Brand Analysis Project - Care Super - Case Study Example

Name of the student) (Course Tittle) (Name of the professor) (Date) Table of Contents 1.1 Introduction 2 1.2 Superannuation industry and growth 3 2.1 Segmentation of the Superannuation Industry 8 3.2 Competitor’s analysis 10 4.1 Consumer Trends 11 4.2 Product positioning and strategy 13 4.3 Promotion 14 4.4 Distribution 14 4.5 Pricing 14 5.0 Conclusion and advice 15 1.1 Introduction Care super was established in 1986 as one of the superannuation fund specifically designed to provide members with the means to save for a financially secure future on retirement. Care super is one of the Australian super funds that have recorded strong performance over the past years as it continues to grow (Antolin, 2011). It has approximately 180,000 members of which more than sixteen thousand are participating employers and approximately have $ 1.5 billion assets. Care super Pty Ltd is the trusty of Care Super (Antolin, 2011). Its board members are made up of equal numbers of directors that are representative of the employer and members and one independent director (ABS, 2013). The trustee members are responsible for ensuring that CARE Super is well managed in the best interest of all members and their dependents. The trustee helps in providing advice and identifying other professional bodies that could help in running the organization while ensuring that the organization is managed to the best interest of all stakeholders (ABS, 2013). This paper analyses the brand provided by Care Super as one of the Superannuation fund provider in Australia. In the brand analysis, the paper starts by introducing Superannuation industry as a whole by giving the definition of the name Superannuation. The paper discusses the industry growth since its inception and factors behind its growth since the Walli's inquiry in 1997(Antolin, 2011). The paper gives five sub categories of segmentation of the superannuation industry before concentrating on the product offers by the Care Super as one of the companies providing superannuation fund. The paper analyses the existing market, competitors and finally gives a brief conclusion and recommendation on the Care Super brands and the target customers (Antolin, 2011). 1.2 Superannuation industry and growth The superannuation industry in Australia is a very important component of the Australian Economy and contributes a larger percentage towards Australians financial wellbeing. Superannuation literally means antiquated or absolute, something too old to use and retired because of age. Superannuation offers individuals an opportunity to make the right financial decisions during their working careers, therefore enables them to save well for their future lives. Though the fund has greatly improves the lives of many in society, the industry still have a long way to go in terms of improving and simplifying the accessibility of the fund. The superannuation and banking sectors combined dominate the Australian financial system. Superannuation assets as a share of GDP has increased twice the original value sin the completion of Wallis Inquiry in 1997, to be currently over 100 per cent. Since the completion of the Walli's inquiry in 1997, the assets of Superannuation assets and shares have more than doubled and by December 2013, it was 100% double (Ashcroft, 2009). This increase is because of many factors, which have resulted into the growth of the sector and the fund in specific. Some of the factors include the tax incentive adopted by the Australian government, compulsory SG, and the drastic changes in the retirement’s lifestyle expectation (Ashcroft, 2009). It can be noted that the Superannuation system changed for as long Period and a drastic shift away from DB scheme towards DC scheme, with most of DB schemes shares moving downward (Antolin, 2011). The decline in the DB scheme has coincided with the decline with the shares of Superannuation funds held by the public sector has most of the shares are currently owned by private investors (Antolin, 2011). In the superannuation industry, in Australia, self-managed superannuation is the fast growing segment. In the year 2013 the fund was around $ 500 billion in assets only, and that composed of over one third of the total industry assets that currently stands at over $ 1.6 trillion that is an increase from 19995 from 9% to 20% equivalent to 30% increase in the real GDP (ABS 2013). The superannuation accounts also increased drastically having double for the last few decades (ABS 2013). The drastic growth in the Superannuation industry has been because of strong legislation that has supported its growth over many years. The introduction of the law that allows employees to choose the fund that their employers can deposit their contribution and the fund they can use has assisted the employees to choose SMSF. This law has also made it more flexible for the people to choose SMSF contributing to its rapid growth in the past decades. The choice of the benefit payments also played a crucial part in the growth of superannuation fund and asset. If the benefit payments were taken as a form of an account-based income stream, then the assets will stay longer on the superannuation system while the benefit taken as a lump sum payment which will remove the asset from the system quicker. Since the introduction of this law, many have chosen income stream, benefit payment, as opposed to lump sum payment hence increasing the asset growth (ABS 2013). For SMSFs almost 70% of the benefits payments are in the form of the income stream whereas for other funds, income stream currently account only 40% of the total benefit payments. As a result, the share of superannuation assets held in MSMSFs increases, then it is likely that the proportion of benefit payments taken as an income stream will also automatically continue to increase explaining high growth rate in superannuation funds (ABS, 2013). In July 2007, the law that simplified the superannuation fund came into effect. This law majorly eliminated the taxes that were payable on the retirement benefits, and this encouraged many people to save more and more since their savings were not subjected to any tax. The tax was eliminated from members who were 60 years and above. The legislation further introduces the cap on after-tax superannuation contribution. The law set it at $ 150,000 above which the normal contributions are taxed and are at the top of marginal tax rate. During the transitional period, the legislation also allowed individuals to make a contribution of up to $ 1 million in after tax contribution (Ashcroft, 2009). The legislation came as a reprieve to the members and a motivation, as a result; there was drastic in member’s contribution to SMSFs in 2006- 2007 and the assets in the sector shifted upwards. The law, which changes over the past few years concerning the management and investments in the Superannuation sector, increases the accessibility and attractiveness in the investment, in the sector more so in property investment via an SMSF and this was a strong motivation for people to invest in the sector. Especially young people were attracted and heavily invested in the sector (Ashcroft, 2009). Several individuals who have been motivated by a desire to have control over the funds have seen invested heavily in it. These aspects have been seen as an important aspect more so after the global financial crisis. Some of the research firms have cited the need for cost saving investments and good performance investment as some of the forces behind drastic growth in the superannuation fund. It is also the main reason superannuation fund was established. The information from Roy Morgan research center shows that SMSF satisfaction among the investors is on the rise and the customer satisfaction has attracted many individuals to continue investing in the fund (Ashcroft, 2009). Another main driver of superannuation asset growth since the inquiry has been individual contribution to the fund something which has exceeded the investment own earnings. Like other countries, both the compulsory and voluntary superannuation contribution receives a fair tax treatment, and this has influenced the inflow of cash into the fund. For a contribution by APRA, the employer SG has mostly influenced regulated funds, individual’s contributions. While for SMSFs, voluntary contribution has driven the asset growth more so during the transition period up to the time when the simpler Superannuation system was introduced (APRA, 2014) The resulted effect of the contribution on the superannuation asset growth is partly offset by the benefit payments. Before the introduction of a simpler Superannuation system, there were several restrictions on the amount of benefits that could be paid by people at the concessional tax something, which hinders the growth of assets of the funds. In the year 2007, the Restrictions were removed, therefore, eliminating the tax that were payable on the retirement benefits from the tax source (Ashcroft, 2009). SMSF invest their funds in buying real estate property. Small amount of their assets are hold in the foreign assets and equities (Ashcroft 2009). Their direct owning of equities are negligible and their total risk exposure to the market asset is small compared to other superannuation funds. Some of their assets are also hold in debt security though in a smaller percentage reducing their risk hence we can conclude the SMSF is less risky than other types of superannuation funds and investment (Ashcroft 2009). More recently, there are tentative signs that SMSFs are moving some of their assets out of cash and into higher-yielding assets. A large share of the SMSF is held in property. Other investors in the market hold the direct property holding accounts for over 15% of the total SMSF assets and smaller percentage of indirect assets. Once the property is in the fund, the fund can lease the property to the business owner at a commercial rate and the rent paid by the business owner can be claimed as a business expense, reducing the taxable profit of the business. By contrast, SMSFs' direct holdings of residential property are relatively small (23 per cent of their total direct property holdings) (Ashcroft, 2009). Some of the potential risk is the liquidity risk that is facing financial sector with superannuation fund not an exceptional. How to manage cash flow from other investment has been a problem (ABS, 2013). Global financial crisis, which has heated all sector of the economy including superannuation sector with collapse of major financial crisis currency fluctuation in overseas investment is another potential risk which affect the company hence before investment into the fund, one need to consider(ABS, 2013). Otherwise compared to other types of investment, it is more secure and less risky 2.1 Segmentation of the Superannuation Industry The superannuation industry can be segmented into five major categories. First, industry funds are regulated by the superannuation entities that are having employees who are working in the same industry or group of related industries (Ashcroft, 2009). Most of the industries funds are currently accessible to the general public through initial public offer. Secondly are corporate funds, which are regulated superannuation entities established specifically for employees of a particular entity or the group of related entities, which are having joint member and employer control (AR, 2013). Thirdly, public sector funds that are superannuation entities that provides benefits mostly to the government employees or employees of a statutory body or schemes that are established by the commonwealth states. The fourth is the retail funds which are superannuation entities that offer superannuation products to the public on a commercial basis. All eligible rollovers funds and multi-members approved deposits funds are classified together (AR, 2013). Lastly, small funds predominantly self-managed super funds regulated by the Australian taxation officers that are having less than five members of whom all are member’s trustee or director of the corporate trustee. No fund member can be employee of the other unless they are related (Ashcroft, 2009). 3.0 Product and services offered by Care Supper. Apart from superannuation savings to the members, Care Super offer wide range of services. They include; Independent financial advice and planning- as a member, one can access personal advice relating to specific financial matters including investment choice, insurance, tax retirement benefits, estate planning or any other financial planning one may require (Ashcroft, 2009). This facility is only provided by the industry fund financial planning, and the first consultation always is given free of charge, and if the customer has decided to get more, the fee will be agreed upon then the service will be provided to the client (Antolin, 2011). Within the industry, Care supper is the only institution providing this service free hence having a competitive edge in the market compared to other service provider. Secondly, the Care Super provides its members with home loan free from the hidden charges; the service comes with low interest rates for members, no application fees, free accounts maintenance, variable, fixed rates and split options, there are top-ups and redraws within the company, payments according to the agreement which can either be weekly, monthly or fortnightly (Antolin, 2011). Thirdly, the company offers a low cost credit cards consisting with the interest free days, up to 44 days interest free on purchase, low annual fees at $30, and no additional charges to the cardholders. Another service provided by Care super is an everyday bank account, which is called the InterestME savings account that earns high interest on the customer’s savings without necessarily locking customer’s savings in long-term deposit scheme. Within the industry, only Care Super is providing these services giving it a wide product breadth in the industry. The customers have wide options of the product, which they can choose from within the available ones (Ashcroft, 2009) 3.2 Competitor’s analysis In Australia, there are majorly five best superannuation funds, which provide competition to the Care Super fund. The top five superannuation funds in order of performance include; Rest Super Core Strategy Care Super Australian Super QSuper balance option AusttSafe Super Balance Ranking Metric’s for the super fund FUND NAME Ranking Criteria REST - Core Strategy Care Super - Balanced Australian Super - Balanced QSuper Balanced AustSafe Super - Balanced 5 Year Average Return % p.a 7.6% 6.6% 6.0% 6.2% 6.7% 10 Year Return % p.a 8.3% 7.9% 7.9% 7.6% 7.1% Risk Band Rating** 5 - Medium to High 5 - Medium to High 5 - Medium to High 4 - Medium 6 - High Size of Fund ($Billion) $25.416 $5.509 $44.868 25.533 $1.5 Rank 1 2 3 4 5 While Retail Employees Superannuation trust, (REST) is an industry super fund mostly targeting workers in the retail occupation, this fund is the most performing and the biggest competitor to Care Super fund, who mostly targets people involves in the professional, administrative, service and managerial careers. The Care Super is better than REST since Care Super is open to everyone in Australia. In numbers, REST is the best performing Superannuation fund with a capital base of more than Care Super. With an asset allocation, favoring shares of around 30% worldwide and 20% Australian, in the wake of the global financial crises, the REST core strategy fund is a very strong contender you for any investor. The asset of the Care Super equities is around 28% internationally while in Australia is 22%, this is much higher indicating strong presence within the Australia(Ashcroft, 2009). This gives the Care Super a competitive advantage in the Australia market with a good capital base of around $ 5.5 billion, the risk Band rate is 5-medium high indicating high product breadth. 4.1 Consumer Trends Likewise, the ongoing digitalization of every sector of economy, super funds industry in Australia has not been left behind. The companies are offering digitalized and mobile services to their consumers (Antolin, 2011). The IQ group did a benchmark study on the superannuation sector digital platform to assist the industry stakeholders to identify management and membership gaps. In their findings, almost all the companies in the superannuation industry but out of them, only 36% of the companies offers mobile-optimized site to their customers, one of the main requirements for engaging the members through device drive and marketing. Mobile optimization site are mostly built for smartphone and tablet users, they are designed for quick loading, mobile functionality that include tap-to-call, tap-to-email, and does not necessarily requires left to right scrolling or what is called pinch to zoom functionality in technology (Ashcroft, 2009). E-Marketing is an emerging market trends, more than 2.23 billion people worldwide are potential markets, 48.9 percent of the total mobile users will at one point go online with their mobile devices. Another important finding by IDC research center indicates that almost 80 percent of smartphone users browse more frequently than they do call hence is an emerging market, which needs to be tapped (Antolin, 2011). Consumers always want to access websites from their smartphones to search and transact. However, when it is too hard they will quickly turnoff to other sites that are simple and easy to use, Care Super sites is easily accessible through mobile hence most advertisement are being done through the e-marketing , though not quite effective it is an emerging market trends (Ashcroft, 2009). The one area that needs improvement and provides a greater potential for funds is the one on the online membership management, most of the funds offer online sign-up activities and online employer sign-up (Ashcroft, 2009). Throughout the search engine, only one company offers digital membership card that contain principal member details and have the ability to offer a more dynamic capabilities (Antolin, 2011). From their smartphones, members can complete membership forms, access up-to-date account balance information, and loyalty offers. The funds can also exploit this technology to deliver member specific, easy to understand bursts of communication. One of the fastest ways to interact and provide powerful brand differentiation reduces operational cost and also improves members retention is two-way communication. There is no specific specialized employer on mobile application provider to the fund providers hence explaining low mobile application uptake among the fund companies. With more than one million available mobile applications in store today, one would expect to find some of these targeting the superannuation sector, however, the global rush to build and develop application to the superannuation fund and space, the programmers should come up with the application not only in Australia and the worldwide(Ashcroft, 2009). Across the sector, online transaction capability varied greatly. As emerging trends, the fund should be providing direct online access to their account and also give their employer opportunity the same facilities. The consumers prefer transacting on a digital platform either online or mobile money transfer (ABS, 2013). The fund should embrace changes in technology and factor in their customer needs and wants if they want to tap the emerging markets within the superannuation fund within the Australia and all over the world. Since the world is a global village, the company needs to increase their international presence and this can be done well on digital platform. 4.2 Product positioning and strategy Care Super product positioning and strategy from being targeting the professional, administrative, service and managerial careers within the industry and making a niche for itself across the Australia and worldwide (Ashcroft, 2009). As one of the Australian superfund, with the advertisement regulatory commission, the company uses a variety of product, which gives the customers one stop shop for their financial retirement planning. The company offer free financial planning to the customers, home loans, withdrawals and deposits as a means of reaching the customer. In order to increase their asset base, the company has a variety of investment options, which the fund manager can invest from hence helping in risk mitigation. The company has offer 28% of its total investment in international markets as a means of expanding their market territory and increasing their market base (Ashcroft, 2009). The company uses mobile application to offer adverts and online communication with their customers thus giving it a competitive age in the market. SMSF growth has been dramatic but it might slow because of contribution caps, people opting out at retirement phase and equivalent features being available in retail products, need for investment diversification. Retail funds could gain some ground on the typical industry fund territory with MySuper products a product developed and launch by Care Super Company (ABS, 2013). The superannuation wealth sector will dominate the non-superannuation sector and asset management is trending towards in house solutions in the short term through product strategy and diversification 4.3 Promotion The fund use different channels to reach their customers. One of the promotion tools is through online, televisions and direct marketing of the company to the target market (ABS, 2013). The company uses successful career individuals as marketing too land referral of financial. The company collaborates with other financial providers and corporates to market their product. 4.4 Distribution The company allows online member registration and physical registration as major means of recruiting the fund membership (ABS, 2013). 4.5 Pricing The company offer low interest rates loans and free financial services to the members. the company also offer reasonable interest on members contribution and saving, free master cards and deposits and withdrawals activities. 5.0 Conclusion and advice From the brand analysis, the super fund needs to expand their market target to cover all industries and individuals within the Australia. The company needs to improve their market research and market accessibility through consumer trends. Digital platform is the current trends and the Care super fund need to advance their market penetration. Otherwise, the product with s quite encouraging. The introduction of a re- vamped television show may not be the best channel to pursue the market but should be adopted by the marketing department of the company. Bibliography Antolin P, (2011), ‘The Economic Impact of Protracted Low Interest Rates on Pension Funds and Insurance Companies’, OECD Journal: Financial Market Trends, Volume 2011 – Issue 1, pp 1–20. Ashcroft. J (2009), ‘Defined-Contribution (DC) Arrangements in Anglo-Saxon Countries’, OECD Working Papers on Finance, Insurance and Private Pensions, No 35. ABS (Australian Bureau of Statistics) (2013), ‘Deaths, Australia, 2012’, ABS Cat No 3302.0, November APRA (Australian Prudential Regulation Authority) (2014), Superannuation Trends, January Available at AR (2013) CARE Super Annual Report 2012/2013 www.caresuper.com.au Read More