Macromarketing Environment and Company's Successful Marketing - Essay Example

? Ways in which forces within the Macro marketing environment affect the company’s ability to market its products successfully Course: Tutor: Date: Introduction Organizations do not exists in vacuum, the immediate environment which consists of the political, social, cultural, economic and legal environments impact on the nature of the operations and the ability of the organization to operate competitively in the industry. Marketing includes all the activities of the organization which are geared at identifying market opportunities, satisfying the customer needs and gaining competitive edge in the industry while at the same time maintaining an acceptable level of profitability (Kotler 2003). Financial services include the satisfactions and benefits which are connected to the functions of money which customers receive from the financial institutions. They include bank accounts, debit cards, loans, and mortgage facilities and other financial related value like interest payable and capital appreciation of the bank deposits (Kotler 2003). The development of financial services marketing has been slow due to the unique nature of the services. Financial services are perishable, inseparable and lack standardization in the service performance. This paper shall discuss the strategies which Royal Bank of Scotland in overcoming the challenges of financial services marketing. The paper shall also address the macro marketing environment forces which affect the banks ability to market the financial services (Kotler 2003). The paper shall also review the market segmentation approaches which the bank has implemented. In the final part, the paper shall discuss some components of the banks marketing mix and how the bank has incorporated them in the marketing mix. Question 1: Strategies used by Royal Bank of Scotland in financial services marketing Financial services have certain unique features which presents challenges to the marketing team. Financial services are characterized by intangibility, heterogeneity, fiduciary responsibility, and contingent consumption, duration of consumption, perishability and inseparability of the services from the consumer. Financial services are intangible since they cannot be seen or touched by the consumer. In dealing with intangibility challenge, the Royal Bank of Scotland provides physical evidence to the consumer by providing debit and credit cards to the consumers (Kotler 2003). The bank also gives cheque books to the consumers and ensures the staffs are properly dressed and present themselves professionally while dealing with the customers. The bank also emphasis on the benefits of its services like low interest rates in order to reduce the customer perceived risk (Kotler 2003). The bank has overcome the intangibility challenge by building good working relationships with al customers hence this helps in attaining customer loyalty. Financial services marketing experiences the problem of inseparability since they are produced and consumed at the same time in presence of the consumer and the service provider (Kotler 2003). Royal Bank of Scotland has implemented several marketing measures which overcome the inseparability challenge. For instance, the bank employees understand the importance of excellent customer service since they strive to understand the unique needs of the customer by asking for detailed information on the customer requirements (Kotler and Keller 2009). The bank also provides sufficient information to the customers on the financial services offered and the related costs. The bank has also implemented a service delivery process which ensures customers quality services from the bank. Financial services marketing experience the challenge of heterogeneity since there is no standardization in the service delivery (Kotler 2003). Many financial institutions lack the ability to regulate the quality of the service before the customer begins consuming the services; however, Royal Bank of Scotland has implemented service quality control measures which reduce the quality differences across all the branches and all the personnel in the organization. The bank has invested heavily in employee training and development. The bank has implemented modern banking technologies across all the service delivery process hence reducing the service delivery cycle time and increasing the service quality (Kotler and Keller 2009). The bank offers 24 hours online banking services hence customers can access the financial services from the comfort of their home or workplace (Kotler 2003). The service processes are flexible enough to meet customer changing needs and the employees can easily adapt to the changing conditions. Financial services are perishable since they cannot be stored for consumption in the future. Since financial services are produced and consumed instantly, the bank has been able to manage the perishability challenge by regulating the demand and supply forces of the services. The bank has been able to manage high peak demand of the services through provision of online services and increasing part time staff (Kotler 2003). The bank also offers extended banking hours in particular branches. The bank has been able to create demand during the off-peak times by offering discounts on interest rates to a particular number of customers who take up loans during a specified period of time. Financial services marketing encounter fiduciary responsibility where the service provider should create trust among the consumers. The bank guarantees privacy of customer confidential information and gives correct information when dealing with customers. The bank has also overcome the two-way information flows challenge by diversifying the communication channels to the customers (Kotler 2003). The bank utilizes short messaging services, telephone and an internet communication technology which ensures information is easily disseminated to customers. The bank ensures long term consumption by offering current and fixed deposit accounts where customers can deposit their money for future consumption (Kotler 2003). The bank also encourages contingent consumption by emphasizing on the security of customer deposits. Question 2: Macro environment forces impact on the marketing ability of the bank Financial services marketing cannot afford to ignore the external environment in which the company operates. The management can control the micro environment which consists of competitors, shareholders, customers community and suppliers have no absolute control of the macro environment factors hence they can only adapt their operations to suit the macro environment (Kotler and Keller 2009). The macro environment consists of economic environment, social-cultural environment, political and legal environment, demographic environment, technological environment and the natural environmental factors (Kotler and Keller 2009). Demographic environment Demographic environment consists of people, the demographic factors like age distribution, rate of population growth and household patterns (Kotler and Keller 2009). Increase in the number of working women has increased the demand of financial services from Royal Bank of Scotland. The bank has also experienced high demand of wealth management services due to increase in the number of aged retirees which has been attributed to improved global health services. The increase in urban population especially in main cities has increased the demand of the financial services like mortgage facilities (Kotler 2003). The demographic environment has aided the bank to increase its profitability. Social-cultural environment The social-cultural environment includes the literacy levels, the attitudes and culture of the population and the general consumer buying behavior. It also entails the tastes and preferences of the population. Social-cultural environment also includes the language of communication (Kotler 2003). The education levels are high hence the bank has to provide relevant information to the customers. The customers are also knowledgeable about the service offerings by the competitors hence the bank has been forced to improve on their customer service level (Kotler and Keller 2009). The population believe that the opinions and beliefs of peers on the quality of services is powerful in their buying behavior hence the bank has been forced to maintain good working relationship with previous customers and offer loyalty programs to retain the customers (Kotler and Keller 2009). The customers have unique needs and tastes hence the bank has been forced to offer customized financial services to the different customer segments (Kotler 2003). The bank has also incorporated Islamic banking in order to comply with Shariah banking rules which prohibit payment of interests on customer deposits. The bank has also localized their advertisement language to the local language of the target market. Political/legal environment Political environment and legal environment are interrelated. The political environment consists of government legislations and general political stability in the country. The legal environment consists of the business regulatory environment which may include banking laws, employment laws and contract laws which the bank must observe (Kotler and Keller 2009). Currently the political environment is stable since no major government legislations which have affected the operations of the bank. The political stability will foster the operations of the bank (Kotler 2003). The bank has complied on the privacy laws which require banks not to disclose customers’ confidential information. The bank has complied with employment laws which prohibit non-discrimination (Kotler and Keller 2009). The bank has also complied with the banking laws on the level of customer deposits which it must hold with the central bank and the amount of loan facilities which it can advance against its asset base. The bank has also maintained acceptable liquidity level (Kotler and Keller 2009). Economic environment This consists of economic factors which influence the performance of any business in the market. They include the Gross domestic product, the inflation rate, the interest rate levels, the exchange rate levels and general consumer income levels (Kotler and Keller 2009). The recent global recession negatively affected the customer savings level hence the bank has been forced to result to external borrowing to finance its operations (Kotler and Keller 2009). The bank has also been forced to increase the interest rates which its pays on customer deposits in order to increase its lending capacity. Generally, consumer income levels have declined hence the bank has faced low demand of credit and low deposits. The fluctuation of the exchange rate increases the risk of lending to foreign customers (Kotler and Keller 2009). Due to the high inflation levels prevailing in the economy, the bank has been forced to hike its interest rates on loans in order to cushion itself against the loss in the purchasing power of money and the high risk of default by the customers (Kotler and Keller 2009). Technological environment The recent developments in modern information and communication technologies have helped the bank to enter new markets. The bank has utilized internet communication technologies to market its services to the customers. The bank offers 24 hours online banking services (Kotler and Keller 2009). The bank has extensive network of Automated Teller Machines (ATMs) hence customers can access their money at time of the day. The bank sells its financial services through the internet and allows customers to send complains and queries through the internet to the bank. The banking technology has helped in increasing the accessibility, convenience, choice and speed of response in the banking processes (Kotler and Keller 2009). Environmental influences The bank is responsive to the climate change and the general environmental degradation concerns. The bank has preserved the environment through the use of paperless banking (Kotler and Keller 2009). Question Three: Market segmentation approaches of the bank Financial services customers have unique tastes, attitudes, needs and characteristics hence desire unique financial services from any financial institution. Their unique characteristics dictate the buying behavior process. Royal Bank of Scotland does not operate a mass market strategy by identifies a particular collection of customers with similar characteristics and needs and designs a financial service which suit their needs (Kotler and Keller 2009). The bank considers customer characteristics like income level, profession, age, lifestyle, location, religion and personality in designing the financial services. The bank has personal, commercial and corporate customers segments (Kotler and Keller 2009). The bank creates market segments which are unique, easy to reach by the branch network, large enough and which can add profitability to the bank. The main market segments of the bank include personal banking, private banking, business banking, corporate banking and digital banking. Personal banking consists of financial services like credit cards, mortgages, loans, savings, insurance, international travel and money advisory services (Kotler and Keller 2009). Corporate banking segment includes financial services like payments processing, sector expertise advisory services and project financing arrangements. The company has tax and wills segment which cater for the wealthy and elderly individuals who wish the bank to administer their estates (Kotler and Keller 2009). The digital banking segment caters for customers who would like to access the financial services at the convenience of their homes or offices. The bank has segmented its market on the basis f customer characteristics and customer responses (Kotler 2003). The bank has the urban market which is mainly concentrated in cities and rural market which is associated with activities like fishing and farming. The bank has also created a market segment based on the income levels of the customers by having executive banking which is manly associated with wealthy individuals (Kotler and Keller 2009). The bank has included the psychographic segmentation which considers the social class and lifestyles of the customers. Based on this approach, the bank has developed insurance products for the customers that include medical insurance package and life insurance package (Kotler 2003). The bank has also segmented its market by offering off-shore banking facilities to customers located in other countries. The bank has also segmented the market on the basis of individual customer needs by offering both savings accounts to customers whose need is to accumulate deposits for investments and current accounts to customers who need immediate access to their money for business purposes (Kotler 2003). The marketing segmentation approaches since they have enhanced customer satisfaction and retention. The market segments have enabled the bank to fully utilize its strengths and capabilities which has increased the profitability of the bank (Kotler and Keller 2009). The market segmentation has enabled the bank to remain competitive in the industry. The segmentation approaches have created new financial services and also reduced the overall spending by the bank on promotional and advertisement activities (Kotler 2003). Question Four: Components of marketing mix The marketing mix consists of product or service components which make sure the product or service meets the customer needs. The traditional marketing mix consists of price, promotion, product and place (Kotler 2003). However, services marketing due to its unique nature incorporate other additional elements like people, physical evidence and service process (Kotler 2003). In this section of the paper, we shall consider two components of the marketing mix which are the price and the promotion which are used by Royal Bank of Scotland. The bank has ensured transparency in its pricing mechanism. The bank has maintained flexibility of its interest rates hence it has been able to adjust down the interest rates charged on loans in order to avoid competition from other cheaper banks like the Bank of England (Kotler and Keller 2009). The prices of the financial services include the interest rates paid on loans by customers, the accounts periodic maintenance fees and commissions which are charged on account withdrawals (Kotler and Keller 2009). In determining the price, the bank has considered the branch maintenance fees like staff costs and other administrative costs (Kotler 2003). The bank also considers the level of competition in the market and general economic conditions prevailing in the market. The bank must achieve an acceptable level of profitability in order to survive and pay the shareholders some dividends for their capital which is staked in the bank capital (Kotler 2003). The bank considers competitors prices, the market positioning and the nature of the market in developing its prices. The new financial products are usually cheaply priced in order to increase the market share (Kotler 2003). The bank has a differential pricing policy hence the executive and corporate market segments are charged highly due to the added value services which they receive from the bank like 24 hours online customer care support services. Since the bank offers high quality and customized banking services, most of the customers are willing to pay a premium price. The bank has addressed the concerns of the customers through paying considerable amount of interest on customer deposits (Kotler 2003). Promotion The bank utilizes different market communication strategies in reaching out to the target markets. The bank utilizes a variety of messages, methods, channels and media in informing and persuading the customers to purchase the financial services (Kotler 2003). The promotional activities are geared at recruiting new customers, enhancing customer loyalty and creating a positive public image. For instance, the bank launched TV advertisements in 2011 which were geared at increasing the market share. The most common promotional strategy which the bank has embarked on is internet marketing. The bank has developed an interactive website which contains all the relevant information concerning its services offerings. The internet promotion has enabled the bank to reach out to offshore customers (Kotler 2003). The bank has also utilized direct marketing methods like emails and telemarketing which is mainly targeted to high value customers like corporate bodies. The bank has relied on the point of sale promotions hence customers can receive brochures which contain a list of financial services offered by the bank (Kotler and Keller 2009). The bank has improved customer retention through publicity and public relations which is aimed at enhancing the public image of the bank (Kotler 2003). Conclusion Royal Bank of Scotland has overcome the challenges of financial services marketing by providing physical evidence to the services through provision of credit cards. The bank has highly trained staffs that are responsive to unique customer needs. The bank has also implemented modern banking technology. The bank has adapted to the macro environment by observing all the banking regulations and implementing modern technology. The social cultural and demographic environment is conducive for the operations of the bank. The bank has managed to deal with economic factors like changes in inflation rate and exchange rates. The bank has segmented its market according to the unique customer needs. The company has differential pricing strategy and utilizes different promotional methods like advertising and publicity in informing and persuading customers to purchase the financial services. Bibliography: Kotler, P (2003) Marketing Management. Eleventh Edition. London. Prentice Hall Kotler, P and Keller, KL (2009) Marketing Management. (13th Edition). London. Pearson International Read More