The Marketing Practices of the Lloyd TSB Bank - Assignment Example

Consumer Behaviour Introduction Human behaviour is viewed as being affected by multiple levels of influence. These levels of influence include intra-personal or interpersonal factors, individual factors, public policy factors, institutional or community factors, and organizational factors. Intra-personal factors include individual characteristics that influence behaviour such as prior disposition, knowledge, attitudes, beliefs and personality traits. Interpersonal factors refer to primary groups such as family, friends and peers who provide social identity, support and role definition. Marketers usually use the marketing mix to influence all the above named people and factors that cause consumers to purchase their products. This paper will be focused on the marketing practices of the Lloyd’s TSB bank in its endeavours to retain its customers. Lloyd’s TSB is a retail bank that is based in the United Kingdom. It was established in 1995 by the merger of Lloyd’s bank and the TSB group. Lloyd’s bank was originally founded in Birmingham in 1765 while the TSB group, a rival bank, was formed in 1810. The marketing mix of Lloyd’s TSB has seen it realise admirable profits through the years. The marketing mix elements, also known as the 4p’s, are price, place, product and promotion. Product In simple terms, a product includes all features as well as goods and related services that a business offers to its clients. The product is the most crucial component in the marketing mix. This is because products are the market expression of the manufacturer’s productive capabilities. Products determine a producer’s capacity to link with customers. A product policy or strategy is of enormous significance to a corporation; product decisions dictate the scope and direction of industry activity (Singh, 2011). Additionally, market indicators such as profits, sales, image and market share are also dependent on products. The products of companies also influence other components of the marketing mix. Therefore, without proper product policy, a corporation cannot pursue further elements of the marketing mix. With the rapid advancement of technology, a banking company has no choice but to advance as well in order to satisfy the desires of its clients and remain competitive. The Lloyd’s TSB group boasts a diverse array of services and products that cater for a large clientele. The banking options available to its customers include the phone bank as well as internet banking. Customers can also text financial information from a mobile phone and make use of cash point machines. The Lloyd’s TSB group also offers post office banking to loyal clients. Consequently, its clients can choose from an assortment of options to complete their daily banking transactions. Many necessary personal and banking options are on offer by the Lloyd’s TSB group. These are the Lloyd’s TSB group savings and investments, credit cards, loans, mortgages and insurance. To address the growing concern about personal privacy and security, the Lloyd’s TSB bank provides an online banking guarantee as well as PrivacyGaurd. This helps protect the identity and personal credit history of its clients. With a demonstration that is fully interactive available online, potential clients can examine how easy banking with Lloyd’s TSB can be as well as what it has to offer. Pricing Price formulation is a fundamental process of establishing monetary value for a service or product, and coming up with a competitive price is not easy. It is normally presumed that a low price will attract more customers than a high price. This is not a valid argument as clients do not respond to the pricing alone. Most customers will respond to the value of goods and services. A lower price will not necessarily result in expanded sales if the product does not satisfy the expectations of the customers. The general pricing strategy is divided into the price administration and price determination. Price determination can be described as the process undertaken to arrive at the price of a product. This often includes the contemplation of relative product prices that lie within the same line as well as differences in price for similar products of different qualities. Price administration refers to the activities involved in fitting basic prices to different sales situations such as geographical location and position of distribution channel members. The Lloyd’s TSB group has recently employed a competitive pricing strategy. It offers high interest rates and attractive extras for those clients that are willing to open a new account with them. This is a worthwhile move as most accounts are usually used for cross selling opportunities and their profit making abilities are limited. The Lloyd TSB bank’s charging structure also includes the removal of the 15pounds monthly unplanned overdraft charge. It will change to 5pound usage fee when a customer utilizes an unplanned or planned overdraft. Consumers who have a student, graduate, or added value account with an arranged overdraft free of interest and fees will not have to pay this small fee. This is on condition that they remain within the fee free amount and the interest. Fees charged daily for unplanned overdrafts will be reduced to less than ten pounds. The returned item fee of 20 pounds is also to be halved. Additionally, the Lloyd’s TSB bank is to introduce a fee free and interest free buffer zone of ten pounds for both planned and unplanned overdrafts. Place Placement involves all marketing activities that make the product available to the targeted customer. Various ways of making products available to customers can be used based on factors such as sales, communications and contractual considerations. When planning placement strategy, most corporations choose between direct access to consumers or use of middle men as well as between single and multiple channels of distribution. Firms also have to consider the length of the channel of distribution, the number of distributors, and the types of intermediaries. They also have to consider which intermediary to make use of based on quality and reputation. The Lloyd’s TSB group has a variety of branches in almost every developed country which are outfitted to cater for the needs of all types of clients. A percentage of clients usually make use of the online banking service. This service also allows for clients apply for overdrafts and loans. For British customers, Lloyd TSB group has branches in almost every town in, the nation. There are many branches that are open for business on the weekend, considering that most clients have to work throughout the week and may not be available then. On week days, there are various branches that remain open in the late evening hours in order to cater for clients who may need to access their accounts. Promotion Promotional strategies consist of all means a corporation utilizes to communicate the benefits and values of its products or services. It can also be defined as the company strategy that requires interaction between two or more people and groups. Apart from online banking services and providing branches of the bank in every town in the U.K., Lloyd’s TSB regularly contacts its 75,000 customers as part of a systemic customer feedback program. In the year 2010, the bank launched a campaign aimed at identifying and removing any policies and processes that were deemed unhelpful to clients. The bank has come up with new and innovative products which provide catering to the ever-changing needs of clients and underlines its vow, aiming to build long-term relationships with them. For example, the ‘lend a hand’ mortgage allows buyers to acquire a mortgage with deposits as low as 5% at a corresponding rate to borrowers with a considerably bigger deposit. To increase transparency for savers, Lloyd’s TSB also ensures that current interest rate information is displayed clearly online and on paper statements. The bank has also ensured that all its savings accounts are open to both new and existing customers. It also continues to ensure that an online calculator is always available to clients; it is there to assist them to establish just how much interest they will be able to earn in different accounts. Definition of Marketing Strategy It is impossible to pursue every market opportunity so managers must make strategic choices. There are many alternative methods for segmenting business markets. In outlining geographical segmentation, a medical instrumentation firm can obtain data from hospital associations’ directories to target hospitals by region and bed size. When factoring business demographics, a graphic supplies distributor can easily target advertising agencies by using firmographs. When featuring the products usage factor, markets can be segmented according to consumption levels of various user groups-heavy, medium or light. The best customers can be identified by several criteria. These include number of orders, unit sales, revenues, profitability and share of customer volume (Weinstein, 2004). The underlying rational of a mass marketing strategy is that everyone in the market wants the same product delivered, priced and promoted in the same way. Or, if there are differences within the market, they are not usually significant enough to affect demand. They also do not merit being addressed by the organization with a different marketing mix strategy. Advantages in this type of marketing include elimination of extra costs that ensure larger production runs. Its limitations, however, underscore its limited usefulness. Different shopping patterns, income levels and work habits require different pricing for certain services or products. This is well served by the segmentation strategy. Also, a mass marketing strategy that tries to appeal to everyone leaves a company susceptible to having a segment of its customers won over by any other firm that more closely tailors its marketing mix to attract that particular subgroup. Some technology factors include research funding, maturity of technology, innovation potential, intellectual property issues and progression of information and communication systems (Contento 2010). Marketing segmentation refers to the identification of one’s customers, bringing to them what they wish for, building strong relationships with co-marketing partners and communicating via highly targeted promotional media e.g. event sponsorships or interactive websites. Segmentation is the practice of partitioning markets into groups of prospective clientele with like needs and who are likely to exhibit similar purchasing behaviour. Segmentation efforts must be managed to be successful. To retain the loyalty of occasional consumers, Lloyd’s TSB has ensured that its staff in all the branches benefits from compulsory customer training. It also makes sure that it has enough employees to cater for the preferences of every client. When dealing with customer’s grievances, Lloyd’s TSB makes sure that it offers to make things right with a reimbursement or alternative product and checks with the clients if they clients are satisfied with the new alterations made due to the complaint. The Lloyd’s TSB group seeks to develop long lasting associations with its consumer group in order to afford sustainable development patterns. The triumph of the consumer policy is confirmed by: (a) Capacity to deepen active client associations and produce high-class earnings through sustainable proceeds streams. The retail bank has sustained advancement and delivers revenue impetus. There are enhancements in a wide range of products such as mortgages, private lending and depository savings. Outstanding cost control measures have authorized Lloyd’s TSB to decrease its cost income quotient while making progressive savings in business. The retail trade continues to build on associations with clients at the time of consumer attainment and outside that time. (b) The sustained attainment of new clients: Lloyd’s TSB continues to expand its client franchise. (c) Constant output enhancement: high performance necessitates a constant focus on output, which compels both enhanced client service and cost decrease. In the recent past, Lloyd’s TSB has been constructing a group of strong competencies in the decrease of errors, functional effectiveness and procurement. Together with these capacities, Lloyd’s TSB subscribes to a “profits enlargement must supplant cost expansion” discipline in creating aims for each of its businesses. This requires a bigger break between growth of profits and cost expansion in lower enlargement trades. The Brand A brand is an icon or mark (logo) that helps distinguish one product from another. The brand represents the product. From the marketer’s point of view, it is the sum total of all user experiences with a specific service or product, building both repute and future expectations of benefit. Successful brand building involves paying constant attention to user enjoyment of a given product or service; setting sufficient budgets for marketing and evolving the brand overtime as markets and opinions change. Companies invest in building and marketing their brands for a number of reasons. These include increased recognition, establishing trust and building brand loyalty. The Lloyd’s TSB bank has an intercontinental multi brand existence in the trade and indemnity and speculation arenas. It also possesses a sturdy corporate banking license. The Product: Consumer Behaviour Perspective Lloyd TSB’s aim is profitability. Therefore, this corporation tends to focus on the main procurers of indemnity and mortgages. This target group becomes the beneficiaries of extra goods and services that appeal to individuals of their market segment. An example is that a client who purchases a mortgage will also require commodities for a new home. Clients with higher salaries have been categorised with customized services for administration of possessions (Tehrani, 2008). Lloyd’s continues to offer such goods and services to its grouped markets thus availing more products to clients who are the most profitable. The brand name of Lloyd’s TSB gives them an economical advantage over new participants in the United Kingdom. To give itself a competitive edge over other corporations, Lloyd’s TSB also constantly searches for ways to improve the products it offers in order to affix value for clients. Motivation for Customers Lloyd’s TSB enjoys the capacity to set up phone and online banking. With such advantages, there is the possibility to create an efficient delivery structure between customers and the corporation saving on the functional price. Lloyd’s TSB has also made arrangements outsource call centres in order to decrease the charges of phone banking. The call centres have become subcontracted to nations in which manual labour expenditure was low compared to Britain. The functional policy of Lloyd’s is not solely to generate the means for the existing competencies. It is also to keep enhancing these capacities in order to draw more customers to the company. The functional policy that was created to meet the marketing demands resulted in altering the culture of Lloyd’s, as well as its goals. Cognitive Response Stimuli List of References Read More