The Banking Industry in the Target Country - Assignment Example

Introduction Aim and purpose of this report (add 10 words) The aims an purpose of this report is to High lighten the banking strategies . The banking industry in the target country: According to Pauly L W (1987), the Australian banking industry is modestly concentrated with the four nationally operated banks dominating the market. Banks can be broadly classified into four groups: major banks, State owned banks, other regional banks and foreign banks. In anticipation of the entry of foreign banks in 1986, Australian banks strategically formed larger banking operations, the four major banks, to compete against the incoming banks. These major banks are nationally operating banks with extensive branch and agency networks. Deregulation of the banking industry enabled them to compete more effectively with non bank financial institutions in many fields of financial services. Ethical product consumption trend: (add 20 words) Outline (add 20 words) 2. Background The co-operation bank and smile strategy in UK (their customer’s segmentation): The co-operation bank, whose roots date back to 1872, is a full service retail player in the UK commercial banking industry. The co-operation bank has 3 million customers accounts for comparison Barclay’s Bank is a major competitor with over 10 million current UK accounts. Smile is a part of Co?operative Bank, which was founded in 1872 as a part of the Co?operative Movement. The Co-operative Movement grows out of the revolution of industry to create a good means of distributing profits. In order to approach objectively to determine the success of any retail bank Customer service strategies of that bank should be reviewed. A successful bank should be able to define and implement solutions to all the challenges at customer end. Here are the some essential positioning strategies presented to help you realize the needs of improving customer experience, leveraging cross-sell and up-sell opportunities and by promoting agent productivity and satisfaction in Banking Segment; Offering an inviting “Customer Door” By making more Effective use of customer data Handle calls more actively Use inbound marketing to reach the customers outside the branch Leverage demographic profile to establish customer intimacy Boost the productivity of your agents through interaction blending. The target country Australia segmentation: The main purpose of segmentation is to match the Bank’s offer to the customers’ needs. Precisely, customer segmentation is the process of defining who are your potential customers and group them regarding their requirements, characteristics and/or behavior and their worth. Segmenting the Customers is a stepping key stone for a banks superior performance. The Australian banking industry indicates an oversupply of services as evidenced by reduced interest margins, falling interest revenue as well as moderate economies of scale amongst the major banks. Customer base segmentation is the established method for understanding customer requirements and needs as it enables an institution to reflect the homogenous groups within its customer community. Customer segmentation is an important part in the banking sector of Australia. In Australia various Segmentation factors such as customer-value, life stage, sophistication and geographic situation are all explored and the merits of each are analysed. The Research of private banking websites will show that they all speak of individual attention and tailored services. If some Australian private banks seek to better service their clients and to build their high reputed relationships, then there are two possible ways to be considered namely: genuinely tailored responsive service two-way client defined communication. For the cooperative bank the segmentation is being done on the basis of: Average annual gross income of the customers by age Rural and urban background of the customers Economical background of the customers Industrial setup of the customers Introduction of consumer behavior model: It is very simple to conceptualize the importance of the customer behavior in regard to your banking services. This is the key which drives actually your market value and promotions. Blythe J (2008) says that consumer behavior is one of the highly discussed and researched areas of discipline in marketing. There are a number of models that describe how the consumers behave or react towards a product or service. However a few models are highly used by many organizations in order to make an in-depth study of the consumer behavior. The following figure gives a clear picture of the five stages involved in understanding a consumer buying process. Banking service should be complete enough that it provides a separate and individual approach to every customer keeping in view the above five stages and the best in hand guidance during these stages will no doubt keep the customer in circle. Understanding of customers need and problems may lead to a better out of the offered services so this understanding is the necessity. A complete thorough scanning of the minds of your customer will help you to cope with their best needs, Actually it is for them you are offering services so the priority should be your customer. The following model shows that how much your customer means for you. 3. Analysis and application of consumer behavior theory (1100) Most important is to analysis the target country Australia’s consumer behavior, identifies and critically evaluates 2-3 consumer behavior influences most specific to the context: Consumer behavior is an important force which drives the banking sector and it should be understood that the many customers the many behaviors you are going to face. To cope with the behavioral situations every bank has established a Dynamic Contact centre. It is designed to transform customer service by automatically optimizing customer traffic, internal sources and business outcomes. Differences in Customers Behavior: Bank Staff should be aware of the social and cultural behavioral differences of their customers because this understanding will be quite helpful for daily services. Regional Differences: The customers may belong to various cultural backgrounds depending upon the area from where they belong and thus this should be keenly took into notice for the staff offering services in a particular area. Language differences: Language differences may come into play while dealing with the customers that may cause some customers hesitation. It is possible that customers cannot speak English in that case the staff should be familiar with the local languages as well to let the customers feel comfortable. Moral & Ethical Differences: The behavior of customers may vary due to the moral and ethical values impact. Factors influencing the consumer behavior: The major factors which influence the consumer behavior are described below: The factors influencing consumer behavior are: i. Cultural Factors: Jayashree C H (2007) feels that the cultural factors that affect the consumer behavior could be classified into three. They are Culture: A culture is the fundamental factor that affects a person’s want and need. Any man living in the universe is a part of a culture and the culture has the greatest influence on him. Sub- culture: Culture consists of several sub-cultures. Sub-culture is the subset of the culture that influences a consumer. Social Class [1998]: Social class denotes a specific group or classification of the society that is a part of a sub-culture. The following figure shows the cultural factors that affect the behavior of consumers. Figure 1.1 Cultural Factors Affecting Consumer Behavior ii. Social Factors: Social factors denote the elements of the society that influence consumer behavior. The three social factors identified by Kotler that influence buyer are: Reference groups Family Roles and Statues iii. Personal Factors: According to Peter D (1993) Personal factors, as the name suggests is more specific and varies from one individual to another. The personal factors that influence consumer behavior are: Age and Family life cycle stage. Occupation and Economic background. Lifestyle. Personality and Self Concept. iv. Psychological Factors: The fourth one is the psychological factors that are purely unique to each individual. It is this factor that results in the final decision making process of an individual. The psychological aspects that influence buyer behavior are: Motivation. Perception. Beliefs and Attitudes. Teaching. Personality Perception: Perception is affected by the exposure to a stimulus and by an individual interpretation. Personality: Baker M J (2007) says that Personality means a pattern of behavior found on an individual's outlook and internal traits and it is the weak component of consumer behavior. Beliefs: Consumer belief is a combination of knowledge, emotions and the actual actions to purchase or not purchase. Attitude: Consumer attitude is a combination of perceptions, values and beliefs. UK Consumer Behavior comparison: UK Consumers spend over ?40 million on ethical and green products in 2006, by representing an increase of 20% on 2006. UK consumers buy trade goods regularly around 40%. Ethics is very important in the consideration of purchase and consumers must reward those ethical products and punish those which are not seen as ethical. 60% of the UK consumers believe that it is important to buy socially or ethical responsible products. UK Consumer has concern for the increase in ethical issues. UK Consumers call for ethical products to be available in high streets. The larger visibility of ethical problems and ethical purchasing will occur in UK. Actually Ethics plays a small part in the decision making of consumers. Quality, value and price are the key concerns of consumers. Ethical concerns do not affect the choice of consumer significantly. For most of the consumers an apparel purchase and ethical attributes takes a back seat to product the features. Richard (1993) says that the environmental awareness may impact on the purchase decisions of consumers’ but other moderating factors are likely to be important. UK Consumers posse’s responsible attitudes, but these attitudes are acted upon rarely. Social responsibility is an important factor in purchase intention of clothing although the individual desire exerts a larger influence. Steps to establish Smile Bank and Co-operative Bank in Australia: There are many important measures that could help the Australian consumers to drive the competition in the banking industry by switching, choosing and identifying to the better deals that create an incentive for the competitors of banks and non-bank to provide good deals to attract the consumers. The following are the six steps to establish Smile Bank and Co-operative Bank in Australia: The failed experiment of the industry association must be put to an end and the Government of Australia has the responsibility for delivering the bank account switch service and to develop an effective scheme that would allow the portability of bank account consumers to own their bank account numbers. They can also switch a port to different bank institutions without setting a new account or new debit and credit instructions. To set up a bank in Australia UK pattern must be followed by making the exit fees to be always disclosed in upfront using easy cash amounts and make all the institutions to call the fee by the similar name so that the consumers can shop around and compare the products easily The Australian banks must be more particular in the national Laws of Consumer Credit that costs only that are related directly to the early termination which can be recovered in the early exit fee. The direct costs must include the costs of giving the effect for an early exit, but not the associated costs with ending a contract. According to Banks D (2002) Australian banks must clarify that the deferred establishment fees is a simple form of early exit fee and they will become the huge loophole that was used by the lenders to keep the consumers to switch the mortgages. Australian banks must introduce the standardized one-page financial Summary Tables for the loan products in which the consumers are given before applying for a product so that they can understand easily their features and key terms of the banking products and use the tables to select the best deal and compare the deals for them. The Australian Banks must introduce the investigation power and studies of market into the national competition and the framework of consumer law are based on the model in the UK Enterprise Act, which allows their regulators to study the particular problems in markets and develop with a better and broader range of solutions. 4. Implications for the marketing mix Use 7P for co-operation bank and smile bank. What is 7P’s of marketing mix? The 7 P's of marketing mix are the Product, Price, Promotion, and Place. The additional 3 P's of the marketing mix are Process, People and Physical evidence. The first 4 P's are considered as the cornerstones or basis of process of marketing. Each of these needs must be looked carefully to ensure that an appropriate value is assigned to each one of the marketing mix. It is believed that the product success will differ depending on how well these 7 and 4P elements functions together in similar conditions. The last 3 P's is the recent addition for the whole process of marketing. This is because though their contributions are not seemed to be apparent, they must play a subtle yet difficult role in providing the service or product success. 7P for co-operation bank: Kayak E (1997) says that the 7Ps for co-operation bank is: Products and Services. Price. Place. Promotion. People. Process and Physical Evidence. Products and Services: Co-operative Bank offers various products for at every stage of life. The Co-operative bank offers the products and services in various fields, such as: Protection Plans Wealth Creation Plans Health Insurance Plans Premium Guarantee Plans Education Insurance Plans Retirement Plans Rural Plans Group Plans Price: Price is a very important marketing mix in Co-operative bank’s life insurance. The life insurance of co-operative bank is used as policyholders and they are attracted towards more often. Co –operative bank has some unique policies which differ from other banks. Place: Mostly companies of Life Insurance have offices in major locations in towns and cities. But most of the consumers buy the insurance policies with the help of agents. Therefore place is an important marketing mix but other than place Bank Assurance is more important in vast distribution of policies directly through banks. Promotion: In the last few months, Co-operative banks have been advertising about their plans in press, television and outdoor. The ad highlights the promises strength of a husband who makes future plans for his wife, through the depiction of everyday situations, and then emphasizes that Co-operative bank will be there for him to fulfill his wife’s promises. People: According to Ferrell O C (2008) people are the major assets for any organization. They are a treasure for the service sector. Therefore, Co-operative Bank has better number of talented persons in their organization. Every member of the Co-operative banks is committed to five major core values. They are: Customer First Integrity Ownership Passion Boundary less Process: The client approach the insurer through an agent with a proposal containing his personal details, medical history, income details, products provided by the insurer like claims, maturity bonus, etc. These features vary from product to product. Physical Evidence: Physical evidence includes the equipment signage, facility design, tangibles and employee dress. 7P for Smile Bank: Once the marketing strategy is developed, there is a 7 P Formula that should be used to evaluate and reevaluate the activities of business. The seven Ps of the Smile Bank are: Product: According to Chrismal (1992) to start with, marketer must develop the habit of looking the product as though it was an outside marketing consultant that was brought in to help the company to decide whether or not it is in the right path in the business. The products and services offered by the Smile Bank are: Accounts, Loans, Deposits, Insurance, Investment. Prices: The second P in the formula is the price. Marketer must develop the habit of examining and reexamining the products and services prices which the marketer sells and they are appropriate to the realities of the present market. Sometimes they need to slowdown their prices. And some other times, it may be correct to raise their prices Promotion: The third P is the habit of sales and marketing in terms of promotion. Promotion includes the ways which the client tells their customers about their services or products and how they sell and market to them. Small changes in the advertising can lead to high sales immediately. Place: The fourth P in the marketing mix is the place where the service or product is sold actually. Fifed P (2007) marketers can sell their product in various places. Some companies use direct selling, and send their salespeople personally to talk and meet them with the prospect. Some marketers sell by telemarketing. Some marketers sell through mail order or catalogs. Many companies use a combination of one or more of the methods. It refers to those activities of the company that makes the available product to target consumers. It includes distribution channels, geographic spread, dealer ships that facilitate the establishment of network. Process: The fifth element P in the marketing mix is the process. Process refers to the services or products that appears from outside. Packaging refers to the people and how they groom and dress. It refers to people’s offices, their correspondence, their waiting rooms, their brochures, and single visual element about their company. Positioning: The next P is the positioning, which is the habit of thinking continuously about how the marketers are positioned in the mind and hearts of their customers. Co-operative Bank has positioned their branches in all the position strategies so that it is accessible easily to maximum the customer. It has also developed with some payment hub, phone banking centre and with centralized collection. People: The final P of the marketing mix is the people. Here the marketer must develop the habit of thinking in terms of people who are inside and outside of their business who are responsible for every part of their sales and marketing activities and strategy. 5. Conclusions and recommendations These two banks should surely enter in Australia as it is going to be a novel addition. Entry level of and substitute is well analyzed by idealizing the room for its existence. As far as Australia is concerned the market of Australia is still at the exploration stages and thus there is a possibility of these two banks that they can nurture provided they are offering excellent services accordingly to the needs of customers. Facts and figures of entry: Consumer behavior should be the major agenda at the entry level. Segmentation and branches at hand should be the strategy. Research of the local market will help in exploring for the latest key customers. Case studies of the successful banks should be followed and the key features should be adapted. The contact centre of bank is increasingly getting importance in world ‘famous banks not only to gain customers experiences but also to deepen customer’s relationships, so it should be focused. Customer satisfaction key drivers should be carried along. References: 1. Banks D (2002), Orchids of Australia, Australia, University of New South Wales. 2. Pauly L W (1987), foreign Banks in Australia, Australia, Macquarie University. 3. Blythe J (2008), Consumer Behavior, New York, Thomson Learning. 4. Tran V H (2005), Advances in household economics, consumer behavior and economic policy, London, Ash gate Publishing. 5. Solomon M R (2009).Consumer Behavior, A European Perspective, New Jersey, John and Wiley Sons. 6. Baker M J (2007), The marketing book: Volume 2003, New York, Thomson Learning. 7. Sharma A K (2006), Consumer Behavior, London, Global Vision publishing. 8. Jayashree C H (1998), Consumer behavior of urban working women, London, Oxford University. 9. Peter D (1993), Consumer behavior, New York, Prentice-Hall. 10. Richard (1993), Aggregation and consumer behavior, New Jersey, John and Wiley Sons. 11. Kayak E (1993), The four key marketing strategies, UK, John and Wiley Sons. 12. Ferrell OC (2008), Marketing Strategy, London, Cengage Learning. 13. Chrismal P M (1992), Marketing: A Behavioral Analysis, New York, McGraw-Hill. 14. Fifed P (2007), Marketing strategy: the difference between marketing and markets, London, Butterworth-Heinemann. Read More