Keep it Under 30% its an absolute must MKTG320 due sunday

Advertising and Public Relations

Colorado Technical University

Instructor: Heather Weller

10/13/2014

Market Segmentation in Banking Sector

In banking, market segmentation refers to dividing the targeted market into small manageable groups of customers in order to improve efficiency and service delivery. Currently banks are treating all the customers as being equal and that they have equal needs which have to be satisfied. All the services are for the entire targeted market. This strategy is not effective as compared to market segmentation. This is so because market segmentation is based on understanding the customers and providing for them as per their needs, preferences, wants, psychographics, priorities etc.

An ideal market segment in banking should be divided into loans, high-end savings and Investment segments. This will meet the needs of each group separately and more effectively through advertising and public relations practice. Therefore in targeting these segments the bank will be able to meet it its specific marketing objectives and goals. In order to make correct judgment and conclusion it is good to evaluate the relevance of the current form and the new segment strategy and thus the need for comparing and contrasting between the two.

Both strategies are targeted towards service delivery to the market. Through advertising and public relations the public is able to know of the services being offered by a certain bank. They are all geared towards public awareness and for the purpose of increasing demand.

Despite the two being similar in terms of their purpose they differ in the essence that one of them is more advantageous as compared to the other since it will be effective and will serve the customers more diligently. Therefore the table below illustrates the differences between the current strategy and the new segment strategy with regard to the needs, wants and psychographics of the customers.

From the above differences it is clear that a bank will opt to operate using the new segment strategy in order to perform effectively in satisfying the needs, wants and psychographics of the customers and also since it will earn a lot of profits as compared in using its current strategy.

Branding

It is a marketing strategy whereby a unique name and image of product or service is being created in the mind of the customers through advertising and public relations. A brand communicates message concerning the product or service to the customers. A good brand establishes a significant and differentiated message so as to retain loyal customers and attract new ones in the market. For branding to be efficient there is the need to understand the market very well. That is why it will be good to use the new segment since the market is divided into segments where customers have the same needs and priorities. A good brand should have a clear and straight-forwarded message, should be of motivation to the targeted segment and finally it should be for the purpose of retaining loyal customers to the market and attract new ones too.

Branding Messages

In banking the following key message can be created in the new segment of loans, high-end savings and investments:

Loans: “Low interest rates of up to 0.5% charged on loans.” Such a message can be used in branding during advertising and public relations. It is very clear since it hits the nail on the head by specifying the minimum interest rate on loans. It will motivate even low income earners to take such kind of loans which are affordable to them. For the existing customers they will be encouraged to continue enjoying such services which are being offered.

High-end savings: “Open a fixed account and start earning interests on quarterly basis.” This branding message is for those who prefer savings so as to be able to withdraw in future and do some developments, be able to pay fees etc. The message is self-explanatory thus is conscience to the targeted group. When people hear of earning interests they will be motivated to open such an account.

Investments: “Annually Bonds earning up to 30% interest.” This message of branding will be of benefit to those who which to dispose their cash for a while so as to be able to earn huge interests and later invest. Therefore it means they will buy the bonds and wait till maturity period for them to be given their share of interests.

The above three messages will appeal the market directly since the messages are very clear and have some benefits associated with them. The messages will reside in the hearts and minds of the customers and as a result majority of them will be influenced to bank in that certain bank so as to enjoy all the benefits quoted in the branding messages. The messages have some motivation since they have advantages in them, this will not only retain the loyal customers but will also attract new ones to acquire the services.

Different customers will be attracted to the different services as per their needs and priorities. For example those who wish to acquire interests in the course of saving will opt to open the fixed account which belongs to the high-end savings segment. Customers within the different segments will be attracted to their respective segment services. Through branding messages customers are able to prefer one organization over the other since they have a clear picture of advantages and good service delivery.

Digital/ Traditional approaches.

In marketing digital approach in doing promotion involves the use of electronic devices such as smartphones, computers, cellphones and tablets to engage with customers in the market. It applies the use of technologies and websites to convey information and create awareness to the market. It is targeted to those who can access online services using their electronic devices. It basically involves use of social media marketing thus can be referred to as online campaigns. It can be best applied in transactions or businesses which involve online activities and the targeted group involved should be knowledgeable enough to use the internet to view the adverts and any other information which is represented online.

Traditional approach in marketing involves the combination of all the activities which create consumer value. It explains the basic components of the product which makes the customer to prefer a certain product. These components include products, pricing, place and promotion. Under this traditional practice there is the use of advertising in promoting the goods and services to the public. Advertising is being made through TV commercials, radio, banners, posters etc. Therefore it can be best described as street marketing.

In the new target market, traditional approach has to be mainly used for the bank to perform effectively. This is so because it is mainly geared towards the locals and banks are being used by its citizens more. Thus street marketing campaigns will be very effectively. The level of interaction is very high as compared to that of online campaigns. This implies there is quick flow of information from the bank and as a result instant feedbacks. This will be very valuable when testing a new service in the market because the bank is able to get a real-time feedback and know on how to make the relevant adjustments to suit the needs of its target market. The use of bank services is not only limited to the elite, who have internet skills, in the society but also is for those who are illiterate and would wish to save their cash, take loans or invest. Through street marketing the bank is able to convey its message in a language that is best understood by everyone unlike in online campaigns where only the literate can be able to access the information. Therefore traditional approach will be of best use in the banking sector.

Communication channels

A communication channel in marketing can be defined as the means by which organizations inform, convince or persuade its’ customers about the products and services which they do offer. In banking sector there several communication sectors that can be used to convey information on the bank’s services to the public. Some of them include advertising and public relations form of communication.

Advertising: The bank can communicate to the public some of their services so as to retain its customers or attract other potential customers. It will give information which is meant for a particular targeted market. For instance, if the advert is for those in the loans segment it will be having a header which only attracts those who wish to acquire loans. This will only be a direct message to a particular group who has interest on what is being advertised by the bank.

Public relations: Ensures there is constant delivery of information to the customers concerning the services offered. It gives information concerning the services offered in the different segments of the bank. Therefore each customer will only view the information which best serves him or her.

These two channels are very efficient since they save customers time because they only read what is beneficial to them and are of priorities in their lives since the two can have headers which describes their target market segments.