Marketing Campaign analysis

Session 4 Product Development

COM5407 1

Ansoff Product/Market Matrix

COM5407 2

Airmiles

AIA (China)

Mortgage One

Product Life Cycle (PLC)

COM5407 3

Growth Maturity Decline Senility Introduction

Sales

Time

Profit i-bond RMB FX-linked Deposits

Forwards Passbook A/C

Accumulators – “I-kill-you-later” – fad? Credit-linked notes/ Credit Default swaps – not for retail?

Early adopters Early majority Late majority Laggards Innovators

BCG Matrix

Market share

COM5407 5

Table 2.2 : Money supply1 貨幣供應1

Table 2.2.1 : Adjusted for foreign currency swap deposits (HK$ million)

就外幣掉期存款作出調整 (百萬港元)

M1 M2 M3

貨幣供應量M1 貨幣供應量M2 貨幣供應量M3

As at end of HK$ F.C. Total HK$2 F.C.3 Total HK$2 F.C.3 Total

期末數字 港元 外幣 總計 港元2 外幣3 總計 港元2 外幣3 總計

201x Jan 1月 786,088 336,520 1,122,608 4,120,706 4,076,301 8,197,008 4,128,548 4,086,859 8,215,406

Feb 2月 838,271 365,458 1,203,729 4,214,947 4,081,519 8,296,465 4,222,341 4,093,216 8,315,557

Mar 3月 803,741 375,570 1,179,311 4,157,766 4,103,254 8,261,020 4,164,459 4,114,575 8,279,034

Apr 4月 820,975 396,541 1,217,516 4,182,098 4,164,245 8,346,343 4,188,681 4,176,051 8,364,732

Source: http://www.hkma.gov.hk/media/eng/doc/key-information/press-release/201x/20110729e5a1.pdf

Profit impact of market strategies (PIMS)

• Profit increases with market share

• Return on capital and market share analysis, but only when certain critical market share is reached, it will fall.

• Economies of scale, learning, technological improvements, simplifying products

• Cost advantages

• Experience curves

• Strategies – Build, Harvest, Withdraw, Hold

COM5407 6

Project management

• Important skill to acquire as a marketing professional • Objective:

– Quality, Budget, Timescale

• Problems: – Teambuilding, Expected problems, Unexpected problems, Delayed

benefit, Specialists, Stakeholders

• Project Life Cycle: – Define, Design, Deliver, Develop

• Project manager: – Outline planning, Detailed planning, Teambuilding and delegation,

Communication, Co-ordinating project activities, Monitoring and control, Problem resolution, Quality control

• Project planning tools – Gantt charts

COM5407 7

Gantt chart

COM5407 8

Customers Groups

• Personal – High net-worth individuals

• Corporate – Large, medium and small enterprises

• Needs – Move money and make payments – Earn return on money – Defer payment and advance consumption – Manage risk – Need for information – Need for advice or expertise

• Need to understand the exact wants, what are the triggers, and the product itself

COM5407 9

My Dream Account

COM5407 10

Core My Dream A/C

Provide Kids account

Tangible

Reputation, conveniences, choices

Augmented

Limited edition by season and by deposit amount

Potential

Mickey Mouse Piggy Banks

Islamic Financial Products

• Murabaha – cost plus financing – avoid issues with paying or receiving interest – bank buys the goods from third party and then sells it at a higher price to the customer.

• Musharakah – equity funding – business and bank invest in venture, profits are shared and both parties bear the losses.

• Mudarabah – Sleeping partner entrusts money to the entrepreneur, when project is complete, the principal is returned and pre-agreed share of profit.

• Al-ijara – Leasing finance – bank purchase an asset required by customer and then lease to customer at a rrate.

• Qard Hasan – interest free loan, borrower is obliged to repay principal, but additional payment is optional.

• Attractive to Muslim customers, with the tweet in the products, it fits their religious beliefs.

• In Malaysia, 70% of these products are offered to non-Muslims. [Source: Financial Services Marketing, Ennew, C, Nigel W, 2007]

COM5407 11

Understand your environment

• Customer changing tastes

• Competitors

• External environment

• Internal factors

COM5407 12

Managing existing product lines

• Features of existing product – Means of differentiation – but can it last? – E.g. 24-hour FX services, ForEx Switching, Technical,

functional, Intangible thru’ branding

• Product modification, line length modification – Changing attributes to make it more attractive – Creating new variant of existing product – Improving performance e.g. Mortgage One, Cheque and

save account, 24-hour manned hotline – Line Stretching e.g. Premium Accounts, appealing to a

segment – lower risk but sometimes it may not be the case • Wrong segmentation, increase costs in systems and maintenance,

migration of clients from legacy system to new system.

COM5407 13

New product development

• Major innovations – e.g. RMB products, MPF, Structured Products

• Governments often are major drivers, influence product policy, e.g. interest rate deregulation, price caps, tax changes.

• New service lines – “Me-too” e.g. mortgage One, Payroll account

COM5407 15

New-product development strategy

COM5407 16

NPD strategy

Idea generation

Idea Screening

Development and testing

Product Launch

Evaluation & tracking

International Trade Account

Idea Generation

• Data mining

• Existing client profile

• Profitability, sector, nature, transaction pattern, decision makers

• Applied segmentation strategy

• Identify bank strategy – Increase deposit by x billion

Idea Screening

• Segmentation by deposit size

• Segmentation by behavior

• Segmentation by sector

Decision factor: Positioning, differentiation, profitability

Development and Testing

• Based on segmentation strategy

• Decide segment needs

• Work with IT, ops, trade, marketing, HR, distribution in a 3 month working plan to launch the product

• From idea generation to product launch and marketing campaign: 3 months

Product Launch

• Product

• Place

• Promotion

• Price

• People

• Process

• Service Delivery

Evaluation

• Number of accounts

• Profitability

• Deposit and trade volume

• Sales incentives

• Complaints

• Service delivery standards

• Transfer best practice to other countries