Marketing Strategy - Term Paper Example

«MARKETING STRATEGY» Table of Contents Positioning Strategy 3 Brand Positioning 4 Brand Pillars 4 Brand Idea 4 Brand Principles 4 Product Strategy 5 Growth Strategy 5 SWOT Analysis of Marketing Department 5 Price 8 Place 8 Promotion 8 People 9 Process 9 Physical Evidence 9 CUSTOMER RELATIONSHIP MANAGEMENT 11 Peril 1: Implementing CRM before Creating a Customer Strategy 11 Peril 2: Rolling Out CRM before Changing your Organization to Match 11 Peril 3: Assuming that More CRM Technology is better 11 Peril 4: Staking, Not Wooing, Customers 12 Halifax Brand Association to LTSB 13 CONCLUSION 15 BIBLIOGRAPHY 16 INTRODUCTION Lloyds Banking Group owns various brands however; the major brands of the Group are Lloyds TSB and Halifax (Lloyds Banking Group). Halifax is currently operating as a subsidiary of Lloyds Banking Group and it is recognised as a bank of Scotland with branches in Northern Ireland, Wales and England. Halifax brand offers residential mortgages and saving accounts to the consumers. Halifax appears as one of the successful brands of Lloyds Banking Group. Although product features of the company do have contributed to the overall success of the brand therefore, analysing the capabilities of marketing department is very significant. In this report, the capabilities of the marketing department of Halifax have been analysed. The association of the marketing department with the other department such as operations and HR has been also determined. Moreover, the customer relationship management at Halifax has been evaluated in consideration to the Four Perils of CRM. Positioning Strategy Halifax marketing strategy is based on a positioning of value based. The target market of the company is “everyone” as mentioned by the marketing strategy of company “Every day for everyone”. In the market dominance strategies, Halifax can be classified as a Challenger. The reason for classifying Halifax brand as a challenger is that company is challenging the market leaders and its competitors’ services by positioning its services as more value based. In the generic framework of Porter (1984), the marketing strategy of Halifax is Product Differentiation. In other words, company does not pursue a narrow strategy but it is pursuing a broad strategy. Brand Positioning “The market challenger where friendly people offer great value, no nonsense relationship banking” Brand Pillars The three brand pillars of Halifax are: Rewarding: We make it worth your while to bank with Halifax Straightforward: We meet your everyday banking needs and make things simple to understand and easy to do Enthusiastic: We are friendly approachable people with an upbeat, can do approach to meeting your needs Brand Idea The brand idea of Halifax is “a little extra help” Brand Principles The brand principles based on which, Halifax implements its marketing strategy, include Great Deals, Everyday for everyone, Keep it Simple, Fast and efficient banking and a vibrant experience. These brand principles are delivered through Products, Channels, Communications and Colleagues. To learn whether strategy is communicated to staff, questions were asked from Griffiths. In the interview with, Steve Griffiths Head of Marketing Halifax Brand, it has found that detailed strategy of the company is articulated at broader level however, only the important elements are communicated to the employees. Griffiths argued that front line colleagues serve the customers directly therefore, they should have clear understanding to the strategy of the company, so that they may serve the customer in a better. Most importantly, front line colleagues only need to learn the important elements of marketing strategy. The company focuses on mass marketing “Every day for everyone.” Product Strategy Halifax aims to offer value to the customers through its products and “Demonstrating value” is one of the four basic Halifax’s principles of doing business. The product strategy of the company could be perceived in broad terms as good price however, company focuses on value in terms of innovative product offers that demonstrate value with leading on price. Reward Current Account of Halifax. Growth Strategy Halifax current marketing offers show that company is pursuing market penetration strategies to increase its market shares. Marketing department of Halifax appears to be very active to attract and retain customers. Through a research conducted by company, it was found that in banking industry, rewarding loyalty appears to be a key insight and most of the banks are not good at it. Most of the banks believe in “New Customer Only” loyalty. Based on this research, marketing department of Halifax decided to launch a program in 2009 “Halifax Rewards”. These rewards are given to demonstrate that existing customers are rewarded ahead of new ones for banking with Halifax and these are exclusive offers for Current Account Customers. SWOT Analysis of Marketing Department Swot analysis has been performed for marketing department of Halifax. Strengths Weaknesses Clear marketing goals and positioning Product and service innovation such as products of company reduces time thinking of customer by providing simplified features Strong financial position of LBG Good coordination with other departments Different philosophies of Lloyd and Halifax create problems Broad marketing strategy reduces the focus of the company on niches Casual brand and un-thought-through Opportunities Threats Go beyond additional product value such as Halifax Reward Club Saving account customers are extending their commitments with new current accounts To achieve cost leadership by encouraging more and more transactions online More investment approvals from LBG Increasing competition Positioning strategy of Halifax may deteriorate, if marketing department seeks to establish a single positioning strategy for Lloyd and Halifax. The reason is the different characteristics of customers of Lloyd and Halifax. Increasing customer complaints MARKETING MIX Product When asked whether, Halifax maintains a balance portfolio or not, Griffiths argued that Halifax is currently offering too many products and they have not been developed based on marketing design but as a coincidence of integration. However, to balance the portfolio, company aims to reduce the number of its products such as currently it is offering 23 live savings. The company was offering mix of loans/mortgages/cards three years ago however, the recent mix offered by the company is savings/cards/little loans. Colin Kemp Network Director in the interview mentioned that Halifax aims to encourage online transactions. The given diagram shows the core products and value features offered by Halifax. Source: Lloyd Banking Group The Competitive Advantage Proposition of Halifax is: “Straightforward, great value banking that makes you better off” The company promises to offer straightforward products with simple qualification, criterion and features such as, Products Halifax Clarity Card. Price The company pursues a price penetration strategy. Griffiths explained that Halifax was associated with mortgage market because of its dominance in that market, therefore, to increase market shares, company kept its prices low. Company ended up with same market shares however, generated lower margin and risk profile went up. The company aims to offer value to its customers through innovative product offers and prices. To “Demonstrate value”, Halifax has decided to price position its front book products in the top peer group competitors such as LTSB, NatWest, HSBC, Barclays, Santander & Nationwide. Moreover, CA, Mortgages and Savings will be offered in the top two of peer group competitors. Halifax will also demonstrate value by developing innovative front book products, but not necessarily comparable with the competitors but compelling for the customers. However, the marketing department has identified an obvious gap of back book pricing in these two options. Such practices of company reflect a price strategy of (1) competitive pricing strategy and (2) penetrating pricing strategy. Place The current distribution strategy of Halifax is to sell its products through its own branches and retailers. The products are available both at branches and on the website. The websites contain all details about product specifications, features, types and packages available. The innovative technology has changed the banking processes and procedures to a great extent. The company is quite responsive to the shift of technology and seeking to shift low value or no value tasks to online. By introducing IDMS Machines, the burdens on employees have lowered and they are now able to focus on problem solving and supporting the customer in a better manner. Group Property Design of Westfield Branch is an example of Halifax bank branch pursuing these practices. Promotion To create a strong brand image of the products is the core part of communication strategy of Halifax. By integrating the messages promoted through all media, Halifax aims to reinforce its brand name and its points of product differentiation. The company promotes its products through direct targeting the customers through mailing them. In this way, Halifax also maintains its customer management process. To attract and retain customers, company mainly publishes its information on its website. To promote the services at broader level, Television media is used. The current communication strategy of company seems to encourage purchases online rather than through channel partners. People At Halifax, internal employees are given great consideration because company believes that they have to serve customers well and they are the ones who deal with customers. According to Collin, marketing at Halifax starts right from the recruitment of right people. Recruitment philosophy of Halifax is to recruit for attitude and train for competency. Therefore, by establishing strong and highly skilled people’s network, marketing activities are improved. Another important group of people to Halifax is customer group. According to the company, Halifax targets the people “who primarily want a relationship with friendly, likely-minded people; Find finances boring, want to minimise time thinking about it; Find finance frightening, don’t want to be bamboozled by a large dominant bank and Want to deal with people who they trust not to rip them off.” Process To manage customers, company has adopted one to one marketing strategy. Moreover, through the information collected from researched data models of the company, calls are made to customers. Customer strategy of Halifax based on one to one marketing is a strong strategy, however, the current records of customer complaints show a weakness of the company in handling over the complaints of customers. Company considers Brand Board as a proposition governance of Halifax. Physical Evidence Halifax relay on existing customer satisfaction to potential customers because customers made perceptions based on brand assumption and aspirations. Marketing department has always considered physical space as important reflection to the services of Halifax. To improve the physical space, marketing department has plans to establish more rooms in new branch design. Moreover, meetings rooms will improve customer dialogues and will help in developing meaning relationships thereby, linking Halifax to LBG values. The company has developed a branch network so that single most effective brand positioning, “Customer Dialogue” could be promoted. CUSTOMER RELATIONSHIP MANAGEMENT Customer relationship management practices are widely adopted in the organisations however, CRM initiatives usually fail to deliver the desirable results. However, marketing department of Halifax has been effectively managing customer relations. Peril 1: Implementing CRM before Creating a Customer Strategy Since CRM is based on old-fashioned segmented analysis, therefore, implanting CRM without conducting segmentation analysis and market goals is not appropriate (Rigby, Reichheld, & Schefter, 2002). The marketing department of Halifax has developed a strong customer base through which they have developed customer relationship models, which help them to implement CRM, therefore, department has been successful in avoiding the first peril of CRM, which may deteriorate CRM. Peril 2: Rolling Out CRM before Changing your Organization to Match Customer-orientation of organisation should not be a part of strategy only but all practices of organisation before implementing CRM should meet customer needs. Halifax has been positioned as a brand bringing value to customers. In order to meet the customer needs and to provide them the promised value, Halifax has developed innovative products and rewarding loyalty programs. In addition, company promises “a little extra help”, therefore, employees are encouraged to meet the customer needs by providing them all support during the service process. It shows that by avoiding the second peril of CRM, Halifax is on its way to effectively manage customer relations. Peril 3: Assuming that More CRM Technology is better Company may motivate employees to understand the customer demands and it is not necessary that to maintain good CRM company needs huge technology investments. Halifax has maintained CRM however, during the interview, Griffiths, only once mentioned that this technology is uses to learn about the customers. Griffiths also mentioned that Halifax aims to improve its processes by introducing innovative technology and machines which may mechanise various processes for customer, thereby, lowering burdens on employees and allowing them to serve the customers in a better manner and to meet their needs. Halifax has been investing more in improving the processes through innovative technology, so that employees may focus on customer services. This approach of Halifax shows that to effectively maintain CRM, the third peril of CRM is also avoided. Colin Kemp mentioned that branch colleagues of Halifax are keen to build strong relationship with customers and they are encouraged to do so. Peril 4: Staking, Not Wooing, Customers The organisations usually make relationships with wrong customers or they make relationships with right customers in a wrong manner. Most of the organisations’ loyalty programs are failed because of this reason. Loyalty programs of Halifax targets two kinds of customer groups including Main Current Account/AVA customers and non-main Current Account Customers. Company aims to offer “Halifax rewards exclusively deals” to its current account holders whereas, non-main current account holders have been rewarded (not with exclusive deals) to extend and retain relationships. It shows that company has been trying to build more relations with the customers, which are main current account holders. If company is avoiding four perils of CRM, then what could be the other reasons contributing to increasing number of complaints? Lloyds Complaints Publication Report 1 Jan 2010 to 30 June 2010 shows that number of complaints opened by company in banking industry were 103,686 and number of complaints closed by company were 348,700. The number of complains Lloyds have faced in banking is the highest as compared to those in general insurance and pure protection, documentation and life pensions and investments. Source: Lloyds Complaint Publication Report January – June 2010 The high number of complaints does not mean that loyalty programs are not working but it could also mean that company has been unable to meet the customer needs completely. LINKS TO OTHER DEPARTMENTS Verhoef & Leeflang (2009) found that main drivers of influence of marketing department are accountability and innovativeness. They also found that marketing orientation is positively related with the marketing department influence in organisation. Based on their findings, they suggested two solutions to improve marketing department influence, (1) Marketing department should become innovative in introducing new products and services (2) If marketing actions and policies are linked with financial results, then marketing department could be made more accountable. The marketing department of Halifax appears to be influential because to provide value to customers, more focus is given towards product innovation. Moreover, marketing actions like rewarding loyalty programs are also evaluated in terms of their impact on financial gains. The marketing department of Halifax is associated with all other departments of the company. The insight teams coordinate with the other departments. In an interview with Colin Kemp Network Director - Community Banks, it has found that Marketing functions are significantly linked with Operational functions. The company’s monthly Brand Board chaired by David Nicholson along with other direct reports including Steve Griffiths Marketing Director looks after the coordination between marketing and operational functions. After putting in an idea by marketing department, it is also evaluated from operational perspective. Moreover, the Terms of Reference has been clearly defined. Similarly, marketing department is linked with Human Resource Department because to ensure right people serving the customer, the recruitment policy should be in harmony with marketing policy. Halifax Brand Association to LTSB Colin Kemp argued that Halifax brand is different from LTSB because Halifax is a vibrant brand. Halifax has a distinct customer base; market research of the company shows a distinct Customer Base only a very small overlap with LTSB. A gap has been identified in the multiband strategy, which is very critical. When asked whether marketing department of Halifax shape and influence, Colin argued that marketing department shape and influence the company, has clear marketing goals and shape future thinking. However, he also suggests that more have to be done to capitalise on the Halifax brand. Collin also argued that Helen Weir has approved more investment on distinct branding between Halifax and Lloyds TSB. The approval of more investment shows that Lloyds is satisfied from the capabilities of marketing department. Therefore, in future, future growth strategies can be expected from Halifax. CONCLUSION Based on above analysis, it is concluded that marketing department of Halifax has been successfully positioning and branding the products of the company. The marketing strategies, marketing mix and plans established by the department have helped the company to build a strong brand under the umbrella of Lloyd Banking Group. Marketing department has also established an effective customer relationship management system, which is evident from the increasing number of customers which are extending their saving accounts to new current accounts. However, the increasing complaints of the customers show the need of improvement in customer services. Moreover, marketing department has a strong influence on other departments because of product and services innovation and desirable financial gains. Therefore, marketing department is capable to help the company in improving its market shares however; more market research needs to be done to determine what customers want. BIBLIOGRAPHY Halifax . (2010). Halifax Personal Banking . Retrieved September 7, 2010, from http://www.halifax.co.uk/home/home.asp Kotler, P., & Armstrong, G. (2009). Principles of Marketing, 12e. Pearson Prentice Hall. Lloyd Banking Group. (2010). About us . Retrieved September 7, 2010, from http://www.lloydsbankinggroup.com/ Rigby, D. K., Reichheld, F. F., & Schefter, P. (2002, February). Avoiding Four Perils of CRM. Retrieved September 9, 2010, from http://docs.google.com/viewer?a=v&q=cache:W8B0CNBklIoJ:https://www.u-cursos.cl/ingenieria/2007/2/IN71K/1/material_docente/objeto/152521+four+perils+of+Customer+relationship+management&hl=en&gl=pk&pid=bl&srcid=ADGEESjhQFZdy6GB1OzrqG9Du4xSacaWlvUwhzz-WfbGEY Verhoef, P. C., & Leeflang, P. S. (2009). Understanding the Marketing Department's Influence Within the Firm. Journal of Marketing , 73 (2). Read More