Customer Relationship in Australian Banking Industry - Coursework Example

The Impact of Technology in Relationship Marketing Table of Contents Introduction 3 Marketing Issues 3 Industry Overview 4 Company Profile 6 Current Marketing Issue 7 Marketing Issue and the Industry 9 The Bank and Relationship Marketing 11 Marketing Issue and Other Firms 11 Inbound Marketing 13 Cloud Computing 14 Recommendation 16 References 18 Bibliography 21 Abstract Every firm has a marketing issue. The issue changes with the time and vary with industry. This project has been written based on the Australian banking industry. Australian banking industry is one of the most safes and stable industries in all over the world. From last few years it has been noticed that banks in Australia focuses on implementing increased use of technology. For bringing automation in their business, they even closed down their branches. It has a great effect on the customers. Hence, impact of technology in relationship marketing is one of the current marketing issues in that industry. For the requirement of the project, a particular bank has been taken. Commonwealth bank it is one of the major banks in Australia. Now they have concentrated more on cloud marketing and they also has award winning web-site. The bank has speeded their branches not only in Australia but also in across the world and that is a positive sign. Ultimately as the entire industry is lagging behind in creating customer relationship, it is to be recommended to use cloud computing technique and inbound marketing. Thus, they can get over this marketing issue and can add value to the customer proposition. Introduction Marketing issues form an integral part of any organisation. It can be anything for which a industry or a firm faces certain difficulties or which creates hurdle towards earning profit, gaining market share or even for sustaining. Marketing issues varies with respect to company, industry and even country. Nowadays, business world is becoming more competitive. For sustaining in this world along with earning profit is very difficult. The firms always should come up with new and innovative ideas in order to address the marketing issues. Marketing Issues The marketing issues often depend as per the stage in which the company or the industry is into. Company which are in the initial stage should not give higher priority to the customer. For those kinds of companies, marketing issue will be with the supplier or finance as at this stage the critical issue is being projected the sources of funding and raw material. For the companies which are new in this market place, the marketing issue will be promoting the company itself because in a new marketplace the identity of that new company is not known to all. When a company is effectively established then the marking team always should support the sales team and have to taken care of all sales programs. The marketing programme should be designed according to the sales program. Otherwise, entire effort of the marketing team will be worthless. Another vital aspect of the marketing issue is that of the ‘exit strategy’. At the beginning itself, it is important to find out the ways, through which the company can get out of the industry. As per such necessity, the company should build up its strategies (Collison, n.d.). Sometimes, the nature of the product also proves to be an issue, as the selling and marketing techniques are changed depending on the nature of the product. For example, the marketing strategy will not be same for both a durable and non-durable product. Product pricing can be another issue of concern in marketing as the targeted customer are chosen and the medium of the advertisement has been selected on the basis of the prices. It is critical for the company to decide whom the company will consider as the target customer and when the company should approach to them (Kotler & Et. Al., 2008). Industry Overview Banking industry has been chosen for this project. Australia’s banking industry has international reputation. As per the Global Competitiveness Report, 2008-09 Australia’s banking sector stood 4th among 134 other countries. According to Standard and Poor’s, it is the most stable banking sector in the region of Asia – Pacific. As per the statistics are concerned, there was 58 authorised banks out of that 44 were foreign owned. The top 4 major banks in Australia is Australia and New Zealand Banking group Commonwealth Bank of Australia National Australia Bank Westpac Banking (Invest Victoria, n.d.) The Australian Banking System is regulated by Australian Prudential Regulation Authority (APRA). It tries to mention the consistency of Capital Adequacy Requirement (CAR) with other developed countries. APRA’s written consent is necessary for setting up a new representative office in Australia (Atrium Incorporation Services, n.d.). Australia is renowned for safe banks. It can be proved with a fact. Since 1931, there was no case of loosing deposit in any Australian Bank. In 1931, some depositors in Primary Producers Bank of Australia had lost a negligible amount. Australian banks are cautiously handled by the international best practices. It has a strong surveillance system. The Australian Banking System is based upon the international standard, set by the Basel Committee for International Settlement. (Australian Bankers’ Association Inc, n.d.). Company Profile As per the need of the project, it was required to select any firm or company to show the effects of current issues on the company. Commonwealth Bank has been selected for the purpose. As it is one of the major banks in Australia out of The Big Four. Commonwealth Bank is established under the Commonwealth Bank Act, 1911 and started its operation in1912. Now its employee strength is 38,000 and has more than shareholder of 700,000 (Commonwealth Bank, n.d.). The bank has asset value of $ 625,476 million assets. Its net profit after tax is $2,914 million. Commonwealth Bank has a well speeded distribution network, having 1,000 branches along with 4,000 ATMs nationally. Out of its total employee strength, 63% is women. David Turner is Chairman of this bank and Ralph Norris is CEO (Commonwealth Bank, No Date). This bank has 5 strong bases on which its activities and achievements are depended. These are Community Customer People Governance Environment The management of the bank identifies that there are still some opportunities are available in their business to add more value to the shareholders, customer and company. That is why the bank has taken new strategy to focus on five areas. Those priority areas are Business Banking, Technology and Operational excellence, Profitable growth, Trust and Spirit and Customer Service. Commonwealth bank has its global presence with branches in Asia, New Zealand, Europe and North America. To achieve Trust and Team spirit within the organization, the bank is committed towards the employee benefits; health, safety and well being; flexibility leadership development and diversity (Commonwealth Bank, n.d.). Current Marketing Issue It has been found that the issue in the BFI sector, mainly in banking sector is the impact of technology on relationship marketing. Nowadays, customers usually maintain the contacts with bank through few remote channels such as mobile, internet. That is why the importance of the bank’s customer relationship is important. From various research and surveys, it is clear that internet plays a key role in relationship management. Relationship with a customer is considered as the most valuable asset for a modern day business as getting a new customer cost six to nine times more than retaining an old customer. The relationship marketing can be defined as a process or an effort from the seller’s point of view to maintain a long term and cost-effective relationship with customer. Relationship marketing is also termed as Customer Relationship Management. Goal of this management is to develop a better understanding of the value of each customer for the company and try to advance the effective communication process. It helps the company to find out customer’s requirement and serve accordingly. To maintain the relationship with customer the company have to focus on three major areas marketing, sales and service. ( McCOMBS Scholl Of Business. n.d) Now-a-days, relationship marketing has become web-based. It has two contents. One is open content and the other one being the premium content. Open content means the pages of the web-site which the visitor or the customer can easily access. The visitor does not require registering to access the web-site. A set of information of that is open for every one where as the second one refers to the pages which include specified and rich information. To access the pages the visitors must be eligible. This kind of pages is always pass-word protected and the visitors have to register to access that. Due to the advance technology the area of premium content is become narrow but it will still exist because of the privacy and confidential information. To become more competitive the companies should design their web-sites with more rich information and as per the requirement of the customers. Even they needed to update the information as well. All the product ranges and offer should be clearly stated. Not only the web-sites, they should also take care of online and off - line advertisements depending on the current situation. Before using technology for the relationship marketing, any company should identify the stage of business cycle in which it falls and also have to understand the issues for what they are lagging behind in respect to other companies of the industry. Depending on this only they should use the technology. Otherwise, the entire effort will be worth less. (Parker, 2000). Marketing Issue and the Industry Impact of technology in relationship marketing is not of much higher standard in Australian banking industry. The adoption of technology led to the closure of quite a few banks in Australia. It is known that Australian banks are known to be the safest banks all around world. But closing down their branches for implementing latest technology brings some new problems for the banks. To highlight the issues it can refer to a study, conducted by Zeynep Robert and Leanne Carter in Macquarie University. This research tries to provide an idea regarding the impact of technology in Australian Banking Industry. As per the literature of the study concerned, it provides few concepts related with the technological problem that arises in the bank. Technology has been used to achieve cost reduction. It also can be adopt to standardise the banking service by reducing the customer interface. The effect also has been included in the literature review according to Howcroft; the major changes in the banking sector have been implemented due to the technological enhancement. Due to this the relationship and link between the bankers and the customer has been changed. Other scholars also possessed same view that all customers do not have an expectation to use technologies and they may not be feeling comfortable and capable with new technologies. The Australian banks had an objective of using more technology based system and indulge their customers to use that. It has been found that branches of the banks plays a critical role as it can provide a product or a service with the detailed help of bank staffs. Even a customised service is also important which can not be done by the machines. For example, the case of financial planning identifies the biggest problem related with the new technology called Phone Banking System. They find that the customers have to repeat there messages again and again. This is very time consuming. Because of no direct contact the customer looses there confidence on their banks. Another issue also has been found is that there were no such differences in the service provided by one bank compared to another bank. Due to the use of technology it has become a standardised service. This has often not been able to fulfil the requirement of the customers which leads to loosing the long term relation with the customer for the Australian Banks (Zeynep & Leanne, 2003). The Bank and Relationship Marketing Commonwealth Bank has won numerous awards for: Asian Banker Excellence in Retail Financial Services Awards 2010 Best Retail Bank in Australia Best Retail Bank in Asia Pacific Best Brand Building Initiative Insto Awards 2010 Global Finance - World’s Best Banks in Developed Markets 2010 (Commonwealth Bank, n.d.). All these accolades prove that they have a very strong base. This bank is able to establish itself as a financially stronghold. It also has won awards for its web-sites. Commonwealth bank has been served with 1000 branches and 4000 ATMs. It means along with concentrating on online relationship marketing they also provide customize and rich service to their customer with a broadly spread network. Marketing Issue and Other Firms It has been found that the other banks in this industry adopt certain techniques to improve their relationship with customer that primarily comprises of inbound marketing and cloud computing. Discussions regarding these two strategies are as follows: Inbound Marketing Inbound marketing means when the customer take an initiative and call the sales person of a company to make appointments or in order to purchase the products (Business Knowledge Source, n.d.). It can be also defined as the process where customer will find the serviced provider through search. It is more effective than the traditional marketing method. Inbound marketing try to avoid the process of cold calling, sending emails etc. It build up a website which can help the customer to get information about the company and let them contact with the company (Word Stream, n.d.). Inbound marketing is an affordable and effective source of gaining resources. Some of the most popular technique of inbound marketing includes usage of blogs, search engine optimisation and interacting on social media, etc. This kind of marketing technique is more useful at the time of recession. With such techniques, marketers can save time and deals with only those persons who are really interested in that company. Whereas, in case of outbound marketing the marketing departments have to generate new contacts, giving a lot of time to approach them and there is no such surety that the leads will get converted into the clients. So, in traditional method there is huge scope of wasting time and money whereas inbound marketing is less expensive and time consuming. Cloud Computing Cloud Computing is something which delivers hosted service through internet. It has certain characteristics such as: It can be sold on demand of the customer. It is elastic in nature and any one can use it as per their convenience Cloud Computing process is fully controlled by the provider. The customer only has to search through internet. As from the above discussion, it is clear that cloud computing is a service. And this service is divided into three categories. Infrastructure-as-a-Service (Iaas): In this service, provider owns the equipments which used to support the operation (hardware, server etc). The clients pay as per the use. Platform-as-a-Service (PaaS): It is a prototype for delivering associate service along with the operating service. Software-as-a-Service (SaaS): Here, the applications are hosted by the service provider and is made available to the customer through a network. Cloud marketing can be public or private. A public cloud provides or sells service to anyone by virtue of internet. And private cloud is kind of data centre where supplier provide service to a limited number of people. When the private cloud service provider takes the help of public provider, then the service is termed as virtual private cloud (Tech Target, n.d.). Recommendation Cloud Computing and Inbound Marketing are the most important tools in relationship marketing. Both of it have a positive trend. The Commonwealth Bank should increase its value proposition and focus on customer benefits. Though it has an award winning website, the bank should depend on initial sites to avoid the present problem and for taking a long term vision. As, no information has not been found related with cost effectiveness of the bank, so it is being recommended to reduce the cost of communication, applying innovative tools such as cloud computing and inbound marketing. It is important to use new technologies but keeping in mind the problems related with adopting of new technologies, the bank should ensure that the messages are delivered though media to cover up each and every valued customer. They have to take care whether the website of the bank can be easily and quickly accessible or not. They should drive the traffic and always make available of their offer through on-site and off-site advertisements and these advertisement should be innovative and informative which can easily attract the customer’s attention. The site should have the best possible security measures for customer’s privacy. Finally, the bank has to hold an independent auditing to check the traffic with respect to volumes, pattern and profile among others. Conclusion Banking industry is a service industry. Like other service industries, banks also have to sale its services. Selling service need more customer attachment than selling a product. But Australian banking industry is now passing through a customer relationship problem which arises because of the technological enhancement. Increased adoption of latest technology might lead to lesser customer satisfaction because all customers are not capable to access the technology. A different application of technology can remove this issue and will able to build up a long term relation with customer. This is more necessary in this situation. It is recommended to adopt inbound marketing and cloud computing process for the betterment of the relationship marketing. Both of these are the application of latest technology. References Atrium Incorporation Services. No Date. Banking System in Australia. Atrium Incorporators http://www.atrium-incorporators.com/australia%20banking%20system.htm (accessed May 27, 2010). Australian Bankers’ Association Inc. 2004. A Strong Banking System. Australian Bankers’ Association Inc http://www.bankers.asn.au/Default.aspx?ArticleID=587 (accessed May 27, 2010). Business Knowledge Source. No Date. What is Inbound Marketing? Business Knowledge Source. http://www.businessknowledgesource.com/marketing/what_is_inbound_marketing_024298.html (accessed May 27, 2010). Commonwealth Bank. No Date. Awards 2010. Our Company. http://www.commbank.com.au/about-us/our-company/awards/default.aspx (accessed May 27, 2010). Commonwealth Bank. No Date .History. Our Company. http://www.commbank.com.au/about-us/our-company/history/default.aspx (accessed May 27, 2010). Commonwealth Bank. No Date. “Profile. Our company. http://www.commbank.com.au/about-us/our-company/overview/default.aspx (accessed May 27, 2010). Commonwealth Bank. No Date. Strategy. Our Company. http://www.commbank.com.au/about-us/our-company/strategy/default.aspx (accessed May 27, 2010). Collison, Tery. No Date. CriticalMarketing Issue. 1000 Ventures. http://www.1000ventures.com/business_guide/marketing_4issues_bybrc.html (accessed May 27, 2010). Kotler Philip & Et. Al., 2008. Principles of Marketing. Prentice Hall/Financial Times. McCOMBS School of Business. No Date. Customer Relationship Management – Overview. The University of Texas. Parker Roger C. 2000. The role of technology. An Introduction to Relationship Marketing http://efuse.com/Design/relationship-marketing.html (accessed May 27, 2010). Roberts Zeynep & Carter Leanne. 2003. The Impact of Technology-Based Systems on Relationship Marketing in the Banking Sector. Macquarie University http://smib.vuw.ac.nz:8081/WWW/ANZMAC2003/papers/SER22_robertsz.pdf (accessed May 27, 2010). Tech Target. No Date. Definition. Search Cloud Computing. http://searchcloudcomputing.techtarget.com/sDefinition/0,,sid201_gci1287881,00.html (accessed May 27, 2010). Victoria. 2009. Australia’s Banking System. Invest Victoria Melbourne http://www.invest.vic.gov.au/Assets/860/1/Australia_Banking_System_Aug09.pdf (accessed May 27, 2010). Word Stream Internet Marketing. No Date. Inbound Marketing. Word Stream Keyword Management Tools for PPC & SEO. http://www.wordstream.com/inbound-marketing (accessed May 27, 2010). Bibliography Australian Institute of Bankers, 1995. 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