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CFMP > Book Notes > Flashcards

Book Notes Flashcards

1
Q

Marketing mix

A 
4 Ps
Product 
Price
Promotion
Place - distribution

Product is at center of mix

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2
Q

Strategic planning

A

Vision and mission of firm; defines existence and purpose

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3
Q

Marketing planning

A

Ongoing process- involves devising the strategy for carrying out he business goals

The marketing planning process is comprised of important activities with documented outcomes:
Situation analysis
Target markets
Objectives and goals
Strategies and action plans
Budgeting
Helps answer:
Where are we now?
Where do we want to go?
How are we going to get there?
How will we know when we arrived,
What will we invest when we get there?
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4
Q

Marketing

A 
4 key elements
Multi dimensional
Involves creating value
Focuses on tangible goods, service, or even an idea
Relies on relationships
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5
Q

Marketing plan

A

Is the output of the planning process for a particular period- it’s a document,

marketing plan describes the specific tactics and timeframes for strategies

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6
Q

Prerequisites for the marketing planning process

A

Senior management support and involvement

Cooperation at all levels of the bank

Willingness of management to conduct the required research

Designated responsibility form implementing the plan

Assigned accountabilities for communications

Recognition that the plan will not be perfect and unchanging

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7
Q

4 essential marketing planning questions

A

Where are we now?
Where do we want to go?
How are we going to get there?
How will we know when we have arrived?

Answering these 4 questions constitutes the process of planning and assist in leveraging resources and ensuring that goals are: quantifiable, attainable, and directed toward benefiting the organization

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8
Q

Situational analysis

A

Answers “Where are we now?”

It involves gathering historical trends data on the bank and its competition; reviewing the markets and market segments in which the bank operates or would like to operate; and evaluating the external factors influencing the bank’s markets (macro and microenvironmental factors), internal factors (internal capabilities, balance sheet, departmental strengths). And finally understanding the perceptions of the customer and the markets have concerning the bank and its operation are necessary.

Although it is critical to the planning process, the information generated need not be included in the plan itself.
Must be based on research.

The end product of situation analysis is a summary of the banks SWOT.

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9
Q

4 categories of customers

A

New
Existing
Exiting
Exited

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10
Q

Family life cycle and banking needs

A

See photo

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11
Q

Situation analysis

A

Situation analysis it the first phase in marketing planning.

  1. The bank must conduct a self assessment by evaluating internal secondary data and by amassing feedback from customers and non customers through primary research. The bank should evaluate it’s current marketing strategies (4 Ps) as well as it current market share.
  2. The second step is an analysis of the macro environmental factors relevant to the topic covered by the marketing plan. Bank must understand the economic and demographic environment in which it competes.
  3. The third is an analysis of the micro environmental factors. This includes info on bank’s customers-much of which can be obtained from survey research.
  4. The final step of situation analysis is SWOT.
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12
Q

ROE

A

Return on Equity = net income / shareholder equity

Anything greater than 10% is considered stong

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13
Q

ROA

A

Return on Assets = net income / total assets

Anything over 1% is considered strong

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14
Q

Asset sensitive

A

Bank that is asset sensitive, the assets will reprice faster than liabilities

Being asset sensitive is good in a rising rate environment

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15
Q

Liability sensitive

A

If a bank is liability sensitive their liabilities will reprice faster than assets

This is good in a declining rate environment.

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16
Q

MCIF

A

Can be used to examine current product usage, patterns, account performance, and profitability. can study the differences from branch to branch.

Is a more universal tool for banks of all sizes and complexities

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17
Q

CRM

A

customer relationship manager

Software systems that compile info concerning customer’s info with the bank

Is for a more customer focused organization that wants to assign customer accountability to individual bankers

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18
Q

Macro environment

A

Banking in the market place

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19
Q

Micro environment

A

Marketer’s own bank

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20
Q

In developing a marketing research plan, the marketer must

A

Search secondary sources of data to refine research and as well as answer there research questions

Select the right research technique (methodology) for the job

Design an appropriate sample

Understand the timetable needed for results

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21
Q

Internal secondary data

A

Are reports gathered from other departments - accounting , admin, branch management, info gather at account account opening

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22
Q

Sarbanes-Oxley Act of 2002 - SOX

A

Requires public companies to establish internal controls to ensure that material information relating to the company and it consolidated subsidiaries is made known to the bank’s senior officers. Also required bank to hire external auditors to assess and report on these internal controls. The bank’s PR department is heavily involved in communicating the efforts of the board of directs to meet their corporate responsibility to shareholders. PR reports information abut the bank’s compliance efforts, the transparency of its actions, and other important information related to SOX

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23
Q

Data warehouse

A

Is an analytical software tool that gathers enormous amounts of info, typically transaction details and data on usage of bank products and services, provides ‘search’ features to identify key trends and opportunities for new products and services, monitor govt relation reporting, integrated demographic and geographic data and so forth.

Is for the larger bank seeking to understand its customer base across multiple analysis points

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24
Q

Object of market segmentation

A

To id customer groups and the peruse with a tailored producer supported by appropriate pricing, promotion and distribution strategies

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25
Q

Differentiated marketing aka multiple segmentation

A

A firm selects two or more different segments as its target markets and develops separate offers for each segment. This may be done in one of two ways. 1. A firm might offer different products to each market segment 2. Or it might offer the same product, but vary the offer through the promotional strategy.

Ex home equity line of credit may be aimed at parents of college kids who need additional financing, while another might be directed at households who seek a loan to fund home improvements.

Can lead to greater penetration in larger markets but tends to be more expensive to market. Never the less most banks use differentiated marketing as their approach to market segmentation because it typically provides better leverage of the market investment compared to the results generated.

26
Q

Positioning

A

Once a bank has identified and selected target markets, the firm must carve out a position for itself and its product in the minds of individuals and business in the target market.

Idea of positioning came to prominence when JAck Trout and Al Rise wrote Positioning: The Battle for your mind. Defines positioning as “no what you do to a product”, rather “what you to do the mind of the prospect… You position the product in the mind of the prospect.”

Five rules of positioning:
Position your bank or someone else will
Know your target customer thoroughly
Be only what you can be 
Tell your customers why you are special
Be consistent
27
Q

Marketing budget expenditures

A 
#1 advertising
#2 public relations
#3 Sales promotions
28
Q

Brand management process

A

Requires that a bank discover, define, deliver and develops the brand

Brand discovery - the outcome you are looking for from the brand discover process is a clear set of personality traits that reflect the brand, a brand promise statement, a list of brand values that are core to the organization, your mission as a brand, your vision as a brand, and a brand story that is emotive and reflects both the personality and promise of the brand.

29
Q

Product advertising

A

Focuses on sell a specific product or service

30
Q

Institutional advertising

A

Focuses on the image or the brand of the bank or company

31
Q

Benefits measurement

A

(Benefits-Costs) x 100/ costs

Quantitive - KPIs

Qualitative - sentiment buzz volume

32
Q

Programmatic advertising

A

Buying digital media in an automated fashion, usually through exchange or a demand-side platform

33
Q

Ad network

A

A media company that sells inventory access across a range of publisher sites to advertisers at a set price. Ad networks work directly with publishers to sell ad impressions that a publisher has not directly sold. It is not programmatic

34
Q

Ad exchange

A

A technology platform where publishers and ad networks sell their impression to advertisers programmatically.Similar to E*Trade

35
Q

Demand Side Platform DSP

A

A technology platform that allows advertisers to manage, purchase and optimize programmatic inventory from multiple ad exchanges and SSO through one interface

36
Q

Supply Side Platform SSP

A

A technology platform that allows publishers to manage, sell and optimize programmatic inventory for advertisers to bid on. SSPs connect multiple ad networks, exchanges, and DSPs at once to maximize the opportunity to sell inventory

37
Q

Email communications

A

A form of direct marketing

Benefits:
Timely
Rich in content
Circulated virally and create buzz
Targetable
38
Q

Potential product

A

Includes all the modification that the product might undergo over time

Ie. An ATM that can dispense a replacement debit card

39
Q

A company’s product has two characteristics

A

Breadth- # of different product lines in the mix
Ie. Checking, savings, CDs, loans, fee based products

Depth- refers tot the number of items within each product line
Ie. Types of checking free, regular, 50+

40
Q

Service

A

A service is any act or performance that one party can offer to another that is essentially intangible and does not result in the ownership of anything. It’s productions may or may not be tied to a physical product.

Characteristics of services are:
Intangibility
Inseparability
Variability
Perishability
41
Q

Intangibility

A

Because it cannot be seen our touched, customers cannot shop for a service like they would a tangible product.

The pre purchase stage is important because it enables the customer to assess the quality and reliability of a product.

Service marketers must compensate for a customer inability to touch the products physically. Many service marketers try to overcome problems associated with intangibility by identifying their service with a symbol. Ie. Travelers Ins and the umbrella

42
Q

Inseparability

A

A service cannot be separated from the person selling or delivering the service. In some cases a customer cannot establish a new relationship without directly dealing with a bank employee

43
Q

Variability

A

Services outlets may sell and deliver the same services, augmented products they dispense are not identical Fromm branch to branch. No service business scan have precisely the same standard of service every time

44
Q

Perishability

A

Services cannot be stored. ie seats at football games

Tellers are idle and cannot be used to provide quicker services at noon on Friday when lines are forming.

Demand fluctuates by day, hour

To deal with Perishability some banks charge a fee for check cashing, another would be to create and account with ATM refunds, eSTatement and online banking

45
Q

Product / market expansion

A

How banks can grow, either by selling more of its current products to the current and new customers or by selling new product to current and new customers

46
Q

Product expansion

A

Adding new products to an existing product line or adding new product lines to an existing product mix. When adding new items is deepens and when adding new product lines it broadens

47
Q

Product contraction

A

Sometimes firms thin their product lines by eliminating product, entire product line, that may be contributing little to profits. They do this to concentrate their resources on a narrower product mix that will generate more profits and reduce overhead. This strategy also is designed to make selecting a product earlier for customers

48
Q

Product modification strategy

A

Modifying, Changing packaging, name, adding new features to increase market share

Helps continuously meet customer’s expectations and create value for the product and service

49
Q

Product repositioning strategy

A

Repositioning is the implicit change of perception of product used benefit or value in the mind of the customer.

Trying to set product apart from the competition

Banking soda has multiple uses, OJ is just not for breakfast

50
Q

Trading up or down

A

Trading up -adding a higher prices or prestige item to a product line

Trading down involves adding a lower prices item to a prestige line. The hope is people who are attracted to, but cannot afford , will the lower priced item

Free checking trading down
High interest check trading up

51
Q

Phygital

A

Physical and digital connections

52
Q

Project

Project management

A

Project is a temporary endeavor to create a unique product, service, or result

Project management in then an extension of the project, by applying skills, tools and techniques to meet project requirements.

Project management processes fall into 5 groups:
Initiating
Planning
Executing
Monitoring and controlling 
Closing

The results of each stage in the project management process build in the previous step

53
Q

Gantt chart

A

A bar chart that illustrate the project schedule. The typical Gantt chart will show the takes included in the project and itemize the anticipated time required to complete the task.

54
Q

PERT chart

A

PERT Charts- Program Evaluation Review Technique were developed by US Navy. The present a graphic illustration of a project as a network diagram consisting of numbers nodes ( either circles or rectangles) representing events, or milestones int eh project linked by labeled by vectors (directional lines) representing tasks in the project. The direction of arrows on the lines indicated the sequence of the tasks.

PERT is sometimes preferred of Gantt because it clearly illustrates task dependencies

55
Q

Flowchart

A

Rather than focus on anticipated time frames and deadlines, a flowchart examines the process required to complete a task. By illustrating the flow of activities from the beginning of the task to the desire outcome, manager can evaluate the efficacy for their process and procedures. The flow chart can then provide a visual contest for prescribed tasks embedded in a Gantt or PERT
Chart to compile the the illustration of a major project

56
Q

ROI

A

ROI= (revenue-cost)/cost

Is a measure of economic performance of specific marketing programs and is calculated by determining the incremental financial value (revenue) driven by each marketing process (which can be determined by the marketing mix model) and comparing it to the investment made in that particular activity or marketing program

Incremental financial value (revenue) may include:
Incremental gain in interest income
Incremental gain resulting for the investments of deposits
Additional fee income

You are measuring direct results

57
Q

ROMI

A

Return on marketing investment

Gives you a better perspective when you calculate on ROI for each program to determine what portion of the marketing mix provides the best payback for dollars invest. ROMI also makes it possible to account for the ripple effects that marketing and advertising create across the entire organization

Should be calculated in total for all marketing programs and shred with entire organization

The “true” measure of marketing’s effect on the entire organization and all business lines.

58
Q

ROMI hurdle metric

A

A ratio that you must achieve, such as a payback of at least 4 to 1 on any low-level risk
(Small dollar, specific target) marketing program - before implementing the program. If you do not surpass the hurdle in the calculations you do not proceed. It create a benchmark and provides insight into programs that may need to be reevaluated, modified, or cancelled based on preliminary analysis of their expected returns.

To calculate ROMI you would also include the effect of the marketing program had on other business lines and on the bank’s brand.

It is advisable for the hurdle to be 100 percent - a comfortable range is 120-150

Gaining agreement - the calculation methods, input variables, and assumptions must be agreed upon prior to the beginning of the program- main areas are balance, margin, baseline, promotion impact

59
Q

Methods of evaluation to determine effective use of marketing spend

A
  1. Effectiveness and attribution, efficiency, and payback

2. Full organization impact - includes ripple effect of marketing

60
Q

LIFT

A

Calculating lift in sales for a potential promotion allows you to determine if the lift is realistic, based on the cost for marketing. To determine projected sales lift, review year over year sales statistics during the same time prime.

Pre campaign ROI = (x-y)/y

To determine incremental financial gained (x): projected # of additional sales times the balance of the product times net margin on a portfolio

TO determine marketing investment (y): project a budget that includes any advertising, direct mail, bonus or giveaway, or any other items that is determined to be part of the marketing spend

61
Q

ROI of a Sponsored or community event

A

See photo

62
Q

Lifetime value of a customer

A

Is an important component of ROI

CFMP (2 decks)

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