Segmentation, Targeting and Positioning Strategies for HSBC Australia - Essay Example

? Utilising market research to develop segmentation, targeting and positioning strategies for HSBC Australia BY YOU YOUR SCHOOL INFO HERE HERE Utilising market research to develop segmentation, targeting and positioning strategies for HSBC Australia I. Purpose HSBC Australia is currently struggling to identify new customers in the geographic region of Australia for Financial Services. However, the business has very high brand recognition according to a 2010 survey of competing financial services brands (HSBC, 13). The target of achieving more customer volume related to personal financial services and planning is the purpose for developing a new market research program to segment, target potential or existing banking services customers, and also position HSBC Australia above other domestic competition. II. Background “Today’s financial services customers is a ‘Butterfly Customer’, sceptical, and not loyal to any product or company, and yours only until the next good thing comes along” (O’Dell & Pajunen, 2008, p.24). Because of this, HSBC requires a sound methodology for conducting market research to ensure more customer volume increases. HSBC Australia conducts routine customer-related surveys to gain quantitative information about the brand in the eyes of customers, willingness to recommend HSBC over other target competition, and a variety of customer service feedback systems. Refer to Appendix A for a chart of survey results associated with intent to recommend HSBC from the company’s 2010 annual report which highlights the very low level of word-of-mouth HSBC can rely on based on this quantitative information. Financial services at HSBC include personalized planning from HSBC financial planners in areas of superannuation, retirement planning, wealth creation, borrowing for investment purposes, and personal insurance policies (hsbc.com.au, 2011). Since it has been determined that HSBC is not meeting its Board-mandated sales results in gaining customer loyalty for using HSBC for its financial planning, the business must revamp its current marketing strategies and change its current format of reliance on market research tools. Tightening of monetary policies from the government has a very hard impact on interest rates during a recession. This makes investment less attractive to customers and they instead seek bank loans (Bolton & Freixas, 2006). It has been established that HSBC outperforms most of its Australian competition in banking, and it is necessary to try to restore confidence in target consumers to ensure that existing banking customers and new customers choose HSBC for its financial planning and investment services offerings. III. Discussion It is being proposed that HSBC conduct a new type of market research program that includes qualitative data in the form of questionnaires rather than the traditional survey format. Qualitative research provides key insights into emotional capacity of consumers, their confidence in banking and investment, and also serves to uncover the psychological dimensions of what is driving such a high resistance to financial planning services. Why is this a preferred research format over the survey currently being utilized? Financial investment services represent risk to the consumers. Financial decision making is driven by the willingness to accept risk along with intuitive factors, such as trust in a brand, as well as data and options analyses (fsa.gov.uk, 2005, p.9). Intuitive factor is the key phrase in this proposal, since most of this is based on sociological or psychological factors which determine how a consumer structures and plans their investment strategies. Identifying which financial services planners best fit the buyer needs is a very elongated search process that include pricing, perceptions of reliability, service quality, and many other factors (Laffey & Gandy, 2009). The longer a search process takes, the less chance a brand has of gaining consumer interest immediately in areas of promotion. The data gleaned from qualitative research instruments can give the business valuable data regarding how to position the company among competition (such as price or quality) and develop advertising that will gain instant attention associated with lifestyle factors or preferences at the emotional level. A.T. Kearney, a management consulting firm, identifies that women make up 80 percent of all decisions related to purchasing on the consumer market (Schulaka, 2009). “Given her education, workforce participation, and predominance in major expenditures, her influence in financial planning is likely to increase” Coughlin & D’ambrosio, 2009, p.84). The “Baby Boomer” generation, those over 55, also have much more discretionary income and are thus a large market for financial planning services (Coughlin & D’ambrosio). Women also represent a group with the lowest preference for absorbing risk (Powell & Ansic, 1997). By recruiting HSBC representatives to target women, because of their high influence in purchase decision-making, questionnaires can assist the business in understanding what psychological mechanisms drive their financial planning services needs and gain their revenues. The pros of this new strategy to utilize questionnaires rather than surveys is related to the propensity of customers to stay with a chosen financial services company due to the switching costs associated. “Time, monetary and psychological toll” is a reason why service providers retain their customers over time in this industry (Lang, 2001, p.333). If the business can understand the psychological constructs that drive willingness to defect or remain with a chosen brand, the company can develop appropriate targeting and positioning strategies to ensure they remain loyal to HSBC or gain their commitment. The evidence identifies that the customer will stay with HSBC for a long period if catching their attention can be accomplished through marketing promotion and advertisement. Golding (2009) identifies that it is necessary for a financial services company to rely heavily on its logo since this is how customers visually connect with the brand. When Bank of America merged with Merrill Lynch, it changed its logo which led to diminished customer volume. Having HSBC representatives equipped with questionnaires and clothing that clearly present the HSBC brand will help them to identify with the brand (which is already well-known according to survey-based research; well above industry norms). Asking more in-depth questions related to needs at the emotional level, rather than structured survey questions with a ranking scale, will show these consumers the commitment level of HSBC to developing a sound financial planning structure to fit their diverse needs. Other realistic options available to the company include developing a website with online surveys, offering certain incentives for taking part. This would require costs associated with information technology architecture development and support that would negate the ultimate goal of attempting to build more customer loyalty and target effectively. Per-click auditing of online customer activity associated with banking can also be compiled by extracting it from the HSBC database, a form of data mining for market research, which would also require expertise and financial investment to coordinate and correlate for meaningful results. The goal is to establish a system that is in-line with current budgeting for market research and fits the strategic goals of gaining more customers and more willingness to spread the HSBC name for recommendation. Stakeholders involved in this new questionnaire process include executive leadership, marketing and sales, the consumer, and internal subordinate labour needed to carry out the questionnaires in a variety of consumer environments with an emphasis on the female buyer. IV. Recommendation After assessing all of the available options for this research endeavour, it has been determined that the questionnaire designed to gain more in-depth knowledge of consumers is the most appropriate research methodology. The support systems and compilation technologies are already in place, as identified in the Annual Report and this report’s appendix section, thus no expenditure to analyse and report on questionnaire data is required. This fits with current budget restrictions and also will give HSBC a new presence in the consumer market related to financial services planning. Schwartz (1986) offers that buyers already have very large-scale knowledge of products and prices related to this important decision-making process and are easily capable of processing comparison data to make decisions without necessarily considering costs alone. Therefore, instead of focusing on pricing matters, the new qualitative data research format digs deeper into the consumer consciousness to identify psychographic (lifestyle) factors, family factors, or even investment-related fears to help HSBC adjust to a more appropriate model to meet these needs. HSBC requires more presence on the consumer marketplace, especially with the influential female buyer group, thus it has been determined that qualitative research in the form of questionnaires is the only research tool that can truly satisfy long-term objectives for revenue growth and customer commitment. Because it does not require a significant investment to restructure the existing market research methodology, it represents significant cost-savings and the ability to launch the program quickly without a great deal of training to existing market research staff members. This market research will allow the company to identify which key markets are most likely to choose the HSBC Australia brand, target them with relevant advertising based on majority needs and emotions, and put the business in a position directly related to these cultural, social and attitude-based values. It is a win-win scenario for consumer and the HSBC brand. References Bolton, P. & Freixas, X. (2006). Corporate finance and the monetary transmission mechanism, The Review of Financial Studies, 19(3), pp.829-870. Coughlin, J.F. & D’ambrosio, L. (2009). Seven myths of financial planning and baby boomer retirement, Journal of Financial Services Marketing, 14(1), pp.83-92. Fsa.gov.uk. (2005). Financial Services Authority – Consumer Needs Research: Informing our future work, p.9. Accessed October 24, 2011 at http://www.fsa.gov.uk/publs/other/consumer_needs.pdf. Golding, A. (2009). Symbolic Gesture, Marketing, July 1, p.16. HSBC. (2010). Annual Report. Accessed October 23, 2011 at http://www.hsbc.com/1/PA_1_1_S5/content/assets/investor_relations/hsbc2010ara0.pdf Laffey, D. & Gandy, A. (2009). Comparison websites in UK retail financial services, Journal of Financial Services Marketing, 14(2), pp.173-187. Lang, B. (2001). Switching barriers in consumer markets: an investigation of the financial services industry, Journal of Consumer Marketing, 18(4), p.333. O’Dell, S. & Pajunen, J.A. (2008). The Butterfly Customer: Capturing the Loyalty of Today’s Elusive Customer, Toronto: John Wiley & Sons. Powell, M. & Ansic, D. (1997). Gender differences in risk behaviour in financial decision-making: an experimental analysis, Journal of Economic Psychology, vol. 18, p.607. Schulaka, Carly. (2009). Marketing to consumers: effectively reaching high net worth women, Journal of Financial Planning, 22(9), p.S6. Schwartz, B. (1986). The Battle for Human Nature. WW. Norton: New York. Appendix A: 2010 Survey of Willingness to Recommend HSBC Compared to Target Financial Company Competition Source: HSBC (2010). Annual Report. Read More