The Royal bank of Canada (NCBC)
Once you have decided on your market, your next step is to research the needs and wants of these people. You must discover their partialities in products and services, and then develop your products and services to satisfy those wants and needs.
MasterCard International’s James Shanahan recommends the articulation of a strategic objective as a first step in financial product or service development. Is the product intended to explore new customer segments, are you reacting to a play by one of your competitors, or are you simply trying to make money? The strategic goal, for example, behind the design of MasterCard’s new travel promotional program, “The Master Plan for Travel,” was to make a direct promotional hit on the company’s arch rival, American Express. Consider also the motivation behind Great-West Life Assurance Company’s “Living Life” insurance account.
The introduction of this product in reaction to widespread public criticism of insurance as a financial product served an important public relations role. Consumers demanded simplicity, value, and flexibility, which is exactly what they got in Great-West’s new product. Vancouver City Savings Credit Union, on the other hand, designed its consumer loan campaign, “Prime Plus One,” to soak up surplus company cash.Let’s look further at how these firms went from product idea to product fulfillment.
IT’S THE CUSTOMER’S OPINION THAT MATTERS
Because we are apt to color the world with our own perceptions, it is often difficult for us to see things as our customers see them. But, for marketing professionals, reality is not what we think, or even what our bosses think, but what the customer believes to be real.
Midland Doherty Financial Corporation
Established in 1883, Midland Doherty Financial Corporation is a full-service Canadian investment dealer headquartered in Toronto, Ontario. With 61 offices and over $7 million in assets, the company serves investors across Canada, the United States, England and the Federal Republic of Germany. Total assets under administration at year-end 1987 exceeded $2.7 billion.
THE ROYAL BANK OF CANADA
“VIP” NAME- THE CUSTOMERS’ CHOICE
Managers at Royal Bank of Canada found themselves out of synch with their potential customers when they selected a name for a new product package aimed at upscale Canadians. Multiple interviews were conducted with groups of consumers representative of the bank’s target market for this product, the 4% of the Canadian population earning over $60.000 a year. The unanimous choice in these focus groups was “Royal VIP Service.” Customers felt this designation conveyed an image of spe-cialness which they thought reflected their own self-images.
Nevertheless, senior management berated the product’s signature as mundane and overworked. The bank’s marketing staff stuck to their guns and stuck to the name, finally winning over management by stressing that this name was the choice of actual customers, those nice people who were going to put hard money down to purchase this service. Post-product-launch interviews with VIP clients reconfirmed the appropriateness of the product’s name and package contents — customers gave an overall rating of 8.2 on a 10-point scale.
MIDLAND DOHERTY FINANCIAL CORPORATION
ACCEPTING THE CUSTOMERS’ WORD
John Vivash, former vice president of Marketing for Midland Doherty Financial Corporation. found he had to fight a similar battle with his management over what the customer wanted. Three years ago. a Midland senior executive decided it was important to provide insurance on any customer credit balance, something not currently available. Vivash warned that this move would send up a red risk flag to clients and they would want insurance on their entire portfolio, and at what cost? The executive was adamant though.
To strengthen his no-insurance case. Vivash commissioned an outside research agency to put several questions to 2.000 typical Canadians: Did they think their brokerage funds were insured by some government or industry agency; and. if they were aware that their funds weren’t insured, would such insurance prompt them lo move accounts? Nearly 25% of consumers polled were convinced that such insurance already existed. Further, of the over 75% who were aware of the no-insurance reality, only 2%; saw sufficient value in balance insurance to bother switching accounts from another firm.
Vivash was not content lo slop at this point. He had another telephone survey done, this time with 1,000 Canadians earning annual incomes exceeding $50,000, a group more representative of Midland’s target audience. The results were the same. Faced with this information, the executive reluctantly shelved his project, but not without expressing his considerable dismay that things hadn’t come out differently. It is often hard to face the sobering reality of the customer’s viewpoint!
DESIGNING THE PRODUCT FOR THE MARKET:
Different groups of consumers want different things from their financial institutions. Your product must be designed and packaged for the large! market you have identified. Below, we look at how four linens, each trying to please distinct segments of the financial consuming public, came up with four unique ways of packaging convenience.
It quickly becomes clear that convenience is in the eyes of the beholder and different definitions abound. To most, convenience re ales to location where you place your transactional outlets — but to others convenience means extended operating hours, improved access to a variety of services, shorter transaction times, or easier access to their funds. Although all kinds of convenience are part of product development, locational convenience is primarily a matter of product delivery, so it will be discussed in the next chapter.
NATIONAL COMMERCE BANCORPORATION
CONVENIENCE EQUALS EXTENDED BANKING HOURS
According to research conducted by National Commerce Ban-corporation, convenience is the number one factor considered by consumers in the selection of a financial institution. For NCBC’s target market — middle America — convenience is defined as easy access to financial services.
Motivated to learn more about customers and financial service convenience, NCBC purchased external research reports. A telltale pattern emerged. Customers prefer shopping, including bank “shopping,” during non-traditional banking hours. At Sears, the world’s largest retailer, for example, 70% of sales occur at night or on weekends, times when financial institutions have typically remained closed. The obvious solution? The extension of banking hours in line with customer preferences.
NCBC has accomplished this by teaming up with The Kroger Company, America’s second largest supermarket chain, to place full-service branches in Kroger stores. This strategy has given NCBC’s customers access to financial services from 10 a.m. to 8 p.m., Monday through Friday, plus on Saturday from 8:30 a.m. to 6 p.m.. The arrangement obviously agrees with the bank’s key customer group — the $3(),000-annual-income crowd – – as more than 40,000 of them have set up retail deposit accounts at NCBC’s “Money Markets” over the past two years.
MERRILL LYNCH PIERCE FENNER AND SMITH
Clients or Merrill Lynch Pierce Fenner and Smith see considerable benefit to quick and easy access, not so much to any specific financial services, but to their own funds held at the New York-based brokerage house.
Data on client preferences was gleaned from Merrill’s research studies, begun 10 years ago as part of its new strategic orientation. At that time, the company’s management recognized the need to change from an investment-oriented firm to one concerned with building long-term relationships with key clients, the affluent arid emerging affluent.
In response lo customers’ bias for one-slop access to all their funds revealed in company-sponsored consumer interviews, Merrill developed its “Cash Management Account” or CMA. Clients maintaining balances of at least $20.000 can consolidate all their banking and investment funds into one CMA account, accessing these monies easily by check or with a Visa credit card.
Merrill promoted its new account primarily through the firm’s 11,700 sales representatives or “financial consultants,” with.