Marketing Plan for the Kenya Commercial Bank - Assignment Example

? Marketing Plan for the Kenya Commercial Bank Number: Due: Financial Summary A close analysis on the figures of the local commercial banks in the year 2001 showed that Kenya Commercial bank still leads in the assets, loans giving and the deposits in many parts of the world. The loan comparison to the deposits show a ratio of 76% which is an acceptable figure relative to Central Bank's guidelines of 75% to 85% . However, despite this good performance of Sample bank, her competitors are still at a higher level in terms of the profits. The return on assets of the bank was only 0.65% as compared to the average industry return approximated to be only 0. 81%. According to research, this low performance was due to the low interest from the public sector, that gives about 48% of the deposits and 28% of the loans (Thomas 2001). The country's government, in its proposed housing report has given a directive to the Bank to give 100% mortgage finances to its civil servants for three years (Roger 2000). The strategic plan of the Bank for the period starting 2001 to 2004 does not however include this directive from the government, as the competition for the deposits is still high . This situation therefore is a clear indication that the Bank has a great task to manage and give funding for this kind of loan deposits if it's to work with the guidelines of the Central Bank. The government, however, has given the Bank an opportunity to increase its market share as the deal would generate more money. Therefore, there need to raise the required money through deposits, while giving the Bank a greater market share in the local industry and increase the profits for the bank in the coming three years. This has been analyzed by looking at both the internal and external factors. The external factors has taken a look at the “macro-environment” , and the rivals in the market, while the internal factors was the analysis of the performance of the Bank, its management, infrastructure, the mission statement and its market coverage. There was the “SWOT” analysis that was aimed at identifying the Bank's strengths, weakness, opportunities and the threats. The analysis gives the Bank an indication that their need to change the strategies the bank used that and to give the market coverage the importance. This does not show that the Bank should ignore its existing market such as giving service to the public sector but refocusing the already being used mission. This would help the bank to achieve her stated objectives over time. Introduction The directive by the government to the Bank to give mortgaging, financing to the public servants puts the bank in a hard situation to get the deposits required to finance these servants. The mortgages will have a repayment period of 15 years with the interest rates based on 7. 5 per annum. The mortgage amount the Bank is expected to raise for the civil servants is $ 65 million and according to a research the new mortgage plan is to amount to $10 million in the first year, $18 million in the second year, and $37 million in the third year. This marketing plan for the Bank is intended to enable it raise the required funds for the directive, while to secure a strong position in the market industry and get higher profits for the 3 year period and the future plan (Carl 2000). In order to achieve this objective, the Bank had to deal with the issue of retaining the existing customers, come up with new customers, raise the $65 million to fund the civil servants over the next three years, increase her market share, maintain loans to deposit ratio to be in line with central bank's guidelines (appendix A), and to increase the company profits (Mintel 2001). Analysis of the Company Situation Competition In the country, there are four other related banks that offer similar services as the Kenya Commercial Bank. The banks include, the Barclays bank, the Standard Chartered bank, the Equity Bank, and K-Rep bank. These banks have all been successful in their delivery of service and the market coverage. These banks have come up with a variety of strategies to attract more customers such as the use mobiles in the banking sector that would be more convenient to the customers. There are also other non-bank financial sectors such as the credit unions, savings and loans banks, women finance banks, building and loans association and several insurance companies. These non-banks too just like the Kenya Commercial Bank accept deposits and give more convenient services to its customers that farther provide more competition to the said bank. There is also the emerging of the Mpesa service in the country that has attracted more customers as most people who have more access to the mobile phones. Nevertheless, this is a concern for the Kenya Commercial Bank who are aiming to be the top service delivery and to attract more customers in their industry. Also there is competition from the regional and other international institutions that have come due to the rise of globalization. Nevertheless, the emergence of the security exchange services offer exciting opportunities for investors. A few clients often decide to do business with the competitor banks and non-banks because of government interference in the Kenya Commercial Bank and therefore there is some form of political interference. Since the government is a shareholder to the bank there is the effect of customer confidence while banking with Kenya Commercial Bank. The Kenya commercial bank may be unable to attract more customers because government interference and the customers thus fear that their account information might be open to the government and its agencies. However, other nationals who are patriotic decide to bank with the Kenya Commercial because they believe that the profits generated by the bank are for the people and will be used for the development of the country. Internal Structure The internal structure looked at the performance of the bank, the customers that was all aimed at identifying the position of the company performance. Clearly the bank has been successful over the other banks except the Barclays bank. In the analysis of her balance sheets for the fiscal year ended 2000, the bank has 34% of assets, 38% of loans and holds 35% of deposits (appendix B). However, until the year 1998, the bank has been the leading in terms of the deposits held, but has since lost its customers to its competitors. This has showed that the profits have been dropping and not been to the company expectations (Kevin 2000). Management and Staff The Kenya Commercial bank has several branches in the country and abroad unlike most of her competitors. Barclays bank has been the only bank with several branches worldwide. Most of the employees of the bank are young and have the required abilities to work for the required time period. Moreover, this staff are flexible to technological changes and able to be trained at any time (Mintel 2005). Most of the employees are locals and have a good understanding of the environment where the company's headquarters are located. However, the company is disadvantaged since most of the employees have served the middle level customers unlike the competitors such as Barclays whose employees have been exposed and have the required experience dealing with high income earners. The bank is moreover not equipped with the qualified staff to keep the company in line with changes in technology and other changes that affect their operations (Mintel 2003). Infrastructure and Delivery of Service The bank has several branches in the country with a mortgage financing company, several cash agencies, and several ATM's in the country. It's the leading bank among the country's competitors and it has the main banking system that can change with any advancements in technology. Nevertheless, the bank has good relationships and networks abroad, however there fear from the competitors in such relationships. Customers The Bank has the highest number of customers that range from the public sectors to the private companies. However, despite the public sector that account for the highest percentage of profits, its customers are mainly the low class citizens whose needs are owning homes, household items, transports, education, small scale business, and transportation (Mintel 2005). Analysis of the Market Situation The market for the bank consists of the government, the public sector, the corporate entities, the insurance companies, the professionals, the public servants, teachers, doctors, the Kenyan residents, and Rwanda. As at December 2000, the number of deposits held by the bank was totalling to $990 million. Out of this amount, the public sector contributed $234 million; the business firms contributed $129 million, while the private sector contributed $435 million. Nevertheless, the bank has a deposit of around 69% from the public sector, while the private sector contributes a percentage of 23 and 7% from the business firms (Patricia 2001). SWOT Analysis Through SWOT analysis of the bank, there were several opportunities, threats, strengths and weaknesses of the bank identified. Opportunities The bank has a higher number of customers mainly from the government, and the public sector business. Nevertheless, apparently most citizens who are patriotic to the country would do business with the bank because the government is a shareholder, to the bank and they thus believe that the money generated, will be used in the development of the country, and the deposited cash belong to the citizens. There are also available opportunities such as the emergence of telecommunications systems and the rise of technology that has seen the company develop the mobile banking system that would in the end ease business from the customers based abroad and other local areas to get the bank's services. Moreover, the issue of technology would pave way for Internet banking and the development of new services. The rise of technology has made more people to be educated in computer use and this would enable the bank reach more customers through “electronic communication”. Moreover, there is the rapid growth in the tourism sector, there was the building of the Ism airport, growth of hotel industries, that bring new foreign investors in the country. This in turn would bring in more capital for the locals that would be able to start new business and the end bring the issue of banking. In addition, there is the increase of peace in the country that is an encouragement of the foreign investors to come back and invest in the local businesses. The radical changes that are being experienced by the competitor banks would be an added advantage for the bank to get more customers. For example, Barclays bank wants to adapt the Mpesa service in her operations that would result in internal conflicts brought by cultural differences and the change resistors and this may cause the customers to move to the bank. The country consists of the young and energetic citizens that would effectively suite in the government's 2030 vision and this is an added advantage to the bank. Threats The customers prefer doing business with the competitors because of government being a shareholder with the bank and this brings in political interference to the customers that lose confidence with the bank. Moreover, the adoption of the western culture would affect the local economy since most people opt to spend their income and do not invest or bank the cash. There is also competition from other non-banking institutions who offer similar services. The need to go abroad would hamper its business as it is not possible to understand the customers abroad like the locals. This would call for more attention to the abroad customers in the need to keep them. Nevertheless, the rise of the insecurity in the world such as the American war is likely to affect the world economy that would farther affect the tourism as people would fear moving to different countries to invest. Strengths The bank is the leading in terms of the assets it holds, the loans and deposits. This great market share would put them in a high position to influence the level of interest rates. This is the only commercial bank with the trusted board of directors in the country that can attract more customers as it has the most successful business people. The board of directors are experienced and have the strongest social network in the country. Therefore the approval of loans is not a problem with the board of directors ensuring that this is a fast affair. Most of the employees are young aged and this gives the bank the required employee skill to forge ahead and discover her objectives. The young people are more conversant with technology that is vital to the realization of the bank's goals. Most of the employees are locals that understand the culture and the customers' very well as they are part of them. This puts the bank at a good position to attract and retain more customers to the industry. Most of the ATM's and other networks are well accessible from anywhere and this ensure good service delivery to the customers. There have never been any complains about the service delivery of the bank by customers and according to a recent study, the bank is among the leading in the country in terms of service delivery. Weakness There is poor exposure of most of the bank employees and this hinders service delivery as compared to the competitors. Most of the bank's competitors such as Barclays are well equipped to deal with technological advancement through well established research departments and qualified staff that keep their companies in line with any changes in technology. Nevertheless, the bank relies on the international relations with its competitors for foreign exchange business and this might be a big blow should the relationship breakdown (Richard 2000). Research shows that the bank has been one of the most successful and has a stronger customer base as compared to her competitors however the bank is disadvantaged because of the government's share in the bank that brings in political influence and therefore the bank might not attract more customers soon because this. Future Marketing Strategies and New Product Idea Supply Strategies The bank should come up with a new account that shall attract a higher interest rate as compared to the normal savings account. This will moreover give the customers an advantage over other services at lower prices. Demand Strategies The bank should have a strategy that shall target the high class individuals that are able to invest. The banks should start practicing the “differentiation” strategy that would give her advantage over her competitors (Mintel 2003). Financial Forecast The bank is expected to benefit greatly from this plan in comparison to the other business plans that the bank has had over the years. See the comparison for the profits accrued in the end of the three year plan appendix D compared to appendix C). Conclusion This analysis has considered the problem Kenya experienced that Commercial Bank in the delivery of her service that affects her from realizing her goals. There have been a look on both the external and internal environment, the SWOT Analysis. Through this analysis the way forward was identified through the strategies proposed. References Carl V 2000, "Mobile Banking: The Smart Way to Sell Information." Enhanced Edition. Boston: Harvard Business School Kevin L 2000, "The Brand Report Card." Banking Strategies Reviewed, Online Journal, 12, pp. 33-5 Mintel 2003, “ Strategic Businesss Analysis: Management.” Business Research Papers, 5(772). Mintel 2001, “ Buyer Power in Business.” Business Plan Events, 2(200). Mintel 2005, “Analysis of Business Industry.” Case Studies, 3(594). Mintel 2004,” Levis Marketing Strategy in Relation to Type 1 Jeans Model.” Online Journal, 4, (766). Mintel 2005, “ Marketing Communications Plan for Consumer Electronics.” Case Studies, 5(655). Patricia S 2001. "Get Inside the Lives of Your Customers." Harvard Business Review, Richard B 2000, "Are You Reaching Your Customers?" Harvard Management Communication Letter. Online Jornal, 4, pp.43-5 Thomas O 2001, "Why Satisfied Customers Defect." Business Enhanced Edition. Boston: Harvard Business School Publishing Roger B 2000, “ Market-Based Management: Strategies for Growing Customer Value and Profitability” , 2nd ed. Upper Saddle River, NJ: Prentice-Hall Appendix A (Mintel 2001) Appendix B (Kevin 2000) Appendix C (Mintel 2005) Appendix D (Mintel 2005) Read More