Book Notes Flashcards
Marketing mix
4 Ps Product Price Promotion Place - distribution
Product is at center of mix
Strategic planning
Vision and mission of firm; defines existence and purpose
Marketing planning
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?
Marketing
4 key elements Multi dimensional Involves creating value Focuses on tangible goods, service, or even an idea Relies on relationships
Marketing plan
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
Prerequisites for the marketing planning process
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
4 essential marketing planning questions
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
Situational analysis
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.
4 categories of customers
New
Existing
Exiting
Exited
Family life cycle and banking needs
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Situation analysis
Situation analysis it the first phase in marketing planning.
- 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.
- 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.
- 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.
- The final step of situation analysis is SWOT.
ROE
Return on Equity = net income / shareholder equity
Anything greater than 10% is considered stong
ROA
Return on Assets = net income / total assets
Anything over 1% is considered strong
Asset sensitive
Bank that is asset sensitive, the assets will reprice faster than liabilities
Being asset sensitive is good in a rising rate environment
Liability sensitive
If a bank is liability sensitive their liabilities will reprice faster than assets
This is good in a declining rate environment.
MCIF
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
CRM
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
Macro environment
Banking in the market place
Micro environment
Marketer’s own bank
In developing a marketing research plan, the marketer must
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
Internal secondary data
Are reports gathered from other departments - accounting , admin, branch management, info gather at account account opening
Sarbanes-Oxley Act of 2002 - SOX
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
Data warehouse
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
Object of market segmentation
To id customer groups and the peruse with a tailored producer supported by appropriate pricing, promotion and distribution strategies
Differentiated marketing aka multiple segmentation
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.
Positioning
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
Marketing budget expenditures
#1 advertising #2 public relations #3 Sales promotions
Brand management process
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.
Product advertising
Focuses on sell a specific product or service
Institutional advertising
Focuses on the image or the brand of the bank or company
Benefits measurement
(Benefits-Costs) x 100/ costs
Quantitive - KPIs
Qualitative - sentiment buzz volume
Programmatic advertising
Buying digital media in an automated fashion, usually through exchange or a demand-side platform
Ad network
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
Ad exchange
A technology platform where publishers and ad networks sell their impression to advertisers programmatically.Similar to E*Trade
Demand Side Platform DSP
A technology platform that allows advertisers to manage, purchase and optimize programmatic inventory from multiple ad exchanges and SSO through one interface
Supply Side Platform SSP
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
Email communications
A form of direct marketing
Benefits: Timely Rich in content Circulated virally and create buzz Targetable
Potential product
Includes all the modification that the product might undergo over time
Ie. An ATM that can dispense a replacement debit card
A company’s product has two characteristics
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+
Service
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
Intangibility
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
Inseparability
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
Variability
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
Perishability
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
Product / market expansion
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
Product expansion
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
Product contraction
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
Product modification strategy
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
Product repositioning strategy
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
Trading up or down
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
Phygital
Physical and digital connections
Project
Project management
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
Gantt chart
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.
PERT chart
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
Flowchart
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
ROI
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
ROMI
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.
ROMI hurdle metric
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
Methods of evaluation to determine effective use of marketing spend
- Effectiveness and attribution, efficiency, and payback
2. Full organization impact - includes ripple effect of marketing
LIFT
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
ROI of a Sponsored or community event
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Lifetime value of a customer
Is an important component of ROI
