Product and Brand Management - Essay Example

of the Program: Module Module Number: of the Assignment: of the Number: Part Analysis The study has selected HSBC in order to develop the strategic report that can help Oxford Brookes Brand Consultancy (OBBC) to decide which brand they want to pitch for. Next section of the study will describe the ‘brand HSBC’ in context to their business vision and business operation. Company Overview HSBC Holdings Plc is a renowned multinational banking and financial service provider which is headquartered at Canary Wharf, London, United Kingdom. Although the retail banking giant was established by Sir Thomas Sutherland in the year 1865 but officially the brand HSBC came out in the year 1991. According to Forbes and Fortune magazine, HSBC is one of the top 100 power brands in the world. Intraday market capitalization of the company is $122.65 billion (Yahoo Finance, 2012). HSBC operates through four business verticals such as commercial banking, investment banking, global private banking and retail banking (HSBC, 2013a). The company has established more than 7,000 offices across 85 countries in the world. As of 31 December 2012, the company had total asset of more than $2.5 trillion (HSBC Holdings Plc, 2013). Product Portfolio The study will focus on discussing retail banking services of HSBC in order to analyze its brand image in front of retail customers of UK. The bank offers retail banking services to more than 50 million customers across the globe. Retail banking services of HSBC is comprised of following offerings. The bank offers personal internet banking services to customers with the help of world’s largest internet banking networks. HSBC offers mortgage and home loan to retail customers in order to help them purchase real estate property or home. The bank offers personal loan and credit card service to retail customers, worldwide acceptance of credit card of HSBC is helpful for retail customers to purchase their favourite items from shops located in different parts of the world. Retail customers can save or transact their money with the help of their saving accounts in HSBC bank. The banking giant also offers insurance services and retirement saving schemes to customers which can protect them from financial crisis in both present and future time (HSBC, 2013b). Core Values Vision: To be leading international bank in UK. Mission: The Company has a mission to connect customers with the growth opportunities and helping business, people and economies to prosper and achieve its dreams. Core values of HSBC is to be resilient, committed, trustworthy, decisive and capable of taking personal accountability for any losses to customers and other stakeholders due to any misleading activity of the bank. Environmental Analysis PESTLE analysis can be done for HSBC in context to its operation in UK. Political Political environment of UK is stable for operating banking and financial services in comparison to other European countries. For example, banking system in UK is controlled by FSA or Financial Services Authority. Stable regulatory environment will help HSBC to expand its operation in UK. Economical Economic system of UK was affected marginally due to sovereign debt crisis where as countries like Greece, Spain, Italy etc were the worst sufferer during the time Euro zone crisis. Comparatively stable economic environment of UK will provide growth opportunity to HSBC. Social Many British customers have reported their concern over failure of operational security system of HSBC which can help the hackers to get access to personal and financial documents of retail banking customers. Young generation retail banking customers in the UK prefer online banking solution hence HSBC needs to tweak its service offering with the help of online solution in order to attract young Britons. Technological The bank focuses on using digital technology in order to process customer data. HSBC is working on deploying OTPs or one-time passwords for retail customers in order to address security concerns of British customers. Environmental In UK, HSBC has already implemented green IT systems in order to reduce the electricity and water consumptions. In UK, the company has announced various corporate responsibility programmes in order to ensure sustainability of the environment in the country. Legal Corporate governance norms in UK have became stringent after the banking crisis during the time of recession. Banking and financial institutes in the country need to follow corporate governance norms such as Walker committee recommendation, Volker rule and combined codes. Hence it can be said that HSBC will face legal complications in UK if they fail to adhere to corporate governance norms in the country. Industry Analysis According to Porter (1980, 1985 and 1991), companies need to understand industry dynamics and then use existing opportunities in the industry in order to achieve competitive advantage over competitors. Porter five forces can be used in order to understand industry position of HSBC. Competitive Threat Intensity Characteristics Bargaining Power of Buyers Moderate In UK, due to availability of various banking and financial service providers such as Barclays, Halifax, Lloyds TSB and NatWest etc., switching cost for retail banking customer is moderate. Bargaining Power of Suppliers Low-moderate Abundance of suppliers such as software companies, manufacturer of cards etc has increased choice alternatives of supplier selection for HSBC and other banks. Threat of New Entrant Low It is very difficult for new entrant to compete with existing large players like HSBC, Barclays, and NatWest due to resource constraints in terms of financial, technology, human capital and IT capabilities. Threat of Substitute Products High In UK, plenty of substitutes to traditional retail banking services like non-banking financial institutions, Para banking services, small investment firms, depository companies are available to customers. Internal Rivalry High UK banking industry is characterized by presence of both related & non related, mid level & large competitors with more or less similar kind of product portfolio. (Source: HSBC, 2012) SWOT Analysis SWOT analysis of HSBC will reveal its current market position. Strength Weakness HSBC is one of top three banks in the world with strong presence in international market. Strong international presence has helped the bank to adopt global business trend and tailor the financial services in accordance with the demand of the situation. In UK, the bank has the financial capabilities to diversify the revenue mix and adjust the volatility of cash flow. In UK, conjoint effect of competition from local competitors such as Barclays, Halifax, Lloyds TSB and NatWest and asset quality depreciation has negatively affected the profit margin of the bank. Weak performance of global strategic units of the bank has marginally reduced total market capitalization of the bank in UK. Frequent failure of operational security system of the bank has increased privacy concern for retail customers, which has negatively affected brand equity of the bank in UK. Opportunities Threat HSBC needs to work on diversifying its retail portfolio with the addition of some unconventional financial service; service diversification can improve enterprise value of the bank. In UK, HSBC has the opportunity to increase penetration by introducing low interest rate mortgage services to customers. External environmental threats like economic recession, sovereign debt crisis can halter the business growth of HSBC and other financial institutions across the globe. Stringent EU financial norms can negatively affect the future profit margin of the bank. In UK, cut throat competition in the field retail deposit among competitors might increase funding cost for HSBC. Business Strategy In UK, HSBC focuses on using five filter frameworks in order to examine viability and profitability of its existing business portfolio. Five filter framework of the company focuses on measuring as connectivity, economic benefit, cost efficiency, profit margin, and liquidity in the business operation. Value Chain Strategic analysis of the value chain operation HSBC is needed in order to understand the core capabilities of the bank. Inbound Logistics Cross country investors are the major stakeholders for HSBC bank and these stakeholders are also the suppliers of fund to the company. Cross country investors provide additional fund to the bank by investing money in shares and commercial papers. Operations HSBC offers various retail banking services such as insurance, credit cards, mortgages, personal loan, saving schemes to customers. The company has diversified its retail banking portfolio by integrating all the additional services to both online and off line platform. Outbound Logistics According to Peel and Gancarz (2002), modern banks try to perform customer relationship management by offering different types of services. HSBC offers number of services such as e-banking, branch banking, ATM service and mobile banking to retail customers. After Sales Service In UK, HSBC has implemented specialized software tools such as electronic data management system in order to maintain customer database and address customer’s grievance in quickest possible manner. Customer query handling cells of the company has also improved after sales service of the bank. Part 2: Strategy According to Chernatony (2010), Edwards & Day (2005), a brand is associated with two types of values such as, functional value which is basically the material benefits of the brand and emotional value which is basically psychological benefits of the brand. According to research scholars such as Rumelt (1986), Barney (1986), Dierickx & Cool (1989) and Grant (1991), companies should develop its distinctive position in the marketplace by using its internal resources. Hence HSBC should develop its brand position in the field of retail banking by using its existing resources and capabilities. Marketing scholars such as Aaker (1991 & 1996) has defined brand value or brand equity as set of asset and liabilities which is attached to the brand. Aaker (1991) has also stated that, equity of a brand is dependent its ability to emotionally connect with customers. In such context, HSBC should try to increase its brand equity by aligning interest of customers with formulated positioning strategy in order to achieve sustainable competitive advantage. The study has identified three strategic positioning options available to HSBC in context to UK retail banking context. Strategic Option 1 Currently HSBC is offering both retail banking and wealth management services to retail customers of UK. Generally retail banking services of the bank offer products in accordance with the need of general customers while premier and advanced services of the bank are targeted to affluent and emerging class of affluent customers. Now the question is that, is HSBC capable of delivering value to both the class of retail customers simultaneously? However, there cannot be one simplified answer to the question because the answer could decide the future brand positioning of HSBC which is basically a multidimensional issue. HSBC needs to provide special benefits as such to high net worth (HN1) customers in order to retain them whereas for day to day customers, the bank should offer full range of retail banking service portfolio which should be designed in accordance with local requirements (HSBC, 2011). The Canary Wharf based banking giant can provide branded, co-branded, private label (store) cards to both HN1 and general customers. Interesting fact is that, earning of a bank is dependent on its capability to provide wealth management services to customers whereas normal retail banking services such current and savings accounts contribute marginally to the earning of banks. The same is also true for HSBC; hence the bank should focus more on providing tailor made personal banking services such as mortgages, personal loans local, international payment services and wealth management services like insurance, mutual fund and financial planning services to retail customers. HSBC has the option to position itself as unique service provider who has the capability to deliver both retail banking and wealth management services to both daily and high net worth customers. Advantage The bank will catch the attention of affluent class customers who really strive for international level network and banking services. Focusing more on wealth management services will give scope to financial advisors of the Bank to interact with retail customers and offer them additional financial products. Such cross selling of financial products will help the Bank to generate additional revenues. Disadvantage Focusing more on wealth management services might decrease the brand equity of HSBC among customers who are not interested in taking insurance or any kind of investment services. The strategic option is little bit biased to serving the demand of high net worth individuals which will negatively position the bank among daily and non-affluent customers. Strategic Option 2 HSBC can go for premium services which are only targeted to high net worth customers in UK. For example, providing preferential banking services which has international recognition to high net worth retail customers and their immediate families will help he bank to fetch large amount of money from a particular segment. HSBC needs to appoint relationship managers who will handle wealth advice and financial advice for high net worth customers. High net worth customers will have the option to use emergency travel assistance, telephone banking, home banking etc and they can also transfer money internationally without paying additional charge with the help of their premier accounts. Advantage Small customer segment will give the opportunity to HSBC to cater demand of each individual specifically which will enhance its brand equity among UK based HN1 clients. Disadvantage The strategic option sounds more like personal & private banking whereas the strategic focus of the study is to recommend positioning strategy in context to retail banking. Recommended niche banking will confined the brand image among particular segment of the society and simultaneously alienate the brand name to larger section of the society. Strategic Option 3 The bank should formulate three verticals under the umbrella of retail banking such as, retail banking, wealth management and commercial banking. Retail banking will provide services like personal loan, savings account, current accounts, low-interest mortgage, credit cards to both daily and affluent customers. Variety of distribution channels such as Marks & Spencer Money, partnership card for local retailers such as ASDA, Sainsbury, and John Lewis etc should be used in order to cater demand of local customers. Under wealth management, customers will get benefits like life, general insurance, mutual fund etc. Commercial banking services of HSBC will be provided to entrepreneurs, sole proprietors, quoted companies in order to help them grow their business and alternatively help the British economy to grow. Commercial banking services will include e-banking, current and savings accounts, trade finance, business loans & overdrafts, foreign exchange, capital markets instruments etc. Advantage More holistic in nature in comparison to other two strategic options. Catering demand of all the members in the society will position itself as “An international bank which is capable of understanding the local demands and deliver tailor made services to fulfil the demand without compromising quality. Such positioning statement is very close with the current positioning statement of HSBC, "The Worlds Local Bank." Catering to the demand of major section of the society will help HSBC to increase its brand equity in monetary terms. Catering to the demand of retail-commercial customers will help the bank to grow as socially responsible brand which works on developing economic condition of the country. Disadvantages There are no such disadvantages except the fact that the company needs to spend huge capital in order to develop the holistic positioning statement. It is evident from the above discussion that strategic option 3 is the most suitable positioning option for HSBC in order to attract retail banking customers of UK. Suggestions Client’s marketing team should work on deciding both tactical and strategic promotional strategies in accordance with the demand of each customer segment. First they need to decide the target customers for the marketing communication programme which will be the part of tactical marketing strategy, then formulate the integrated marketing communication programme such as direct selling, advertising, public relationship activities and digital marketing in order to generate the brand awareness. In the next section the study will recommend the implementation strategy. Part 3: Implementation Internal Branding HSBC needs to make sure that its employees align their personal interest with the new positioning statement of the bank in order to sustain the future competitive advantage that can be gained by positioning HSBC as holistic retail banking service. Following strategies should be adopted in order to help employees to realize internal values of the bank. Communicate the new positioning statements to all the employees, from lower level employees to top level managers. Make the employees as the brand ambassador by communicating the same positioning message through all the possible channels. Organize weekly knowledge sessions, where employees will be asked to suggest recommendations about development of new product or service quality improvement in order to transfer knowledge among employees. Sharing of knowledge regarding the new positioning statements will increase the co-ordination among employees to perform in order to cater demand all the customers. Seminar regarding details of all the products will increase product knowledge of employees and help them to deliver quality customer services. New Product Development According to Keller, Aperia & Georgson (2012), brand resonance depends on both rational and emotional perspective of the brand, which means that customers judge a brand on the basis of its emotional appeal and performance. Hence marketing communication for HSBC should be developed in such a manner that it can connect to British customer emotionally along with delivering high quality retail banking services. In the proposed positioning statement, HSBC is not developing any new product rather they are reshaping the distribution channel by focusing on fulfilling customer demand in a more holistic manner. Hence traditional concept of new product development holds very little water in new positioning statement of HSBC. In such context, client’s UK marketing team should use the marketing activities mentioned below in order to push the HSBC brand: TV advertisement should shift from being brand-led to showing actual benefits of the services offered by the bank in order to develop the rational background of the brand. Allocating at least 20% to 25% of marketing budget in brand marketing. Coordination between social media marketing managers such as UK Twitter manager, UK Facebook manager etc is required in order to respond to consumer sentiments expressed in social networking sites. Use digital and social media marketing in order communicate with customers regarding data usage, privacy issues. Use below the line activities such as billboard advertisement, print ads in order to generate awareness among retail customers. Strategic placement of billboards in the Airport, Railway station, and Bus stop will also help HSBC to communicate its retail banking services to potential customers. The study will end this discussion with a comment of Chris Clark, who is HSBC group marketing director. According to Chris Clark, “Strong brands have an organic sense: you can shape them and mould them, but never set them in concrete. You need to let the marketplace respond to them and then respond to that” (Brownsell, 2012). Reference Aaker, D. A., 1991. Managing Brand Equity. New York: Free Press. Aaker, D. A., 1996. Building strong brands. New York: Free Press. Barney, J. B., 1991. Firm resources and sustained competitive advantage. Journal of Management 17 (1) pp. 99-120. Brownsell, A., 2012. HSBCs Chris Clark on a new era for the banks marketing. [online] Available at: [Accessed 21 March 2012]. Chernatony, L. D., 2010. From Brand Vision to Brand Evaluation: The Strategic Process of Growing and Strengthening Brands. 3rd ed. Oxford: Butterworth- Heinemann. Dierickx, I. and Cool, K., 1989. Asset stock accumulation and sustainability of competitive advantage. Management Science 35(12) pp. 1504-1511. Edwards, H. and Day, D., 2005. Creating Passion Brands: How to Build Emotional Brand Connection With Customers. London: Kogan Page. Grant, R. M., 1991. A resource based perspective of competitive advantage. California Management Review 33 pp. 114-135. HSBC Holdings Plc., 2013. 2012 Results Highlights. [pdf] Available at: [Accessed 20 March 2012]. HSBC., 2011. Annual Report and Accounts 2011. [pdf] Available at: [Accessed 21 March 2012]. HSBC., 2012. Connecting Customers to Opportunities. [pdf] Available at: [Accessed 20 March 2012]. HSBC., 2013. About HSBC. [online] Available at: [Accessed 20 March 2012]. HSBC., 2013b. Retail Banking and Wealth Management. [online] Available at: [Accessed 20 March 2012]. Keller, K. K., Aperia, T. and Georgson, M., 2012. Strategic Brand Management: A European Perspective. 2nd ed. London: FT Prentice Hall. Peel, J. and Gancarz, M., 2002. CRM: Redefining Customer Relationship Management. Amsterdam: Elsevier. Porter, M. E., 1980. Competitive Strategy. New York: Free Press. Porter, M. E., 1985. Competitive Advantage. New York: Free Press. Porter, M. E., 1991. Towards a dynamic theory of strategy. Strategic Management Journal 12 pp. 95-118. Rumelt, R. P., 1986. Strategy, Structure, and Economic Performance. Harvard: Harvard Business School Press. Yahoo Finance., 2012. Key Statistics. 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