be in great demand in developing countries (Chaffey, 2008). Resource Allocation The most crucial part of a marketing communications strategy is tactful distribution of funds on marketing expenses. Dividing ? 5 million into 12 months, we need to invest on an average ? 416,666 approximately on advertising, promotions, PR, research, communications and networking each month. Starting from market research, web research seems to be the ideal way of locating prospective borrowers and lenders. Engaging a research firm could be a viable alternative where we can invest at least 10% of our monthly budget. In communications, we need to spend on promotional brochures, television, radio and web, which could exceed to 20% around of the total monthly expenditure budget planned. Networking spending would include subscriptions, affiliations and memberships, not much to mention spending-wise. Actual regular spending in a major way would be on advertisements in the print media such as newspaper, billboards, bus sides, and online media such as mailings and brochures. Evaluation and Control Monthly evaluation of our budgetary spending can help us in evaluating whether the same spending is required or needs to be changed. Although regularity in investment on marketing communications planning is recommended but an elastic approach on not fixing before hand amounts can save costs on communication in such areas as secondary research where benefits can be accrued on for a long time. Our ideal vehicles (Kennaugh, 2011) for spending are PR activities and promotional literature to promote wide reach and improving company image, which will remain the focus of our marketing communications strategy. To this effect regular monthly appraisal can bring the spending situation under control. References Avasarikar, D.P. & Chordiya, Dr. S.B., 2007. Marketing research. National Government Publication. Training Manual No. 117.Washington, D. C. Available from: http://books.google.co.in/books?id=vpH_jzHN2noC&printsec=frontcover&source=gbs_v2_summary_r&cad=0#v=onepage&q=&f=false [Accessed 21 March 2011]. Chaffey, Dave., 2008. Zopa.com E-commerce case study. Available from: http://www.davechaffey.com/E-commerce-Internet-marketing-case-studies/Zopa.com-Case-study [Accessed 21 March 2011]. Financial Spread Betting., 2011. Zopa Online Borrowing/Lending. Available from: http://www.financial-spread-betting.com/Zopa-loans.html [Accessed 21 March 2011]. Gorman, Tom., 2003. The complete idiot's guide to MBA basics: Ch 18: Who are your customers, anyway? Penguin. Available from: http://books.google.co.in/books?id=Q8MVitN4WhwC&pg=PA253&lpg=PA253&dq=definition+of+Market+research+types+of+Market+research+functions+or+purpose+of+Market+research+books&source=bl&ots=JpD47vd_jB&sig=c7-QSI24a6aislOlcWjIspRGO98&hl=en&ei=hSXzTJ_jM4GWvAOMyNj6DQ&sa=X&oi=book_result&ct=result&resnum=10&ved=0CFsQ6AEwCQ#v=onepage&q&f=false [Accessed 23 March 2011]. Keegan, Victor., 2008. Zopa shows banks how to do it right. The Guardian. Available from: http://www.guardian.co.uk/technology/2008/nov/13/zopa-credit-crunch [Accessed 23 March 2011]. Kennaugh, Cindy., 2011. Develop a marketing communications plan. On The Mark. Available from: http://office.microsoft.com/en-us/word-help/develop-a-marketing-communications-plan-HA001171113.aspx?CTT=5&origin=HA001168402 [Accessed 23 March 2011]. MMC Learning., 2009. Marketing communications. Available from: http://www.multimediamarketing.com/mkc/marketingcommunications/ [Accessed 23 March 2011]. Patsula Media., 2001. The Entrepreneur’s guidebook series. Patsula Media. Available from: http://www.smbtn.com/books/gb71.pdf [Accessed 23 March 2011]. Wikipedia., 2010. Integrated marketing communications. Available from: http://en.wikipedia.org/wiki/Integrated_marketing_communications [Accessed 23 March 2011]. White, George., 2007. Lending Club gets VC round for Facebook startup. TheDeal.com – Tech Confidential blog. Available from: http://shsonline.com/by/investment/lending-club [Accessed 23 March 2011]. Zopa Press Release, September 2010. Press release: for immediate publication - 30th September 2010: Zopa lending passes ?100 million milestone. Available from: http://uk.zopa.com/ApplicationResources/press/2010/Zopa%20lending%20passes%20100%20million%20milestone.pdf [Accessed 23 March 2011]. Read More