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Marketing Assignment: A Marketing Plan for HSBC (7Ps)

Posted by Eternity in an Hour on October 28, 2009 4 Comments


Table of Contents
Details

Page Number

1. 1. Executive Summary

1. 2. Objectives

1. 3. Marketing Strategy

1. 4. Target Market

4-5

4.1 Market Segmentation and Targeting


4.2 Market Positioning
1. 5. Marketing Mix

5-10

5.1 Product
5.2 Price
5.3 Place
5.4 Promotion
5.5 People
5.6 Physical Evidence
5.7 Process
1. 6. Research

10-11

6.1 Pre-implementation
6.2 Implementation Stage
6.4 Post-implementation
Objectives

This marketing plan aims to define the means of notching up HSBCs current
account market share by 1.5% (960,000 current accounts) from HSBCs
current market share of 8.9%.

The new HSBC prepaid card that would be introduced will increase the
profitability of current accounts by encouraging customers to save, hence
making more funds available for further lending by the bank.

The new current account package also aims at rebuilding consumer


confidence towards HSBC by portraying the bank as a responsible and
socially conscious financial institution.

The new current account package also aims and building up HSBCs corporate
image and branding theme of being global bank with local knowledge by
introducing new products that are in line with the current economic downturn.

(See appendix 2)
3. Marketing Strategy
HSBC should implement the market penetration and product development strategy
by capturing current account market share from other financial institutions that
have been weaken from the economic crisis. Besides that, the launch of the new
prepaid card would be a step towards product development that would be useful to
counter non-traditional financial institutions that are poise to enter the current
account market.
The market development strategy can also be carried out at a later date by bringing
the new and tested prepaid card product into other geographical markets like China
and India. This would be in line with HSBCs slogan of being the Worlds Local Bank
and would also take advantage of HSBCs global network in more than 79 countries.
[1] In relation to the Porter Generic model, HSBC should aim at using a broad based
differentiation strategy to capture market share from ailing financial institutions.
(See appendix 1)
Marketing Mix
Marketing for financial services pose distinctive challenges to marketers because
services are intangible, inseparable and cannot be inventoried. An expanded
marketing mix is required to fully answer the differences between product
marketing and marketing for financial services. The expanded marketing mix aims
to capture the distinctive nature of financial services (Booms & Bitner, 1981).[6]
(See appendix 2)
5.1. Product
The product is the heart of the firms marketing strategy. Poorly designed service
products that do not create value for customers are destined to fail regardless of
how well the other 6 Ps are executed. The goal of the product element is to create a

service concept that would offer more value to a market segment than competitors.
Working to transform this concept into reality involves designing a cluster of
different but mutually reinforcing elements.
The product must be a means to solve a problem or satisfy a want in the market. To
date, overspending is a major issue in the Western world. This is the reason why the
new HSBC prepaid card is included in the new current account package as a means
to ensure that customers do not overspend by ensuring prudential budgeting of
financial resources.
Unique Features:
Prepaid Card
HSBC will launch two prepaid cards, namely, the HSBCs Financial Manager and the
HSBCs Budget Manager prepaid card. Both prepaid cards come preloaded with 10
after the customer pays the initial card issue fee. The Financial Manager is a way to
manage a monthly budget by transferring your spending money from your bank
account onto the card. It has an annual load limit of 15,000. The Budget Manager
on the other hand has a smaller annual load limit of 2,000.
The new HSBC prepaid cards would be fee-free while offering the same flexibility as
a credit or debit card. The prepaid card however, would need to be loaded up with
cash first before allowing its users to purchase products and services. The prepaid
cards can also be used to withdraw money from cash machines.
Real Time Balance Alerts
Real time balance alerts will be sent to the customers mobile device every time a
HSBC prepaid card user purchases something. This balance update will notify the
prepaid card user on the amount of money spent and the amount of money left for
free. HSBC may need to team up with companies like Vodafone to provide this
service.
Online Banking
Another unique element of the HSBC prepaid cards are their flexibility in managing
the customers financial resources. Bank customers can access the HSBC website
and set standing orders on how much money to load onto the budget manager
every month as long as the funds are available in their current account.
Optional Savings Account
Bank customers that pay more than 500 into their current account every month
would qualify for the HSBCs Current Account Advance. Regular payments can be
made through the internet or by direct standing order from the customers current

account to save a specific amount every month. This feature is ideal for customers
with a fixed monthly income.
5.2. Price
The pricing component plays twin roles for HSBC in the sense that it must be able to
first attract customers to purchase the service and also generate revenue for HSBC.
According to Adrian Palmer (2008), there are five main factors that influence pricing
decisions, namely, profit maximisation, market-share maximisation, survival, social
considerations and personal objectives.[7]
While pricing strategy is highly dynamic for other products and services, pricing for
current account services have become rather static in recent years. Most banks do
not require any fees to set up a current account. Banks instead rely on the money
that floats in the interval when they are deposited to when they are spent in order
to profit from current accounts.
It is unlikely that any increases in interest rates would be able to attract customers
to open up new current accounts with HSBC. The base lending rate that is now at
0.5% provides little room to manoeuvre for banks and other financial institutions.
Adding to that is the credit crunch and declining asset prices that makes borrowing
at a higher rate unattractive at the moment. The initial prepaid card issue fee
should be around 10. This is in line with what competitors are charging at the
moment.
The catch with the prepaid card scheme is that it encourages bank customers to
save. Any money that is saved is held within the customers current account and
remains available for banks to provide further lending. This may prove to be highly
beneficial to HSBC during times when raising new capital is extremely difficult.
(See table 3)
5.3. Place
The place element involves delivering the product element to customers through
appropriate methods and delivery channels. Delivery may involve both physical and
electronic channels. Failure to make a service product readily available to customers
would guarantee its failure regardless of how good the service product is. The new
current account package would be made readily available throughout HSBCs 1,492
branch network and also through the internet.
(See figure 1 & 2)
5.4. Promotion
The promotion element relies on effective communications to bring awareness in
the market of the service products offered by HSBC. The three objectives of the

promotion element are to gain the attention of customers, provide additional


information and persuade customers to purchase the product. Advertising is mass,
paid communication that is used to transmit information, develop attitudes and
induce some form of response on the part of the audience (Adrian Palmer, 2008).
The choice of media that would be utilised includes newspapers, magazines,
outdoor advertising and the internet. A sales promotion will also be carried during
the first three weeks after the launch date to help stimulate customer purchase and
the effectiveness of intermediaries (Adrian Palmer, 2008). Other promotional
materials include press releases, posters and brochures.
(See appendix 3)
5.5. People
Despite technological advances, many financial services still require direct
interaction between customers and bank employees. The nature of these
interactions strongly influences how customers perceive service quality (Hartline &
Ferrell, 1996).[8] This is particularly true for financial services as employees are
often the first line of contact with the customer.
Due to the importance of this element in the marketing mix, special attention needs
to be given to the training of employees concerning the new current account
package. The prepaid card concept also requires some serious attention as its aim is
to show HSBCs change of stance concerning the psychology of spending.
Training should only be given to bank staffs that are directly involved in the new
current account package. However, back office staff must also be formally notified
concerning this new current account package to ensure that the entire organisation
have a coherent understanding on the banks products and services. Besides that,
training of IT personnel must also be stressed as new information systems may
have to be put in place before the launch of the new product.
(See appendix 4)
5.6. Physical Evidence
It is generally recognized that physical evidence can be subsidized into two
components (Shostack, 1982): peripheral evidence which can be possessed by the
consumer but has little independent value and essential evidence, which cannot be
possessed by the consumer but has independent value.[9] The peripheral evidence
is the prepaid card itself while the essential evidence includes bank branches, cash
machines, posters and brochures.
(See appendix 3)
5.7. Process

The process element focuses on the mechanisms by which the service is delivered,
including business policies for service provision, procedures, degree of
mechanization etc. It is imperative that the policies and procedures are written and
tested before the launch of the new current account package.
Bank personnel are to conduct a test to determine how efficient and effective front
line staffs are at explaining the new current account package and setting up new
current accounts. A step by step guide on how to set up a new current account and
prepaid card system is to be issued to all front line staff to ensure that no confusion
is to occur during the critical launch date.
Besides that, front line staff should also be constantly monitored to ensure that the
delivery of services occur smoothly. Customer feedback and complaints should be
welcomed as they would provide the input needed to continuously improve service
delivery and customer satisfaction.
(See appendix 5)
6. Research
Market research will be carried out before, during and after the launch of the new
HSBC current account package. There are three methods for a financial services
organisation to carry out its research, namely, using in-house resources, using the
services of a specialist agency or a combination of the two methods. During the
period nearing the launch of the new current account package, both pre and post
implementation research should be carried out by specialist agency commissioned
by HSBC.
6.1. Pre-implementation stage
During this stage, research should be focused on whether the markets current
external environment matches the companys initial results during the first external
environment analysis. Political, legal and economic elements of the external
environment are likely to be very volatile in the coming days that may cause HSBC
to either delay or bring forward the launch of the new current account package.
Furthermore, research should also be done on the companys corporate image and
the receptiveness of market for a new product and concept during a time when the
banking industry is facing heavy criticism from the public.
6.2. Implementation stage
A tracking study should be carried out by the research agency during the
implementation stage. The tracking study will be done through monitoring
consumers awareness and acceptance of the new current account package. This
process should be an ongoing one during the products life cycle. Tracking studies
should be conducted with small groups of a target market segment. It would also be

advisable to rotate the members of a group with another group to ensure that a
variety of responses is noted.
6.3. Post-implementation stage
Post-implementation research should be aimed at obtaining tangible results on
whether HSBC has indeed managed to obtain the desirable level of market share
and profitability. Another goal of the new current account package is to change the
attitudes and perception of the public towards HSBC. Marketing research at this
stage should also determine on whether HSBC is now perceived to be a more
responsible financial institution that not only aim for profits but provide value to
customers.
Besides obtaining tangible results on whether marketing objectives are met, it is
also important to gain feedback on customer satisfaction levels and any complains
on the product offered by HSBC. This is to ensure that further improvements can be
made in the future and any mistakes made would not be repeated.

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