Performing of Bank in the UK - Case Study Example

College: MARKETING ANALYSIS OF HSBC PREMIER BANK LIMITED Introduction HSBC is a UK based bank with a range of services to customers in the UK as well as the world. They have positioned their services as premium and expect the customers to enjoy and pay for this premiership. Their banking facilities can be accessed by customers world wide. These services do not differentiate whether one is local or international as they have been standardized. However the local retailers do get a different offer. (HSBC Bank UK, 2008, Online) The HSBC premium services include a range of services such as the HSBC Premier Bank Account. This is accompanied by an international debit card to help customers access their fund internationally. The customers have an unlimited access to a relationship manager to take care of all their concerns. On request, all customers are provided with an independent financial advisor (IFA) to advise on further accounts management, opening, borrowing and savings. Specific account holders have access to family travel insurance as they travel all over the world. (HSBC Bank UK, 2008, Online) The banking communication is also accessible through out the day with customer being able to call or use internet to make enquiries. Any overdrafts below 500 do not attract any interest. Any overdrafts above 500 and below 5000 will attract interests with the latter being the upper limit for overdrafts allowed. Customers are not required to pay for the set up of the account. However there is a 9.9% EAR surcharged. The overdrafts ceiling is subject to review on a case by case basis. (HSBC Bank UK, 2008, Online) The HSBC have acknowledged that the internet transaction technology came with its challenges. Thus they have put up robust measure to protect the customers against the vice of identity and transaction theft. Customer will therefore not be subjected to any charges of overdrafts occasioned by online theft. Finally customer's have the privilage of cashing a check of upto 2000 for a paid in cheque over the counter. (HSBC Bank UK, 2008, Online) How the product/company is performing (brand share, sales etc) In the UK, the HSBC has felt the impact of the bottom of the cycle. The HSBC Premier has been targeting the commercial properties segment which in the last quarter of 2007 was impacted by the pricing problem. This period saw the capital values go down 11.8% as an extension drop from the Q2 of 2007. (Investment Property Data Bank, 2007, Online)(HSBC Premier, 2008. p.1-7) But since the momentum of capital value reduction is going down, it can be justifiably noted that the HSBC Premier Property Market is moving to the bottom of the cycle. The share capital value declined by about 2% in January 2008 in comparison to the 4.2% in December 2007. Thus the capital share value is picking up positively towards a fair value. (HSBC Premier, 2008. p.7) This correction has had an impact on the market sales even with the prices declining further. The customers have therefore been overreacting to the sale buy buying more capital through HSBC Premier Services. These increased sale could be risky to the economy of UK as the retailers could be working on false values of property. If this outlook is exploited by the impending development plan at the central London, there could be a bleaker and more suppressed rental value for houses. Overall the market is suffering from weakened currency, slowed equity market, mixed performance of the mortgage loans, unstable interest rates and harsh economic conditions (HSBC Premier, 2008. p.7) The brands targets, segment appeals and available marketing competition in that banking sector HSBC Premier is targeting a range of middle to upper income class customer. This is evident in their setting of minimum overdrafts and maximum overdrafts. The second evidence is in the way the respective overdrafts will be subjected to interest rates and their subsequent securities. Thirdly, their stress of international debit cards is yet another precautionary strategy of financial discipline and convenience. There are aware that most low income earners may not be credit worthy and are better of with international debit cards that will allow them to access their cash even as they travel abroad. The fourth indicator that they are targeting the medium to high income lot of customer's is the availability of insurance facility to customer's who have a specific account portfolio with the HSBC Premier. This is mostly available to customer with some saving account and portfolio, thereafter an insurance scheme is built in for them. Thus the HSBC is targeting the medium to upper brand of customer. (HSBC Bank UK, 2008, Online) HSBC is competing in the segment of mortgage loans. In this case they have been targeting all clients, prime clients, non traditional clients and subprime clients. Overall the performance of the non traditional clients is currently at 80% of trends growth, having surpassed the subprime client from the lead position following data released in March 2008. Subprime are at about 70%, followed by the prime who seem to be having a borrowing difficulty. The 'all' category have been locked of this mortgage loans since March last year. (HSBC Premier, 2008, p.1) Secondly HSBC is competing for banking market share in the UK banking segment. But this has not been very smooth as the competition has been faced by sand and grease effect of the economy. In UK it has been established that the banking has been easing without any signs of serious recession. This competition has also been affected by the weak earnings in the banking sectors that have been further compounded by weak customer confidence. The pound has also been appreciating with impacts on export value. With inflation at 3.2% in Q1 2008 and 10% cheaper prices- to-earnings, the overall valuation has been maintained at attractive face value that will still feel the pressure of expansion. (HSBC Premier, 2008, p.2) Thirdly, HSBC is competing in the market segment of interest rates in relation to fixed income. However the government has only returned a bond of only 0.5%.For the last two years this has declined by 21 points. The interest rates market has been hinging on the price stability but HSBC is aware that this can have negative impact on the economy and may lead to HSBC keeping higher interest rates in the short terms as markets are really volatile. HSBC have an even better reason to keep higher interest rate due to the decrease in the credit rating as the competition are following suit.(HSBC Premier, 2008, p. 4) HSBC has also been competing in the currency market. When they instituted the international debit and credit cards, they were aware that customers will be withdrawing money at local currency rates. However their main focus is the currency rate movers and shakers that are the Yen, Dollar, Pound and Euro. Competition to reduce interest rate will subseqly has impact on the currency values. The good new is that the GBP is affordable to the dollar whereas the EUR is over valued against the dollar. Again competition here will only be won be higher interest rates. (HSBC Premier, 2008, p.6) Finally, HSBC is competing in the equity market segment. This has however suffered from bad credit and hence poor earnings. This segment has also been impacted by the weaknesses of the currency. (HSBC Premier, 2008, p.6) Analysis of the marketing program for the brand in terms of product, price, place and promotion and the effectiveness of the positioning against the target group. a.) Product HSBC is marketing the HSBC Premier product. This product is expected to give some latitude of banking and financial services. The product will be a direct response to loan interest that has in the recent past caused discontent amongst the customers. Other features of the HSBC Premier will include international cash transaction, world wide credit history and world wide investment ability. This product was to move away from the average customers to the affluent populace. (Effie Awards, 2006, p. 1-2) b.) Place HSBC has client in over 200 countries in the World. They have both UK and offshore financial services. The main offshore markets are in Hong Kong, Singapore, Dubai and South Africa. The marketing team has the task of maximising ROI, offering top customer services and meeting business targets. The branding campaign is to take place globally. (Effie Awards, 2006, p. 2) c.) Price HSBC product will target the affluent population who have $100,000 - $ 1,000,000 worth of assets that they are willing to invest. The target was a deposit of over $400 million with an additional $210 million. (Effie Awards, 2006, p.2) d.) Promotional The Theme of the promotion was to double the premier deposits that were being targeted for interest over the same financial year. The promotion set out to compare the customer's psychology with the HSBC product. With a banking without boundary strategy. The promotion used ads and direct mail to communicate with the customers. There was also a face to face promotion with the customer's as the HSBC marketing team would know exactly where to find them. The direct mail had unique features such as the global map that did not have boundaries with an entertaining bit at the last phases of the mail. (Effie Awards, 2006, p.2) The media plan was to use the mails initially then follow it up with the advertising. This had a motive of making the customer's aware that the campaign is running ahead of going public with the product. The promotion team acquired mailing list from leading media publishers at cost. This same media fraternity such as the Financial Times and the Economist were also used in the proposition of the HSBC premier brand from some strategic positions to establish a strong verbal talk with the society. The overall promotion took the mode of dailies, magazines, e-mails, direct postage mails, retails points of sale, PR and one on one interaction. The online mode had signage of world map that did not have borders and was positioned at BBC.com, CNNFn.com among others. The HSBC relationship managers were also very instrumental in the set up of sales kits and rewards to customers after running contests. (Effie Awards, 2006, p.3) HSBC also put up a wall paper direct marketing promotion to create an awareness of the Home Insurance segment as one of their products. This was targeting over 0.7 million clients. It was offered by a contracted firm, RMG Connect. (Varley, 2007, Online). Customers The promotion was to move out of the regular national boundaries to the international front which is faced with ever changing global issues. The promotion also targeted affluent people who have $150,000 per year and are aged 35 - 50. These customers are those who work for International Governmental and Non governmental organizations. They are fond of travelling and are adventurers. The UK alone could be having over million such clients. The other potential customers are the armchair cosmocats. This lot does little or not travelling but are in more or less the same business block. (Effie Awards, 2006, p. 2) How the marketing budget is split between the various activities and why. The Media budget was just below $5 million. It is noteworthy that this budget was less considering what the other industry player had invested. (Effie Awards, 2006, p. 3)The media budget was split up as follows: Dailies: $1 million- They use this allocation to advertise on world renowned newspaper and online dailies sucy as New York Times, Business Dailies and others. Online magazines: $0.3 million - These are used to describe real life achievements of personalities who have been engaged with the HSBC Premier products. Other businesses that are associated with the HSBC are also feature. E-mails: $0.4 - This is spent on appealing and responding to the individual customer concerns 24 hours a day. Direct postage mails: $2.6 million- This is the main focus and strategy of targeting the cosmocraft and armchair cosmocrafts. Retails points of sale: $0.3 million - This is used at this point to capture the customers who work at home but have income that falls between the range that HSBC is targeting. Public relations: $0.4 million - these come in handy following the incidence like that of college student who expressed negative views about HSBC loaning schemes. Total Budget = $ 5 Million - To market the HSBC Premier Brand. Analysis of the above views of the customer's decision making in the banking market under review. The customer's who had been the actual cause of this campaign following the initial negative view they express in the outlest such as the facebook are now in good relationship with the HSBC Premier product. The customers were concerned that HSBC was not paying attention to their views. This has since been sorted out. . HSBC in response decided to reorganise the whole loaning process to be customer comply with the 4P and corresponding 4C of banking marketing. The interest rates have also been reviewed. (Johnson, 2007, Online) Earlier, more than 5000 student had put a campaign blog on the face book to complain about the student loaning policy that they claimed was not servicing there needs and nich. Hence HSBC reversed their policy to address these interest rate needs and repayment modalities. (Durrani, 2007, Online) Overall the $5 million that was spent managed to earn HSBC more that $240 million which gave a Return on Investment margin of above 94%. During this 2006 campaign, HSBC earned $413 million above targets as well as doubled the $205 million goal of deposit. The customer base also reduced as they were now targeting the cosmocrat whose return on investment was noted to be high in the high cost product. Thus the fewer customers mean that there was less operational cost and higher profits. Thus it can be summarily noted that the customer's of HSBC successfully managed to shape the Brand of HSBC from the external point and with positive reaction HSBC was successful in propositioning the HSBC Premier Brand. (Effie Awards, 2006, p. 4) LIST OF REFERENCES Durrani, A. (2007). HSBC in Dramatic U-turn after Facebook campaign. Available at On August 30, 2007. Accessed on March 31, 2008. Effie Awards (2006). HSBC Premier: Banking Without Boundaries Campaign. Mindshare. p. 1-4. Available at Read More