Marketing of Hong Kong and Shanghai Bank Corporation - Assignment Example

1. Risks and benefits Introduction Hong Kong and Shanghai Bank Corporation (HSBC) has for sometime now positioned itself as the world’s local bank. Established in 1865, the bank has grown to become the second largest bank globally. A key factor leading to its success has been its fundamental operating strategy of remaining close to its customers. HSBC provides a variety of financial services to its customers while approaching each country uniquely blending local knowledge with a worldwide operating platform. The positioning is creative and compelling as every business and individual customers desire to be associated with HSBC as they feel that the bank gives them a variety of sophisticated global benefits to them right where they are Jackline. Jackline (2005), states that the bank’s adverts depicting its world’s local bank positioning are always strategically placed for everyone to see. However, despite the fact that HSBC’s positioning is quite beneficial to the bank, it also exposes the bank to a number of risks which it should endeavor to minimize. The risks and benefits are explained below; Risks HSBC’S positioning itself as the world’s local bank despite being beneficial exposes to a number of risks. As a world’s local bank, customers expect the bank to offer them superior quality and sophisticated services that are of a world class right at their door step. Therefore, the bank’s offering to its numerous customers should be nothing short of this. As the world’s local bank, customers also expect the bank to give them services with a personal touch (Albaum, Strandskov, Duerr and Dowd, 1994).The positioning of the bank as a world’s local bank therefore exposes the bank to the risk of loosing a lot of customers to its customers if they feel that the bank is not offering them world class services it claims to provide. This is because the customers trust to the bank will have been betrayed. As such, the bank should always ensure that it employs and trains high quality employees who will deliver the world class services expected by the customers. This is in addition to investing heavily in research and development so that customers will always see it as the world local bank it has positioned itself to be. Being a multinational bank, HSBC operates in a multicultural environment. As such, the bank has to deal with people of differing cultures every day. Just like technology, culture is also dynamic. According to Etienne (2009), for the bank to remain the local bank it has positioned itself to be, it must always understand all the different cultures in its areas of operation so as to offer services that reverberate with the different cultures. As such, there is a great risk that the bank will be unable to understand the different cultures and hence offers services that differ with various cultural requirements. This would be dangerous for the bank as it will no longer have the ‘local’ touch with its customer and they will no longer view it as the world local bank but a foreigner. This means that their trust in the bank will dwindle. Similarly, culture being dynamic, consumer preferences from various cultures will constantly evolve. Competition will also become more sophisticated. As such, the bank faces the risk of failing to ensure the strength and relevance of its service brands. It also faces the risk of failing to keep improving its commercial capabilities so as to deliver service brand propositions that will meet consumer/customer demand while being in tandem with the various cultures. As such, the bank must always be active in research and development so that it can always keep pace with changing consumer demands. The bank has traditionally been known as a high averse bank. Furthermore, the bank is also known for its bureaucratic procedures. Being high risk averse means that it may not be willing to finance some ventures if they are highly risky. On the other hand, its bureaucratic nature may cause a lot of delays before delivering services to customers. For instance, recently when the bank was going through the bad sub prime loans, every decision regarding loans had to be made from London. This implies that for customers in other continents, the “local” bank which did not even know them was making decisions which didn’t favor their needs. Furthermore, the bank was so risk averse to any new loans that it introduced a lot of cumbersome rules. As Jack (2005) put it, it must have taken a lot of time for approvals owing to the long bureaucratic red tape existing in the bank. Jack, T. (2005), this implies that the customers actually received no “local” care and understanding of their needs. The result was that HSBC lost a number of customers to other banks as they felt that the bank was not being ‘local’ as it purported to be. This shows that the bank risks loosing customers to its customers unless it reduces red tape and risk averseness since customer will feel that it is not “local” after all. Benefits There are many benefits associated with HSBC positioning itself as the world’s local bank. The bank invests heavily in acquitting itself with local cultures in all the areas it operates in. as such, it is able to structure all its services in such a way as to deliver a “local” touch to the customer. For instance its promotional activities and adverts differ from one country to the other depending on their culture. As Philip (2010) writes, this has the effect of increasing customer numbers making it to have more than 100 million customers currently. In addition, it’s positioning as the world’s local bank has the benefit of increasing loyalty among customers. This makes the bank continue to retain its customers even when its competitors continue to loose their customers. Being the world local bank, HSBC’s employees are sourced locally. This makes sure that they have adequate understanding of the local culture and hence customer needs. The employees are also highly rewarded and hence they feel part of the world’s local bank. According to Davis (2004), increased research and design always makes it to be at pace with the changing customer needs. This ensures that employees remain loyal to the bank and hence offer high quality services with a personal touch to the customers. This further increases customer loyalty. As such, the bank continues to perform well financially even during hard economic times. Conclusion The positioning of HSBC as the world’s local bank has in no doubt made the bank perform better than it did before. Its customer numbers have increased while it continues to open more and more branches. In addition, this has seen its customers become more loyal due to its world class services at “local” level hence preventing it from losing them to its competitors. However, it’s positioning as the world’s local bank poses some risks that the bank must endeavor to minimize. The bank must reduce some of its red tape so as to minimize the risk of losing customers should they see as if it doesn’t understand them despite being local. The bank must always strive to give services with a local touch and heavily invest in research and development. This will always enable it to be at pace with changing consumer needs as well as differing cultural needs and hence give world class services to local customers. Otherwise, the bank risks loosing customer loyalty and confidence if they deem the bank as offering services that are not different from those offered by other local banks. 2. Whether the campaign resonates with the target market Introduction HSBC has invested huge amounts of money in advertising in a bid to promote itself as the world’s local bank. A key feature of its advertising campaigns is a depiction of how it understands its customers from cultural backgrounds. This is shown in its campaigns which use similar products to depict different meanings in different cultures. For instance, the bank sponsors more than 250 cultural as well as sporting activities with an aim of connecting with different people and communities. As put forward by Alphonse, (2011), the key issue is whether this aggressive HSBC campaign resonates with its target audience. This is because for the campaign to achieve its intended purpose, it must reach its intended audience in the intended manner. To a great extent, the HSBC’s campaign resonates with its target audience. As the world’s local bank, most of its clients would expect the bank to have wide knowledge of their culture. As such, part of the campaign involves researching and acquainting itself on the different cultures that its market represents. Valerie (2000), states that this enables it to structure its promotional efforts in such a manner that each segment of its market gets promotional activities that resonate with the local culture. This is in addition to provision of high quality services to all its target audience. As such, the target audience is made to believe that HSBC is actually the world’s local bank. Furthermore, the bank is able to promptly respond to local customers immediate needs hence giving itself an image of a caring and understanding “local” bank. This can be seen in the aggressive campaign it took in 2003 in Hong Kong to revitalize its economy when it had been hit by SARS outbreak. By delaying interest payments for its target clients (cinemas, hotels, restaurants and travel agencies); the bank presented itself as a listening and caring partner. Part of the campaign also involves aggressive investment in research and development of products that suit niches with unique products and services. The success of this campaign has enabled to come up with new product areas to serve the niche. This can be seen in its introduction of pet insurance which has been growing at 125% annually. Another example is where the bank offered smart cards to the underserved student segment in Malaysia (Harmon, 2010).All these efforts geared towards presenting the bank as a local bank that understands even the most unique needs and serves even the underserved were highly successful. Conclusion It is no doubt that HSBC has put in a lot of effort in presenting itself as the world’s local bank. Its numerous campaigns have been greatly successful due to the fact that they resonate with the target audience. This is evident from the high degree of loyalty portrayed by its customers. As stated by Alex (2008), its ability to come up with new products that serve niches with special needs and which are readily accepted by the target customers further strengthens this fact. It is due to this campaigns that the bank has seen its customer numbers increase to 100 million while its sales have risen to$142 billion in 2009 despite the fact that most company’s were still struggling with the effects of the global economic crisis. It is due to the bank’s ability to effectively reach its target audience with the right campaigns that the bank has been rated as the 2nd largest bank in the world. References: Jackline, M. (2005), HSBC: Global yet approachable. The bank marketing international journal, 2(28), 12-17. Albaum, G.A., Strandskov, J., Duerr, E., Dowd, L. (1994), International Marketing and Export Management, New York: Addison-Wesley. Etienne, M. (2009), Succeeding in the global village, Chicago: Richard D. Irwin, Inc. Jack, T. (2005), Segmenting the global market, Melbourne: Longhorn publishers. Philip, K. (2010), Successful positioning strategies, New York: John Wiley. Davis, S. (2004), HSBC’s efforts bearing fruits, International marketing Journal. 10(13), 34-39. Alphonse, M. (2011), Target marketing strategies, Chicago: Richard D. Irwin, Inc. Valerie, W. (2000), The power of market positioning: presenting yourself as the best, International marketing Journal. 6(22), 103-106. Harmon, G. (2010). Positioning your firm in a dynamic world, London: Rutledge. Alex, M (2008). How HSBC remains strong in the storm, Retail banking .35, 26-27. Read More