Marketing Communication of Cooperative Financial Services Limited - Research Paper Example

Introduction Cooperative Financial Services Limited, (CFS), Britain’s largest consumer co-operative, employs 9,778 staff in 146 offices across the UK (Times Online, 2008). CFS is a wholly owned subsidiary of The Co-operative Group which is the largest consumer co-operative and sixth-largest food retailer in the UK. It has over three million members, over £10 billion turnover, and core business interests in financial services, food, travel, pharmacy and funeral care. CFS offers green mortgages, eco insurance and even produces some of its own energy. CFS includes the Co-operative Bank, through which they offer a range of financial products, from current accounts, savings accounts, credit cards, to mortgages and loans (Sinequa, 2009). The Co-operative Insurance offers a variety of insurance products. In addition to this the company also includes The Co-operative Investments and smile – the internet bank. For making sustainable development its top priority, CFS was recognized as the Company of the year 2008 and received the Awards for Excellence from Business in the Community’s. All of its activities demonstrate leadership and integration of its corporate responsibility practices. Marketing Objectives The business of businesses may be to maximize profits but the business of cooperatives is to meet individual and community needs and hence it has multiple bottom lines (NCB, 2005). ‘Ethical consumerism’ has been prevalent in the UK consumers which consumers’ concerns over environmental issues (Nicholls, 2002). According to the Ethical Consumer Report (2007), every household in the UK spent £664 in line with their ethical values in 2006 compared with just £366 in 2002, an increase of 81 per cent. They are avoiding budget clothing outlets and focusing on ethical food and drinks. There has also been a rise in ethical banking and ethical investments. This demands a strategic response from all sectors and this is the response that CFS has given to the cause. In fact companies deemed to be socially responsible have a higher stock market index. However, this is not a response to consumer pressure but to the need of the society. The consumers would be made to feel that they are contributing to a greener environment. CFS strictly refuses to invest in any business whose core activity contributes to climate change through the extraction or production of fossil fuels. CFS has denied finance oppurtunities worth £110m (Times Online, 2008). The employees’ pension plans too have an ethical investment policy. CFS has environmental commitments at its heart and it goes for the best green solution than for the cheapest one. Thus, CFS has environmental concerns as its objective and hence all its marketing efforts are directed towards this. In cooperatives the structure, values and goals of the people are embedded in their system and even if the members change, the goals do not. All members carry the same values and goals. The marketing objective of CFS is to focus on the environmental issues and stand up against climate change. The objective of the cooperative is to become the most admired financial services cooperative and the most sought after cooperative. To meet this objective the cooperative has refused loans and businesses that violate the norms. They remain committed to the cooperative values and beliefs. They endeavor to attain long-term brand value without focusing on short-term financial gains. The effectiveness of branding has to be communicated to all members. The entire marketing communication plan is based on achieving these goals. Statement of marketing communication objectives CFS has exclusive products on offer but re-branding is necessary to demonstrate the differentiating factor. The marketing communication objectives are to effectively use new marketing tools towards brand enhancement, towards communicating the ethical stand of the cooperative. Evaluation of the contribution of the communication tools Marketing is a societal process by which individuals and groups obtain what they need and want through creating, offering and freely exchanging products and services of value with other (Kotler, 2003, cited by Holm, 2006). The emphasis is on value – the ratio between benefits and costs – between what the customer gets and what he/she gives. Hence the purpose of marketing communication is to enhance the consumer’s perception of value and affect the relation between benefits and costs. IMC hence endeavours to control and manage all market communications. It also implies to ensure that the brand positioning and messages have synergy across all elements of the communication mix. It means to integrate and optimize the best use of resources for the best results possible. IMC recognizes that there would be multiple audiences and each has to be dealt with individually. Direct marketing by way of personal calls has become redundant and even to some extent banned by the government. Face-to-face interactions have become redundant in these days with advance communications technology. Personal selling has been replaced by virtual communities in which people with a common interest carry out their social discourse and activities using the internet (Lagrosen, 2005). Marketing communications perform three functions: to inform, to remind, and to persuade. Reminders and information dissemination can be performed by the traditional model but the persuasion function for differentiating the brand is difficult through the traditional model. Marketing through the internet offers a departure from the traditional marketing environments (Hoffman, Novak & Chatterjee, 2000). The internet has brought new marketing oppurtunities for marketing communication process. Internet is a global medium and it is possible to reach a wide range of members. CFS has to a large exploited the oppurtunities that technology has presented. As an effort towards direct selling and also as a platform for publicity, CFS has launched its own blog which highlights examples of where CFS has demonstrated clear ‘ethics in action’ (Bowker, 2008). This blog also provides an opportunity to the public to post their comments and views on the corporate social responsibility that CFS is engaged in. This platform is also serving to publicize its microfinance project for development of small businesses in developing and the underdeveloped countries. This 'goodwithmoney' blog has a series of video clips, archive footage, interviews and photographs both via the site, vimeo, flicker and YouTube. To help its direct marketing activity they have also invested in technology and bought some analytics that would help to analyze the data collected (Lepper, 2005). Blogs have become a powerful tool to exchange ideas and information. It helps to understand members’ needs, their view points and it helps generate new business ideas as well. It is a platform of the members for the members. The blog postings can influence a company’s reputation or affect the product life cycle (Chen, Tsai & Chan, 2008). By analyzing the blog threads it is possible to track the important bloggers and then determine the influence of the blogsphere. Hence CFS has used the right platform as a channel, as its direct marketing policy and also as a public relations strategy. As an innovative customer contact channel, CFS has a customer magazine that has become an essential part of its wider marketing communications strategy (Royal Mail, 2006). CFS wanted to maintain a consistent approach to managing customers across its three core businesses – bank, insurance and Smile. It already has different distribution or contact channels like the branch, telephone, internet, affinity products, financial advisers, and the retail network. They subsequently identified a customer magazine as the ideal complement to the existing contact channels. Through this new sales channel customers could directly respond to them and communicate with them. It would also help the cooperative to develop a single unified voice for the business and enable them to promote their commitment to ethical finance. It also generates new business leads for them and reduces customer attrition. This magazine known as Change has a customer audience between 21 and 70 with the main focus on the family unit. The magazine informs, engages and rewards the readers with useful and surprising information. The magazines tagline is ‘helping you do the right thing with your money’ has not been appreciated because it goes against the basic objectives of CFS which is ethical finance. This tag suggests that money and business are important, thereby sending the wrong signals or communication. The CFS needs to advertise even though it has an ethical stand but when they engaged in communicating their ethical stance, controversies were raised. There were objections that if CFS advertised then it were not from a pure moral duty but vested with self-interest. However, advertising is meant to attract more people not merely to avail of the banking services but to distract them away from unethical practices. Besides, there may be many that do want to move away from unethical banking but were not aware of such a facility/oppurtunity. It is essential to convey their ‘responsible sourcing and distribution of funds’ to the potential customer in a simple and motivating way (Prague, 2009). Hence advertising by a cooperative is not against the objectives and the values of a company. As part of its public relations, CFS offers various incentives to attract new members within its fold. For instance, CFS has been engaging in carbon offsetting for all mortgages for the past 8 years and of car insurance policies for the pat two years (Times Online, 2008). For every year that the customer holds a mortgage, CFS pays to offset a fifth of a typical UK home’s CO2 emissions. In addition, they are offered a free home energy rating on house purchases. For each year that a car insurance policy is held, CFS offsets 20% of the car’s CO2 emissions. Apart from carbon offsetting, CFS charges a lower rate of interest fro ethical purchases made on credit cards. The incentive for the first-time users of the credit card for ethical purchases is very attractive. They buy and protect half an acre of Brazilian rainforest in the customer’s name. Recommendation The marketing communication efforts should achieve the goals and this requires integration into a coordinated framework (Lagrosen, 2005). Hence internet communication activities need to be integrated in the overall marketing communications mix. They need to be coordinated with the objectives of the cooperative. Naomi Klein points out in her book No Logo that newspapers, television stations, Internet servers, streets and retail spaces are all controlled by multinational corporate interests (The Economist, 2001) but when environmental degradation and human rights abuse or child labor is cited against certain brands, people boycott these brands. CFS is primarily engaged in service through propagation of ethical business and stand against climate change. Since brands have an impact on the consumers CFS should appeal to them through different marketing techniques. Instead of the traditional media digital media should be used aggressively to communicate the cooperative goals and message. The cooperative has the objective of long-term relationships and not short-term gains. CFS has established brands and products and uses an online media company to plan they media. Since it is the field of offering financial services while focusing on the issue of climate change, it wants to communicate the message effectively. According to Aaker (2004) product offering must be able to deliver the brand promise which implies that commitment to quality is essential. For instance a bank must ensure that the appearance of the bank statement is understood and effectively managed. The marketing objective of the bank is to fight the climate change and this message has to be carried in all its advertising. This can be done in several ways. For instance, the logo should be green and uniformity should be maintained in all forms of advertising. Advertising need not be paid advertising and can be in different forms. One of the objectives of marketing communication is brand enhancement. When CFS buys for instance half an acre of rainforest in the customer’s name, an email towards this should be sent to them which would be further circulated through viral marketing. Today every individual has his or her own social network and this should be circulated. People who make ethical purchases through their card or buy stocks in companies that are socially responsible would be recognized through their magazine. Brooker and Burgess (2008) focus on customer relationship marketing where the intention is to attract the trendy visitors who can spread the word through what is known as Word-Of-Mouth (WOM) publicity. Viral marketing is a form of WOM. The intended purpose of viral marketing is WOM marketing when they describe what they have encountered in FaceBook or YouTube. The latest trend is to post videos on YouTube and then agents are employed who spread the buzz about the new product through their own social network (SD, 2008). While this may appear to be a commercial initiative, the intention of CFS is to propagate ethical finance and hence adopting such measure is not against the objectives of the cooperative. The members themselves can volunteer to develop such social networks. Direct marketing can be in the form of viral marketing, which works on the principle that a small number of highly motivated customers are chosen to seed the idea, product and message and allow it to spread like virus effortlessly to reach millions (Watts and Peretti, 2007). The reliance on traditional media is decreasing as marketers try to establish direct-to-consumer relationships. The digital media allows for real-time changes and adjustments in advertising, marketing and promotions. So when through their own social networking, others come to know how a cooperative is contributing towards environment, the others would be keen to be a part of the project which in turn enhances the brand image of the cooperative. However, negative WOM and publicity can also adversely affect the brand (Grace & O’Cass, 2005). The UK government has made it mandatory that support would be extended only if the cars agree to bring out low-carbon vehicles (Gribben 2009). As a sales promotion measure, CFS should support this cause by offering special interest rates on loans to those who purchase greener cars. Such advertisements should be spread through viral marketing among the members who in turn would reach the message to all their friends in their own networking. This is the cheapest yet the most effective form of advertising. Messages would also be conveyed to undertake online funds transfer and payments online as far as possible to keep the issuing of cheques to the minimum, thereby reducing the use of paper. The members of the cooperative should be encouraged to form a global information exchange network that would circulate information of climate change and the reasons. This global information exchange network would serve as an advertising media. This could take the form of e-newsletter where opinions are also invited by the readers. This could also serve to enhance public relations of the cooperative to attract more ethically conscious members. The interactivity of the internet is a powerful tool (Lograsen, 2005). The members of the cooperative will be able to interact with each other and also with the members of the board. This forms relationship marketing or what was traditionally known as personal selling or direct marketing. However, consumers or members may differ in their prior knowledge of climate change. They may also differ in their stage of readiness to accept environmentally conscious projects. They may also differ in their processing goals in terms of what they want to get out of the marketing communication to which they are exposed (Keller, 2001). Consumers may vary in what they know and what they want to know. Marketing communications can vary in the amount and nature of brand related information. The responses to the marketing communication can vary across individuals. Hence different forms of marketing communication techniques have to be employed to suit different mindsets. To meet this objective, blogs should be made more attractive and participative. Blogs helps to interact at a personalized level. The data collected through blogs helps to take the future marketing decisions. It would help the cooperative to know what the customer wants. Marketing communications theory which suggests that it is not enough to listen to the customer, it is essential to understand the customer (Olorunniwo, Hsu & Udo, 2006). CFS should strive to effectively manage the blog because this serves as a powerful marketing intelligence. It would help them to retain loyal customers/members and enhance the brand value, which is the objective. Blogs today are a tool for two-way human conversation and a major tool for online two-way public relations (Xifra & Huertas, 2008). They have a conversational air about them and hence blogs on different issues should be started and conversational exchanges and the threads formed. There should be separate blogs for climate and environment where ideas could be exchanged and experiences shared. This can serve to motivate those that are not so conscious or unaware of how to combat or stand against the issue of climate change. Another blog – a newsletter blog can highlight or publicize the names and experiences of members that have participated or initiated environmental projects. Suggestions can be invited on blogs and this can be a source of innovation and creativity. The logo which carries symbols of an ethical policy should be transmitted through every blog and this should be filtered down through viral marketing to reach as many consumers as possible. The achievements of the cooperative in climate change could be advertised through these blogs which would make the employees and the consumers proud to be a part of the cooperative. The advertisement would highlight that the policy reflects the concerns of the customers. All these would help to generate confidence in those that are yet to have faith in online financial business and on firms that take an ethical stand. Responses to an advertisement would be encouraged through blogs instead or telephone calls or personal emails. This saves time and energy and makes the process more effective and fast. Recommendations for control/evaluation procedures Technology has advanced and the technology that encourages online banking and other services can cause extensive damage as well. There are possibilities of hacking of sites and abuse of information posted on the blogs. Since it is an open platform anyone can easily misuse the service. To keep things under control and manage this effective means of communication in the positive direction, efforts would be made to monitor the blog on an hourly basis and to remove any indecent or unwanted message or exchange that might have been posted. Feedback would be encouraged from the members intermittently to make changes if necessary to the product offerings or even to the marketing communication tools. These would not just be invited but heed would be paid to the complaints and the suggestions received through the feedback mechanism. Regular communication would help to build the much needed confidence among the cooperative members and thereby enhance the brand image. Conclusion Growth of ethical consumerism has given rise to a new dimension of doing business. Many might start a cooperative or just another business, but the difference lies in doing something different. Ethical concerns have encouraged ethical expenditure even on household items including food, drinks and clothing. Consumers have expressed readiness in ethical investments and banking as well. However this sector too has seen growth and competition thereby prompting CFS to engage in some differentiation strategy. Customers face innumerable problems at normal banks and this is where CFS wants to step in and make a difference. CFS has taken a stand not to invest anywhere that is considered unethical. On the other hand they have decided to encourage ethical investments taking a strong stand against climate change. 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